By Demian Russian
Liberty Media Corporation (Nasdaq: LCAPA, LINTA, LSTZA) reported second quarter financial and operating results for Liberty Capital group, Liberty Interactive group and Liberty Starz group Monday (see call transcript). Liberty Media’s 40% stake in Sirius XM Radio (NASDAQ: SIRI) is currently represented in its Liberty Capital tracking stock group. Although Liberty Media did not report full results for Liberty Capital [LCAPA] at the time of the conference call, they did disclose that Liberty Capital’s operating loss increased by $64 million in Q2, while revenue increased by 1%. Liberty Capital Group’s Starz Media recorded an impairment charge of $42 million, due to a number of its movie titles not garnering as much theatrical, home video, and television revenue as has been expected.
“We significantly reduced debt at Liberty Interactive and Liberty Capital and continued to repurchase stock at Liberty Capital. We made progress on our split-off of Liberty Capital and Liberty Starz, filing our private letter ruling request with the IRS and a lawsuit seeking to clarify aspects of our indenture position.”
–Greg Maffei, Liberty President and CEO
Liberty Media reported that it had continued to repurchase Liberty Capital Series A common stock during the second quarter. Between May 3rd and July 30th, 2010, Liberty purchased 8 million more shares of its LCAPA stock at an average cost of $43.11 per share. This equates to a total cash consideration of $344.3 million. Liberty reported that they had repurchased a total of 44 million shares of its LCAPA stock, at an average cost of $20.78 per share, since Liberty Capital’s reclassification on March 4th, 2008. The total LCAPA stock repurchases to date equate to a total cash consideration of $914.5 million, and the total repurchases represent 34.1% of the LCAPA shares outstanding.
What’s interesting about this is, while Liberty Media has approximately $740 million remaining under its Liberty Interactive stock repurchase authorization and approximately $447 million remaining under its Liberty Starz stock repurchase authorization, Liberty only repurchased shares of its Liberty Capital tracking stock during the second quarter. Liberty still has approximately $185.5 million remaining under its Liberty Capital stock repurchase authorization. While the Liberty Capital tracking stock group represents a variety of Liberty Media’s investments, Sirius XM Radio is currently LCAPA’s largest holding. Liberty also announced that it had applied proceeds from the settlement of equity collars to reduce debt at Liberty Capital by $379 million.
In June, Liberty Media announced that it intended to spin off Liberty Capital and Liberty Starz from Liberty Interactive to form a new company called “Newco,” which would then be divided into two separate tracking stock groups, “Newco Capital” and “Newco Starz.” Newco Capital would track the assets currently attributed to Liberty Capital group and Newco Starz would track the assets currently attributed to the Liberty Starz group. Last Friday, Liberty Media Corporation announced that they, along with their subsidiary Liberty Media, LLC, had filed a lawsuit against The Bank of New York, as the bank is trustee under the indenture governing Liberty Media, LLC’s public indebtedness. Liberty’s suit seeks injunctive relief and a declaratory judgement by the court that the previously announced plan to split-off the businesses, assets and liabilities currently attributed to Liberty Media Corporation’s Liberty Capital and Liberty Starz tracking stock groups will not constitute a disposition of substantially all the assets of Liberty Media, LLC under the indenture.
During the second quarter Liberty Interactive group’s revenue increased 6% to $2.1 billion, while operating income increased 3% to $274 million, mainly due to favorable results from QVC. Liberty Starz group’s revenue increased 4% to $311 million, while operating income increased 28%, mainly driven by Starz Entertainment results. Starz's original series, The Pillars of the Earth, was reported to be a solid performer.
Disclosure: Long SIRI
