Liberty Live Holdings (LLYVK) Q4 2003 earnings summary

Executive summary

• 2003 brought a shift from passive investments toward control of operating businesses, led by the QVC acquisition and increased influence over UGC; operating results were strong across most businesses.

• The stock’s market value continued to lag its underlying value; simplifying the structure and improving investor recognition remained priorities for 2004.

Financial highlights

• Consolidated revenue was $4.028B in 2003, up 93.3% YoY, primarily reflecting $1.973B of QVC revenue consolidated from September.

• Operating cash flow was $832M, up 96.2% YoY; QVC contributed $434M after consolidation, partly offset by lower Corporate and Other results.

• Operating loss was $956M versus $184M in 2002, including a $1.362B long-lived asset impairment charge; net loss was $1.222B versus $5.330B.

• Diluted net loss per share was $0.44 in 2003 versus $2.06 in 2002; 2002 included a $1.869B after-tax cumulative accounting-change impairment.

Outlook and guidance

• Planned 2004 cash investments in existing investees were $1.4B–$1.7B, including approximately $600M invested in UGC in Q1 and approximately $450M in News Corp.; subsidiary capex was expected to be $340M.

• A further approximately $1.0B of corporate debt reduction was planned for 2004; expected 2004 interest payments were approximately $470M.

• Starz Encore expected programming costs to rise $170M–$190M in 2004 and a further $125M–$175M in 2005, reducing operating income; revenue or other cost savings were not expected to fully offset 2004 increases.

• QVC’s 2004 focus was international expansion, customer additions, higher sales per customer and new domestic growth opportunities, including Internet sales.

• A tax-free distribution of the International Group as Liberty Media International was expected in June 2004, subject to approvals and other conditions.