Earnings: Liberty Media's Interactive Group Q3 Operating Income Drops 14 Percent, Revs Up 2 Percent

This story was written by David Kaplan.
Liberty Media's Interactive Group posted slim revenue gains of 2 percent, while adjusted operating income fell 14 percent in Q3. The increase in revenue was primarily driven by the impact of the Bodybuilding.com purchase last December and growth at the other e-commerce companies. The decrease in adjusted OIBDA was due to the results at shopping channel QVC, which is the largest part of the group and has been hurt by the economic downturn. In keeping with the unsteadiness of the market, Greg Maffei, Liberty President and CEO, said the company would concentrate on bringing down its debt. Earlier this month, the company drew down on its QVC bank facilities and retired 87 percent of our senior notes that mature in mid-2009. The company repurchased 13.6 million Liberty Capital shares from August 1st through October 29th. Also, Liberty has instituted a hiring freeze, company-wide. Given the uncertainty in the economy, the company is withdrawing its guidance for Q4.

-- Liberty's board has authorized a change in the attribution of $551 million of its Viacom (NYSE: VIA) exchangeable senior debentures. The holdings will be transferred from Liberty Entertainment to Liberty Interactive along with $380 million in cash, as the company looks to build up Liberty Interactive's liquidity. Liberty Interactive will use $300 million of this cash to fund an offer for two series of its senior debentures. The move is being couched as "a necessary step" in a possible split-off of Liberty Entertainment.

-- Liberty Entertainment group's revenue grew 21 percent, but adjusted operating income declined 15 percent in Q3, due to affiliate agreements at the Starz Entertainment. The increase in revenue was primarily due to the addition of the Liberty Sports Group, which was acquired in February 2008. Starz Entertainment's Q3 revenue slipped 1 percent to $278 million, as operating income decreased 11 percent to $78 million.

-- Since DirecTV (NYSE: DTV) will not release earnings until November 6th, the company is holding off on making any comments on the business until then.

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By David Kaplan
  • CBSNews

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