Liberty Live Holdings (LLYVK) Q4 2004 earnings summary

Executive summary

• Strong 2004 operating performance and continued portfolio simplification; Liberty Media International was spun off in June, with a second distribution planned for 2005.

• After the planned Discovery Holding distribution, the portfolio was to center on QVC, Starz, News Corporation and IAC, alongside liquid assets and smaller businesses.

Financial highlights

• FY04 consolidated revenue was $7.682B, up more than 100% YoY; the 2003 QVC acquisition was the primary driver.

• Operating income was $742M versus a $939M loss in 2003; 2003 included a $1.352B Starz goodwill impairment.

• Net earnings were $46M versus a $1.222B loss in 2003; basic and diluted EPS was $0.02 versus $(0.44).

• Operating cash flow, a non-GAAP measure, was $1.537B versus $800M; QVC contributed $1.230B in 2004.

Outlook and guidance

• QVC’s 2005 priorities were domestic customer growth and continued international growth, supported by wider access and product selection.

• Starz expected 2005 programming costs to rise $115M–$135M YoY, reducing operating cash flow and operating income; a return to OCF growth was expected in 2006.

• Planned 2005 debt repayments were $1B; subsidiary capital spending was forecast at $435M, including $275M at QVC.

• The Discovery Holding distribution, covering Ascent Media and Discovery interests, was expected in Q2 2005, subject to tax, regulatory and other approvals.