Liberty Media posts Q2 gain at QVC

Starz results mixed; Starz funding may still be months away

NEW YORK - John Malone's Liberty Media reported a second-quarter profit gain for home shopping channel QVC on Monday and mixed results at its Starz businesses.

Starz's search for funding for original productions for its premium channels may still take several months to complete, management also said Monday.

Liberty Media doesn't report consolidated results for all its operations combined.

Liberty Starz recorded a second-quarter revenue gain of 4% to $311 million, and operating profit before depreciation and amortization declined 1% to $103 million. Impairments amounting to about $5 million on two cancelled original series, "Party Down" and Gravity," were a drag on the figure. But excluding the charges, operating profit rose in the double digits.

Compared to the year-ago period, the Starz channel business posted a 3% decrease in average subscription units, and Encore posted a 1% decline. However, management said that Starz added 200,000 subscribers in the second quarter over the first and Encore added 800,000.

Meanwhile, QVC's quarterly revenue rose 5% to $1.8 billion, but in a sign of cost-consciousness, operating profit jumped 12% to $270 million.

On a conference call, management said the company continues to look at options for the Starz Media assets - home entertainment distributor Anchor Bay, animation arm Film Roman and Starz Animation. Sources have said the company has considered a sale or, alternatively, a merger with its Starz Entertainment channels business.
Starz CEO Chris Albrecht on Monday's earnings call also said his team continues to explore several funding options. As reported by THR, Starz has been eyeing $1 billion to help it fund original productions. Albrecht said the process "could take several more months."
He also signalled that lower film costs due a reduced number of studio films may also free up some money for originals.

With the first season of Starz's "Spartacus" hitting the DVD market next month and Starz having retained the DVD rights to "Camelot," Albrecht said TV DVD sales have held up "better" than movie DVD sales.

Liberty Media CEO Greg Maffei said he continues to expect a split-off of Liberty into several entities to happen in the first quarter, even though a lawsuit related to it and announced Friday may cause some delays.

Liberty said Monday that QVC plans to launch second channels in the U.K. and Germany with mostly previously-recorded content. QVC CEO Mike George said the U.K. channel will focus on beauty, with the German channel also having "a heavy beauty focus."
The low cost in those European markets of getting distribution for a second network combined with "modest" revenue potential make this an interesting business proposition, George told Wall Street. He signalled that the financials likely wouldn't work out in the U.S.
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