DOW JONES NEWSWIRES
Liberty Media Corp. (LINTA) said it took steps to reduce risk
and shore up its cash position amid the financial-market turmoil
and advertising slump that have plagued the media industry.
The conglomerate controlled by media mogul John Malone said it
used $503 million in cash to retire $750 million in debt and has
settled all of its swaps that reference its own or third-party
debt.
"We have increased net asset value and strengthened our balance
sheet by decreasing our debt at a significant discount to face
value and eliminating almost all of our derivative counterparty
risk," said Chief Executive Greg Maffei. "We are focused on balance
sheet management as well as providing greater transparency and
clarity for our investors."
Liberty also drew down an additional $1.64 billion to reduce its
counterparty risk exposure related to its equity position in Sprint
Nextel Corp. (S) and Embarq Corp. (EQ) and sees using $2.38 billion
in derivative proceeds to offset borrowings. Liberty also said it
unwound its remaining derivative positive related to its LodgeNet
Interactive stake. It received $41.4 million in cash from the move
and no longer holds any LodgeNet Interactive equity.
The moves come more than a month after Liberty reported
fourth-quarter results showing continued weakness at the QVC
home-shopping network. The company, which is in the process of
spinning off its Liberty Entertainment (LMDIA) tracking stock,
which holds a 54% stake in DirecTV Group Inc. (DTV), also recorded
a $1.24 billion goodwill write-down at its Starz unit.
Many major media conglomerates took similar write-downs in the
recent quarter, reflecting the dire economic conditions and steep
stock market declines that are plaguing the industry amid the
global economic crisis.
With Liberty spinning off its entertainment tracking stock into
an asset-backed stock, investors hope the company will be able to
simplify the corporate ownership structure of DirecTV.
Liberty Media shares fell 3.8% to $3.27 in recent trading and
are off 80% in the past year.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com