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Liberty Media Capital Q2 2010 Earnings Call Transcript

Liberty Media Capital Q2 2010 Earnings Call Transcript

Liberty Media Capital (LCAPA)

Q2 2010 Earnings Call

August 9, 2010 10:30 am ET

Executives

TST Recommends

Gregory Maffei – President, Chief Executive Officer

Christopher Shean – Controller

Michael George – Chief Executive Officer, QVC

Chris Albrecht – Chief Executive Officer Starz

Bill Myers – President Starz Entertainment

Dan O’Connell – CFO of QVC

Analysts

Barton Crockett – Lazard Capital Markets

James Ratcliffe – Barclays Capital

Doug Mitchelson – Deutsche Bank

Matthew Harrigan – Wunderlich Securities

Tom Egan – Collins Stewart

Doug Anmuth – Barclays Capital

Jason Bazinet - Citigroup

Presentation

Operator

Good day, and welcome to the Liberty Media Corporation Quarterly Earnings Conference Call. Today’s call is being recorded.

Compare to:
Previous Statements by LCAPA
» Liberty Media Capital Q1 2010 Earnings Call Transcript
» Liberty Media Corporation Q4 2009 Earnings Call Transcript
» Liberty Media Corporation Q3 2009 Earnings Call Transcript

This call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about financial guidance, business strategies, market potential, future financial performance, new service and product launches, the anticipated split off of the Liberty Capital and Liberty Starz Groups and other matters that are not historical facts.

These forward-looking statements involve many risk and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements including, without limitation, possible changes in market acceptance of new products or services, competitive issues, regulatory issues, continued access to capital on terms acceptable to Liberty Media, and the satisfaction of the conditions to the proposed split off.

These forward-looking statements speak only as of the date of this call. And Liberty Media expressly disclaims any obligation or undertaking to disseminate any update of revisions to any forward-looking statement contained herein to reflect any change in Liberty Media’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

On today’s call we will discuss certain non-GAAP financial measure, including adjusted OBIDA. The required definitions and reconciliations, preliminary note and Schedules 1 through 3 can be found at the end of this presentation.

And at this time, for opening remarks and introductions, I would like to turn the call over to the President and Chief Executive Officer Mr. Greg Maffei. Please go ahead sir.

Gregory Maffei

Thank you. Good morning to all of you, and thank you for your continued interest in Liberty Media.

Today on the call we have with me our Controller, Chris Shean, QVC CEO Mike George, Starz CEO Chris Albrecht, and other executives are available.

I’m going to start on Slide 3 highlighting our second quarter events that we thought were noteworthy.

It was a very solid quarter driven by strong operating performance across our operating businesses and good work by our management teams.

At Liberty Interactive, QVC again displayed strength in its operations. The U.S. OBIDA margin was 25.4%, the second highest in the company’s history. We continued Internet growth at the business.

QVC.com revenue grew 21% year over year and makes up now 32% of U.S. Sales. We also experienced good international results despite the strength of the U.S. dollar.

Our e-commerce companies posted 15% revenue growth, which are strong results given the choice we made to change our non-transaction revenue programs, NTR, that those choices reduced the revenue and more dramatically impacted our adjusted OBIDA.

We expect that change will continue to impact revenue, and even more dramatically OBIDA, for the balance of 2010 as we previously have discussed.

We also, at Liberty Interactive, continue to strengthen the capital structure; reducing debt and extending maturities. We retired $479 million principle amount of our 5.7% 2013 bonds through tender and open-market purchases as of July 26

th

.

At Liberty Starz we had solid results despite a substantial programming write-down. We continue to see positive sequential trends in subscribers.

In July, we successfully premiered Pillars of the Earth. We’ve also announced the prequel for Spartacus and are happy to carry on with this very successful series. And we reached a comprehensive new affiliation agreement with Comcast, our largest distributor.

At Liberty Capital, Sirius XM posted strong financial results driven by good operating performance, including 583,000 net ads, improved conversion from pre-pay and churn reduction down to 1.8%.

We continued a strong buy-back program at LCAPA, and repurchased $344 million worth of shares from May 3 to July 30. We applied the proceeds from the settlement of certain of our equity collars to reduce debt by $379 million. As the end of the quarter, Liberty has no equity derivatives outstanding, and all related equity debt has been repaid.

And lastly, at Liberty Cooperate, we announced the plan to split off Liberty Capital and Liberty Starz from Liberty Interactive. Post this spilt-off, Liberty Interactive will become an asset-backed stock. We continue to make progress on this spilt-off. We recently submitted our request for a private-letter ruling with the IRS.

You may note that we filed a related lawsuit on our debt last Friday. We did this to clarify certain aspects of our indenture of position. A bond holder, had alleged that the spilt-off will violate our indenture because the spilt-off assets are “substantially all” of our assets. We don’t agree. We felt, however, that it was important to get this to a swift resolution in order to remove any doubt; therefore, we filed suit.

The spilt-off will not happen until we get a successful resolution to that lawsuit. Anticipating a question that might arise from an investor, the lawsuit may affect the timing of the ultimate spilt-off, but we still are targeting a Q1 completion of the spilt-off.

With that, let me turn over to Chris Shean, our Controller, to talk about LCAPA’s financial results.

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