What to Make of Liberty Media's Mixed Results

The main revenue driver continues to be subscriber growth with Liberty adding 149,300 revenue generating units in the quarter, however, this was only about half the number added in the year-ago period. That said, we believe the firm’s faster broadband speeds will enable it to continue to grow its customer base as will the build out of Project Lightning that is taking its network into new neighbourhoods. We are also pleased Liberty was able to raise prices in the U.K. and expect additional price increases to help. The firm continues to work on controlling costs, which enabled its EBITDA margin to reach 45.9%, as we compute it, versus our projection of 45.7%. However, Liberty’s free cash flow fell 16.4% in the quarter to $844 million and dropped 21.6% for the year to $1,551 million. Some of this is due to the increased spending on sports rights in Switzerland. While we believe the firm can improve its free cash flow going forward, this remains a concern.

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