Liberty Media Group (L)

1
Liberty Media Group (L)

• SELL 520 shares
• Presented by
• Todd Whaley
• February 27, 2002

2
Company Overview

• Liberty Media Corporation owns interests in a
  broad range of video programming, communications
  and Internet businesses in the United States,
  Europe, South America and Asia.
• Libertys assets include interests in Starz
  Encore Group LLC, Discovery Communications, Inc.,
  AOL Time Warner Inc., QVC Inc., USA Networks Inc.
  (USAI), Telewest Communications plc, Motorola
  Inc., Sprint PCS Group, The News Corporation
  Limited and Liberty Digital Inc.

3
Principal Assets
(amounts in millions) September 30, 2001 September 30, 2001
Affiliate Percentage Ownership Carrying Amount
USA Networks (USAI) 18.6 2,542
Vivendi (12/17/01) 3.6 1,600
Telewest Communications 25.0 525
Discovery Communications 49.0 2,945
QVC, Inc 43.0 2,504
Other Various 3,285
4
Affiliate Performance
(amounts in millions) Share of Earnings/Losses Share of Earnings/Losses
  Nine months ended September 30 Nine months ended September 30
Affiliate 2001 2000
USA Networks (USAI) 48 (18)
Telewest Communications (2,126) (262)
Discovery Communications (246) (219)
QVC, Inc 1
Teligent, Inc. (85) (1,106)
Other (417) (786)
5
Overall Performance
(amounts in millions) 1997 1998 1999 2000
Revenues 1,225 1,359 964 1,526
Other, Net (345) 1,618 (247) 4,721
Net Income (470) 622 (2,045) 2,569
6
Stock Performance
7
Valuation

• DCF valuation method yields an intrinsic price of
  approximately 9/share vs. 12.50 mkt price
• Assumptions
• Abnormal sales growth of 15 for years 1-5
• Transitional sales growth of 10 for years 6-10
• Steady state sales growth of 5
• WACC 10

8
Sell Rationale

• Earnings very unpredictable due to dependence on
  success of very diverse portfolio of assets
• Major other-than-temporary declines in value of
  primary assets in 2000 2001 makes it difficult
  to treat as non-recurring
• Projected negative earnings through FY 2002
• Near term appreciation would likely be momentum
  driven

9
Recommendation

• SELL 520 SHARES AT THE MARKET