Good day everyone and welcome to the Liberty Media Incorporation Second Quarter Earnings Conference Call. Today's call is been recorded. This presentation includes 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 statements contained herein to reflect any changes in Liberty Media's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Please refer to the publicly filed documents of Liberty Media including the most recent Form 10-Q 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 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 sir.

Thank you and good morning and thank you all for joining us. Liberty has kept up rapid pace of activity through the second quarter and I look forward to sharing some of those developments of the past several months with you this morning. I will discuss recent events of Liberty and take a look at the operating performance of some of the businesses and assets attributed to both Liberty Interactive and Liberty Capital's tracking stocks. I am joined on the call today by QVC's CEO Mike George; QVC's COO Meade Rudasill; QVCs Chief Financial Officer Dan O'Connell; from Starz we have the Chairman and CEO, Bob Clasen; President and COO, Bill Myers; and EVP and CFO, Glen Curtis; and from Liberty I am joined by our Chairman, John Malone; and several of our Senior Executives. At the end of my remarks and the remarks of the others, we will be happy to answer any questions. After discussing the developments of the second quarter, I will turn over the call to our Controller Chris Shean, who will chat about Liberty Interactive and Liberty Capital's attributed businesses including recent financial results and our liquidity picture. Mike George will pick up and address developments at QVC and Bob Clasen will chat about recent events at Starz, and I will close with a brief summary of the quarter and our outlook as we embark upon the remainder of 2007. Then we will open the call to questions. So let me now turn to recent developments. As we noted this morning, upon completion of our asset exchange with News Corp., we will issue two new tracking stocks. One of these groups designate, Liberty Entertainment, is expected to have attributed to it the assets obtained in the News Corp. exchange including the 38.5% stake in DirecTV…

Thanks Greg. Let's start by taking a look at Liberty Interactive. The slide you are looking at is a quick glance at the second quarter revenue and OCF performance of LINTA. As the slide indicates, Liberty Interactive's attributed businesses continued to grow revenue and operating cash flow during the quarter albeit at a slower pace. Slowing growth was primarily the result of difficult market conditions, challenging comparisons with last year's strong results and continuing operational challenges at QVC's international businesses most notably Japan and Germany. And we will get into that more shortly. Looking more closely at LINTA, Liberty Interactive's businesses achieved 4% revenue growth and a 2% increase in operating cash flow. As I will discuss in more detail in a minute, the pace of revenue and operating cash flow growth slowed at QVC during the second quarter. Provide Commerce and BUYSEASONS which were acquired in 2006, again experienced strong year-over-year revenue growth during the period and Provide also continued to experience solid operating cash flow increases. Backcountry, which was required in June and is not reflected in the second quarter results experienced 83% revenue growth during the quarter. It's operating results will be consolidated starting in the third quarter this year. During the quarter we continued to repurchase Liberty Interactive shares. Through June 30th we had repurchased 21.4 million shares in 2007 and 73 million shares or over 10% of the shares outstanding since the inception of the LINTA share repurchase program about a year ago. We continue to believe in share repurchases as a good means of enhancing shareholder value and we will continue to evaluate opportunities to cost effectively shrink Liberty Interactive equity. We have remaining authorization from our Board of Directors to purchase up to an additional 500 million of Liberty Interactive equity. On taking…

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 at the businesses attributed to LINTA, the group has attributed cash and public investments of $5.4 billion and has $6.9 billion in attributed debt. The increase in the debt balance during the quarter was a result principally of $484 million tender offer of LINTA shares that we completed in June. Excluding the value of the investment positions in Expedia and IAC LINTA's attributed net debt of approximately $6 billion equates to a multiple of just over 3.5 times annual OCF. As previously stated we would be comfortable sustaining net debt levels of 4 to 5 times OCF. As a result LINTA businesses have significant liquidity to grow organically and through acquisitions and to shrink LINTA equity as appropriate. Now let's move on to Liberty Capital's businesses. As Greg mentioned earlier upon completion of our exchange with News Corp. group, we will classify [ph] Liberty Capital tracking stocks into separate [indiscernible] capital. Meantime we made a new progress during the second quarter transforming the assets attributed to Liberty Capital and to well position focused operating assets. Overall during the quarter, Liberty Capital reported a 30% revenue gain while OCF declined 38%. LCAPA's largest attributed operating asset, Starz Entertainment which excludes Starz Media, is continuing to strengthen its cash flow. In the quarter it's revenue declined 4% to $254 million while it experienced a 10% operating cash flow grow to $55 million. We will talk more about this shortly. Taking a closer look at Liberty Capital's events during the second quarter. As I just mentioned LCAPA attributed revenue grew 30% in the quarter while OCF declined 38%. Revenue growth resulted from the inclusion of Starz Media and the…

With regard to Starz Entertainment, we are pleased that subscriptions to Starz and Encore continued to show solid growth in the second quarter. In addition we continue to experience a decline in programming cost which resulted in improve cash flow versus the same quarter a year ago. However we saw a decrease in the average effective rate for each subscription, which resulted in a decline in revenue. Our major goal in the coming months will be to complete ongoing negotiation with two of our key affiliates for new mutually beneficial carriage agreements that will allow our business to continue to grow. On the Straz Media side we have completed the integration of the former IDT Entertainment into our business. Our Home Video unit which accounts for the bulk of the Starz Media revenue, increased revenue this quarter versus the same quarter a year ago. In addition, the addition of movies from our Overture Films unit will provide valuable new product for our Straz Home Video Company, which in the past has not had a slate of major first run films to sell. For it's part, Overture has announced its first slate of films including Mad Money, starting Queen Latifah, Katie Holmes and Diane Keaton; Last Chance Harvey with Dustin Hoffman and Emma Thompson; and Righteous Kill with Robert De Nero and Al Pacina. The quality of these first films and the level of talents appearing in them reflect the fact that the Overture model is being very well received in the Hollywood creative community. Since this is the first time we have talked about this, investors should be aware that in the movie business even if the film is a hit, all the costs comes prior to the release of the film and all the revenue after it. Even in the best case, a startup studio such as Overture will have a negative cash flow for several months until revenue from its first films begins to come in.

Thanks Bob. Taking a quick look at LCAPA's liquidity situation. The LCAPA business has remained in a position of financial strength. At quarter end and including our News Corp. stake, LCAPA was attributed with approximately $16.8 billion of public investments and derivatives. This declined from the first quarter principally due to the disposition of a portion of our Time Warner stake in our entire CVS position. In addition to its public holdings Liberty Capital had attributed cash and liquid investment of just over $2.7 billion at quarter end. Total cash and public holdings approximate 19.5 billion and are only partially offset by $5.3 billion face amount of attributed debt. This provides Liberty Capital with significant flexibility to grow its businesses and we will play an important role in the strategic direction of these assets going forward. That said, I will now turn the call back over to Greg who will quickly recap the second quarter and talk about what's ahead in 2007.

Great. Thanks Chris and thank you to Mike and Bob for the updates on your respective businesses. Well we have tried to give you a lot of detail today on both the operations of the businesses and some of our transactions and capital... oriented capital markets, oriented movements. As you can see we remain busy during the quarter and had a number of important developments on the Liberty Capital side. As we've noted we completed number of asset sales and exchanges and we completed our first tender for the LCAPA shares. Today we have announced our intent to take another important step in simplifying the asset attributed to Liberty Capital by reclassifying the equity into the two new tracking stocks, Liberty Entertainment and Liberty Capital. As I detailed earlier we believe this change will further our efforts to reduce complexity while giving investors the opportunity to focus their investment capital on the most attractive vehicle for their interest. It will also create we believe a currency which should give us enhanced financial flexibility. Liberty Interactive did experience slow organic growth in the quarter but we remain confident in the long-term fundamental strength in QVC and the other Liberty Interactive businesses. You heard today some of the reasons why and some of the actions that management is undertaking to get us back on our normal track. We again repurchased LINTA shares during the quarter bringing our total repurchases since we issued the tracking stock last May to over 10% and we are diligently seeking further strategic value enhancing acquisitions. Looking ahead we will continue our strategic development efforts to determine the best path to increase shareholder value. We have maintained significant financial flexibility and look forward to putting that to work to enhance organic growth, shrink equity and make strategic acquisitions. So thank you for listening and thank you for your continued interest in Liberty Media and I would now like to open the call for questions. Operator? Question And Answer

Thank you. Today's question and answer session will be conducted electronically. [Operator Instructions]. We will go first to Robert Peck with Bear Stearns. Robert Peck - Bear Stearns & Co.: Hey guys, just two quick questions. I guess the first is give us sort of a bigger picture. As we think about the domestic growth of being about 4%, I think HSM domestic, ex-America store was around 3% or so. Both were not doing as well as maybe you had originally anticipated. Is there anything else bigger picture going on here besides the [ph] inventory issues and what have you? Are you losing industry share maybe to the internet with Amazon and eBay relatively and doing relatively strong quarters. Can you talk maybe just picture beyond the prices of gold, what's happened domestic, and I just have a follow up?

I would start and then I will ask Mike or Meade or any of the other folks from QVC there to follow in. My perspective is that we have a business which we have always suggested has lumpy elements and that if you look at what we have put forth as our long-term growth rate the business exceeded that in '05 and exceeded that in '06 and is trailing it in '07 and we don't believe we need to change what our suggestive long term growth targets are. We do monitor that, we watch it and we think about it but we are comfortable that we can get back on track. I would... I don't think you're seeing radical change in how video commerce is used by the consumer versus e-commerce and in fact as you know an increasing percentage of our sales are e-commerce. So in the way it's more of a continuum of which we are part despite the success of eBay and Amazon. I also would say that there is somewhat of a difference the performance at H and the performance at Q. While we clearly were disappointed to get 4% revenue growth domestically, I mean that was below our targets as we said. That was done with a pretty controlled cost structure and a pretty controlled maintained gross margin rather than what appears to have been just looking at the external numbers and the decline in operating performance at the EBITDA line, at the gross margin line, a far more promotional environment at H. So while we are disappointed and not satisfied with what we've got, I don't think it's the same animal as what occurred at H. You want to add something to that Mike. Michael A. (Mike) George - President and Chief Executive Officer,…

There have been forever talks about asset swaps. So this period would be not different than any other period. And I don't think we as a practical matter, reveal whether we are blacked out from tendering or not. I don't believe we have done that in the past and I don't think that's a policy I would want to start with now. So I am not going to... I think as a practical matter we are not going to disclose whether we are blacked or not. Robert Peck - Bear Stearns & Co.: thank you very much.

Thank you.

We'll take our next question from Imran Khan with JP Morgan.

Yes hi, thank you for taking my question; a couple of questions. Number one question is regarding the credit crunch in the current credit market. Does that have any impact in your buyback for Liberty Interactive shares and secondly can you give us some breakdown on average selling price and unit growth for Germany, U.K. and Japan, and the last question; sorry for all these questions; I think you've mentioned that channel changes in EcoStar might impact the consumer behavior in the near term. Can you give us some color, what kind of impact do you see in the near term and any sense how quickly you can have a channel shift for DirecTV after the News Corp. deal close? Thank you.

Well I'll take a shot at number one and I'll let off with... why don't we let you do two, Mike, and I'll split number 3. So I think the liquidity we have at LINTA is committed. Certainly the funds of the open to buy and actually we have a credit facility that is committed through the end of the year; I don't believe we'll have any issue or have... that will have impact upon our share repurchase or our ability to certainly do our open to buy the 500 million we've got open and in fact larger amounts. Mike do you want to talk about ASPs? Michael A. (Mike) George - President and Chief Executive Officer, QVC, Inc.: Yes, let me actually ask Dan O'Connell, our CFO, just to run through the numbers on ASP versus units in the few markets and then I can add additional commentary if needed.

Okay in the U.K. unit growth for the quarter was 7.6% and ASP was down roughly 3%; Germany, the unit growth was 5.3%, roughly 8.7% decline in the ASP. Japan had just under 1% decline in unit growth and basically flat ASP.

Do you have any color Mike? Michael A. (Mike) George - President and Chief Executive Officer, QVC, Inc.: Yes, just one thing I'd add to that is, just to give you a flavor of the dynamics; UK we are not particularly concerned about the ASP decline, in fact largely driven by the fact that with the strength of the pound, our purchasing costs are a little bit better in China on a relative basis in the way we price. We depend [ph] on customer; so those ASPs will ebb and flow but generally speaking our ASPs are positively healthy in the U.K. That currency effect is probably part of the driver of the decline you are seeing. Germany is really an issue of the continued struggles in merchandizing, that does reflect some level of markdowns which obviously compressed the ASP as well as some of the challenges in the jewelry mix. So I do think that low ASP performance is a reflection of some of the challenges we've talked about in Germany, and Japan is a pretty stable right now, and of course the US had a solid pickup in ASP. On the DirectTV question, a couple of thoughts and Greg can add to it. I guess the comment I would make and then I will let Greg add is we are interested in an improved channel position on Direct, we don't think it is as material as a change in the channel position on Echo because our starting point is much better today on DirectTV than it is on Echo. So we think we can do better... like to do better but we are already in a solid neighborhood and not next to other shopping channels. We want to generally avoid being mixed with shopping channels; that was our problem on Echo. With Direct, we would love to see an improved position although again the caveat is we don't see the impact of it being as great as it is with echo.

Again I think I'd echo, so to speak, Mike's remarks. We are in a better position on Direct and whatever we would do there we certainly hope that our friends at Direct would work with us and be as positive as they could be. But they are... they have their own public shareholders and in fact they are not even... even the 40% odd stake that we have is not even attributed to the Liberty Interactive business which is essential to group at Liberty Interactive, it's attributed to Liberty Capital. So all things while they could be done friendly, they would have to be done to justify and make sense for Direct as well.

Okay thank you.

Thank you. Next question please.

We will take our next question from Doug Mitchelson with Deutsche Bank Securities.

Thanks very much. I was interested in a little more information on the new tracking stock. Will the terms you proposed be similar to those of the LINTA Liberty Capital split where companies can be put back together again without a shareholder vote and any other details you think might be relevant? And also what are the tax implications and any strategic limitations that the tracking structure might create, any more details on that might be helpful?

I think I am going to hold on how those combinations would work until we distribute more information in the form of the proxy. But I think we will obviously endeavor to make sure that it's fair to all parties and that it make sense for all parties. If you look what's happened here we've... I can just give some color, we split off Liberty Interactive and Liberty Capital because we thought we had a cogent group of companies and businesses and investments that fit together in Liberty Interactive and we had some or more of a mish mash at Liberty Capital. We have now come together and put a... because of our proposed exchange which we believe will close we will have a logical group of companies and investments that fit together and are synergistic and additive together at Liberty entertainment. So our focus is that these companies... not that they will come back with the Liberty Capital but really that they will have... would make sense if they are their own cohesive unit and candidly I think they have more synergies over time with Liberty Interactive as a series of operating businesses than they do with joining with Liberty Capital. But we will outline all that in the proxies when that comes forward. As far as the tax matters, I am not exactly sure about what you are aiming at there Doug, but there will be a tax treaty between the businesses... somewhat of a tax treaty that is currently in place between Liberty Interactive and Liberty Capital today.

I guess what I am curious about is strategically is there anything that would stop you or limit you from taking any one of the three tracking stocks and you know selling them to another company or buying them.

Well I think that's... look, I mean, candidly that's always a challenge only in that you could certainly do that but do that... but do they... does the buyer want to be part of the group and still owning shares in a group in which they have issues because you are not disconnected from the group from a credit perspective, you are still some part of the same tax group, etc. So that would need to be thought through. The other point about this all is that we are working hard to ensure that we have maximum flexibility and that if we have opportunities to have these in the hands of our shareholders eventually, if that makes sense at some point, that's not our plan today. But we believe we are going to create as much flexible to do that if we want.

I also ask, has your relative position changed in terms of competing with private capital buyers for assets given the liquidity in the debt markets and maybe some temporary liquidity but --

Who knows and it may be the case right know that the capital market is so bad for borrowing that even relatively less leveraged corporate buyers who should be advantaged; right now the markets are probably so negative that unless you truly are willing to pay up and you need to get it done people are backing off even doing those kind of deals and you are seeing assets pulled from the market, Virgin Media being a good example, because the perception that there are not buyers may be creating such a condition that you don't... it's moved past helping us to the point were nothing is getting done. But eventually I... without having a lot of absolute evidence but just prognosticating, we do believe that a situation where you can borrow but you can't leverage to the degree of the private equity has been able to leverage, is probably a good situation for us in terms of strategic acquisitions.

Got it. Thank you.

We will take our next question Scott Devitt with Stifel Nicolaus.

Thank you. I was wondering if you could talk about how much of QVC's inventory that you feel is proprietary in one way or another meaning a unique product, a bundle or a warranty customer service attachment versus the product that can be just directly comparison shopped on the internet? And then secondly could you just explain the sale tax legislation that requires QVC to charge tax on TV and online despite only having a physical presence in a few states? Thanks. Michael A. (Mike) George - President and Chief Executive Officer, QVC, Inc.: Sure. On the... in terms of the sales tax, we have charged sales tax for a numbers of years, we made the decision quite a while ago to err on the side of charging sales tax rather than trying to fight the game of physical presence, so that's been an ongoing strategy and I'm sorry, remind me of the first question.

Just in terms of the proprietary nature of the inventory on the show, I mean historically you have stated that a significant percentage of the inventory that's displayed is proprietary in one way or another where they are providing distribution for a regional brand where there was a unique warranty customer service line like you have in your Dell presentations and I'm just wondering as the earlier question related to the internet in comparison shopping, how much of your inventory that you feel is protected because its proprietary. Michael A. (Mike) George - President and Chief Executive Officer, QVC, Inc.: Thank you. I would say its hard to put an exact number on it. But the overwhelming majority of our product sales are exclusive and I want to clarify when I say that we have an extended assortment online at that... is similar to assortments... other internet... but that's a very small percentage of our sales, less then 2% or 3%. Majority of our product for on air and online is exclusive in some way. So for example about a third of our business we would classify as proprietary. That means it is a QVC brand name like Denim & Company in apparel that is only on... when we make the product, it's only on QVC. When you look at our national brands which is roughly another third of our business, much of that is proprietary in that it is an exclusive line like the Diva line by Dana Buckman. Dana Buckman you can find in department stores but you can't find the Diva line in a department store, it's made only for QVC. And in the electronics area which is the one area where it's harder to have strictly exclusive merchandise we do have as you described generally speaking heavy hitters in terms of sales volume will be products where we have reached some agreement on exclusive configuration, exclusive features, bundles or something else that allows us to sell the whole bundle at a discount to what's available in the retail marketplace and we always want to be below the retail marketplace in price point and sometimes we get there to a proprietary product line, some times you get there to value added configurations that are exclusive to us. So a long way of saying, I'm going to put it in the 80% plus neighborhood that is needed on some dimension.

That's helpful. Thank you.

We will take our next question from Jeff Shelton with Bleichroeder.

Thanks. It appears that the increase in gold prices hit the UK market about a quarter ahead of the US. I was wondering if there were any lessons to be learnt there and if you think the US market can dig out of it's second quarter hole quicker? Michael A. (Mike) George - President and Chief Executive Officer, QVC, Inc.: I don't know that there are any specific lessons. A lot of different... two businesses, I think they were both hit by the challenge of how to absorb the price increases and probably the timing of when we took the price increases, what the condition of the existing inventory was, all of that impacted the results. As I mentioned, I do... I am cautiously optimistic, but I will underscore cautiously, that we are beginning to see a little bit of a pickup in the market which I think is driven by a number of things although it's all speculation. Part of it is that customers have now had many, many months to get used to higher gold prices which they are obviously experiencing at all retailers. Yes, I think we are getting smarter about our merchandizing and again and not dumbing down the product which we were a little guilty of doing as an initial reaction and partly quite frankly, the comparisons are getting a lit bit easier because the business started to soften last year. So as we go into the back half, the comparisons are a little bit easier.

Okay. And do you have a revenue breakout for the international markets for the quarter?

Yes that's included in the quarterly report that will be filed later today.

Okay. And then could I also ask you, do you have OCF numbers for the international operations, so we can get a base for how those are performing on an individual basis?

We have not disclosed that information at that level of detail.

Okay, thank you.

We will go next to April Horace with Janco Partners.

Hi, thank you for taking my question. One, I just want to congratulate you on proposing this new tracker, I think it's a good thing with respect to having a... flexibility for new currency. But my real question is, can you give me some clarification on the turnaround on the international, previously you said it was going to be three quarters and I am not sure I quite followed what you thought it was going to be for each of the individual markets going forward? Michael A. (Mike) George - President and Chief Executive Officer, QVC, Inc.: Sure. I will go through it market-by-market. The UK essentially had a tough quarter in Q1 of this year. We saw solid performance in Q2 and I don't want to try to predict obviously the current quarter performance or give a short-term outlook. But there's nothing in the fundamentals that would make me think that the UK business isn't on anything other than a fairly healthy and improving track. Japan I think you have to look to a year from March... a year from last March to see us fully anniversary the impact of this regulation that caused us to have to pull back on our health business. So our health business has declined in mix about 10... our health business alone was in the low 20s in mix of our business, it's now in running in the 10 to 12 range. So that essentially took about 10 points of top line growth off the business. And once you anniversary that next March that obviously you are on a cleaner comparison. In the interim we are trying to get these other businesses that I mentioned to a little bit stronger growth rate to fill in some of the gap. We did see somewhat improving performance in Japan through the quarter. So a year to anniversary the full impact. But clearly we are not standing still and we are trying to fill in some gaps in the interim. And Germany as I mentioned I'd be hesitant to try to predict a date because the bills... the issues there are a little more fundamental and we need to resource the merchandise and we are doing that in a way that we think is going to be long-term healthy but it basically means earning credibility in a number of new brands and categories to offset over reliance on a few categories in the past. And so it's just... so it's higher to predict how long that's going to take to work through while we also work through current inventory and to that one... I hate to put a date on that one.

Okay. Considering the current credit environment and what was previously thought about leveraging up DirecTV, can you give us an update as to what your thoughts are now with respect to when the transaction is closed and leveraging either DirectTV or Liberty Entertainment?

Well I think as far as the transaction closing, we have no new information. I... we expect to close in the next few months but we don't have much clarity beyond that. It's August in Washington DC, that's probably unlikely to be this month, so we are hoping for maybe September or October. As far as the leverage at Liberty Entertainment and DirectTV, both will be at... Liberty Entertainment will be a net cash though it will not be a hugely cash flow generating entity, will have net cash and no net debt, and DirectTV today has probably got, depending on where their share of purchase is and I think they are going to announce tomorrow. So I'm not going to tip all that off. They are probably at about $1 billion of net debt against heading towards $4 billion of EBITDA. So it's not a... it's significantly below when... what we would think as optimal leverage. Whether the credit markets are, this is the right time to go out and get that leverage and how you might want to use that leverage, are you using it for share repurchase, are you using it for combination, are you using it to buy other content assets, all of those are opportunities we think are interesting, but this may not be the optimal time in the next month to think about trying to go out and get a big yield out or a big offering out. But clearly, both entities are underleveraged from what we would consider optimal.

Okay, thanks. That's all I got.

And we will take our next question from Mathew Harrington [ph] with Ferris Baker Watts.

Good morning. Can you comment or give us some more elaboration on some of the initiatives you talked about at your QVC Analyst Day last year? I mean, specifically you talked about re-branding, trying to reach beyond 8.2 million so customers that you had, you are working I think with the shop in the Bay area IDO to that effect. And also I think you said that your advertising spend of sales was about 0.2%, and clearly the worst and the last thing you want to do is crank it up to what somebody like Amazon or Best Buy does, but you more or less imply that you thought that there were some elasticity to marketing spend that hadn't been fully capitalized on in the past?

Sure. As I mentioned previously earlier in the call, we are going to be talking a lot more about our re-branding efforts in September. We did retain IDO to help us, really take a hard look at the brand. And since that work we have taken a very deliberative posture in terms of really trying to sort out how to take the brand to the next level. We think our brand is strong today. So we don't want to do anything knee jerk to go after new customers that would offend or turn off our current customers that obviously never works in our favor. But having said that, we were kind of through those deliberations and in the design phase of some pretty exciting work, to just update the brand a little bit in terms of how we present ourselves on air, how we present ourselves on dotcom, how we advertise the brand. And you will see that unveiled in the back-half of the year. We are not prepared at this point to talk in detail about it, but we likely will at our... at Liberty September investor conference. When you look at marketing spend, the pure advertising portion of it is 0.2 to 0.3, although when you add in other dimensions of marketing, our total discretionary spend, I think, in the US is in the 0.6 to 0.7 range. And we may begin to take that up carefully, it won't be a massive increase by any means, but we do think a little more spend to get the word of mouth... to help the word of mouth, which is one of our big drivers of new customers, is probably a value, but we'll do that in a pretty methodical way and test away to it beginning... again beginning later this fall.

Good, thank you.

We will take our next question from Jamie Neilson [ph] with AJS Ventures.

Hi Bob. The past two quarters operating cash flow has been negatively impacted by True Position and Star Media, and positively impacted by reduced programming expenses at Starz Entertainment. As a percentage, what is the overall impact of the True Position and Starz Media? And how do you see the negative and positive trends for each of these three entities continuing through the rest of 2007 and 2008?

Well, this is Greg and I will say we will probably let Bob not have... Bob Clasen not have to cover True Positions. I don't think that's in his portfolio and probably not what he feels most comfortable commenting on. So, maybe, Bob, could you talk about the two Starz entities and then, John Orr, do you want to comment on True Position or Mark afterwards? Go ahead Bob?

This has not been released yet.

Yes, but the press release has got it.

Starz Entertainment, which is the pay television company, we continue to expect, as we've reported previously, a continuing decline in our programming costs as amortization of bonus payments go away, and as we are able to buy in the spot market very high quality films for less than we could a few years ago. And so, we are optimistic that cash flow will continue to grow. Starz, by the way, in 2006 when our studio partners in 2005 haven't... hadn't released the greatest slate of films, we were still the 12th rated service by Neilsen in homes where we existed. So we have a pretty important position in the cable and satellite universe. So that's the trend there. Starz Media is new, we are just starting to report it. We have --

I don't believe we report it separately, we report as a part of the other right? The cash flow?

Right.

So you might just comment generally.

Okay. Well, the decrease was influenced by Starz Media $16 million and $26 million in the period. Both... Starz Media is in the business of both delivering the home video, but also in the business of television production, animation, theatrical, and for television, our film roaming unit just completed the successful Simpsons Movie and we have done The Simpsons Movie for years at that unit. And yet because it's so heavily into production, there is an awful lot of spending that goes on and that gets amortized over the period of when the revenue comes in, and so we expect that that would be at cash flow negative for some period of time until the revenue catches up to the spending to do the production similarly to what I mentioned a little while ago at Overture. We've got an awful lot of spending to make the movies and market the movies and now all of a sudden, as the revenue starts to come in, the situation changes, but it does take quite a bit of time.

Thank you Rob, and John or Mark... John Orr or Mark, do you guys want to comment on TP in general?

Greg, I'll cover this.

Okay.

The True Position situation is one where revenue recognition from a financial reporting standpoint is virtually stopped due to some amendments to a contract that was done very late part of 2006. So, I mean, you are talking about a company that last year had for the 6 months over $50 million of revenue, that this year at least from a GAAP standpoint generated $6 million of revenue. But I will point out that under these contracts, we continue to perform and the elements of the performance of the contract are hung up on the balance sheet in the form of deferred revenue and deferred costs. And that the entity itself is not burning cash at that rate. So --

Because of that SOP 97-2, they can't recognize this revenue until they deliver this software elements at the end. And so they are collecting a lot of cash, but not being able to recognize the revenue.

That's correct.

Next question please. Maybe we could have two more and call it a morning.

We'll go next to Jason Bazinet with Citi.

Thank so much for the question. I just had two questions regarding the news Liberty Entertainment tracker.

We just want to make sure your research reports came true, Jason.

Very kind of you to make strategic decisions based on our... the stuff we print. Anyway, I was a little bit surprised on the $551 million of exchangeables that you're going to put at the Liberty Entertainment side. I was wondering if you could just talk a little bit about the thinking there. And then second, I was also curious about the allocation of cash. I think you said $580 million of cash.

The... what we are anticipating is that we will send over one of the exchangeable issues, which is... in which the potential for exchange is very low and it is considerably... the stock is considerably out of the change money, therefore highly unlikely it will be exchanged and there is no real exposure. We don't believe there is significant exposure or risk that Liberty Entertainment shareholders will have to pay more than the face amount of the debt.

Got it.

So we think that's the true anticipation, if we send that one issue over, it would be a be true... or if we attribute that one issue, obviously they are all part of the same legal entity, attribute the one issue, it would not be a burden on them in excess, the Liberty Entertainment shareholders in excess of the face amount of the 551.

Understood.

And the cash, the cash would be being received is the cash that we will receive upon the completion of the exchange with News.

Understood.

So our deal with News, we would give them exactly what we got from News, the Liberty Entertainment shows will get stake in Direct, the three RSNs and that cash.

Okay, that's very helpful.

That is the general... that's what we anticipate will be in there.

Okay, thank you so much.

And our final question today comes from Ben Swinburne with Morgan Stanley.

Thanks, thanks for taking the question guys. Just one on QVC and then one strategic for the team. Like, how much of the US business is jewelry this quarter versus a year ago, just so we can get a sense of that base business trend?

Dan, do you have those numbers

The mix of jewelry in the second quarter '06 was about 23% and were down to 21% in the current quarter.

Great, thanks. And then looking at what we've seen this quarter from Sprint and the cable companies and the joint venture side, if you need moving in different directions, you can throw Clearwire in there as well, you obviously have some Sprint assets that you would look to exchange at some point down the road potentially. I am just curious as you look at DirecTV position sort of development in the wireless broadband side, and what seems to be a moving apart from between cable and Sprint, any comment sort of on how you see wireless data playing out over the next couple of years and sort of how involved do you think DirecTV will be in that movement and any opportunities you see now to get closer to Sprint now that they have moved away from the cable venture?

Well, that's a big wide open question and I will comment, maybe I will ask John Malone if he's got any additional thoughts, but I would say couple of things. First, we are not I think entirely surprised that Sprint and the cable company Spectrum venture has... looks to be parting ways, didn't seem like a long term fit for a bunch of reasons. We have positive dialog with Sprint about 355 type exchanges, not clear that the Spectrum alone would qualify, but may some business shifting over and participating in the Spectrum, all those are potentially interesting. DirecTV has expressed for a long time and looked at various ideas and we are I think in good dialog with them about how to think about broadband and particularly mobile broadband as an interesting opportunity. I would note that both Comcast and Time Warner appear to have significantly slowing rates of broadband customers. And so one of the things that's been in the back of our minds without not a absolute certainty value, but with a fear or what we saw potentially was that you move toward saturation on broadband, and that if you were to come with a product in three or four year, the market could be quite saturated. It may turn out that it's happenings... the rate of saturation is recurring quite earlier if you look at those slowing rates. And coming with something that we'd need to and didn't offer incrementally differentiated features would not be of high value for our customers or ultimately for DirecTV and/or Liberty in terms of what the economic opportunity was. So, some broadband mobile, particularly where it provided the potential for mobile television, mobile video, is something we will look at very closely and if potentially something arose out of Sprint, given our position all the better. And as you note, the breaking of that partnership with the cable companies is perhaps the good first step in allowing us to reexamine that or look at that more closely. But it got to be probably something that's different and unique and not something where you're just going to offer what's fixed... competing with fixed because just on feeds and speeds and unlikely where that is in terms of the saturation point in the three, four years when you're really out there ubiquitously, even if you had a launch today or... you are not going to be particularly competitive. So we are weighing all those, weighing our stake and thinking about what interesting product in conjunction with DirecTV we might be able to offer. John, do you want to add anything?

Yes, I think it's just very interesting this proposal coming out of the internet crowd that the architecture on these new licenses should be open because that could change the ballgame quite substantially in terms of bundling and bundling firepower of cable or satellite. So, we are watching that real close. I mean, obviously, I agree with what Greg is saying, it's going to take several years for these licenses to be issued and deployed. And it's really going to come down to portability versus capacity and that's going to be a function of how much consolidation of Spectrum will take place and how saturated the broadband market will already be, and also how saturated the cellular or wireless will be with voice. So there is a lot of things going on here, but clearly more technology in broadband is good for our potential investment in DirecTV. It reduces the leverage of bundling that the cable currently has relative to satellite.

Might be worth just noting also it was interesting to see that in some of the competitive reports that slowdown in the rate of broadband customers and loss in at least one case of a major cable company, not just the mid level guys, but a big guy of basic video subs. And so we'll see what DirecTV reports tomorrow, but we are probably more optimistic than that about video growth, and are happy with the performance. Great. So, I think thank you very much everybody for joining us this morning and for your questions and we appreciate your interest in the company and your continued support.