Good day and welcome to the Liberty Media Corporation quarterly 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. 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 under which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA. The required definitions and reconciliations, preliminary note and schedules one through three 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.

Good morning and thank you to all of you for joining and for your continued interest in Liberty. Today, we’ll review our performance in Q3 and discuss the operating results at our controlled subsidiaries. Speaking on the call this morning we’ve got Chris Shean, our Controller who will discuss the attributed businesses' financial results and the liquidity picture for each of the trackers; we have got QVC's CEO Mike George; we have got the Starz CEO Bob Clasen; and we have assorted other Liberty, QVC, and Starz executives available to answer your questions. Building on momentum from Q2, we posted strong operating results at QVC and Starz in the third quarter, many of our other businesses had and trend investment type great performance including notably serious. During the quarter, we continued to strengthen the balance sheet. QVC raised a $1 billion in senior secured notes, extended maturities out to 2019 and the offering was quite well received. This was the first $1 billion high-yield deal to price below 8% since DIRECTV priced in May of [2008]. It was just the non-investment grade deal to price below 8% out of 213 transactions year-to-date. It was the first 144A deal to price below 8% since March of 2007. Today, QVC has paid down $344 million of its 2014 revolver, which we would expect to be redrawn to pay the $500 million of term loans due in 2010. QVC expect to be able to continue repay this revolver as free cash flow allowance. Subsequent to the end of the quarter, QVC repaid or rather let to repay $50 million of the intergroup loan it had to each of entertainment and capital group. During the quarter, all of the Liberty stocks reached 52-week high in fact all the reach was in the last couple…

Thanks Greg. Liberty Interactive groups' revenue increased 2% to $1.8 million while adjusted OIBDA increased 11% to $345 million for the quarter. QVC is the primary driver of results amongst the Liberty Interactive group attributed assets, posted favorable results in which total revenue increased 2% to $1.7 billion while adjusted OIBDA increased 10% to $343 million. eCommerce group of companies at Liberty Interactive which include Provide Commerce, Backcountry.com, Bodybuilding.com, BUYSEASONS, LOCKERZ, and The Right Start experienced revenue growth of 2% in the third quarter and adjusted OIBDA growth of $2 million to $5 million. The increase in revenue driven by two small fold in acquisitions in 2008. During the third quarter, QVC issued $1 billion principal amount of 7.5% senior secured notes due 2019. QVC used the net proceeds to fund the purchase and cancellation of outstanding term loans under QVC senior secured credit facilities that mature in 2014. Now I will hand it over to Mike George for additional comments on QVC.

We were very pleased with our results in Q3, as we continue the improvement in business trends that began in Q2. Sequentially, our local currency revenue growth rates improved in every market except Germany and our adjusted OIBDA growth rates improved in all markets. In total, our revenue increased 2% and adjusted OIBDA increased 10% without the change in revenue recognition practices that we implemented in Q2, our revenue would have been $9 million and adjusted OIBDA would have increased an additional $4 million. These results reflect the success of our sales growth and cost management initiatives along with what appears to be at least some stabilization of consumer spending in the U.S. and U.K. We also appear to be gaining share at an accelerating rate from a broad range of retailers to compete for the consumers discretionary spend in dollars. In the U.S., net revenue increased 2%, our first positive sales growth since early last year. We saw the strongest gains in beauty, accessories, consumer electronics and our kitchen, cook and household categories. As in prior quarters, our jewelry and apparel businesses remained soft, although the rate of decline in jewelry has moderated somewhat, as weakness in gold jewelry was partially offset by strength in lower price point fashion accessory lives. We also saw continued gains in QVC.com which grew 17% and now represents 28% of our sales, up from 24% last year. We benefited from a 100 basis point improvement in return rates, largely driven by product mix. We’re also very encouraged by 9% increase in the count of new customers joining QVC in the quarter, our highest rate of new customer growth in the last seven years. However, as I have stressed in the past, even more important than the count of new customers is their total…

Moving on to Liberty Entertainment, revenue grew 2% in third quarter to $369 million while adjusted OIBDA increased 16% to $86 million. The increase in revenue was primarily driven by results of Starz Entertainment. The increase in adjusted OIBDA was due to positive results from Starz Entertainment, partially offset by expenses related to the proposed split-off of LEI. Expected liquidity at Liberty Starz upon completion of the split-off and merger would be approximately $850 million. This is made up of actual cash balances, loans to Liberty Interactive, and a $146 million in expected repayments from DIRECTV for payments that we’ve made on the derivative loan. Expected cash at LEI would be approximately, which includes corporate cash and cash at the Liberty Sports Group. Now Bob Clasen will comment on Starz Entertainment and Media.

Thanks, Chris. Starz posted another solid quarter, as Starz Entertainment revenue grew by 8.3% and adjusted OIBDA by 19.2% versus the same quarter a year ago. The average number of Starz subscription units grew 1.4% versus the year ago during the quarter, but the total number of Starz subscriptions on September 30 was down slightly versus the same date last year. Encore average subscriptions declined by 1% and the total number of Encore subscribers at quarter end was 2.8% below the same date last year. Helping to improve results were an increase in average revenue per subscriber and a 2.8% decline in year-to-date operating expenses versus a year ago. The decline in expenses was largely due to airing fewer first run movies during this quarter versus a year ago, reducing our programming costs. This reduction was partially offset by increased expenses both in production and marketing for original series. We continue to play close attention to some of our affiliates, particularly in the cable arena who have experienced declines in subscriber levels. It is our belief that there are several reasons for this development, including the general economic conditions, particularly the decline in housing starts, rate increases implemented by some affiliates earlier in the year and a lack of marketing resources devoted to premium television as a category. We are working with these affiliates to bring more focus to the premium space and improved sales of Starz and Encore subscriptions. On the other hand, we are encouraged by the progress our affiliates are making toward implementation of the Television Everywhere strategy, which will enable existing authenticated Starz subscribers to receive Starz programming on their computers or portable devices as well as at their TV sets. Starz has been a pioneer in the development of online delivery of programming. We welcome…

During the quarter, Liberty Capital revenue decreased 22% to $171 million, while adjusted OIBDA deficit improved by $21 million. The decrease in revenue was principally due to a decrease in theatrical and home video revenue. The decrease in adjusted OIBDA deficit was due primarily to the timing of theatrical and home video revenue and related expenses associated with the films released by Starz Animation and Overture Films. Now, I’ll turn it back over to Greg for some concluding remarks.

Thank you, Chris, and thank you Mike and Bob for the updates on your respective businesses. To sum up, we feel that the third quarter was a strong quarter on a lot of areas, lot of fronts and we saw signs of improvement in several of our businesses, particularly QVC. If you look ahead, our major priorities first across Liberty Media continue to rationalize some of our non-core, non-consolidated investments in third party and look for interesting market opportunities, could only hope to find those serious. Plus Liberty Entertainment, we are going to complete the split-off and merger with DIRECTV hopefully in the coming few weeks. We will reclassify the new tracker Liberty Starz and hopefully launch it well. At Liberty Interactive, QVC is focused on continuing the movement it had in Q3 going into Q4. At Liberty Capital, we continue to evaluate opportunity for our cash including debt buyback, stock buybacks and additional investment opportunities. With by thanking for your continued interest, also want to thank you for your continued support in Liberty Media. Hopefully we’ll keep busy and have some of the report for you in Q4 as well. Thank you for listening and operator I would like to open it up to questions.

(Operator Instructions). Our first question will come from Doug Mitchelson with Deutsche Bank.

Just a question for Greg and then a couple for Bob. Greg, which is cheaper in your view, SIRIUS stock or LCAPA stock and does your view on that differs factor into your decision making? How to perceive with your ownership stake there? Bob, can you tell us what the amount of the TV production write-down at Starz was this quarter? What your outlook for cost growth might be in the fourth quarter, given you might spend, give or take $15 million bucks marketing Spartacus? Thanks.

Doug, I try not to comment on which of the children I like best, but I will comment on the second part and could say that, that the practical matter if you look, we are prohibited from increasing our investment in SIRIUS XM, as I recall for 18 months from the term of the initial deal which would be about another year from now, first. Then candidly, we’ll be trading lightly in, if we were to do so because of the some of the issues around the tax losses they have in the 382 limitations, so that is not easy path, even though I think SIRIUS is a attractive investment. I think Liberty Capital is quite cheap.

To the 382 limitations end right after two years or is there grey area there?

My understanding is ends after three years, so it would be roughly two and half years from now.

Nine months to-date, we’ve amortized it would put on the P&L about $15 million of growth revenue cost and a lot of that did hit in the third quarter. We’re not going to give guidance for the fourth quarter, but we’ll point out that to your question on marketing, we would expect the run rate to be pretty similar to the third quarter, since we had the second season of Crash that had quite a major campaign and would probably be roughly equivalent to some of the lead end we'll be doing in December for Spartacus with a lot of the Spartacus spending coming the first part of January.

We'll go next to James Ratcliffe with Barclays Capital.

Couple of questions, both related to Liberty Starz. First of all, on the buyback authorization, is there any limit to how other than the [starred] SEC limits to how fast you can theoretically deploy that? Related to that, how much cash do you actually really need around to start the Starz business? Then secondly, ARPU for subscriber was up about 9% year-on-year in Starz, but at the same time you saw a subscriber dropping both of Starz non-core. Can you talk about what you say in terms of both revenue with network and buy a mixed shift or contracting increases and secondly for the people cancelling with those more our card customers or customers in high digital tiers?

On the buyback, we don’t have any, to my knowledge any limitations other than as you know that the SEC’s restrictions on what percentage of volume we can be in terms of share repurchase. As far as cash require to operate at Starz, it's almost a non-issue as you look it's a free cash flow generating vehicle, yes they have some working capital need but they also don’t even have a working capital line. We are heavily capitalized or overcapitalized at those businesses today, that's when we take the corporate and then the operating units.

To comment on subscribers, we have again a mix of affiliates who are both have a card and then have fixed payments and so that really, sometimes decline in subscribers; your revenue doesn’t fall off. Part of the dynamic, we see frankly is there is a shift in some numbers of subscribers from cable to the telco business, and our economics are a little more attractive when they are a telco customer than some of the old historic cable dealers, frankly. We are pretty flat at DIRECTV, Dish is having some issues that flow to us. It's frankly a mixed bag. We have got growth in some affiliates, or at least are holding our own. We have got some declines in the cable space and in the dish space. With regard to cash, we are a cash generator. We are not needing cash from our parent or from the banks in order to operate. We are a generator, and that will be showing up over time on the Liberty Starz reports.

But in terms of cash on hand, it's a pretty minimal amount you need just to run the business day to day?

Right, we have a strong balance sheet as a standalone company.

We will go next to Matthew Harrigan with Wunderlich Securities.

Two questions, first of all on whether the QVC numbers look great, and when you get better sales you are going to get ample drop-through. I thought the e-commerce businesses were a little disappointing. I mean you communicated it pretty well on Backcountry, given the pressure on the higher price point items. It looks like the enthusiast businesses were not quite as robust as you might have thought. Could you give us a little bit more granularity there, and then how we should think about the growth factor on those businesses longer term, because it did appear to be really coasting through the first part of this recession; and then secondly, another Spartacus variant, it looks I guess you could have $30 million to $35 million of costs on that expense next year. Are you going to get enough of a continued savings, albeit at a slower pace on the reduced amount of studio products offsetting us, or we have to see some margin pressure and be within Spartacus, no matter how wonderful it is as far as improving the marketing profile and the brand of Starz?

Note that in general statistics we’ve been saying, for example, comScore recently reported their expectation that eCommerce as a whole was down 2% in Q3. I think you’re saying right. I think you’re hearing and seeing that some of the -- just the timing and the difficulties around Q3 for eCommerce are not unique. That having been said, it’s not one of our big quarters. Q4, we expect that [country] is going to have a substantially better quarter from where it was. The driver for the biggest element by far our eCommerce businesses provide in terms of an OIBDA number is obviously a Q1 or Q2, usually Q2 event, so Q1 and Q2, not Q3. I think they had a good performance in a tough environment in a quarter that is not as critical as it [sounds for us]

We’re looking obviously at 2010, and while we’re not going to provide guidance, I’ll make a couple observations. First of all, our output partners are having a better year at the box office than they did in 2008, and that flows to increased costs to us for our new feature linked films, so there will be an increase in programming costs driven by that. With regard to Spartacus, certainly that will influence our programming cost. Remember, Spartacus has a long useful life; we don’t amortize everything with its first use. There is a period over three years in which it will be amortized on its play. We are expecting programming to go up for those two reasons next year.

Our next question will come Bridget Washa with JPMorgan.

I had two questions on the Liberty Interactive segment. First of all, Germany I know is still in the midst of its turnaround and there is a lot of mixed shift going on driving changes. If you look at the units shipped, it looks like it declined significantly during the quarter. Could you discuss what’s driving this a little bit more, and when you expect the mix shift to moderate in this segment? Then secondly, I think you mentioned how much free cash flow growth you were seeing that winter. Could you give us that number again on a year-over-year basis, and what you see driving us? Thank you.

Sure. I’ll discuss Germany and let Dan comment on the cash flow. We cannot segregate revenue into units and ASP and put a lot of focus on that because for us it's really about what's the consumer’s total spend with us, and I think that’s the best reflection of the health of the business. I would hate to characterize what you will see in terms of units versus ASP, but I think you basically saw was a flat quarter, slightly up without the revenue recognition, and I think that sort of characterizes the business, suppression in jewelry and apparel strength in the other zones. Now, specifically the technical reason that units were down and ASPs was up was really more just kind of product mix drivers. We saw the jewelry business that we did do, we did at a higher ASP; it's a substantially higher ASP. That was in large part due to the reduction in markdowns. So the good news is, we’re using markdowns less frequently. The inventory is better. The products' better. Less markdowns means higher ASPs, so for the same kind of revenue velocity you get fewer units but better ASPs, so that dynamic is hard to predict from quarter-to-quarter because it’s really driven by product mix. We again focus more just on sort of absolute revenue growth. Then Dan, you want to comment on the cash flow?

Sure. The $200 million that Mike referenced for the year-to-date period is primarily a function of working capital. If you look at year-to-date 2009 working capital items are a source of cash by about $185 million and last year they were a use of cash of about $140 million, so that’s the biggest drivers.

Do you expect that to be sustainable going forward or to be more seasonal due to the economy?

In our fourth quarter last year working capital was about $200 million use of cash and I would think that directionally it will move in that direction, but I don’t expect it to be as high as $200 million in the fourth quarter.

Our next question will come from Doug Anmuth with Barclays Capital.

I just had a question about return rates in the U.S. and in particular it looks like in 1Q and 2Q, you saw a sort of a bigger decline basically in return rates year-over-year. I was just curious what your thoughts are there in terms of why it bounced back sort of on a sequential basis from 17% to 19% and how we should think about that going forward.

In Q3, we had about 100 basis point favorability in our return rate at 19.3% and that’s mixed driven as Mike mentioned previously. For the full-year it's about 1.7%, 50 basis points of that is a true-up over accrual call it at the end of 2008. Obviously, we have to estimate what our return rates are going to be and they came in less for Q4 and we recognized that in the first two quarters of the year.

Our next question will come from Jason Bazinet with Citi.

It’s a separate question on Liberty Interactive. I think there was a question earlier about the eCommerce EBITDA what you helped us out with provide color, but I’ve one another question regarding some disclosures in the queue that relate to, I think it was called third-party online discount services that was, that sort of a $6 million or $7 million per quarter in each of the first two quarters of the year. I guess there are two questions there. Can you explain what those are and are those very high margin revenues and will they repeat?

They are offers to our customers by third parties and I think they do have repetition factor, whether there is high growth going forward is not as clear, we’ll see. I think by [common] and lot of eCommerce companies offer these other services to your customers and that is a relatively high margin business.

Do we see a similar amount in the third quarter, in other words it was most of the miss in the EBITDA?

No, no. It’s just because of the nature of how they come, I think we saw less in the third quarter but not any negative way, just try to the offerings in the marketplace. I don’t think it has the trend value.

David Gober with Morgan Stanley has our next question.

A quick one for, Bob; I was just wondering if you could remind us when you expect to hear from Disney about whether or not they are going to extend their output deal which I believe expires in 2012?

We’re meeting with Disney all the time and we have nothing to report.

Is there a day by which there has to…

No, no. They do not have an option.

The current deal expires in 2012, am I right?

For domestic output 2012.

It will be clear, (inaudible) with the channels. It’s really through 13. 12 for DBO, 13 for the channels.

And one for Mike, some of the customer acquisition numbers that you threw out there, were very impressive. Any sense of what’s driving the new customer acquisition? Is it just the improvement in the overall economy? Are new customers coming in different categories than they have been in the past year or so?

No, I think it’s a couple of things. I think part of it is that I would say, we’re in a product mix which we have worked hard to create a product mix that is more favorable to getting new names probably due to our efforts and probably just due to what’s hot right now and so for example, the exercised category, some elements of it are hot and they tend to bring in a lot of new names. We really run after entertainment properties like Michael Jackson, Beatles Remastered; those sorts of properties. They’ve been doing very well for us and those are extremely high with new names, so some of that is driven by those initiatives that are product based and some is driven by the more aggressive marketing and PR outreach that we’ve been doing, trying to bring in a high profile branch like a Rachel Zoe who has her own celebrity following and has attracted unusually high new names for the kind of product categories that Rachel is offering. I think it’s a mix of the quality of the talent, the kinds of hot categories and degree of aggressiveness and PR and marketing outreach and actually I try to put in one more factor which is we have continued to improve our channel positioning. I think it's fair to say that, we probably never made more gains than we've made this year and the quality of our channel positioning that includes getting a second location on DIRECTV and a much more highly trafficked neighborhood, as well as we are now up to about $25 million high definition subs and I think virtually every case those present a second channel location in addition to the SD channel. I think we are seeing the benefit of just being exposed to more people and more attractive neighborhoods.

Has the demographic profile changed significantly of new customers coming in I mean have you been getting a younger customer, older customer?

I have not looked at it specifically for this quarter. We don’t tend to find that amused in meaningful ways quarter-to-quarter. I hesitate to guess what we have generally found over the last few years is that new customers are not surprisingly are younger than existing customers and the age of that new customers has been relatively stable overtime. Don’t know specifically, if it's changed in Q3.

That’s very helpful and just a quick one for Greg. Obviously, we see the Form 4s on IAC stock sales but was there any other movement in publically traded assets during the quarter?

Can’t recall of any substantial ones, we have small positions that we move, but nothing materially that I can think of that happened in Q3. The caller expiring on Sprint, I think we've talked about that, and that obviously was offset by reduction in the borrowings against the Sprint caller. That was a fairly neutral event.

We’ll go next to Murray Arenson with Janco Partners.

Couple of quasi-related questions if I could. On the heels of your comments on the eCommerce business, can you comment on what you see out there in terms of potential acquisition opportunities or things are still looking pretty rich out there? Secondly in looking at QVC’s business and the business you’re doing through QVC.com, can you talk about where you see that potentially growing, maybe a few years out, how much of the business can that be for you?

On acquisition opportunities, we have been pretty much constantly looking for eCommerce opportunities. The last four years, we found four decent sized acquisitions and the couple or three tuck-ins that have worked well into those. Because that has been difficult and if you look at the universe of eCommerce companies, pure eCommerce company, certainly that’s not a huge universe between $50 million and say $5 billion a market cap and particularly ones that we would find attractively strong management teams, define niches, (inaudible) advantages in their business model and protections around Warren Buffett mode type things. Those are not, at time it does and in particularly when you want a reasonable price. There has been a whole change obviously in the blending kind of a content commerce and community that have only made some of that harder because a lot of those have had very large multiples and have more speculative business models. That having been said, we continue to look and we remain bullish on some opportunities and we’ve also taken a couple of tracks like Right Start when we purchase something out of bankruptcy or LOCKERZ where we funded an entrepreneur a little more venture capital type opportunity to try and create a wholesale version of something like that rather than buying at retail. We still look. I don’t think the environment’s got easier in fact I think it's probably got tougher in terms of 2002, eCommerce becoming more expensive and then we’re trying to skin the cat in new ways. I'll let Mike handle the QVC.

On QVC, I’ll talk about the U.S. where the dotcom business is obviously the most developed and 28% right now and Q3 is actually a seasonal low point for dotcom penetration in a grow up. It will go up fair amount in Q4. Our internal goal is to be at 50% QVC.com penetration, so half of our sales are coming from QVC.com by 2014. I don’t think that’s a crazy goal. I think that’s a reasonable stretch goal. We’re going to continue to accelerate on investments in QVC.com experience and we see growing at both as a compliment to the TV channel and as an independent business attracting customers and products separate from the main channel. We think that can get us to those kinds of numbers by 2014. I think we’ll see similar improvements in our international dotcom businesses but they start from a lower base but I think all will be on a fairly attractive trajectory and especially as we roll out a global eCommerce platform next year, its rather than the country’s specific platforms that we currently have we’ll be able to implement much higher levels of functionality in our international operations, which I think will create further boost to those businesses. I wouldn’t take a number on that yet, but in the U.S. I would say 50% over five years is sort of a reasonable framework.

We will go next to Grant Jordan with Wells Fargo.

Maybe if you could give us an idea in total what the QVC inventory is year-over-year just in terms of relative terms and how you think you are positioned going into the holidays.

I will make some general comments and then let Dan give you the numbers. Overall, we feel very good about our inventory position going into the holidays. Given the uncertainty of this year, we gave the challenge to all of our markets to manage inventory very tightly, stay close to receipt flow. We feel reasonably clean going into the holidays with the ability to chase goods if the sales are there. We are clean but not too clean, and we have the ability to kind of respond pretty quickly. So at a qualitative level we feel quite good about the balance of keeping inventories tight but also having sufficient inventory to fund Q4, and I will let Dan give you the numbers. Dan O’Connell: So, on a consolidated basis, at the end of the quarter we had roughly $975 million of inventory, and same period last year about $75 million more. We have cut about five days of sales out of our inventory since September of last year.

Sure, that’s very helpful. Then my second question, again on QVC. Mike, you talked about picking up market share for some other players. Was there any specific category where you felt like you were picking up notable market share during the quarter?

I think in terms of specific categories I would say that we are clearly gaining market share in consumer electronics, which continues to be a very hot business for us. I think we’re definitely gaining share in beauty, and we've built a really wonderful prestige beauty business that I think is outgrowing virtually anyone else out there. I suspect -- although it's a more fragmented market, so it's harder to track, but I think in areas like accessories and handbags, I think we are gaining share as well. And then our downtrend in categories like jewelry and apparel, I don't know that we’re gaining share but I also don't think we are losing share. I think those categories are pretty tough for everyone.

We'll go next to Steve Velgot with SIG.

Yes, a quick question for Greg. Is there a scenario where you could see combining a Starz Media with Starz Entertainment before Starz Media is cash flow positive, and can you give us some idea as to how we might look at valuation even if it’s sometime off?

Well, I think to be clear, would be s combination of Starz Media with Liberty Starz, or with Starz Entertainment the channels, so just to be [guarding] that vehicle. When you think about valuation, I think it would be a function of not only the run rate whether it'd be loss or positive, but what the value and the ultimate that are being built up there, and that is not today, because we've not had as much success at the box office as we would like. That's probably not an enormously scaled number compared to the value of the channel. What they would be in the future will depend largely on how our ultimate [build] going forward, and if we have successful films that will create value and makes Starz Media worthwhile. It's not the only element that is generating value, or not a Starz Media, but it is probably the one with the largest built-in swing factor.

And therefore, are you still intent on waiting until Starz Media is cash flow positive in order to pursue?

No, I think we are intent on trying to make sure that we have a stable business model and good direction for Starz Media, and understand fully where it is going and what it might be worth and whether this model is compatible with channels going on a long term basis.

With that I think we’re done for the morning again. Thank you for your interest in Liberty, and we look forward to seeing you next quarter. Thank you.

This concludes today's Liberty Media Corporation’s quarterly earnings conference call. Thank you for attending, and have a good day.