QVC shoppers prop up Liberty Media
The media conglomerate has bright numbers to report, even in a gloomy economy.
(Fortune) -- The slumping economy has meant bad news for retailers, right? Maybe, but no one seems to have told QVC.
The home shopping network, owned by Liberty Media, saw fourth-quarter revenue risse 4 percent to $2.33 billion. During all of 2007, QVC sales grew 5 percent to $7.4 billion. And that wasn't the only bright star in Liberty's universe. Increases in subscriptions and cheaper production costs helped boost revenue at Starz Entertainment, which rose 3 percent to $265 million during the fourth quarter and 3 percent for the year to $1.07 billion.
Does that mean Liberty had a good year overall in 2007? Well, that's a harder question. Liberty can be a challenging company to grasp. Run by cable mogul John Malone, it owns interests in a broad array of communications, media, and electronic retailing businesses that range from the Starz Entertainment, and the QVC shopping network to Bodybuilding.com and Expedia.
Its securities are divided into several stocks, including two main tracking stocks, Liberty Interactive (LINTA) group, and Liberty Capital Group (LCAPA, Fortune 500). LINTA shares have dipped 38 percent over the last year, and are currently trading at $14.91. LCAPA shares, meanwhile, have risen 9 percent in the last 12 months, currently trading at $117. Over the same period, the S&P 500 has fallen nearly 3 percent.
How does QVC keep its numbers growing? Lehman Brothers analyst Vijay Jayant told investors in a recent note that Liberty Interactive share price underperformance so far this year is unwarranted. Among other things, he believes "QVC's unusual business model, loyal customers, and limited discounting drive relatively more reliable cash flows and higher margins than retail peers." He continued: "QVC US revenue growth is typically about two times retail industry same-store sales growth, suggesting better top-line prospects than peers even in a slowing economic environment."
Another bright spot for Liberty: On Wednesday, the Federal Communications Commission approved a $12 billion deal between Liberty Media and News Corp (NWS, Fortune 500). in which Liberty will gain News Corp.'s 41 percent controlling stake in the country's number-one satellite TV provider, DirecTV. Analysts expect DirecTV's customer base of 16.8 million to grow as more Americans purchase flat-screen, high-definition TVs over the next few years. DirecTV currently offers more high-definition channels than its competitors.
Even so, satellite providers in general are finding it difficult to add customers while competing with cable and telecom companies who can offer bundled discounts on TV, phone, and Internet services. As part of the deal with News Corp., Liberty gives up a 16 percent share of News Corp., but it also receives $625 million from News Corp. as well as two regional sports networks. 
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