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John Malone’s international cable operator Liberty Global Group on Thursday reported mostly lower financials for the fourth quarter, but said it lost slightly fewer subscribers than in the year-ago period.
The company said its quarterly operating income rose 12 percent to $282.5 million, but it swung to a net loss of $1.4 billion from year-ago earnings of $25.1 million, while operating cash flow declined 4.1 percent to $1.3 billion. Fourth-quarter revenue dropped 0.5 percent to fall just below $3.0 billion.
Liberty Global CEO Mike Fries during an analyst call addressed speculation his company has put forward a bid for Univision Communications, the Spanish-language broadcaster that put itself up for sale in 2019.
With $8 billion in cash on its balance sheet, Wall Street has been keen to see how John Malone’s Liberty Global will put that money to work to increase value for investors at the international cable operator. So Fries on Friday downplayed reports his company is among the possible bidders for Univision as the U.S. media player is expected to receive final bids this month.
“The reports of us buying Univision for $9 billion were not accurate,” Fries told analysts. But the Liberty Global boss, with John Malone no doubt looking over his shoulder, hinted the cable group may still be looking to acquire Univision on the cheap.
“But we will look creatively at deploying capital in small venture-like ways in order to drive future strategic opportunities,” Fries added. In January, chatter emerged that Liberty Global was among possible bidders for Univision. Its Liberty Global Ventures investment arm was understood to be looking at partnering with Hemisphere Media Group on a bid for Univision.
“This is a small investment that Liberty Global Ventures is exploring,” a Liberty Global representative told The Hollywood Reporter last month.
On the M&A front, European wireless giant Vodafone Group at the end of July completed its $21.3 billion acquisition of Liberty Global’s cable systems in Germany, Hungary, Romania and the Czech Republic, boosting its pay TV business. The transaction netted Liberty Global around $11.3 billion in proceeds.
With around $11 billion in liquidity, analysts have argued the firm would likely put part of that amount into acquisitions. Fries responded by saying M&A was the lowest on his bucket list of priorities, which is headed up by investing in “capital structure,” including bolstering the Virgin Media network in the U.K., and continuing with share buybacks to increase shareholder value.
Fries also told analysts Liberty Global would put its capital work by investing in core markets — the UK, Switzerland, Ireland, Belgium and Holland. “That’s where the first and best use of cash will be spent,” he said.
Liberty Global’s Latin American arm, which was spun off from the parent company and trades as Liberty Latin America, with operations in Chile, Puerto Rico and the Caribbean, is thought to be eyeing how to leverage Univision’s Spanish-language content. A long-anticipated Univision deal could also help Malone’s various companies accelerate and deepen their initiatives to get a bigger piece of the U.S. market of an estimated 60 million people who speak Spanish or are bilingual.
During the latest quarter, Liberty Global said it lost 25,500 customers in the fourth quarter on a net basis, compared with a year-ago loss of 26,100. Gains in Poland and Slovakia in the latest quarter were more than offset by drops in the U.K./Ireland, Belgium and Switzerland. The U.K./Ireland customer decline of 9,400 marked a reversal from a 9,000-customer gain in the same period of 2018, with the company citing “increased” discounting from competitors.
Liberty Global said it lost 91,300 net pay TV subscribers in the fourth quarter after a 74,900 drop in the year-ago quarter, but it added 15,700 broadband users, down from the year-ago gain of 24,800. The company also reported a decline in telephony users, compared with a gain in the final quarter of 2018.
Netflix and Liberty Global earlier this month extended their integration deal for several years, covering about 11 million pay TV subscribers in Europe.
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