Liberty Media’s 41% DirecTV Stake: Up or Down?

Investor-Relations Head John Orr Discusses Possible Options at Bear Stearns Media Conference

By David Goetzl -- Broadcasting & Cable, 3/13/2008 11:45:00 AM

Liberty Media investor-relations head John Orr reaffirmed the company’s interest in increasing the 41% stake in DirecTV it recently acquired, adding that a decision is expected soon.

“We expect to have a fairly clear direction in the not too distant future,” Orr said at the Bear Stearns Media Conference Tuesday.

At the same time, Liberty is also mulling going in the opposite direction and reducing its stake in the satellite operator that it officially acquired Feb. 27 in a swap with News Corp.

Liberty has cash on hand that could be used to boost its interest -- president and CEO Greg Maffei has said that going all the way to 100% might make sense -- or to pursue other acquisitions.

One possibility Orr cited was adding more regional sports networks to the Liberty portfolio -- the News Corp. deal gave it control of outlets in Denver, Pittsburgh and Seattle. “Sports programming is pretty compelling,” he said. Maffei, however, has previously expressed some wariness due to issues involving escalating sports-rights fees.

Orr appeared at the conference as Maffei and chairman John Malone were in Delaware due to the high-profile trial involving Barry Diller-controlled InterActiveCorp. He did not address that matter. His public appearance as a Liberty representative was rare, with Maffei the normal frontman to the investor community.

Orr went on to praise the work of DirecTV’s leadership, fronted by president and CEO Chase Carey, and expressed support for the company’s efforts to gain a leg up by pushing its HD- and sports-programming options. “It’s a great pure-play operating asset,” he said.

Orr added that should Liberty opt not to increase its DirecTV stake or add other sports programming, it could acquire assets to complement its Starz Entertainment business. Starz has had success trimming costs recently, he said, but he warned not to expect that to continue as it invests heavily in original programming for the first time this year.

As with News Corp., where Liberty acquired the DirecTV interest by exchanging the 16.3% of the company’s stock it owned, Orr said Liberty is continuing to pursue similar stock-for-assets transactions with Time Warner and Viacom, among others. But he added that finding assets that are both attractive to Liberty and meet the right financial parameters remains difficult.

Regarding Liberty’s QVC home shopping network, Orr said the company is only modestly concerned about any challenges in attracting a younger female demo. QVC has a new logo and a relaunched Web site, and Orr said its “average age is not growing.” He added that the network has been successful in replacing lost customers with new ones each year.