Cable magnate John Malone offered a gloomy outlook on the economy to the Wall Street Journal that has not been born out by his own holdings.
“Well, my wife, who is very concerned about these things, moved all her personal cash to Australia and Canada. She wants to have a place to go if things blow up here. Canada has a lot more fiscal and bank responsibility than most places in the world and lots of natural resources. We have a retreat that’s right on the Quebec border. We own 18 miles on the border, so we can cross. Anytime we want to we can get away. It would probably be illegal but we could go. Actually our snowmobile trail goes right on the border.”
Liberty Media Corp. (NASDAQ: LINTA) yesterday reported quarterly results that calls into question Malone’s doomsday scenario. The QVC home shopping business posted strong numbers with revenue increasing 5% in the second quarter to $1.8 billion and adjusted OIBDA increased 9% to $403 million. QVC ‘s US business grew 21%, an astounding amount consider the shaky state of the economy. Starz Entertainment’s revenue increased 4% to $308 million while adjusted OIBDA increased 2% to $107 million and operating income increased 11% for the second quarter. Indeed, his investments in Sirius Satellite Radio Inc. (NASDAQ: SIRI) and Expedia Corp (NASDAQ: EXPE) and IAC/InterActive Corp (NASDAQ: IACI) are doing well. All of the companies posted better-than-expected results. Their shares are all up this year.
So what’s eating Malone? Taxes. The entrepreneur has preserved his fortune by outflanking the IRS through a series of tracking stocks and tax-free spin-offs. He usually prefers to stay in the background and does not say much on Liberty’s earnings conference calls.
Maybe Malone will get more faith in America if his investments continue to do well.
Jon Berr
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