Liberty Live Holdings (LLYVK) Q4 2007 earnings summary

Executive summary

• 2007 revenue rose 9.4% to $9.423B, while operating income fell to $738M from $1.021B and operating cash flow declined 3.0% to $1.729B. Net earnings increased to $2.114B from $840M, reflecting substantial financial-instrument and disposition gains.

• Portfolio reshaping continued through asset exchanges and acquisitions; the News Corp exchange and a new Liberty Entertainment tracking stock repositioned major television and programming assets in early 2008.

Financial highlights

• Revenue was $9.423B, up 9.4% YoY; net earnings were $2.114B versus $840M, and earnings from continuing operations were $1.965B versus $709M.

• Operating income declined to $738M from $1.021B; operating cash flow was $1.729B, down $54M or 3.0% YoY.

• Realized and unrealized financial-instrument gains were $1.269B; net disposition gains were $646M, including a $582M Time Warner exchange gain.

• Effective tax rate was 14.0% versus 26.2% in 2006; $354M of deferred tax liabilities was reversed following tax-efficient CBS and Time Warner exchanges.

Outlook and guidance

• QVC planned to refresh product mix and programming, optimize its website, continue branding where effective and pursue cost controls in 2008.

• Starz Entertainment targeted revenue growth through brand-building, service bundles, HD/on-demand offerings and original programming; 2008 programming expense was expected to be comparable to 2007.

• Starz Media was expected to incur operating cash flow deficits and operating losses for the next two to three years as it builds its content library.

• 2008 expected cash uses included $465M for Interactive Group interest, $210M for capital expenditures, and $152M in federal tax payments for 2007; Starz Media expected $180M for film and TV production.