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We expect Liberty Media Corporation (LMCA - Analyst Report) to beat expectations when it reports fourth-quarter 2013 results on Feb 28, before the opening bell.

Why a Likely Positive Surprise?

Our proven model shows that Liberty Media is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +62.96%. This is a meaningful and leading indicator of a likely positive earnings surprise.  

Zacks Rank: Liberty Media currently has a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks of #1, 2 or 3 have a significantly higher chance of beating earnings.  

The combination of Liberty Media’s Zacks Rank #3 and +62.96% ESP makes us confident of positive earnings beat this release.

What is Driving the Better-Than-Expected Earnings?

Liberty Media is steadily restructuring its business model, targeting to control several subscription-based businesses. The company has entered the cable TV industry and management is aggressively trying to consolidate its foothold in the pay-TV market.

However, Liberty Media’s businesses are susceptible to rapid technological changes. Large cable TV operators are increasingly deploying digital TV networks, which are rapidly gaining market traction. This may adversely impact the channel positioning of Liberty Media’s networks.

Notably, the company recently expressed its intention to take full control of SIRIUS XM Radio Inc., the largest satellite radio entertainment provider in the U.S. At present, Liberty Media holds approximately 53% of SIRIUS XM. The decision to acquire a 100% ownership in SIRIUS XM is viewed as Liberty Media’s attempt to consolidate its position in the U.S. cable TV industry.

Other Stocks to Consider

Other companies you may want to consider on the basis of our model which shows that these have the right combination of elements to post an earnings beat this quarter include:

Grupo Televisa, S.A.B. (TV - Analyst Report) with earnings ESP of +10.53% and a Zacks Rank #3.

BlackBerry Limited (BBRY - Analyst Report) with earnings ESP of +3.57% and a Zacks Rank #3.

NII Holdings Inc. (NIHD - Analyst Report) with earnings ESP of +17.71% and a Zacks Rank #3.

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