ENGLEWOOD, Colo., Feb. 25 /PRNewswire-FirstCall/ -- Liberty Media
Corporation ("Liberty")
(NASDAQ:LCAPANASDAQ:LCAPBNASDAQ:LINTANASDAQ:LINTBNASDAQ:LMDIANASDAQ:LMDIB)
today reported fourth quarter and full year results for Liberty
Capital group, Liberty Interactive group and Liberty Entertainment
group. Financial highlights include: -- Announced a plan to
split-off a majority of the assets and liabilities currently
attributed to the Liberty Entertainment group into a separate
public company. -- Through the DIRECTV share buyback, Liberty's
economic ownership of DIRECTV increased to almost 54%, voting
control remains at 48% per a standstill agreement. -- Reduced
senior note balance by $1.4 billion at Liberty Interactive. -- In
February 2009, agreed to invest $530 million in the form of loans
to SIRIUS XM and receive an equity interest of 40%, which will be
attributed to Liberty Capital. -- Repurchased 1.6 million Liberty
Capital shares from October 30th, 2008, through February 24th,
2009, representing on a cumulative basis almost 26% of those
shares. "Given the turmoil in the financial markets we continue to
reduce debt, manage risk and contain costs," stated Greg Maffei,
Liberty President and CEO. "Many of these choices have been
difficult, especially reducing jobs, but they are necessary for the
long-term health of the company." Maffei continued, "Last week we
announced an agreement to invest in Sirius XM up to $530 million in
secured loans and upon completion of our funding receive a 40%
equity interest in the company. Our investment was driven by the
appeal of the Sirius XM service and the attractive terms of the
securities." LIBERTY INTERACTIVE GROUP - Liberty Interactive
group's revenue decreased 4% to $2.38 billion in the fourth quarter
and increased 4% to $8.08 billion for the year. Adjusted OIBDA
decreased 21% to $432 million in the fourth quarter and 8% to $1.56
billion for the year. The decrease in revenue for the fourth
quarter was due to the decline in revenue at QVC partially offset
by the impact of the Bodybuilding.com acquisition in December 2007
and organic growth at the other eCommerce companies. The increase
in revenue for the year was due to the impact of the
Bodybuilding.com and Backcountry.com acquisitions and organic
growth at the other eCommerce companies partially offset by the
decline in revenue at QVC. The decrease in adjusted OIBDA was due
to the results at QVC partially offset by results at the eCommerce
companies. QVC QVC's total revenue decreased 8% in the fourth
quarter to $2.14 billion and 1% to $7.30 billion for the year.
Adjusted OIBDA decreased 22% to $416 million in the fourth quarter
and 9% to $1.50 billion for the year. "QVC continued to face
challenging business and economic conditions in the fourth quarter
of 2008 that adversely impacted revenue and adjusted OIBDA," stated
Mike George, QVC President and CEO. "QVC's US results were
negatively impacted by deteriorating economic conditions, and the
international business showed mixed results. As we navigate this
difficult retail environment, QVC continues to pursue initiatives
to deliver a compelling brand experience that is relevant to
today's consumer while focusing on cost control measures. Some of
these initiatives include the launch of multiple new national and
proprietary brands and new programming concepts. In addition, we
are enhancing our website infrastructure to provide improved
product search and guided navigation as well as a second live
counterprogramming show stream. The company is continuing its
efforts to manage expenses, reduce inventory levels and limit
extending credit when appropriate to reduce bad debt expense."
QVC's domestic revenue decreased 12% in the fourth quarter to $1.48
billion and 6% for the year to $4.91 billion. Adjusted OIBDA
decreased 29% to $282 million in the quarter and 14% for the year
to $1.07 billion. For the quarter, the mix of product shifted from
the jewelry area to beauty and to a lesser extent, the home
products area. The average selling price increased 3% from $47.11
to $48.33 while the total number of units shipped declined 12% to
33.2 million from 37.6 million. For the year, the mix of product
shifted from the jewelry area to beauty. The average selling price
for the year increased 4% from $46.05 to $47.94 and the total
number of units shipped declined 8% to 112.5 million from 122.2
million. Returns as a percent of domestic sales grew from 16.1% to
17.7% for the fourth quarter and from 17.9% to 19.2% for the year
due to the deteriorating economic environment and higher average
selling prices. QVC.com sales as a percentage of domestic sales
increased from 22.5% to 27.8% for the quarter and from 22.2% to
25.3% for the year. The domestic adjusted OIBDA margin decreased
459 basis points to 19% for the quarter and decreased 210 basis
points to 22% for the year. These decreases are primarily due to
lower gross margin percentages as a result of lower initial product
margins across all product areas, a higher inventory obsolescence
provision, a higher bad debt provision as well as not achieving
leverage on fixed costs. These decreases in adjusted OIBDA margin
for the quarter and the year are partially offset by an increase in
QCard income as well as a decrease in marketing expenses. QVC's
international revenue decreased slightly in the fourth quarter to
$655 million including the impact of unfavorable foreign currency
exchange rates in the UK and Germany. For the year international
revenue increased 9% to $2.39 billion including the impact of
favorable foreign currency exchange rates in Germany and Japan.
Excluding the effect of exchange rates, revenue increased 19% in
Japan and 6% in Germany and decreased 4% in the UK in the fourth
quarter and increased 11% in Japan, 3% in Germany and 2% in the UK
for the year. International adjusted OIBDA decreased 1% in the
fourth quarter to $134 million and increased 6% for the year to
$432 million. International adjusted OIBDA margins remained flat in
the fourth quarter and decreased 58 basis points for the year
primarily as a result of lower initial product margins and higher
commissions expense as a percentage of net revenue due to new
fixed-rate agreements in the UK and Japan. Excluding the effect of
exchange rates, QVC's international adjusted OIBDA increased 4% in
the fourth quarter and 2% for the year. QVC Japan's revenue grew
19% and 11% in local currency in the fourth quarter and for the
year, respectively. QVC Japan has successfully transitioned its
product mix from health and beauty which historically was a
significant portion of their sales but became highly regulated
beginning in the first quarter 2007. Japan has achieved shipped
unit growth of 22% for the quarter and 17% for the year showing an
increase in jewelry and apparel product categories in both periods.
QVC Germany's revenue grew 6% and 3% in local currency in the
fourth quarter and for the year, respectively. QVC Germany's
average selling price decreased 3% and 2% for the fourth quarter
and year, respectively, while units shipped increased 10% and 6%,
respectively. Germany experienced a higher gross margin percentage
in the fourth quarter primarily due to a favorable obsolescence
provision partially offset by lower initial product margins across
each product category. For the year, Germany experienced a lower
gross margin percentage primarily due to lower initial product
margins in the home and jewelry areas partially offset by a lower
inventory obsolescence provision. QVC UK's revenue in local
currency decreased 4% in the fourth quarter and increased 2% for
the year. The UK's average selling price in local currency
increased 3% for the fourth quarter and remained flat for the year,
while units shipped declined 6% for the quarter but increased 2%
for the year. QVC's outstanding bank debt was $5.23 billion at
December 31, 2008. eCommerce Businesses Liberty Interactive's
eCommerce businesses, which include Provide Commerce,
Backcountry.com, Bodybuilding.com and BUYSEASONS, had positive
financial results in the fourth quarter and continue to grow at a
rapid pace. In the aggregate, the eCommerce businesses experienced
revenue growth of 65% in the fourth quarter and 92% for the year
and experienced adjusted OIBDA growth of 19% in the fourth quarter
and 78% for the year. The increase in revenue for the quarter was
primarily driven by the impact of the Bodybuilding.com acquisition
mentioned above and strong organic growth at the other eCommerce
companies. The increase in revenue for the year was due to the same
factors as the fourth quarter as well as the inclusion of a full
year of results from Backcountry.com, which was acquired in June
2007. The increase in adjusted OIBDA for the quarter was due to the
organic growth at certain of the eCommerce companies and the
previously mentioned Bodybuilding.com acquisition. The increase in
adjusted OIBDA for the year was due to organic growth at most of
the eCommerce companies and the Backcountry.com and
Bodybuilding.com acquisitions. Share Repurchases There were no
share repurchases of Liberty Interactive stock during the fourth
quarter of 2008. Liberty has approximately $740 million remaining
under its Liberty Interactive stock repurchase authorization. The
businesses and assets attributed to Liberty Interactive group are
engaged in, or are ownership interests in companies that are
engaged in, video and on-line commerce, and currently include
Liberty's subsidiaries QVC, Provide Commerce, Backcountry.com,
Bodybuilding.com and BUYSEASONS and its interests in
IAC/InterActiveCorp, HSN, Ticketmaster Entertainment, Tree.com,
Interval Leisure Group, Expedia and GSI Commerce. Liberty has
identified wholly-owned QVC as the principal operating segment of
Liberty Interactive group. LIBERTY ENTERTAINMENT GROUP - Liberty
Entertainment group's revenue increased 26% to $360 million in the
fourth quarter and 22% to $1.39 billion for the year. Adjusted
OIBDA increased 143% to $107 million for the quarter and 27% to
$324 million for the year. The increase in revenue and adjusted
OIBDA for both periods was due to the addition of the Liberty
Sports Group, which was acquired in February 2008, and growth at
Starz Entertainment. In December Liberty announced a plan to
split-off a majority of the assets and liabilities currently
attributed to the Liberty Entertainment group into a separate
public company. If the transaction is completed as currently
contemplated, the split-off company will be comprised of
approximately 54% of DIRECTV Group, 50% of GSN, 100% of FUN
Technologies, 100% of Liberty Sports Group, 73% of PicksPal and an
undetermined amount of cash, together with approximately $2 billion
in debt incurred to acquire 78.3 million DIRECTV shares in April
2008. Following the completion of the transaction, the Liberty
Entertainment group will primarily consist of 100% of Starz
Entertainment, 37% of WildBlue Communications, and an undetermined
amount of cash. Starz Entertainment, LLC Starz Entertainment's
revenue increased 8% in the fourth quarter to $285 million and 4%
for the year to $1.11 billion. Adjusted OIBDA increased 69% during
the quarter to $81 million and increased 14% for the year to $301
million. In the fourth quarter, Starz Entertainment recorded a
$1.24 billion goodwill impairment charge as part of its annual FAS
142 analysis due principally to current economic conditions and its
effect on valuation multiples. The increase in revenue in the
fourth quarter of $20 million was due to a $14 million increase in
rates and a $6 million increase resulting from growth in the
average number of subscription units. The increase in revenue for
the year of $45 million was due to a $33 million increase in rates
and a $12 million increase resulting from growth in the average
number of subscription units. Starz and Encore, the two principal
service offerings of Starz Entertainment, experienced average
subscription unit increases of 7% and 8%, respectively, during the
year. Starz Entertainment's operating expenses decreased 6% for the
quarter and increased 1% for the year. The decrease for the quarter
was primarily due to decreases in programming and G&A expenses
partially offset by increased marketing costs related to the new
Starz original "Crash" and an increase in marketing support. The
increase in operating expenses for the year was primarily due to
increased marketing and advertising costs related to Starz new
branding campaign and support of "Crash" and an increase in
marketing support. These increases were partially offset by lower
programming costs, which decreased from $656 million in 2007 to
$629 million in 2008. The decrease in programming costs was due to
lower bonus payment amortization and a decrease in the percentage
of first-run movie exhibitions as compared to the number of library
products exhibitions, partially offset by a higher effective rate
for first-run movies. Starz LLC Chairman and CEO Robert B. Clasen
said, "Starz Entertainment posted solid growth in subscribers,
revenue and OIBDA both for the full year 2008 and for the fourth
quarter. We took a major step in our original programming
initiative in the fourth quarter with the premiere of our first
hour long drama "Crash" in October and the announcement that we
will air a second hour long drama, "Spartacus" in the coming year.
Our programming continues to attract strong audiences. Starz
finished the year in ninth place in total-day Nielsen ratings among
82 rated networks." Share Repurchases There were no share
repurchases of Liberty Entertainment stock during the fourth
quarter of 2008. Liberty has $1 billion remaining under its Liberty
Entertainment stock repurchase authorization. The businesses and
assets attributed to Liberty Entertainment group are engaged in, or
are ownership interests in companies that are engaged in,
television and internet distribution and programming, and currently
include Liberty's subsidiaries Starz Entertainment, FUN
Technologies, Liberty Sports Group, and PicksPal, its equity
affiliates GSN and WildBlue Communications and its interest in
DIRECTV. Liberty has identified Starz Entertainment as the
principal operating segment of Liberty Entertainment group. As
previously noted, Liberty issued the Liberty Entertainment group
tracking stock on March 4, 2008. The assets and businesses
attributed to the Liberty Entertainment group were previously
attributed to the Liberty Capital group. For purposes of
presentation, we treat the assets and businesses attributed to the
Liberty Entertainment group as though they had been attributed to
the group since January 1, 2007. LIBERTY CAPITAL GROUP - Liberty
Capital group's revenue increased 44% to $131 million in the fourth
quarter and 27% to $617 million for the year. Adjusted OIBDA
deficit decreased 20% to $106 million in the fourth quarter and
increased 40% to $294 million for the year. The increase in revenue
for both periods was primarily due to revenue growth at Starz Media
due to the 2008 theatrical release of eight films by Overture Films
and one by Starz Animation, compared with no film releases in 2007,
and the inclusion of a full year of operations for the Atlanta
Braves. The increase in the adjusted OIBDA deficit for the year was
primarily due to marketing and advertising costs associated with
the release of these films and the inclusion of the operations of
the Atlanta Braves for the first four months of the year during
which the team generally operates at a loss as no significant
revenues are recognized until the first home game of the year in
April. Mr. Clasen said, "On the Starz Media side, as expected, we
posted a loss for the year as we continued to invest in programming
and as box office results for Overture Films and the home
entertainment sales of our catalogue product fell short of our
projections. We are nonetheless pleased that Overture, in its first
full year of operation, released eight movies, with three actors
earning Oscar or Golden Globe nominations, and finished 11th among
all studios in overall box office. At Anchor Bay Entertainment
strong sales of the first Overture releases to reach the home
entertainment window partially offset less-than-projected sales of
catalogue product." Share Repurchases From October 30, 2008 through
February 24, 2009, Liberty repurchased 1.6 million shares of Series
A Liberty Capital common stock at an average cost per share of
$11.51 for total cash consideration of $18 million. Since the
reclassification of Liberty Capital tracking stock on March 4, 2008
through February 24, 2009, Liberty has repurchased 33.2 million
shares at an average cost per share of $14.37 for total cash
consideration of $478 million. These repurchases represent 25.7% of
the shares outstanding. Liberty has approximately $122 million
remaining under its Liberty Capital stock repurchase authorization.
The businesses and assets attributed to Liberty Capital group are
all of Liberty's businesses and assets other than those attributed
to the Liberty Interactive group and Liberty Entertainment group
and include its subsidiaries Starz Media, TruePosition, Atlanta
National League Baseball Club (the owner of the Atlanta Braves),
and its interests in Time Warner and Sprint Nextel. 1. Please see
page 12 of this press release for the definition of adjusted OIBDA
and a discussion of management's use of this performance measure.
Schedule 1 to this press release provides a reconciliation of
adjusted OIBDA for each of Liberty's tracking stock groups to that
group's operating income for the same period, as determined under
GAAP. Schedule 2 to this press release provides a reconciliation of
adjusted OIBDA for each of QVC, Starz Entertainment and Starz Media
to that entity's operating income for the same period, as
determined under GAAP. NOTES Liberty Media Corporation operates and
owns interests in a broad range of video and on-line commerce,
media, communications and entertainment businesses. Those interests
are currently attributed to three tracking stock groups: Liberty
Interactive group, Liberty Entertainment group and Liberty Capital
group. Unless otherwise noted, the foregoing discussion compares
financial information for the twelve months and three months ended
December 31, 2008 to the same period in 2007. Certain prior period
amounts have been reclassified for comparability with the 2008
presentation. Liberty completed the sale of its controlling
interests in OpenTV and On Command during 2007, and as such, the
financial results of these companies have been excluded from all
periods presented. The following financial information is intended
to supplement Liberty's consolidated statements of operations to be
included in its Form 10-K. Fair Value of Public Holdings and
Derivatives (amounts in millions and include the value of September
December derivatives) 30, 2008 31, 2008 InterActiveCorp $720 638
InterActiveCorp Spin-Off Companies (1) 548 325 Expedia (1) 1,046
570 Other 147 101 Total Attributed Liberty Interactive Group $2,461
1,634 DIRECTV (1) 14,224 12,757 Total Attributed Liberty
Entertainment Group $14,224 12,757 Non Strategic Public Holdings
(2) 4,405 3,895 Total Attributed Liberty Capital Group $4,405 3,895
(1) Represents fair value of Liberty's investments in the
InterActiveCorp spin-off companies, Expedia and DIRECTV (including
collar). In accordance with GAAP, Liberty accounts for these
investments using the equity method of accounting and includes
these investments in its consolidated balance sheet at their
historical carrying values. (2) Represents Liberty's non-strategic
public holdings which are accounted for at fair value including any
associated equity derivatives on such investments. Also includes
the liability associated with borrowed shares which totaled $598
million and $392 million at September 30, 2008 and December 31,
2008, respectively. Cash and Debt The following presentation is
provided to separately identify cash and liquid investments and
debt information. September December (amounts in millions) 30, 2008
31, 2008 Cash and Cash Related Investments Attributable to: Liberty
Interactive Group $1,442 832 Liberty Entertainment Group 1,076 807
Liberty Capital Group (1) 1,356 1,496 Total Liberty Consolidated
Cash (GAAP) $3,874 3,135 Short-Term Investments Attributed to
Liberty Capital Group (2) 523 104 Debt: Senior Notes and Debentures
(3) $3,108 1,712 Senior Exchangeable Debentures -- 551 QVC Bank
Credit Facility 5,200 5,230 Other 71 60 Total Attributed Liberty
Interactive Group Debt 8,379 7,553 Less: Unamortized Discount (14)
(9) Less: Fair Market Value Adjustment -- (413) Total Attributed
Liberty Interactive Group Debt (GAAP) 8,365 7,131 Senior
Exchangeable Debentures (4) 551 -- Liberty derivative borrowing
2,011 1,981 Other 53 52 Total Attributed Liberty Entertainment
Group Debt 2,615 2,033 Less: Fair Market Value Adjustment (325) --
Total Attributed Liberty Entertainment Group Debt (GAAP) 2,290
2,033 Senior Exchangeable Debentures (4) 3,440 3,440 Bank Credit
Facility 750 750 Other 753 760 Total Attributed Liberty Capital
Group Debt 4,943 4,950 Less: Fair Market Value Adjustment (1,333)
(1,887) Total Attributed Liberty Capital Group Debt (GAAP) 3,610
3,063 Total Consolidated Liberty Debt (GAAP) $14,265 12,227 (1)
Does not include $530 million and $518 million of restricted cash
on September 30, 2008 and December 31, 2008, respectively, that is
reflected in other long-term assets in Liberty's condensed
consolidated balance sheet. Please see discussion related to
Investment in Special Purpose Entity in the footnotes to Liberty's
consolidated financial statements to be included in its Form 10-K.
(2) Represents the estimated fair value of Liberty's holdings in
The Reserve Primary Fund. While Liberty expects to receive
substantially all of its current holdings in the Primary Fund, it
cannot be predicted when this will occur or the amount that will be
received. Accordingly, Liberty has reclassified the investment from
cash and cash equivalents to short-term investments. On February
20, 2009, Liberty received a $35 million distribution from the
Primary Fund. (3) Face amount of Senior Notes and Debentures with
no reduction for the unamortized discount. (4) Face amount of
Senior Exchangeable Debentures with no reduction for the fair
market value adjustment. Total attributed Liberty Interactive group
cash and liquid investments decreased $610 million compared to
September 30, 2008 primarily due to the retirement of corporate
debt through two tender offers partially offset by the $380 million
of cash received from the reattribution of cash from Liberty
Entertainment and cash flow from QVC operations. Total attributed
Liberty Interactive group debt decreased $826 million compared to
September 30, 2008 primarily due to the retirement of corporate
debt through two tender offers ($1.267 billion) and the termination
of a swap arrangement partially offset by the reattribution of $551
million face amount of debt from Liberty Entertainment. Total
attributed Liberty Entertainment group cash and liquid investments
decreased $269 million compared to September 30, 2008 primarily due
to the reattribution of $380 million of cash to Liberty Interactive
partially offset by cash flow from Starz Entertainment operations.
Total attributed Liberty Entertainment group debt decreased $582
million compared to September 30, 2008 due to the reattribution of
$551 million face amount of debt to Liberty Interactive and partial
paydown of borrowings against the DIRECTV equity collar. Total
attributed Liberty Capital group cash and liquid investments and
short-term investments decreased $279 million compared to September
30, 2008 primarily due to the termination of a swap arrangement and
purchase of Liberty Capital Series A common stock. Total attributed
Liberty Capital group debt remained flat compared to September 30,
2008. Important Notice: Liberty Media Corporation
(NASDAQ:LINTANASDAQ:LINTBNASDAQ:LMDIANASDAQ:
LMDIBNASDAQ:LCAPANASDAQ:LCAPB) President and CEO, Gregory B. Maffei
will discuss Liberty's earnings release in a conference call which
will begin at 12:00 noon (ET) on February 25, 2009. The call can be
accessed by dialing (877) 719-9795 or (719) 325-4763 at least 10
minutes prior to the start time. Replays of the conference call can
be accessed until 2:30 p.m. (ET) March 11, 2009, by dialing (719)
457-0820 or (888) 203-1112 plus the pass code 9792984#. The call
will also be broadcast live across the Internet and archived on our
website. To access the webcast go to
http://www.libertymedia.com/investor_relations/default.htm. Links
to this press release will also be available on the Liberty Media
web site. This press release includes certain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements about financial guidance,
business strategies, market potential, future financial
performance, new service and product launches and other matters
that are not historical facts. These forward-looking statements
involve many risks and uncertainties that could cause actual
results to differ materially from those expressed or implied by
such statements, including, without limitation, possible changes in
market acceptance of new products or services, competitive issues,
regulatory issues, the effect of recessionary economic conditions
on Liberty's business strategies and ability to access to capital
on acceptable terms, and the completion of the proposed split-off
of a majority of the businesses of the Liberty Entertainment group.
These forward looking statements speak only as of the date of this
press release, and Liberty expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
Liberty's expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.
Please refer to the publicly filed documents of Liberty, including
the most recent Form 10-K for additional information about Liberty
and about the risks and uncertainties related to Liberty's business
which may affect the statements made in this press release.
Additional Information Nothing in this press release shall
constitute a solicitation to buy or an offer to sell shares of the
split-off company or any of the Liberty tracking stocks. The offer
and sale of shares in the proposed split-off will only be made
pursuant to an effective registration statement. Liberty
stockholders and other investors are urged to read the registration
statement to be filed with the SEC, including the proxy
statement/prospectus to be contained therein, because it will
contain important information about the transaction. A copy of the
preliminary proxy statement/prospectus filed with the SEC is
available, and the registration statement and definitive proxy
statement/prospectus once filed will be available, free of charge
at the SEC's website (http://www.sec.gov/). Copies of the proxy
statement/prospectus and the filings with the SEC that will be
incorporated by reference in the proxy statement/prospectus can
also be obtained, without charge, by directing a request to Liberty
Media Corporation, 12300 Liberty Boulevard, Englewood, Colorado
80112, Attention: Investor Relations, Telephone: (720) 875-5408.
Participants in a Solicitation The directors and executive officers
of Liberty and other persons may be deemed to be participants in
the solicitation of proxies in respect of proposals to approve the
transaction. Information regarding Liberty's (and, if formed,
Entertainment's) directors and executive officers and other
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be available in the proxy materials to be filed with the SEC.
SUPPLEMENTAL INFORMATION As a supplement to Liberty's consolidated
statements of operations, to be included in its Form 10K, the
following is a presentation of quarterly financial information and
operating metrics on a stand-alone basis for the three largest
privately held businesses (QVC, Starz Entertainment and Starz
Media) owned by Liberty at December 31, 2008. Please see below for
the definition of adjusted OIBDA and a discussion of management's
use of this performance measure. Schedule 2 to this press release
provides a reconciliation of adjusted OIBDA for each identified
entity to that entity's operating income for the same period, as
determined under GAAP. QUARTERLY SUMMARY (amounts in millions) 4Q07
1Q08 2Q08 3Q08 4Q08 Liberty Interactive Group QVC (100%) Revenue -
Domestic $1,676 1,176 1,181 1,073 1,481 Revenue - International 658
589 580 568 655 Revenue - Total $2,334 1,765 1,761 1,641 2,136
Adjusted OIBDA - Domestic $396 281 286 221 282 Adjusted OIBDA -
International 135 106 101 91 134 Adjusted OIBDA - Total $531 387
387 312 416 Operating Income $396 250 253 175 278 Gross Margin -
Domestic 35.4% 36.4% 37.0% 34.3% 32.1% Gross Margin - International
37.3% 36.8% 37.3% 35.7% 36.6% Liberty Entertainment Group STARZ
ENTERTAINMENT (100%) Revenue $265 273 275 278 285 Adjusted OIBDA
$48 74 68 78 81 Operating Income $30 60 53 63 (1,151) Subscription
Units - Starz 16.3 16.8 17.0 17.4 17.7 Subscription Units - Encore
30.7 31.4 31.3 31.6 31.7 Liberty Capital Group STARZ MEDIA (100%)
Revenue $59 62 57 104 98 Adjusted OIBDA $(90) (24) (19) (82) (64)
Operating Income $(277) (27) (22) (86) (260) ANNUAL SUMMARY
(amounts in millions) 2007 2008 Liberty Interactive Group QVC
(100%) Revenue - Domestic $5,208 4,911 Revenue - International
2,189 2,392 Revenue - Total $7,397 7,303 Adjusted OIBDA - Domestic
$1,244 1,070 Adjusted OIBDA - International 408 432 Adjusted OIBDA
- Total $1,652 1,502 Operating Income $1,114 956 Gross Margin -
Domestic 36.5% 34.8% Gross Margin - International 37.3% 36.6%
Liberty Entertainment Group STARZ ENTERTAINMENT GROUP (100%)
Revenue $1,066 1,111 Adjusted OIBDA $264 301 Operating Income $210
(975) Liberty Capital Group STARZ MEDIA (100%) Revenue $254 321
Adjusted OIBDA $(143) (189) Operating Income $(342) (395) NON-GAAP
FINANCIAL MEASURES This press release includes a presentation of
adjusted OIBDA, which is a non-GAAP financial measure, for each of
Liberty's tracking stock groups and each of QVC, Starz
Entertainment and Starz Media together with a reconciliation to
that group's or entity's operating income, as determined under
GAAP. Liberty defines adjusted OIBDA as revenue less cost of sales,
operating expenses, and selling, general and administrative
expenses (excluding stock and other equity-based compensation) and
excludes depreciation and amortization and restructuring and
impairment charges that are included in the measurement of
operating income pursuant to GAAP. Liberty believes adjusted OIBDA
is an important indicator of the operational strength and
performance of its businesses, including the ability to service
debt and fund capital expenditures. In addition, this measure
allows management to view operating results and perform analytical
comparisons and benchmarking between businesses and identify
strategies to improve performance. Because adjusted OIBDA is used
as a measure of operating performance, Liberty views operating
income as the most directly comparable GAAP measure. Adjusted OIBDA
is not meant to replace or supercede operating income or any other
GAAP measure, but rather to supplement such GAAP measures in order
to present investors with the same information that Liberty's
management considers in assessing the results of operations and
performance of its assets. Please see the attached schedules for
applicable reconciliations. SCHEDULE 1 The following table provides
a reconciliation of adjusted OIBDA for each of Liberty Interactive
group, Liberty Entertainment group, and Liberty Capital group to
that group's operating income calculated in accordance with GAAP
for the three months ended December 31, 2007, March 31, 2008, June
30, 2008, September 30, 2008 and December 31, 2008, respectively,
and the years ended December 31, 2007 and 2008. QUARTERLY SUMMARY
(amounts in millions) 4Q07 1Q08 2Q08 3Q08 4Q08 Liberty Interactive
Group Adjusted OIBDA $546 401 410 312 432 Depreciation and
Amortization (139) (139) (136) (143) (143) Stock Compensation
Expense (6) (5) (12) (8) (7) Impairment of Long-Lived Assets -- --
-- -- (56) Operating Income $401 257 262 161 226 Liberty
Entertainment Group Adjusted OIBDA $44 81 62 74 107 Depreciation
and Amortization (8) (12) (12) (12) (12) Stock Compensation Expense
(20) (7) (15) (15) 21 Impairment of Long-Lived Assets -- -- -- --
(1,262) Operating Income $16 62 35 47 (1,146) Liberty Capital Group
Adjusted OIBDA $(133) (59) (40) (89) (106) Depreciation and
Amortization (29) (26) (28) (24) (23) Stock Compensation Expense
(10) (4) -- (1) 3 Impairment of Long-Lived Assets (182) -- -- --
(251) Operating Loss $(354) (89) (68) (114) (377) ANNUAL SUMMARY
(amounts in millions) 2007 2008 Liberty Interactive Group Adjusted
OIBDA $1,684 1,555 Depreciation and Amortization (536) (561) Stock
Compensation Expense (35) (32) Impairment of Long-Lived Assets --
(56) Operating Income $1,113 906 Liberty Entertainment Group
Adjusted OIBDA $255 324 Depreciation and Amortization (37) (48)
Stock Compensation Expense (46) (16) Impairment of Long-Lived
Assets (41) (1,262) Operating Income (Loss) $131 (1,002) Liberty
Capital Group Adjusted OIBDA $(210) (294) Depreciation and
Amortization (102) (101) Stock Compensation Expense (12) (2)
Impairment of Long-Lived Assets (182) (251) Operating Loss $(506)
(648) The following table provides a reconciliation of adjusted
OIBDA to earnings from continuing operations before income taxes
and minority interest for the years ended December 31, 2007 and
2008, respectively. (amounts in millions) 2007 2008 Liberty
Interactive Group $1,684 1,555 Liberty Entertainment Group 255 324
Liberty Capital Group (210) (294) Inter-Group Eliminations -- (3)
Consolidated adjusted OIBDA $1,729 1,582 Consolidated segment
adjusted OIBDA $1,729 1,582 Stock-based compensation (93) (50)
Depreciation and amortization (675) (710) Impairment of long-lived
assets (223) (1,569) Interest expense (641) (719) Share of earnings
of affiliates 22 (838) Realized and unrealized gains (losses) on
derivative instruments, net 1,269 (34) Gains on dispositions, net
646 3,679 Other than temporary declines in fair value of
investments (33) (441) Other, net 320 343 Earnings (loss) from
continuing operations before income taxes and minority interest
$2,321 1,243 SCHEDULE 2 The following table provides a
reconciliation of adjusted OIBDA for QVC, Starz Entertainment and
Starz Media to that entity's operating income calculated in
accordance with GAAP for the three months ended December 31, 2007,
March 31, 2008, June 30, 2008, September 30, 2008 and December 31,
2008, and the years ended December 31, 2007 and 2008, respectively.
(amounts in millions) 4Q07 1Q08 2Q08 3Q08 4Q08 Liberty Interactive
Group QVC (100%) Adjusted OIBDA $531 387 387 312 416 Depreciation
and Amortization (133) (132) (129) (135) (135) Stock Compensation
Expense (2) (5) (5) (2) (3) Operating Income $396 250 253 175 278
Liberty Entertainment Group STARZ ENTERTAINMENT (100%) Adjusted
OIBDA $48 74 68 78 81 Depreciation and Amortization (6) (4) (5) (4)
(5) Stock Compensation Expense (12) (10) (10) (11) 12 Impairment of
Long-Lived Assets -- -- -- -- (1,239) Operating Income (Loss) $30
60 53 63 (1,151) Liberty Capital Group STARZ MEDIA (100%) Adjusted
OIBDA $(90) (24) (19) (82) (64) Depreciation and Amortization (3)
(3) (2) (4) (3) Stock Compensation Expense (2) -- (1) -- (1)
Impairment of Long-Lived Assets (182) -- -- -- (192) Operating
(Loss) $(277) (27) (22) (86) (260) (amounts in millions) 2007 2008
Liberty Interactive Group QVC (100%) Adjusted OIBDA $1,652 1,502
Depreciation and Amortization (516) (531) Stock Compensation
Expense (22) (15) Operating Income $1,114 956 Liberty Entertainment
Group STARZ ENTERTAINMENT (100%) Adjusted OIBDA $264 301
Depreciation and Amortization (21) (18) Stock Compensation Expense
(33) (19) Impairment of long-lived assets -- (1,239) Operating
Income (Loss) $210 (975) Liberty Capital Group STARZ MEDIA (100%)
Adjusted OIBDA $(143) (189) Depreciation and Amortization (15) (12)
Stock Compensation Expense (2) (2) Impairment of long-lived assets
(182) (192) Operating (Loss) $(342) (395) DATASOURCE: Liberty Media
Corporation CONTACT: Courtnee Ulrich, +1-720-875-5420, for Liberty
Media Corporation Web Site: http://www.libertymedia.com/
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