May 8, 2007, 12:00 AM

Liberty Media on the lookout for more e-commerce acquisitions

Liberty Media is still shopping for more e-commerce companies after sealing the deal for Backcountry.com, says president and CEO Greg Maffei.

The e-commerce shopping spree is not over at Liberty Media. A day after announcing a deal to buy outdoor gear retailer Backcountry.com, the company’s president and CEO told analysts today he would like to buy more Internet retailers with strong management, market niches and cash flow.

“We’re happy with the progress on these fronts and continue to look for more e-commerce acquisitions,” Greg Maffei said during a conference call with financial analysts.

Excluding the home shopping company QVC, by far the largest of Liberty’s e-commerce holdings, Maffei says Liberty Media will have invested $630 million in online retail sites once the Backcountry.com acquisition closes later this year. He says that amounts to 15 times the free cash flow those smaller e-commerce properties generated in 2006, suggesting they together took in $42 million more than they spent. For this year, he says, the ratio is expected to be 11 times, suggesting free cash flow from the e-commerce businesses of around $57 million, not counting QVC, No. 14 in the Internet Retailer Top 500 Guide.

Maffei says he expects growth in operating cash flow from the e-commerce businesses of more than 20% a year. “That’s quite attractive and a good use of our capital,” he says. Besides Backcountry.com, No. 150 in the Internet Retailer Top 500 Guide, Liberty Media has acquired in recent years IAC/Interactive Corp., No. 23 in the Internet Retailer Top 500 Guide; Provide Commerce Inc., No. 56 in the Internet Retailer Top 500 Guide; and BuySeasons Inc., No. 204 in the Internet Retailer Top 500 Guide.

QVC, which sells merchandise through a television network and online, is the largest business within the Liberty Interactive unit that includes the e-commerce companies. QVC reported revenue of $1.68 billion in the first quarter of 2007, up 8.3% from $1.56 billion in the same quarter a year ago. Operating income was up 14.6% to 243 million. QVC generated 22.5% of its revenue online in Q1, up from 19.8% in the first quarter of 2006. Seventy percent of its revenue was from the U.S.

George says QVC’s web site is being redesigned, and the first phase of that redesign will be completed in the fall, with more enhancements coming next year. He would not go into detail about how the site would change, but said, “We’re working on some fairly exciting things from a marketing and branding standpoint to up-level the QVC brand and position it with consumers in kind of a new light.”

Liberty Media has another unit called Liberty Capital whose largest operating company is TV movie network Starz Entertainment. Revenue at Starz increased 2% to $265 million in the first quarter.

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