Liberty Media Underperforms

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Liberty Media Corp. (LMCA) reported weak financial results for the fourth quarter of 2012. Quarterly GAAP net income was $103 million or 87 cents per share compared with $122 million or a loss of 94 cents per share in the year-ago quarter. On the revenue front, it slumped 52% year over year to $467 million. Liberty Media currently has a Zacks Rank #3 (Hold).

In the fourth quarter of 2012, Liberty Media’s adjusted OIBDA came in at $77 million compared with $323 million in the year-ago quarter. Quarterly operating income was $25 million compared with $293 million in the prior-year quarter. In the previous quarter, Liberty Media repurchased 0.7 million shares for a total cash consideration of $109.5 million.

In 2012, Liberty Media generated $236 million of cash from operations compared with $276 million in the prior-year period. Free cash flow in 2012 was $205 million compared with $262 million in 2011. At the end of 2012, Liberty Media had $2,745 million of cash and cash equivalents compared with $3,929 million at the end of 2011. Total debt, at the end of 2012, was $540 million compared with $1,295 million at the end of 2011. At the end of 2012, debt-to-capitalization ratio was 0.08 compared with 0.09 at the end of 2011.

Starz LLC Segment

Revenue in the fourth quarter of 2012 was $423 million, up 5.8% year over year. Adjusted OIBDA was $102 million compared with $108 million in the year-ago quarter. Operating income was $87 million, showing a yearly decline of 12.1%. At the end of the reported quarter, total subscribers base of Starz notched up 9% to 21.2 million while its sister TV channel Encore had 34.8 million subscribers, up 5% year over year.

Recent Strategic Decisions

In January 2013, Liberty Media spun-off its Starz Entertainment division as a separate entity. Also in the same month, the company also acquired more than 50% control in SIRIUS XM Radio Inc. (SIRI). In the reported quarter, Liberty Media raised its stake in Live Nation Entertainment Inc.(LYV) to around 27%. Earlier, the company invested in Barnes & Noble Inc. (BKS).

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