Liberty Media Outperforms

Zacks Equity Research
August 10, 2011

Liberty Media Corp. (NasdaqGS:LINTA - News) reported solid financial results in the second quarter of 2011. Quarterly revenues of $2,245 million was an improvement of 9.9% year over year, surpassing the Zacks Consensus Estimate of $2,166 million. Quarterly EPS was 30 cents, far ahead of the Zacks Consensus Estimate of 20 cents.

Quarterly total operating income was $382 million compared with $287 million in the year-ago quarter. In the second quarter of 2011, consolidated adjusted OIBDA was $574 million compared with $472 million in the year-ago quarter. Quarterly earnings from continuing operations before income tax was $459 million compared with $98 million in the year-ago quarter.

At the end of the second quarter of 2011, Liberty Media had total consolidated cash and marketable securities of $3,786 million, down 4.4% sequentially. Liberty Media exited second-quarter 2011 with $7,222 million in outstanding debt, down 3.1% sequentially.

Second Quarter Group Details

Liberty Interactive Group: Quarterly total revenue for the group was $2,245 million, up 9% year over year. Adjusted OIBDA was $450 million, up 5% year over year. Operating income was $288 million, up 5% year over year.

Within this segment, QVC revenue was $1,898 million, up 8% year over year. Adjusted OIBDA was $418 million, up 4% year over year. Operating income was $281 million, up 4% year over year. QVC domestic revenue inched up 3% year over year and QVC international revenue increased 18% year over year.

eCommerce Business revenue was $347 million, up 18% year over year. Quarterly adjusted OIBDA was $36 million, up 29% year over year. Operating income was $19 million, up 138% year over year.

Liberty STARZ Group: Quarterly total revenue generated by the group was $403 million, up 5% year over year. Adjusted OIBDA was $118 million, up 146% year over year. Operating income was $112 million, up 160% year over year. Of the additional $20 million revenue generated in the reported quarter, Starz Media businesses contributed $8 million, higher subscription number contributed $6 million, ancillary revenue from international TV distribution rights generated $3 million, and the remaining $3 million was generated from home video. 

Liberty Capital Group: Quarterly total consolidated revenue for the group was down 33% year over year to $135 million. Adjusted OIBDA was $7 million compared with a negative $43 million in the year-ago quarter. Operating loss was $14 million compared with an operating loss of $83 million in the year-ago quarter.

Recommendation

Liberty Media has decided to acquire 70% stake of Barnes & Noble Inc. (NYSE:BKS - News), the largest bookseller of the world, for approximately $1.02 billion. We maintain our long-term Neutral recommendation on Liberty Media. Currently, the stock holds a short-term Zacks #4 Rank (Sell).

LIBERTY MEDIA HOLDING CORP INTER (LINTA): Read the Full Research Report

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