Liberty Live Holdings (LLYVK) Q4 2006 earnings summary

Executive summary

• 2006 revenue rose 12.6% to $8.613B, operating cash flow (OCF) increased 15.7% to $1.783B, and net earnings were $840M versus a $33M loss in 2005.

• A tracking-stock restructuring separated assets into Interactive and Capital groups; portfolio transactions shifted passive holdings toward controlled operating businesses.

• Combined tracking-stock returns were 30.8% for 2006, versus 15.8% for the S&P 500 including dividends.

Financial highlights

• Revenue was $8.613B in 2006, up 12.6%; acquisitions contributed Provide $220M, Starz Media $86M, FUN $42M and BUYSEASONS $32M.

• Operating income rose to $1.021B from $944M; QVC and Starz gains were partly offset by FUN and Starz Media losses and higher stock-compensation expense.

• Net earnings were $840M, including $220M from discontinued operations; the latter included $236M of tax benefits related to OPTV and AEG tax basis.

• OCF reached $1.783B, up $242M or 15.7%, led by QVC's $234M increase and Starz Entertainment's $15M increase.

Outlook and guidance

• Long-term Liberty Interactive guidance remained high-single-digit to low-double-digit revenue growth and low-double-digit OCF growth; 2006 results exceeded this target at 13% and 19%, respectively.

• Starz expected 2007 core-network growth, OCF growth and further programming-cost reductions; programming costs were forecast 6%-9% below 2006, subject to title availability and performance.

• 2007 priorities included operating growth and efficiency, portfolio simplification, strategic acquisitions, balance-sheet management and continued equity repurchases as valuations warranted.

• QVC expected consolidated revenue growth to moderate as household reach matured; future growth depended on new and existing customers and wider platform access.