Liberty’s QVC, Starz Make Small Q1 Gains

Tracking Stocks Liberty Interactive Group, Liberty Interactive Group, Liberty Capital Group Pursue Buybacks
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John Malone-led Liberty Media reported slightly improved first-quarter results Thursday for its QVC shopping channel and Starz premium pay movie service. They are associated with two of Liberty Media’s three tracking stocks.

At QVC, which is part of Liberty Interactive Group, revenue rose 5% to $1.77 billion and operating cash flow advanced 3% to $387 million.

“While we demonstrated slight revenue and operating-cash-flow improvement in a challenging retail environment, our results this quarter remained below QVC targets,” QVC president and CEO Mike George said in a statement.

In domestic operations, its product mix shifted from home to jewelry and accessories. The average selling price increased 4% from $46.04 per order to $48.09, although total units shipped declined to 26.9 million from 27.8 million and returns increased.

Starz, part of Liberty Entertainment Group, posted a 3% increase in revenue to $273 million and a 1% hike in operating cash flow to $74 million. Operating expenses climbed 4%, mostly from costs of a new branding marketing effort.

Starz chairman and CEO Bob Clasen said the Starz and Encore channels ranked first in Nielsen Media Research ratings among the premium pay channels for the first time in February.

During the quarter, the company pursued aggressive stock buybacks, indicating that it thinks its share prices undervalue assets. Liberty Entertainment is authorized to buy back up to $1 billion of its common shares, although there were no stock buys as the quarter ended. Separately, Liberty Interactive repurchased $83 million in stock amounting to 4.7 million units of series-A common and has $740 million authorized for further buys. Liberty Capital Group -- another tracking stock -- received approval to buy up to $300 million of its stock, which replaces an earlier authorization. No Liberty Capital stock was purchased in the quarter.

Separately, DirecTV Group -- in which Liberty Entertainment owns a roughly 41% equity stake (and higher voting stake) -- said Thursday that it plans to borrow $2.5 billion to fund stock repurchases.

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