DENVER—John Malone’s Liberty Media Corp. said Wednesday that second-quarter net income more than doubled despite slower growth at home-shopping channel QVC and a 4 percent revenue drop for Starz Entertainment LLC.
The diversified media holding company also announced plans to create a third tracking stock for entertainment assets including a stake in DirecTV it is acquiring from Rupert Murdoch’s News Corp. in a deal expected to close later this year.
“It will give our investors the opportunity to further focus their investment and will create a currency to give us enhanced financial flexibility at Liberty Entertainment,” Chief Executive Officer Greg Maffei told analysts.
Liberty Media divided its assets into two tracking stocks in May 2006 to make it easier for shareholders to follow its disparate parts. Liberty Interactive Group, the first tracking stock, includes home-shopping channel QVC and other interactive businesses. Liberty Capital Group includes Starz and a range of entertainment businesses.
For the quarter ending June 30, Liberty Media reported net income of $1 billion, up from $478 million in the second quarter of 2006. Revenue totaled $2.2 billion, up from $2 billion in the year-ago quarter. Per-share figures were not calculated for the company as a whole.
In the first six months, Liberty Media had net income of $1.4 billion, compared with $452 million in the first six months of 2006. Revenue rose to $4.3 billion from $3.9 billion.
Liberty Interactive’s second-quarter operating income rose 1 percent to $244 million from $242 million in the previous second quarter, while revenue rose 4 percent to $1.69 billion.
QVC faced both operational and market challenges in Japan and Germany while business picked up in the United Kingdom, the company said. The U.S. business grew at a slower rate.
Janco Partners analyst April Horace, who follows Liberty Media, said Liberty Interactive’s results were “a tad light” both domestically and internationally, which caused a 4.4 percent drop in its stock price in early trading.
“Clearly, the international results were less than expected,” she said. The group’s growth is “really the international piece and we knew it was going to take three quarters to turn around,” she said.
Operating income for Liberty Capital Group in the second quarter slipped to $42 million from $44 million, while revenue dropped to $254 million from $264 million. The declines were caused by a drop in the effective rate for the network’s services.
Liberty Media, based in suburban Englewood, Colo., has agreed to exchange its stake in News Corp. and $550 million in cash for a 38.5 percent interest in DirecTV, the No. 1 satellite television provider in the U.S.
With the expected acquisition, Liberty Media said it would create a tracking stock called Liberty Entertainment Group that also would include interests in Starz, WildBlue Communications Inc., a rural satellite broadband company and Fun Technologies Inc. among other assets. While some of these assets are being pulled from Liberty Capital, that tracking stock will continue to represent a small group of assets.
The change will “give Liberty a new currency with respect to the DirecTV investment,” Horace said.
Shares of Liberty Interactive fell 38 cents to $19.82 a share Wednesday. The price has fluctuated between $19.80 a share and $25.89 a share in the past year.
Liberty Capital shares rose $3.57 to $115.27 a share. The price has ranged from $85.89 a share to $126.46 a share over the past 52 weeks.
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