Liberty Media buys QVC from Comcast

Liberty Media Corp. has agreed to buy Comcast’s majority stake in the lucrative shopping channel QVC for $7.9 billion, the companies said Thursday, The Associated Press reports.

Liberty, which already owns 42% of the electronic shopping service that reaches more than 85 million U.S. homes, told Comcast in March that it wanted to end the joint ownership and negotiate a sale to one party or the other.

Comcast executives sharpened their pencils to decide whether to sell their 57 percent stake in QVC, a major revenue producer for the nation’s largest cable company, said Brian L. Roberts, president and chief executive officer.

“QVC is an exceptional and unique business, but we took a very disciplined financial approach to our evaluation. The cable business continues to be our core focus,” Roberts reportedly said. “With the opportunity to sell at an attractive valuation in excess of $14 billion, we have the flexibility to improve our already strong financial position and to invest for future growth.”

QVC had revenues of $4.38 billion last year, accounting for more than a third of Comcast’s overall $12.46 billion in revenue for the year.

“I’m sure they are sorry to see QVC go; it was a great cash engine,” Matthew J. Harrigan, an analyst with Janco Partners Inc., reportedly said.

But Harrigan said the potential returns from raising cash to invest in such things as improving cable systems probably outweighed those from holding onto QVC.

With the acquisition of AT&T’s cable systems in November, Harrigan reportedly said, “Comcast has such a large cable business they were well advised to stick with it.”

Fast-growing Liberty Media, run by John Malone, was spun off from AT&T Corp. in 2001. Its holdings include stakes in AOL Time Warner Inc. and News Corp., and it has been exploring other acquisition opportunities, including the U.S. entertainment holdings of French conglomerate Vivendi Universal.

Liberty was among recent bidders for the Vivendi assets, along with General Electric Co.’s NBC, Metro-Goldwyn-Mayer Inc., Viacom Inc. and investors led by tycoon Edgar Bronfman Jr., sources close to Vivendi’s board have said.

The QVC purchase doesn’t rule out pursuing the Vivendi holdings, Mike Erickson, vice president for investor relations, reportedly said. “We had always stated that we felt like we have the firepower to do all the things we’re interested in.”

Liberty also owns Starz and Encore and has interests in Discovery Communications Inc., Court TV, InterActiveCorp., Telewest Communications, Motorola Inc. and Sprint PCS Group.

The QVC purchase price will be paid in cash, Liberty Media stock and other debt, with the amounts of each to be determined over the next several weeks, and the transaction was expected to close by the end of the year, the companies said.

Liberty Media will own about 98% of QVC, with the remaining fraction consisting of equity held by QVC managers.

David L. Cohen, Comcast executive vice president, said QVC boomed in value from $2.2 billion in 1995 to about $14.1 billion now.

“QVC has been a wonderful business for us,” Cohen reportedly said. “But we’ve always viewed QVC as a financial asset and not a strategic asset. We are very focused on our cable business.”

Comcast has more than 22 million customers and cable systems in 17 of the nation’s 20 largest cities. It has ownership interests in other businesses including E! Networks, The Golf Channel, Outdoor Life Network and Comcast-Spectacor, which owns the Philadelphia Flyers and 76ers.