Liberty Socked by Falling Starz

The movie channel's lawsuit problems will punish earnings at John Malone's favorite company.
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Liberty Media

(L) - Get Report

shares slipped 5% Wednesday after the cable TV programmer said a legal battle would sap earnings at its Starz Encore movie channel.

The battle pits Liberty and cable TV giant

Comcast

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, which

sued Liberty last fall to obtain lower rates for the AT&T Broadband cable systems it acquired in November 2002. Comcast, known as a low-cost operator, had negotiated lower prices for its Starz Encore service than the deal AT&T Broadband struck when it was still part of

AT&T

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. Once Comcast took control of the AT&T cable systems, though, it sought to renegotiate to reduce the prices it was paying, a move Starz fought.

The ongoing legal fracas means Liberty won't be able to pass on rising programming costs to Comcast's AT&T Broadband properties. As a result, Starz said its 2004 programming costs would rise by $175 million to $225 million over 2003 levels. The company said 2005 programming costs would be roughly flat with 2004 levels. On Wednesday, Liberty fell 64 cents to $11.21.