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DENVER (AFX) - John Malone's Liberty Media Corp. and Rupert Murdoch's News Corp. have made progress in talks about how best to swap Liberty's stake in News Corp. for an asset or assets owned by the global media conglomerate, Liberty's chief executive said Monday.
Liberty, a holding company based in the Denver suburb of Englewood, remains interested in acquiring News Corp.'s 38 percent stake in satellite television operator DirecTV Group Inc. or another asset on a tax-efficient basis, CEO Greg Maffei said.
"While I'm not sure where our negotiations with News will take us, one of the elements of a DirecTV deal that is appealing is the flexibility we would have," Maffei told analysts during a conference call.
Maffei believes Liberty could have a "significant influence" on DirecTV by owning 38 percent to 39 percent without taking "hard control" of the satellite television provider.
Maffei's comments came as Liberty reported some third-quarter financial results for its two divisions, Liberty Interactive Group, which consists largely of its holdings in home shopping network QVC and other interactive businesses, and Liberty Capital Group, which consists of the cable company Starz Entertainment LLC among other assets.
Liberty Interactive revenue rose 15 percent and its operating cash flow rose 20 percent because of strong results at QVC, which reported a 12 percent increase in revenue to $1.65 billion.
QVC's domestic revenue increased 11 percent to $1.15 billion, which Liberty credited to more sales of apparel and accessories to existing subscribers.
Starz Entertainment revenue totaled $253 million, up 3 percent, which Liberty attributed to an increase in the average number of subscription units for services. Operating income rose to $40 million from $35 million and operating costs increased 5 percent because of higher programming expenses.
During the quarter, Liberty completed the acquisition of BuySeasons Inc., which manages online costume retailer BuyCostumes.com.
Liberty said it expects revenue, cash flow and operating cash flow from Liberty Interactive to grow in the low double digits in the months ahead. Revenue, operating cash flow and operating income from Starz will be substantially similar to results in 2005.
Analysts were pleased with the results, saying the numbers were better than expected.
Cathay Financial analyst Andy Baker said Liberty Interactive's results were well above his expectations, although the Starz performance was a little lower than he had hoped. "They put up a good quarter on top of what was a good quarter last year," he said.
Maffei said the board also has authorized the repurchase of an additional $1 billion of Liberty Interactive series A stock, a decision that comes after Liberty repurchased 22.1 million shares in the third quarter at an average cost per share of $17.64 a share.
Last month, News Corp. shareholders extended a "poison pill" anti-takeover measure that was first put in place two years ago when Malone took Murdoch by surprise and acquired a stake in News Corp. that today is about 19 percent. The Murdoch family's voting stake is 30 percent.
"Poison pill" measures are intended to thwart hostile attempts to seize control of a company.
Shares of Liberty Media rose 66 cents, or 3 percent, to $22.60 in early afternoon trading on the Nasdaq Stock Market. Copyright 2006 Associated Press. All rights reserved. This material may not be
Copyright 2006 AFX News Limited. All Rights Reserved.
