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Liberty Wants to End Joint QVC Ownership

March 3, 2003

PHILADELPHIA (AP) _ Liberty Media Corp. has notified Comcast Corp. that it wants to end their joint ownership of QVC Inc. and its lucrative cable home shopping channel.

Analysts say the move Monday, which sets in motion a process that would allow Liberty to sell its stake in QVC, could provide Liberty with cash to finance acquisitions _ including a possible bid for satellite provider DirecTV.

Liberty has indicated it would be interested in buying DirecTV, which is owned by General Motors’ unit Hughes Electronics, either on its own or with Rupert Murdoch’s News Corp.

``They may be interested in raising some cash to provide liquidity,″ said Mike Kupinski, an analyst for A.G. Edwards & Sons. He estimated QVC’s value at $12.5 billion to $13 billion and the value of Liberty Media’s 42 percent stake at $5.3 billion to $5.5 billion. Analysts at Merrill Lynch and UBS Warburg assessed the deal at similar values.

Neither Philadelphia-based Comcast nor Liberty Media would provide a market value for QVC.

Liberty Media spokeswoman Julie Ballantine also declined to comment on what the company would do with the money if its QVC holding is sold.

``It is always possible that those funds could be used for future investments, if in fact that is the route that we go,″ she said. ``We triggered the exit process for Comcast to purchase QVC. It they choose not to, we have to decide if we want to purchase it.″

Under the terms of Liberty and Comcast’s joint ownership agreement, the notification requires Liberty and Comcast to either agree on a market value for QVC or obtain an independent appraisal.

Comcast then has 30 days to make an offer to buy Liberty Media’s 42 percent share. Should Comcast fail to do so, Liberty Media would then have 30 days to buy out Comcast’s share.

If neither company buys the other’s share at the value established, 100 percent of QVC would then be up for sale, with Comcast, Liberty and others free to make bids.

The process could end with no transaction occurring, Comcast noted in a statement, but many on Wall Street believe the asset is too valuable to Comcast for that to happen. QVC had revenues of $4.38 billion in 2002, accounting for more than a third of Comcast’s overall $12.46 billion during the same period.

``We think Comcast would be very interested in owning QVC, but at the right price,″ Kupinski, the A.G. Edwards & Sons analyst, said. If the price were around $5.5 billion, ``we think they have the ability to leverage their balance sheet to do that.″

Other analysts provided similar estimates of the deal’s value. Aryeh Bourkoff, an analyst for UBS Warburg in New York, forecast the value at $13.3 billion. Jessica Reif Cohen, an analyst for Merrill Lynch, was in the same range, valuing Comcast’s share of QVC at about $7.5 billion and Liberty Media’s share at $5.5 billion to $6 billion.

Comcast, with its cable systems in 17 of the nation’s 20 largest cities, can assure wider distribution for QVC than Liberty Media, Ballantine said.

``We have always said at sometime QVC would make sense with somebody else who can do more for the channel than we can,″ she said. ``They are just better situated to assist them than we are.″

Comcast is the nation’s largest cable operator with more than 22 million customers, and other businesses including E! Networks, Comcast-Spectacor, The Golf Channel and Outdoor Life Network.

Liberty Media owns interests in various video programming and other services in the United States, Europe, South America and Asia, including Encore, STARZ!, the Discovery Channel and Court TV.

Liberty Media stock closed up 12 cents at $9.31 a share Monday on the New York Stock Exchange. Comcast shares fell 78 cents to $28.44 on the Nasdaq stock market.

___

On the Net:

Liberty Media Corp.: http://www.libertymedia.com

Comcast Corp.: http://www.comcast.com

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