Economic crisis hits Liberty Media

Company reports operating loss of $1.3 billion

A $1.2 billion writedown at Starz Entertainment due to the economy sent John Malone’s Liberty Media to a fourth-quarter operating loss of $1.3 billion.

The loss compared with an operating profit of $63 million in the year-ago quarter.

The company maintains three units, all with separate tracking stocks: Liberty Interactive, Liberty Capital and Liberty Entertainment. The last group, whose assets include the pay cabler Starz, three regional sports networks and the company’s 54% stake in DirecTV, will be spun off into a separate public company in the next few months.

Starz Media (which includes the recently expanded original programming efforts at Starz) and Overture Films are part of Liberty Capital and will not be affected by the spinoff. Asked about the timing of the spinoff during a conference call with analysts, Liberty execs said May or June was the likely date.

The latest addition to Malone’s portfolio is a 40% position in Sirius XM, which is housed in the Liberty Capital division. Malone agreed this month to invest $530 million to keep Mel Karmazin’s satellite radio company afloat.

Execs didn’t elaborate much on the deal Wednesday, other than saying the appeal for them was twofold: the growth potential of satellite radio as a medium and the bargain-basement stock price. They said they would consider bundling DirecTV and Sirius XM services in a consumer marketing ploy, but don’t see a scenario in which the two operations would be combined.

One vulnerable area for Liberty is QVC, which is part of Liberty Interactive. QVC, exposed to the current retail gloom, saw domestic sales slump 12% in the quarter and total revenue decline 8% to $2.1 billion.

Chris Marangi, an analyst with Gabelli Partners, an investment fund that owns shares in many media companies, said the quarterly numbers did not discourage him.

“It’s an asset story and a financial engineering story, so the quarterly results are less important,” he said.

Tracking shares in Liberty Entertainment fell 2.5% to close at $17.70. Liberty Capital fell 4% to finish at $5.61.

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