LONDON – John Malone‘s Liberty Global reported a wider third-quarter loss, but continued subscriber and revenue gains in its first earnings report that fully included recently acquired Virgin Media.
The European cable giant, which bought the U.K. cable firm in its biggest deal ever, posted a loss of $830.1 million, compared with a year-ago loss of $22.4 million. The company’s financial report showed higher losses on derivatives and higher income tax and interest expenses as drivers of the wider loss. Revenue of $4.37 billion was up from $2.52 billion.
Liberty Global added 314,000 subscriber units in the third quarter, compared with 320,000 in the same quarter last year, amid continued broadband and telephony growth. But video subscribers declined from nearly 21.88 million as of June 30 to nearly 21.83 million as of Sept. 30.
In the U.K., the firm lost 7,000 subscription units at Virgin Media, compared to a year-ago loss of more than 30,000. “Despite aggressive marketing by our competitors during the summer months leading up to the start of the [soccer] season, we maintained reasonable video churn levels,” it said.
As of Sept. 30, 2013, Liberty Global provided a total of 47.8 million service subscriptions, consisting of 21.8 million video, 14.1 million broadband and 11.9 million telephony subscriptions, to 24.5 million unique customers.
The addition of Virgin Media helped Liberty Global grow its average monthly revenue per customer to $46.26 in the latest quarter, up 24 percent over the year-ago period.
Liberty Global also boosted its projection for synergies from the Virgin Media deal, saying it now expects up to $360 million in cost synergies in the coming years, up from the original guidance of $180 million.
Liberty Global CEO Mike Fries also commented on the recent agreement to sell content unit Chellomedia to AMC Networks. “The Chellomedia sale is expected to close in the first quarter of 2014, and the resulting $1.0 billion in proceeds will provide us with increased flexibility to invest in more strategic content going forward,” he said.
“Liberty Global’s third-quarter results look better than expected due to Western European subscriber growth, the integration of Virgin Media that had been essentially rudderless in the few months leading up to LG’s control and to moderately abating Netherlands competition,” said ISI Media analyst Vijay Jayant. “There was particular strength in Switzerland, Belgium and Germany.
Asked some more about how his team could use the proceeds from the Chellomedia sale, Fries said it “frees up resources for more strategically aligned content needs,” such as content with improved geographic focus and content that moves the needle. He didn’t detail what that could include. Chellomedia is “a great business, but geographically diverse, and [it] just wasn’t an important strategic part of our core distribution business,” he added.
Liberty Global’s current content focus is on oonline rights, subscription VOD tier offerings to preempt over-the-top services and its premium sports and movies channels that could be rationalized over time, Fries said.
He also said his team was getting “more and more comfortable” with owning and operating Virgin Media. “We feel really good about the progress” five months into the deal, he said, predicting subscription unit growth for Virgin Media next year.