Recently, Liberty Media Corp. (LINTA) announced that its pay-TV wing, Liberty Starz, has decided to hike its original programming time to more than double its current level in 2011. At the same time, Starz will also try to expand globally to compete with Time Warner Inc.’s (TWX) HBO. Starz currently has around 25 hours of original programming, which may go up to 50–60 hours in 2011.
 
Starz is also on verge of renewing its existing agreement with Netflix Inc. (NFLX). Recently, Epix pay-TV entered into a 5-year $1 billion deal with Netflix. Several analysts opined that a 5-year deal with Netflix may bring $1.4 billion of cash to Starz. During the second quarter of 2010, Starz Media recorded an impairment charge of $42 million, since a number of its movie titles not garnering as much theatrical, home video, and television revenue as had been expected. Starz Entertainment is facing challenges as cable operators are trying hard to offer more bundled and new pay-TV services.
 
Recently, QVC Italy started live broadcasting to 18 million homes in that country. QVC is the leading home-shopping retailer with a 63% share of the market, far ahead of its largest competitor HSN, which holds a 26% share, and ShopNBC, which has a 7% share. QVC’s channel positioning is a major competitive advantage. QVC now reaches approximately 200 million homes worldwide.
 
Liberty Media’s Internet operations are a primary growth engine. We expect QVC.com to continue leveraging the QVC brand to rapidly grow its Internet operations. QVC.com’s margins are higher than Internet retail competitors because its advertising spending is almost nil compared with 15%–20% for most online retailers – the company leverages the QVC home shopping network’s brand and generates customers from those who view the TV channel.
 
We maintain our long-term Neutral recommendation for Liberty Media. Currently it is a short-term Zacks #3 Rank (‘Hold’) stock.
 
LIBERTY M INT-A (LINTA): Free Stock Analysis Report
 
NETFLIX INC (NFLX): Free Stock Analysis Report
 
TIME WARNER INC (TWX): Free Stock Analysis Report
 
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