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Technology Stocks : THE NEW LIBERTY MEDIA GROUP (NYSE: LMG.A and LMG.B) -- Ignore unavailable to you. Want to Upgrade?

To: Jill Collins who wrote (16)	3/14/1999 11:45:00 AM
From: debra vogt	Read Replies (1) \| Respond to of 375

From the New York Times on Sunday 3/14/99: March 14, 1999 As an Entertainment Play, Liberty Is a Variety Show -------------------------------------------------------------------------------- Related Articles The New York Times: Your Money Forum Join a Discussion on Investing -------------------------------------------------------------------------------- By JOANNE LEGOMSKY ow would you like to own a portfolio of some of the most coveted entertainment assets, run by one of the sharpest investors in the industry? It's not a mutual fund, though that may be a useful way to think of it. The investment is the Liberty Media Group, the programming arm of Tele-Communications Inc., the cable TV giant. Both Liberty and Tele-Communications became part of AT&T last week, but Liberty retains a separate market presence. Split off in July 1995 as a Tele-Communications "tracking stock" -- meaning that investors are effectively buying shares in a specified income stream, not ownership of a separate company -- Liberty will now trade on the New York Stock Exchange as a tracking stock of AT&T. Analysts have long been attracted to Liberty's rich portfolio, which includes equity stakes in premiere private entertainment properties that are otherwise inaccessible to ordinary investors. They also like the deft management team that built the portfolio, led by John C. Malone, the chairman of Tele-Communications Inc, who will remain in charge of Liberty under AT&T's ownership. Liberty has not disappointed. Since 1995, the stock's total return has been almost three times that of the S&P 500. In the 12 months ended Friday, Liberty shares advanced 115 percent, compared with a 21 percent gain for the S&P. Other programming plays like Viacom and Fox Entertainment have been hot, too. But unlike them, Liberty is structured as an investment portfolio, not an operating company. Because Liberty trades as an ordinary stock, many investors may not see the distinction, but that may change as the AT&T link raises Liberty's profile, analysts said. Liberty has substantial minority stakes in publicly traded companies like Time Warner, USA Networks and United Video Satellite Group, and in private holdings like Discovery Communications, BET Holdings and QVC. It wholly owns the Encore and Starz movie channels and has a host of smaller holdings ranging from a portion of Telemundo, a Spanish-language network, to stakes in four professional sports teams. For Liberty bulls like Mario J. Gabelli, chairman of the Gabelli Funds, there is reason for excitement: The AT&T deal frees Malone to focus all his attention on running Liberty. "Normally you'd pay a 20 percent fee for management talent of that quality," said Gabelli, who has Liberty shares in all the equity funds his company runs. Richard F. Lawson, manager of the Weitz Hickory fund, has put 5 percent of its $600 million in assets into Liberty and expects 20 percent annual growth in the value of Liberty's portfolio for years to come. "Management has been tremendously successful developing even modest businesses into valuable assets," Lawson said. Liberty has a history of securing large premiums when it disposes of properties. And it soon will have $5.5 billion cash from selling some recently acquired assets to AT&T, which it can use to buy anew. "Every media deal gets run by John Malone first," said Larry Petrella, cable and entertainment analyst with Lehman Brothers. Petrella said he expected Liberty stock, now at $56.875, to exceed $62 within six months, a figure that he said understates what Liberty's properties could fetch when sold. But the stock could go even higher -- and trade at a premium to asset value -- if Malone's full-time involvement gives it the kind of cachet that Berkshire Hathaway gets from its investor-chairman, Warren Buffett. Alan Snyder, president of Snyder Capital Management in San Francisco, also sees Liberty hitting $62. But Liberty is more than just a play on the capital appreciation of media assets, analysts say. "Basic cable programming is the sweet spot of the industry," Petrella said, because it earns fees both from affiliates and from advertisers. "People don't realize that Discovery is more profitable than CBS, ABC and Fox combined," he observed. What if a market slide undercuts the value of the hot media securities in Liberty's portfolio? Snyder said he thought Liberty would buy more shares in a downturn, including its own. "Management's mind-set has always been to repurchase their own shares on price weakness." -----------