Liberty profit up; Starz off

Stockholders await Malone's move

NEW YORK — Investors will be anxiously awaiting even a whiff of strategic guidance when Liberty Media hosts its annual meeting in Gotham today, as John Malone’s media investment vehicle late Wednesday reported a quarterly profit despite revenue falloffs at one of its few wholly owned assets, Starz Encore Group.

A host of possible acquisitions and/or divestitures faces the Denver-based firm, but so far Malone has kept pundits guessing as he moves from one negotiating room to the next.

He is in the process of evaluating Liberty’s 42% stake in QVC and a possible buyout of partner Comcast’s controlling position in the home shopper.

The company also has been perusing its options for the Vivendi Universal Entertainment assets, though most consider it a long shot to make an offer for the whole group. Malone’s company has a small minority stake in Viv U and recently filed a suit against it, alleging improper past financial disclosures.

Liberty on Wednesday said that it intends to exercise rights to buy $838 million in USA Interactive stock. Liberty already owns a 20% stake in USA Interactive.

Total net revenues for Liberty fell to $505 million, down from $513 million in the same period last year, while it turned in $135 million in net income for the quarter, compared with a net loss of $1.5 billion net loss in the first quarter last year.

Starz Encore revenue fell 3% in the quarter to $229 million, while operating cash flow increased by 13% to $107 million. The pay TV net reported a 19% increase in average sub units for the quarter.

Company said the ongoing contract dispute with cabler Comcast was to blame for the sales decline at Starz, since it is booking sales according to the Comcast rate card for carriage rather than the premium rate agreement it had under AT&T Broadband before that cable operator was purchased by Comcast. Under accounting rules, Starz did not recognize the $21 million revenue difference between the AT&T and Comcast rates.

At Discovery Networks, half-owned by Liberty, net advertising revenues were up 26% in the last quarter due to an increase in rates and a strong U.S. advertising market, the company said.

(Bloomberg contributed to this report.)