An analyst on Wednesday upgraded his rating on Liberty Starz Group, the tracking stock of John Malone's media empire that is linked to the Starz and Encore pay TV channels, saying downside risks were being overblown.

Liberty Starz operates channels that play the movies of The Walt Disney Co. and Sony Corp.'s movie studio to paying subscribers.

Some investors were concerned that the cost of providing those movies would increase because ticket sales of Sony and Disney movies have gone up.

Some investors also appeared concerned that Disney might stop supplying its movies to Starz after its deal ends in 2013. Disney is reportedly concerned that Starz is making its movies available for online streaming by movie rental company Netflix Inc.

A third perceived risk affecting the stock is that parent Liberty Media Corp. is considering merging Liberty Starz with Starz Media, an accumulation of TV and film studios that is currently tracked by Liberty Capital Group shares and is losing money.

Thomas Eagan, an analyst with Collins Stewart, said those concerns are being exaggerated.

"We believe that all of these risks are not only overdone, but less and less likely," he wrote in an analyst note Wednesday.

Eagan raised his rating on Liberty Starz shares to "buy" from "hold" and set a $57 price target on the stock.

Liberty Starz Group shares rose $1.32, or 2.8 percent, to close at $48.37 on Wednesday.

Eagan said the domestic box office ticket sales for Sony and Disney rose just 9 percent in 2009, compared to the 17 percent growth estimated by other analysts.

He also said Liberty Media was considering altering the mix of assets inside Starz Media before any combination with Liberty Starz, including leaving the money-losing Overture film studio behind.

Eagan also said he expects Disney to renew its deal because other pay TV outlets, including HBO, Epix and Showtime, already have a healthy pipeline of movies from other major studios.