Greg Maffei - President and CEO Chris Shean - Controller Mike George - CEO of QVC Bob Clasen - CEO of Starz - : Bill Meyers - President and COO of Starz Glenn Curtis - EVP and CFO

Kit Spring - Stifel Nicolaus Imran Khan - JPMorgan Jason Bazinet - Citi Benjamin Swinburne - Morgan Stanley Andy Baker - Jefferies & Company Doug Mitchelson - Deutsche Bank Chris Taylor - Evergreen Management Vijay Jayant - Lehman Brothers April Horace - Janco Partners Brian Lorraine - First Capital Alliance Andrew Cole - JL Advisors Jessica Reif-Cohen - Merrill Lynch

Good day and welcome to the Liberty Media Corporation First Quarter Earnings Call. Today's call is being recorded. This presentation 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, and continued access to capital on terms acceptable to Liberty Media. These forward-looking statements speak only as of the date of this presentation, and Liberty Media 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 Media’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 Media, including the most recent form 10-Q and 10-K for additional information about Liberty Media and about the risks and uncertainties related to Liberty Media’s business, which may affect the statements made in this presentation. On today’s call, we will discuss certain non-GAAP financial measures. The required reconciliations, preliminary note and schedules 1 through 3 can be found at the end of this presentation. At this time, for opening remarks and introductions, I would like to turn the call over to the President and Chief Executive Officer, Mr. Greg Maffei. Please go ahead.

Thank you, and thank you all for joining us this afternoon and for your continued interest in Liberty. These have been exciting times at Liberty and we are quite pleased with some of the operational and structural progress we have made. There is still lot left to do, but I might talk a little bit about, first about how we are doing by tracker this quarter, discuss some of our operating performance at our businesses that we control and cover some of the transactions we did and other developments. Liberty's fine Controller, Mr. Chris Shean will discuss our attributed businesses, financial results and the liquidity picture for each of those trackers. QVC CEO, Mike George, will discuss recent development in QVC, Starz CEO; Bob Clasen will review recent events of Starz. Also on the call we have QVC’s CFO, Dan O’Connell, Starz’s, President and COO Bill Meyers, and EVP and CFO Glenn Curtis and several other Senior Liberty Executives. All of us will be available to answer questions at the end of the prepared remarks. Before we discuss the specific results of the quarter, I will review a couple of highlights and how they tied to our overall chain strategy and direction. Obviously, the most important news for the quarter was that we closed the long awaited exchange with news. Obviously, we think this is the great deal for our shareholders. The value has increased significantly, since we announced the deal. We are probably up about $4.5 million on the swap, and we like the company so much more that post the swap, we have added another 78.3 million shares to our holdings, in a creative low-cost transaction. The collar and borrowing against the collar to purchase the shares. That transaction increased our ownership to about 48% of the company.…

Thanks, Greg. The slide you are looking at is a quick snapshot of first quarter revenue and operating cash flow performance. It shows that Liberty Interactive's attributed businesses picked up the pace of revenue and operating cash flow growth. QVC is the primary driver of performance among Liberty Interactive attributed assets and continues to operate in a challenging retail environment. Nonetheless, business managed 5% consolidated revenue growth and 3% operating cash flow gains, while this below the results QVC strives for but continuing with a disciplined approach in product selection and pricing, the business remained sound. On the international side, we were aided by foreign currency gains, but also saw progress in operations and believe the business is headed in right direction in all markets. I will talk a bit more about this shortly. Looking more closely at Liberty Interactive as just discussed Liberty’s business achieved 10% revenue growth while operating cash flow grew 5%. As I would discuss in a bit more detail in a moment, QVC's domestic revenue in OCF was largely flat in the quarter. Meanwhile, international businesses aided by the FX gains experienced improving performance with over 15% revenue growth in dollars and 10% OCF gains. Liberty Interactive's other E-commerce businesses which include Provide Commerce, Backcountry, Bodybuilding and BuySeasons had strong financial results in the first quarter and continued to grow at a rapid pace. In the aggregate, the E-commerce businesses experienced revenue and operating cash flow growth of 113% and a 144% respectively, due to the acquisitions, largely due to the acquisitions of Backcountry in June and Bodybuilding in December of 2007. Revenue and operating cash flow growth of these businesses were 37% and 55% respectively, calculated on a Performa basis assuming the business were all consolidated at the beginning of '07. As Greg, mentioned…

Thanks, Chris. As Chris mentioned in the US we were truly disappointed with our sales results. We saw fairly broad weakness across most of our product categories. And we remain very focused on bringing our customers fresh and innovative product offerings that will capture their attention in a tough climate and overcome the overall weakness in consumer spending. We are finding that while the customers are being more selective right now, she will respond for new unique exclusive items. And so our focus is on trying to do a better job everyday of delivering those kinds of items to our customer. When we do, she does respond. Along those lines we did premiere several new plans in the quarter with good initial results, including new beauty brand Clinique and Kate Someville, Sony VAIO computers, Lucky brand hand bags, London Fog outerwear and a new bedding line by Whoopi Goldberg. We also expanded our product offerings in categories like big screen TV's and treadmills by developing some new shipping alternatives to lower the end cost to the customers. And we have number of strong brand launches coming later in the year, lot of them we can't comment on publicly this point but some that we have announced includes Steven Madden which premiered this week, Clinton Kelly and Martha Stewart Crafts. We are also focused at the same time on continuing our work to build the QVC brand and increase QVC's visibility through other media. In Q1 we are one of the featured cast on celebrity '"Apprentice" and we ware featured extensively on our week long "Wheel of Fortune" series. So you are going to see us continue to expand these kind of media partnerships to find new ways to draw eyeballs to channel. We also began, as we have announced our…

Thanks Mike. Let's take a quick look at the Liberty Interactive liquidity picture. We continue to maintain a strong capital structure and good liquidity as the businesses that are attributed the Liberty Interactive. The group has attributed cash and public investment of $4 billion and has $7.7 billion in attributed debt. Excluding the value of the positions in Expedia and IAC, LINTA's quarter ending attributed net debt of just over $7 billion equates a multiple at the very low end of our targeted leverage ratio of four to five times OCF. We are likely to maintain a level at the low end of this range until we see stronger capital markets, which would offer more readily accessible capital to us. Then moving on to Liberty Entertainment. The next two slides address our new tracking stock, which I may refer to as LMDIA during this time. The completion of our exchange with News Corp allowed for the reclassification of the old Liberty capital and the issuance of a new Liberty Entertainment tracking stock. Liberty Entertainment Groups operating results are comprised of Starz Entertainment, FUN Technologies and Liberty Sports Group. Attributed revenue grew 11% in the first quarter, while OCF was up 17%. Revenue and operating cash flow growth resulted from modest growth at Starz Entertainment, coupled with the inclusion of Liberty Sports Group. Now taking a closer look at Liberty Entertainment’s principal consolidated subsidiary, Starz Entertainment, it had another solid quarter of subscriber growth as Starz's average subscribers increased 6%, while Encore grew 12%. This subscriber growth was partially mitigated by Starz fixed rate affiliation agreements, which on a combined basis drove 3% revenue growth for the quarter. Starz operating cash flow growth of 1% slightly lagged revenue growth, as operating expenses increased 4% due to increased marketing expenses associated with…

Thanks, Chris. We continue to be pleased with the progress at Starz Entertainment, where subscriber growth continues at a fast pace, now several quarters in a row. As Chris said, cash flow remained flat versus a year ago, as we invested in our new Starz branding campaign and our new original series Head Case and Hollywood Residential. On the Starz Media side many of the initiatives, we launched last year in both theatrical and television programming began to bear first fruits. And speaking of first, we marked several first during the first quarter. Among them, over to films released its first theatrical motions pictures starting with Mad Money in January, which performed well at the box office, and will be a strong performer in home video starting this month in our premium channels later this year. Mad Money is the first example of our audience aggregation strategy because it will generate across multiple platforms. Theatrical, Home Video, Premium Television, Internet and Broadcast Syndication, all through our own in-house distribution businesses. Overture also released The Visitor, which is the best reviewed movie of the year so far, and rolls out to dozen more screen this month. At Starz Media we began our first collaboration on a television movie with videogame giant Electronic Arts Inc. At Starz Entertainment, we launched our first major branding campaign in six years including a strong new logo. We premiered our first comedy series and announced plans to air this fall our first original drama series Crash, based on the Academy Award-winning Best Picture. On the ratings front, for the first time ever, Starz in February finished first among premium channels and the Nielsen ratings will be a total day and prime-time, while Encore continues to rank first among premium channels in terms of subscriber count. As you know recently Viacom, Paramount, MGM and Lions Gate announced plans to launch a new premium television service late next year. Although the initial impact of this venture will be the deprive Showtime of its major first-run movie suppliers, we do not take lightly the possibility that it will provide a competitive challenge to us in the coming years. We intend to press on vigorously the value of our product both to our affiliates and to our subscribers. We will point out that our ratings in subscriber growth continued to be strong and that are investment in original programming in Overture Films will provide us two new sources of programming going forward, that Starz has contracts with our major studio partners, Disney and Sony that extend well into the next decade as well as library deals with Paramount and MGM for exclusive pay TV showings and that we continue to be able to purchase independent films in the open market at attractive prices. I'll now hand it back to Chris.

Thanks Bob. The next set of slides addresses the new Liberty Capital tracking stock group. Upon their reclassification of the old Liberty Capital and the issuance of the Liberty Entertainment tracking stock, the new Liberty Capital was issued. This groups results includes Starz Media, the Atlanta Braves, TruePosition, Leisure Arts and our Green Bay market television stations WFRV. During the quarter, Liberty Capital revenue increased 26% to $91 million, while LCAPA's operating cash flow loss increased to $59 million. Now LCAPA's revenue growth was due to the inclusion of the Atlanta Braves, Leisure Arts and WFRV. The operating cash flow loss was primarily due to Starz Media and the seasonality of the Atlanta Braves, which doesn't really get started with their season until the second quarter. Now let's take a look at the LCAPA liquidity picture. The new Liberty Capital Group has attributed cash and public investments of $6.8 billion, and attributed debt 4.9 billion. During the quarter, Liberty modified certain terms of its 0.75%, Time Warner exchangeable, senior debentures to induce holders to not exercise their one-time put rights. The modifications included differing Liberty's ability to redeem the debentures until April 5, 2013. Committing to pay holders in cash upon maturity or redemption, rather than in Time Warner stock and increasing the rate of interest to 3% and 8% after the March 30, 2008. As a result, Liberty limited the repurchase to $486.1 million of the total issue of 1.75 billion with the residual 1.26 billion debentures remaining outstanding albeit under the revised terms. This repurchase was funded with cash from an existing borrowing facility that we had in place on different [collars] With that said, I'll turn the call back over to Greg who will quickly recap the quarter.

Thanks Chris and thank you to Mike and Bob for the updates on your respected businesses. As mentioned before, we're excited about what's going on at Liberty and hope you are too. We remain very much focused on maximizing value to you, our shareholders through innovative financial transactions, looking for way to redeploy our capital, including share repurchase on an attractive basis. The most cost efficient financing are available in a tough market, managing our businesses and investments best within each tracking stock and supporting our management team to produce this best operating results possible. We think we accomplished a lot this quarter, there is lot more to do and the pace of activity should remain high. So thank you for listening and for your continued interest in Liberty Media. With that, I'd like to open the call for questions. Operator, thank you.

Thank you. (Operator Instructions). Our first question today comes from Kit Spring with Stifel Nicolaus.

Regarding your investment in DirecTV, how do you see the video-on-demand product evolving and do you see the need for a broadband partner there? Thanks.

Well, thank you for the question. I think the video-on-demand product is going to be quite interesting, it highlights the strength of DIRECTV around the total TV experience and I think the implementation that they have looks quite interesting in beta compared to some of the alternatives in the cable universe. I think the question of how video-on-demand and the broadband partnerships work, as you know we are a larger one about our role in broadband. I think we're excited about the partnerships we have in broadband not only with Verizon and Quest but also the opportunities that we've looked at with people like Broadband of Powerline or the alternatives around things like Clearwire but that may not change. Continuing interest in seeing all of those many alternatives bloom or we are sort of in the Maoist school where a 1000 flowers bloom in broadband if that helps us that and so we are excited on how that works for our business overall and not just in video-on-demand and I think a lot of progress is being made there.

Thanks.

We will move to Imran Khan with JPMorgan.

Yes, hi. Thank you for taking questions. Two questions regarding QVC. And first and I was wondering if you can give us some sense how the QVC.com did this quarter. What percentage of your revenues came from QVC.com and how much it's up year-over-year basis? And second question is, can you give us some sense that inventory level trending in both in the US and International market? Thank you.

Imran, we did about 24% in the quarter. I think that's up about 23 or 22 last year. Mike?

That's right. Its up from 23 last year. Roughly one point increase in penetration and are a 5% overall growth I believe.

And you want to talk about the inventories, Mike?

Yeah. As a broad statements our inventories we think are in good shape. They creeped somewhat in Germany. As Germany, struggled with their sales velocity last year, the inventories ended up Q1 of this year to Q1 of last year up, a little bit higher than we would like. So we are focused on that. Our goal is to bring those inventories in line over the course of the year. Its not at a level that gives us a high concern. But, it's still higher than we would like. Other than that, we feel good about our inventory position in both the UK and US and we are also watching those very closely and erring on the conservative side in this environment. Our Japan business is primarily a consignment business so we don't have meaningful levels of inventory in Japan.

Right, thank you.

Thank you.

Okay. Now from Jason Bazinet with Citi.

I think sometime last year maybe early this year there was an adverse IRS ruling regarding some of the tax deductibility of the non-cash interest related to your exchangeables, and I was just wondering if you could just summarize what that ruling was and then sort of a implication for cash that would flow from LINTA to LCAPA? Thank you.

Jason there was a ruling that we or resolution I'd more accurately state with the IRS that we had last quarter that was quite the opposite. There have been some precedents out there from Comcast and others that we believe we are very happy with our result compared to theirs and I will let Albert Rosenthal, our tax expert, and Gloria speak for a moment about it.

Our settlement with the IRS, we basically agreed that we will be able to continue to deduct both the cash and the contingent interest with respect to most of our exchangeable debentures. On two of the series we get to deduct the cash interest but not the contingent interest, so that is the settlement going forward.

And what was the point of the delineation between the two where you can balance or you can't on the contingent?

On the two of that we were issued post-issuance of certain proposed regulations by the IRS back in 2001.

Okay. All right and then the net implication for roughly in terms of the cash that will flow from LINTA to LCAPA?

That is about 200 -- it goes LINTA and LCAPA and it's -- that's a 150 issues, I think it was the right number. We can confirm that offline for you.

Okay

Just to just understand how that's work, so that…We are deducting because of the equity feature that's embedded in those exchangeable, and the market costs embedded because of that equity feature

Yeah.

We are deducting at an exceedingly higher rate than the cash interest being paid.

Yes.

So that is a -- lets say we're deducting at 9% versus paying a three roughly.

Yes.

But that is really a loan from the government, because we are going to eventually have to recapture some of those pieces. The LINTA pays for that tax shield rather than paying the US government, in the interim pays LCAPA for that tax shield.

Understood. Okay, thank you very much.

Benjamin Swinburne with Morgan Stanley has our new question.

Thanks. Greg on the DIRECTV debt issue yesterday, is this leverage level sort of optimal from your perspective or is it a function of just the credit markets and you expect more as the markets go little bit easier to tap later through this year? And then if I can ask the question on the Starz business, the subscription growth, I think you said 6% at Starz and 12 at Encore, there is obviously a lot of going on behind that that leads to a revenue growth number much lower. Can you guys give us a little more color on how we should think about the fixed-rate contracts versus the variable-rate contracts? And what that trend looks like going out over the next couple of years, so we can get a better sense for what the organic long-term growth is in this business?

Well I'll comment briefly on the DTV debt and let Bob who can talk about Starz. I think if we were here about a year ago, you'll have to get in line with all the investment bankers who were throwing us proposals to lend us money at many, many multiple of what the current debt level is. I'm not sure we would endorse what they were thinking then, and if the capital markets are constraining from imaging something to much higher than what DIRECTV is thinking right now. I think the optimal level is probably a little higher than the current, but not necessarily what people were thinking last spring and throwing at us -- while offering to throw us. Bob, you want to comment on that?

Yes. There are a number of moving pieces. Let me just summarize a couple of them and tell you the impact. Some of our affiliates have so called fixed deals, where there are for examples, steps and CPI adjustments for them acquiring and divesting of subscribers, those kinds of actions. And then there are of course, the consignment subscribers, which are more on a one-to-one basis. In addition, you have going on within this next situations, where sometimes we're accounting for revenue based on cash we receive, when we are between contracts and negotiation and until we get a settlement or reach some mutual agreement in various steps, its frankly I see a problems, hard to understand. Let me give you a simple example that’s easier to look at us on an annual basis because some of these deals drag on for a long period of time. We had transactions in the second and third quarter last year that if you normalize them over the first quarter, we would have compared to first quarter in '07 had a 5% revenue growth and 11% cash flow growth. So, not helpful, but its easier to look at us over the period of several running quarters because there are so many pieces and often they are tied to our top five or six affiliates that have such a impact on our overall revenue.

Okay. That is helpful, Bob. And maybe I guess one follow-up on the Paramount Showtime deal or non-deal. What your thoughts given, what you see at Starz in terms of movie cost and the difficulty, getting incremental carriage, and you have a relationship with Paramount any thoughts on working with them on this JV? Any partnership opportunities that just would love to hear your thoughts on their outlook?

Well, I think at this point, they have made their decision to move in their own direction and it will be interesting to see, if there are other partners blockbusters have been mentioned. I don't know what that role would be. The background would be either three existing pay companies all got founded by company's that had massive distribution Time Warner with HBO, Viacom was a major cable company, when they found at Showtime and Starz is in our growth of TCI. I do think that the challenge in the first instances is to what's the box office performance. We are find of saying, we can run a three year old movie and beat most original series, HBO to their credit with the Sopranos, and Sex and the City. They are two gigantic hits in 35 years. So, movies still, uncut movies. In their original screen version, still do drive premium category and yet the original self with branding and identification. Our view would be any new venture, whether it's this new one or any has to have massive distribution in order to be successful and I am just quoting, what most of you have been saying at $3, any $13 million to $15 million to cover your costs, relative to the estimates of where they were with Showtime so. I think it's going to be a challenge, all you need to couple big partners to step up and say they want to do that, and it will happen. To your final point, we do have, what we think are the best MGM and Paramount films under exclusive license for pay that go well in to the next decade, so you are not going to be seeing a lot of the favorites from Paramount and MGM showing up on the new channel out of their library at least.

Thanks a lot.

Our next question comes from Andy Baker with Jefferies & Company. Andy Baker - Jefferies & Company: Thanks a lot. Just two questions, one I guess now that you reduced the number of film, reduced the outstanding amount of the Time Warner exchangeables. There is probably about 27 if I'm so I'm extremely sorry about $27 million shares of Time Warner that are not so under the exchangeable. I'm wondering if you plans to hedge those or maybe look for a transaction with Time Warner, where you can give us back and give one of their businesses and maybe looking to get rid of and then on the onto QVC I was wondering Mike you can talk little bit about the gross margin and may be it has some sort of trickling down a little bit not too much but little about little if there is any more granularity you can give us there and how we should think about that over the long-term?

On Time Warners exchangeable share we have little less than that that are free and clear, but we look to or always consider at 355 exchange with the company if that were available, and we have continuing dialog when I actually talked to Dick Parsons two days ago. I don't think there was anything on the horizon that will be obvious for us not to do that. I think we are we stayed un-hedged for that, partly because that effectively says we believe the stocks is pretty cheap. As you may recall, we did our deal last spring May, 16 that the stock was affectively by 21, so that was pretty good trade up and I think 16 is probably has some more room to run. The unhinging of the ,moment at least of the Microsoft, Yahoo deals probably will be a plus for AOLs and other stuff out there, so we'll take our chances for the moment on at least some piece of our Time Warner stock and we'll remain open to any interesting transactions with the company. We're talk about the QVC gross margin, Mike?

Yes. And I think at a high level, we continue to view gross margins as -- we would see gross margins largely staying flat over time. So, while there have been some bumps recently, there is nothing that we're seeing that would make us feel that -- it kind of average gross margin level that we're typically run that will decline on a consistent basis over time. There have been some fairly discrete things that have happened in the gross margin line in the last 12 months. Most notably, the opening of major distribution center in Florence and another one in Japan and expansion in the UK and Germany, all of those -- the cost of those are our warehousing cost are in gross margin, and until your anniversary the opening of a big facility that's under utilize that the start you have a hit. So, that's sort of one-off issue. We clearly have had some product margin issues from quarter-to-quarter in different counties, particularly as we've seen electronics grow in the mix in a couple of countries and jewelry decline in the mix. And the combination of those two has caused a modest shift in gross margins but I view those as things that will ebb and flow over time. I don't think it's any long-term trend in the business. And as you know, we continue to avoid a higher level of promotional activity. We don't think its looks like our business model or needed and so, net of all that as, we feel pretty good about our margin levels, and that we're not going to face some sort of sustain secular decline in margins. Andy Baker - Jefferies & Company: Okay, thanks guys.

Our next question comes from Doug Mitchelson with Deutsche Bank.

Thanks. Few questions to Greg. I will ask you one and other two together, so it seems like the Discovery spinoff is taking longer than expected. You've got - you're really busy with Interactive Corp and DIRECTV to be able to finish the advanced (Inaudible) negotiations. I know this might not obviously be specifically you, but can you give us any update on, when we can expect the S4 filing on discover?

I'm going to talk that question to our esteemed General Counsel, Charles Tanabe.

Well, first of all, this is a [DAP], call, but I expect that we will be filing an S4 in the very near future. I don’t there are any issues remaining with respect to the roll up.

And then, typically what four to six weeks at the SEC and then you get to go?

Yeah, I think that's a pretty good guess.

All right, so Greg in your [wheelhouse] what was the rational behind the agreement with DIRECTV to fix your voting power at 48%, I mean it was nice for DIRECTV of force, but I'm not sure how it helps Liberty? And then second, I suspect this is delicate subject, given tax regulations, but the lets take theoretical scenario by which you wanted to be able to merge LMDIA and DIRECTV. Let’s assume DIRECTV'S Board will be receptive even if you are not able to discuss the transaction with them yet. What steps do you need to take at LMDIA, and how long do those steps take, before you can be in a position to begin those talks with DIRECTV?

So, on the first question about why we agreed to freeze our voting power, I think we have a very positive relationship with the DIRECTV independent Board Members and we thought it was in their interest and ours. We understand why they wouldn’t want to take an action that would push us into voting hard control. I think that will be a difficult for a Board to do that, so they were left with choices either being sub-optimal in the capital structure or paying a dividend. Choices which they didn't find preferable, and we probably didn't either because we had -- even though, we have may be some tax advantages relative to how that income might come in. We are still not a tax efficient to us, is a repurchase. So that was a highly controversial thing for us to internally hereto agree to hold our votes flat. And we like only more DIRECTV economic we are not as averse to that. One the second question of what would have to be done, to complete a merger. It really depends on what kind of a merger you are thinking of. Because you could imagine scenarios in which, we offered LMDIA a tracking stock to do -- rolled up DirecTV, and if that was acceptable to their holders. That will take a certain amount of time, first to get a deal and then to get it through the FCC and the like, to the degree that you, first because they didn't not want to receive tracking stock imagined, some kind of spin transaction. I think that probably will be a longer term time frame just in terms of getting a spin done. May be four to six months, I am not, it's not something we've agreed to. We certainly thought about all of our options, but its not in our plan today. And if you then had a subsequent merger there would be some tax considerations around Morris Trust, which would ensure that -- would need to ensure that our shareholders who were, 51% of that combined vote and value on a go-forward basis. But if you look at the, assets in LMDIA including the 48% plus the other assets we have in there primarily Starz, the RSN etcetera less the net debt. I think that might be a reasonable scenario. It's unlikely we would combine in any scenario in which would be less than 51%. So, I don't think there is huge impediments to that. Its whether you could get the deal done is another matter. But there is no huge impediments on a tax basis. Just need more time involved with the spin.

Right thank you.

Yeah.

We'll hear next from Evergreen Management and Chris Taylor.

Thanks, that was my question as well, so…

That we anticipated.

Thanks.

We move now to Lehman Brothers and Vijay Jayant.

Given the recent ruling on the litigation with IAC, can you sort of talk about what your options are now? Is there any chance obviously of doing anything before the spins? And also any comment on what may and may not be done with Expedia? Thanks.

I think there is a host of options that are imaginable, but potentially us working with them on the spins on some agreed form going forward potentially, we are still doing a 355 transaction or we, I believe also filed at that time to a potentially appeal if there are -- if they go forward on a basis we don't like. So all options remains open and that could involve a deal also on Expedia but with that I'm not overly optimistic on that prospect.

As following up, I think QVC becomes a [five year trader] business in September or November of this year, so chance of LINTA being spun off, is that something even on the table?

That's not our current thinking and plans I mean in part because not to sound like we've totally drunken the tracker Kool-Aid just for no reason. Partly because we don't know for example look down the road or think about an LMDIA spin because that's a more attractive way to combine with DirecTV. Again we have no current plans for that but we certainly consider that as an alternative out there and whether that might foreclose or cause you think differently about spending QVC or LMDIA, we'll watch and see.

Thanks.

We'll take our next question up from April Horace with Janco Partners.

Hi. Thanks for taking the question. Greg, I think you've mentioned in the beginning of the call, something about a controlled liquidation of LCAPA. Could you expand on that?

Well, I think we believe that those exchangeables create lot of shield, at least on an interim basis, and if we're clever enough to figure out ways to get liquid on some of the investments in LMDIA -- excuse me, in LCAPA, on an tax efficient basis, we should be able to build some value there. The path is not clear. The obstacles are many and there is no near-term event or catalyst that's going to get us there. I do think over the long-term you are likely to be trying to get liquidity and or capture if you cannot capture some of the discount to this present value, some of the parts on pretax basis to the degree you can get the tax efficiently. But, that probably doesn't happen in the long-term -- in the short-term, rather it happens on a long-term basis. You're investing the capital that you have in assets to -- that hopefully out -- that out-earn what our liabilities are growing at. One point to note, we have to maintain a fair amount of liquidity at LCAPA. We can't, as some one might just look and say, why you got lot of cash and you have a relatively low market cap line. Why aren't you just buying the stock hand over fist? One of the challenges there, there are lot of our liabilities on the dead end, on the tax side, which could be accelerated in the events of third-party transactions over which we have no control. And so, we need to maintain a certain amount of liquidity if Sprint were sold or Motorola were sold tomorrow for cash, we need to maintain a certain amount of liquidity to ensure that we would be able to handle our obligations under that circumstance. So the face value of looking at it and saying, oh, there is obviously a huge discount and there is obviously enormous amount of cash, is not as clear once you start looking at what liabilities could be accelerated. So I go back to my statement about why if they control liquidation; I suspect it's a path where we're trying to get liquidity overtime, trying to reduce the size of the equity float, but it's probably something you chip at and you hope you can do well on that. There is no clear path up here.

And one point Dan, you mentioned that you might just some day bite the bullet and pay some tax, and I think that was probably more aimed at Motorola.

Well I don't thinks it as broad fit. That's certainly the case with 20/20 hindsight in which if we just sold an asset at some price and paid the tax it would have been better and that's only with the benefit of 20/20 hindsight. So we will try and have more foresight and hopefully decide if there are cases where liquidating is better than holding out for better after-tax assumed value.

Okay great. That's all I've got.

We'll take our next question from [Brian Lorraine] with First Capital Alliance.

My question was just answered.

We are knocking them down here.

We go next to David Gober with Morgan Stanley.

David you have a question.

Hearing no response we move on to Andrew Cole with JL Advisors.

Hi. Why you were buying back any stock when you thought there was a discount if any. Just your thought processes there?

I am sorry. On which track Cole.

On LMDIA. Liberty Media.

Yeah at LMDIA the reason why, we try and maintain liquidity there is. You sort of go back the way we think about Liberty Capital. Unlike Liberty Interactive where we have big earning asset called QVC. We have a relative corresponding smaller earning asset there and we actually now have a fair amount of debt given the transaction we did to increase our stake at DIRECTV and if we were purchase stocks in size, we would be adding to that debt with no clear way to settle, other than potentially selling of assets, all which have relatively low tax basis. And in some cases we are prohibited from selling and in other cases we think it's strategic to hold more. So, until you see clear pass to get to, an earning asset. I mean if you do tomorrow you are going to merge with DirecTV. Yeah you'd buy the heck of LMDIA because it's writing at a discount. But you don't know you are going to merge with DirecTV, you don't know you are going to have access their relatively larger cash flows to cover any debt that you put on. So until, we have a clear path about what the LMDIA future is, how we would settle that debt, we are probably unlikely to buy back in size.

Okay. Thank you.

Our last question today comes from Jessica Reif-Cohen with Merrill Lynch

I have just two questions. I think you said on preview, that the cost -- well, you did say, the cost increased because you've expanded your relationship. Can you just outline how much it was for the quarter and what we should expect for the year? And secondly with your increased stake in Interactive, could you discuss again, not in this call but again have you happen to pass? How possible or likely it is for you to acquire Home Shopping Network and if that is a possibility, what benefit there are to you since you have said in the past there were not a lot of cost savings? Thanks.

Mike, do you want to talk about the increased cost of carriage?

Yes, the increased cost for Freeview was about a 127 basis points and we will anniversary that in the fourth quarter.

And on HSN, we remain open to a transaction it can be done at attractive price I think what the management team and Liberty have thought is if you look at the operating structures and we haven't done extensive due diligence on HSN, but if you look at the operating structures it isn't apparent that there is enormous cost synergies i.e. items you could knock out because -- it's like a accounts payable or accounts receivable or other G&A function. There is some amount but it's not huge. A large portion of what else's in there in the cost side relates to variable items that probably not be able to or fixed items will not be able to eliminate. You would need to have the two broadcaster facilities for example if you want to keep both present. The potential that seems less clear, but you would think given the relative $4.5 billion-ish revenue stream we had in the US and a $2 billion-ish revenue stream that they have in the US you would like to think you would find some synergies perhaps in purchasing, perhaps in counter programming, when we ran jewelry, they ran power tools or vice versa, so that you were not attacking the same audience. Those are harder to capture, harder to know. As I said we've not done extensive due diligence internally on HSN. Mike, would you add anything.

No. Nothing else to add.

So, that's it operator. I want to thank everybody for joining us this afternoon and for your interest in Liberty Media.

And that concludes today's Liberty Media Corporation first quarter earnings conference call. Thank you for attending and have a good day.