Malone looking to acquire stakes in DirecTV, Viv U

NEW YORK — As John Malone eyes several possible acquisitions, including stakes in DirecTV and Vivendi Universal’s entertainment assets, his Liberty Media Tuesday reported a net loss of $5.3 billion for last year.

The total loss and more was accounted for by a $6.1 billion writeoff on the fair market value of investments, including Liberty’s 4% stake in AOL Time Warner, which declined $2.6 billion, and News Corp., which lost $1.6 billion.

Liberty’s revenues for the year came in at $2.08 billion, up slightly from 2001 when it reported revenue of $2.06 billion and a loss of $6.2 billion.

Of greater interest to Malone watchers, however, was supplemental financial information on Liberty’s private equity holdings, which showed strong cash flow at businesses such as Starz Encore, Discovery Networks, QVC and Jupiter Communications in Japan.

Starz Encore’s Q4 cash flow rose to $102 million, from $76 million in the same period last year. Discovery, of which Liberty owns 50%, closed the quarter with $142 million, compared with last year’s $76 million. For the full year, Discovery revenues topped $1.7 billion, with $379 million in operating cash flow, a 52% increase over 2001.

Liberty prexy-CEO Robert Bennett reiterated the company’s interest in buying up operating businesses that will provide steady cash flow.

“There’s a logic in finding ways to work with the VUE (Vivendi Universal Entertainment) assets and find scale benefits between our Starz Encore unit and their cable and programming properties,” Bennett said in an analyst conference call Tuesday evening.

Revenues for its wholly owned Starz Encore unit was up 10% to $945 million, with cash flow up 19% to $371 million despite a $9 million accounting adjustment coming from a dispute with Comcast over carriage payment terms.

Liberty last week disclosed that Starz Encore will book $80 million less in revenue in 2003 since Comcast refuses to honor the terms of an AT&T Broadband carriage contract. The dispute over fees is in litigation, and Bennett said Liberty is “vigorously disputing the matter” and is confident of a favorable ruling.

Separately, filings showed that Liberty board director Kim Magness resigned his seat March 12. Magness, 50, the son of the late Bob Magness, Malone’s longtime friend and business ally, was reported by Denver press to have been arrested earlier this month on suspicion of drug possession.

Liberty shares closed up 3% Tuesday at $10.09.

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