Liberty Livewire Corp., a Santa Monica-based subsidiary of John Malone's Liberty Media Group, has been taking the local post-production business by storm, acquiring 10 media companies in the past year. But despite the deep pockets of its multibillion-dollar parent, Liberty Livewire is finding that its buying spree is no cakewalk.
In recent months, Liberty Livewire's stock price has plummeted, and two senior executives, including CEO David Beddow, have jumped ship.
The stock began trading a year ago this month at $48 per share, just after Liberty Media's acquisition of L.A.-based post-production company Todd A-O Corp., which changed its name at the time to Liberty Livewire. A few weeks later, the new company's share price soared to a 52-week high of $74.69, but it has since tumbled 91 percent.
"It's probably because Liberty Livewire is not well understood," said Liberty Media senior vice president William Fitzgerald, who is also chairman of Liberty Livewire. "We haven't gone a huge distance in telling the story. We decided to walk before we run with our assets and get our ducks in a row on the operating side before getting out and publicly telling the story."
On behalf of its subsidiary, Liberty Media has spent hundreds of millions on the acquisitions of a variety of media companies from broadcasting to post-production facilities and has no plans to slow down. Another acquisition is pending and, said Fitzgerald, "it's safe to say that we will continue to be opportunistic about acquisition opportunities."
The acquisitions add to Liberty Livewire's already diverse portfolio of properties focused on post production, content creation, content distribution via satellite and fiber-optic networks and interactive programming.
"Over the course of the past couple of years, we identified and acquired companies that would position Livewire to be the preeminent one-stop shop for the entertainment community," Fitzgerald said. "Our goal is to focus on the provisioning of post production and content delivery services for both traditional content and interactive content."
With the depth and breadth of its operations and with the backing of cash-rich Liberty Media, Liberty Livewire does indeed deserve more respect from Wall Street, agreed Rohit Shukla, CEO of the L.A. Regional Technology Alliance.
"Wall Street has not been very sophisticated about valuing this kind of media business," Shukla said. "Liberty Livewire is a fine example of a good company that handles content well, understands the underlying technologies and offers backbone services. And the company is generating a lot of cash."
But there are also fundamental flaws contributing to the stock price collapse, some industry sources said.
"It's not sexy to Wall Street because this business is very capital intensive and not very profitable," said Howard Brock, managing partner of Matchframe Video, a Burbank-based post-production company with 80 employees. "There is too much supply and not enough demand. It's very competitive."
Brock said he and other independently owned post-production companies marvel at the rapid growth of Liberty Livewire.
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