Live action for Liberty

Malone stalks H'wood

Liberty Media hopes to close its purchase of IDT Entertainment in the next several weeks, execs said.

The $200 million deal marks John Malone’s first foray into Hollywood.

IDTE owns animation studio Film Roman and homevideo distributor Anchor Bay.

It’s looking to develop a live-action biz and theatrical distribution and has hired former MGM vice chairman Chris McGurk to lead the way.

“We hope we’ll be able to announce something when the deal closes in a few weeks,” said Liberty CEO Greg Maffei during a conference call on Liberty’s quarterly results.

IDT’s live-action fare is expected to focus on low-cost genre pics. It hopes to distribute its own CG toons once a pact with Fox expires in 2008. McGurk will be seeking partners to handle international operations and private equity investors to co-finance an IDT slate.

Maffei stressed that theatrical animation wasn’t the driving factor behind the deal. “We’re cognizant of the more competitive landscape,” he said.

Fox pact starts with September toon “Everyone’s Hero.” In Cannes, IDT announced plans to produce $40 million animated pic “Sheepish” to go into production in 2007. It’s got “Space Chimps” for 2008.

Pics distributed through Fox will go to HBO, but all future IDT animated and live-action features undoubtedly will air on Starz!; once the deal closes, the two Liberty units will ink a five-year output agreement.

Also for Starz!, IDT is expected to start producing original TV skeins, telepics and interstitials.

IDTE original productions include Showtime series “Masters of Horror,” “Masters of Science Fiction” for ABC and last year’s toon “Valiant,” produced by subsid Vanguard Animation.

In its second-quarter report, Liberty said Starz Entertainment Group saw revenue rise 2% to $264 million and operating cash flow grow 6% to $50 million. It took in $14 million from an increase in subscription units.

Operating expenses nosed up only 1%. Programming costs rose 8% to $180 million, but general and administrative costs fell on a $10 million dip in sales and marketing support commitments under the new affiliation agreement with Comcast — partly offset by costs related to the launch of digital service Vongo.

Sales and marketing costs will ramp up in the second half and be higher this year than last.

Liberty predicted Starz revenue, cash flow and operating income this year should be about flat from ’05.

Starz and IDT are part of Liberty Capital, one of two tracking stocks that make up the overall company. Unit also houses Liberty’s stakes in News Corp. and Time Warner.

Liberty Interactive is the other piece. Its main asset is home shopping net QVC. It owns stakes in Barry Diller’s IAC/InterActiveCorp and Expedia.

QVC revenue rose 10% to $1.6 billion. Operating cash flow jumped 17% to $378 million.

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