QVC made its name hawking cubic zirconium. Now the cable home-shopping network, prize holding of John Malone, the media tycoon who controls

Liberty Media

(LIMDB)

, has shifted away from jewelry (whether the diamonds in them are fake or not) and toward things like electronics and kitchen tools.

The company says it's reacting to recession-weary consumers who are now more apt to buy lower-priced items, when they're buying anything at all.

There's only one problem with the strategy, and it's fairly obvious: Jewelry has higher profit margins.

Liberty Media revealed as much in its first-quarter earnings report, released on Friday. QVC, it said, earned $319 million, 18% less than it did in the year-ago first quarter and almost a quarter less than it did in the fourth quarter of 2008. QVC's revenue, meanwhile, dropped 10% to $1.6 billion.

Liberty Media controls three major holdings: Liberty Interactive, of which QVC is a part; Liberty Entertainment, which controls the cable pay-movie channel Starz; and Liberty Capital, its film production business.

QVC, however, brings in the lion's share of the money, and that was reflected in the parent company's combined results. The three divisions together earned $275 million in the first quarter, down from $286 million a year earlier. Combined revenue rose to just over $2 billion from $1.9 billion a year ago.

The real growth in the first quarter appeared to come from Starz, where earnings ballooned 46% year-over-year and revenue jumped 8%.

The reason for Starz's star turn in the quarter? According to the Liberty earnings release, the channel decided to shun first-run movies in favor of staler fare -- or, as Liberty calls its stock of second-run flicks, "library product exhibitions." They're cheaper than first-run movies, the company said.

Shares of the company inched higher Friday, closing at $6.97, up nearly 4% on heavier-than-average volume.

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