Investor Relations - Financials - Report to Investors


Liberty Media Corporation
Report to Investors
May, 1999

 

CONTENTS

Letter to Shareholders

1

Stock Performance

9

Company Profile

11

Financial Information

20

Corporate Data

21

To request a copy sent by mail, please click here and submit your information.

Letter to Shareholders

 

Dear Fellow Shareholders:

We last issued a letter to Liberty Media Group shareholders in the spring of 1998 as part of the TCI Stockholder Report. At that time we were a tracking stock of TCI, most of our activities were concentrated in domestic cable and satellite programming businesses and we had a total market value of approximately $13 billion. Much has changed in the past twelve months.

First, TCI was acquired by AT&T. In that transaction, TCI Ventures Group was folded into Liberty, and the expanded Liberty emerged as a tracking stock of AT&T. As a result, Liberty added large stakes in Sprint PCS, United Video Satellite Group, Inc., General Instrument Corporation and Tele-Communications International, Inc. (TINTA) to its existing portfolio. We also received $5.5 billion of cash in exchange for certain TCI Ventures Group assets that were transferred to AT&T.

In separate transactions, Liberty acquired the 15 percent of TINTA that had been owned by the public and United Video acquired TV Guide Magazine, changing its name to TV Guide, Inc. Liberty also agreed to acquire approximately 8 percent of The News Corporation Limited in exchange for a combination of cash and our half interest in the Fox Sports regional sports networks, and we increased our interest in General Instrument to 21% percent. Finally, we agreed to contribute all of our assets related to interactive TV and Internet content to TCI Music, Inc. and to change this subsidiary’s name to Liberty Digital, Inc.

As of this writing, we have interests in a broad range of video programming, communications, technology and Internet businesses in the United States, Europe, South America and Asia. We have more than $4 billion in cash and short-term investments and a market value of approximately $45 billion.

Despite the sweeping changes that these transactions have yielded in the scope and composition of our business, our fundamental purpose remains the same as it was when Liberty was established in 1991: to maximize the per share value of our equity over a rolling five- to ten-year horizon.

Growth in Liberty’s equity value results from the convergence of two forces:

Internal Growth

Liberty owns a unique set of assets. These businesses are leaders in their markets and they benefit from a host of competitive, technological and demographic trends. A few examples:

Time Warner, Inc., one of the largest media companies in the world, posted all-time record cash flow of $4.5 billion on revenues of $26.8 billion for 1998, increases of 14% and 11%, respectively, over 1997.

Sprint PCS is the nation’s largest and fastest growing PCS provider. Since the end of 1997, Sprint PCS customers have more than tripled to 3.35 million and the number of metropolitan markets served has doubled to 280. During 1998, revenues increased by $967 million, or 375%, compared to 1997. This trend continued in the first quarter of 1999 with revenue growth of 189%.

TV Guide, Inc. markets and distributes products in the United States to over 100 million cable and satellite homes every week. TV Guide also markets its products internationally in over 30 countries. TV Guide Magazine, TV Guide Channel, TV Guide Interactive and TV Guide Online are the largest print, electronic, interactive and Internet guidance products in the world.

Telewest Communications ended 1998 with 1.4 million residential and business customers, making it the largest provider of residential cable service in the United Kingdom. Revenues grew by 40% in 1998 and cash flow increased by 194% to approximately $233 million.

The above are all publicly traded entities which, in addition to internal growth, have also benefited from the robust stock market. Our privately held assets are well-managed, high-growth businesses that have also benefited from solid economic fundamentals. Our largest privately held assets include Discovery Communications, Inc., Encore Media Group and QVC Inc.

Discovery owns four broadly distributed networks in the U.S., namely The Discovery Channel, The Learning Channel, Animal Planet and The Travel Channel, as well as seven digital channels. It also operates additional networks which reach over 73 million subscribers in 155 countries.

Consumer research consistently cites Discovery as one of the most recognized and respected brands in the U.S. The quality of its content and its brand make Discovery an excellent platform for creating new channels and interactive services.

One of the most exciting projects under way at Discovery is the development of a new subsidiary called Discovery Health Media, which will focus on the delivery of health-related programming. This entity will be among the first to offer consumers fully integrated video and Internet programming. Today’s consumers are bombarded by confusing and often contradictory information about how to live more healthy lives. At the same time, health care companies are continuously seeking more efficient and effective means of reaching consumers. With the credibility of its consumer brand, its vast programming library and its excellent relationships with distributors and advertisers, Discovery is in an excellent position to meet the demands of both these groups.

Encore Media Group is the fastest growing provider of cable and satellite-delivered premium movie networks in the United States. Its 13 domestic networks with 26 different feeds reach over 49 million pay units. Encore’s services include the Encore and STARZ! premium movie networks, ten thematically programmed digital movie services and MOVIEplex, a ‘‘theme by day’’ channel. In 1998, Encore generated cash flow of $100 million, compared with a loss of $28 million in 1997.

With the benefit of digital technology, cable operators and DBS providers can position themselves as virtual video stores. The all-movie programming and everyday low pricing of the STARZ! and Encore services allows distributors to package these services with pay-per-view channels and other pay movie services such that movie viewers have practically the same level of choice and the same cost as video rental without the inconvenience of renting and returning.

As digital growth accelerates, Encore’s unit growth will continue to increase. Encore already has agreements in place with 15 major cable operators and many smaller operators to carry Encore’s thematic multiplex services in new digital packages. These services will be available to over 80 percent of cable homes as digital service becomes available.

QVC continued to break electronic retailing records in 1998. Sales at QVC increased by 15% in 1998 to over $2.4 billion, with operating cash flow increasing by 28% to $434 million. Over the past 10 years, QVC’s revenue and operating cash flow have grown at compound average annual growth rates of approximately 20% and 30%, respectively. Simply put, QVC’s core domestic business is a powerhouse. QVC’s international businesses have also enjoyed success. Operations in the United Kingdom have become profitable, and operations in Germany are improving and approaching profitability.

QVC is also an Internet success story. QVC operates a retail website, iQVC, which is one of the fastest growing websites. Customers can shop iQVC 24 hours a day, seven days a week for more than 100,000 products.

Liberty’s attributed share of the operating cash flow of all its private assets increased by more than 100% in 1998. That figure is inflated somewhat by the turnaround at Encore and we anticipate that our performance in 1999 will be more modest. However, the cash flow of these private assets still should grow by approximately 30 percent this year — a very healthy increase by any standard.

Strategic Opportunism

While we are very pleased with the historical and prospective growth of our affiliated companies, as shareholders, we expect Liberty’s equity value to grow faster than the combined rate of our assets. Accomplishing this goal requires us to manage our capital resources and the portfolio of our business interests at least as aggressively as the businesses themselves are managed.

Our management approach has three principal components. We actively seek acquisition or investment candidates that have attractive growth prospects and, preferrably, the potential to make our other assets more valuable. We seek opportunities to improve the value of our existing business interests with transactions that will create economies of scale, reduce risk, improve liquidity or increase management or shareholder focus. Ideally, we achieve two or more of these objectives. Finally, we enhance the returns to our equity with capital structure transactions, such as debt issuances and share repurchases. In the past several months, we have announced three very significant transactions that illustrate our approach to value creation and equity appreciation.

First, we agreed to purchase an 8 percent stake in News Corp. in exchange for $695 million in cash and our 50 percent interest in the Fox/Liberty regional sports networks. This transaction was attractive to us for four reasons. First, we purchased the News Corp. stock, which we felt was already undervalued, at a 20% percent discount to the trading price immediately following announcement of the transaction. Second, we believe we received fair value for our joint venture interest. Third, we converted an illiquid partnership interest into a liquid security that, if we desire, can be borrowed against or monetized. Fourth, because of the structure of the deal, we deferred taxes on the appreciation of our Fox Sports interest until we decide, if ever, to sell our newly acquired News Corp. stock in a taxable transaction.

In other words, this deal met all of our criteria for creating shareholder value: buy low, sell high in exchange for an undervalued, liquid security that can be used to raise additional capital in the future and defer taxes as long as possible.

In our second transaction, we entered into a seven-year ‘‘cashless collar’’ with respect to 15 million of our 114 million shares of Time Warner stock. In effect, we purchased a put option that gives us the right to require our counterparty to buy the 15 million Time Warner shares from us in seven years for $67.45 per share. We simultaneously sold a call option giving the counterparty the right to buy the same shares from us in seven years for $158.33 per share. The transaction was cashless because the cost of buying the put right was equal to the proceeds from selling the call right. By doing this, Liberty guaranteed that the assets involved would have at least $1 billion of value in the future, regardless of potential shifts in the stock market.

Our purpose in this transaction was to enable us to increase our debt. Because most of our businesses do not return cash to us, we are somewhat constrained in our ability to service debt. However, we recognize that using borrowed money to make investments or acquisitions is an effective means of increasing the returns on our equity. When planning to increase our debt level, we take steps — such as entering into the ‘‘cashless collar’’ — to ensure that we have the means available to repay the debt.

The third transaction was our agreement to contribute our interactive television and Internet content assets into TCI Music, a public company of which we currently own 86 percent. Upon completion of this transaction, we will change TCI Music’s name to Liberty Digital and increase our ownership to approximately 94 percent.

This transaction fulfills several objectives. It will allow us to place these assets into a single public entity, thereby improving their visibility to investors. It will allow us to form an entrepreneurial management team that is focused exclusively on developing businesses and opportunities within the field of interactive TV and Internet content. Finally, it will enable us to create a public stock that will trade in relation to the stocks of other Internet companies, giving us a viable currency for making acquisitions of businesses in this arena. The market has responded quite well to this proposed transaction.

The Future

Our sole objective has always been to maximize the value of Liberty’s stock. We pursue this goal with diligence, focus, energy and creativity. Liberty is managed by shareholders for the benefit of shareholders. Every corporate employee owns stock and has a direct stake in the success of our efforts. Every action we take in the future will be consistent with that goal.

Our strategy for this is straightforward. It starts with the robust growth potential of our diverse collection of industry-leading, entrepreneurially managed businesses. We leverage this growth potential with acquisitions and various forms of portfolio and capital structure management.

For the first time in our history, Liberty has substantial cash resources. We intend to be patient, selective and opportunistic in the use of this cash. Our industry dynamics change very rapidly and we need to be able to take advantage of any opportunities that arise out of these changes.

Acquisition candidates must meet certain core criteria. They must have the potential to be market leaders with predictable, growing cash flow and a tradition of aggressive management. They must be businesses that will benefit in some way from our ownership or that have the potential to profit from an important consumer or technological trend. Most importantly, we must be able to acquire these businesses on terms that will result in above-average after-tax returns to our own equity. We generally seek to be the largest shareholder with at least a 25% stake and substantial influence over management and strategic direction.

Portfolio management will be designed to accomplish at least one of four broad objectives: creating scale economies by combining entities; increasing market awareness or visibility of certain assets; reducing the risk profile of a business by combining it with a larger, more diverse entity; or creating additional financial resources by converting an illiquid asset into a publicly traded security.

Capital structure management will be directed at taking advantage of the inherent value of our existing assets to finance suitable acquisitions or, under the right circumstances, stock repurchases. This will likely mean increasing our debt. We will seek to take advantage of historically low, long-term interest rates, but we will be conservative in how the debt is structured.

We are confident that our strategy can be an effective one. Our stock price increased by more than 90 percent in both 1997 and 1998, compared with the S&P 500 which increased 31% and 27% in the same periods. While this confirms the effectiveness of our management methods, we are not content to focus on our past successes. Rather, we use them to raise our expectations for the future.

One of Liberty’s hallmarks since its inception has been a very small corporate staff. In March of 1998, we surpassed $1 billion of market value per employee. Although our corporate staff has recently increased to 33 employees, our market value per employee has grown to approximately $1.4 billion.

Any discussion of Liberty’s past, present or future would be incomplete without mentioning the instrumental role played by our Chairman. John Malone is the chief architect and visionary of our Company. His fertile imagination, combined with his business acumen and his dedication to creating shareholder wealth are primary factors in our success.

On behalf of John and the entire Liberty corporate staff, I would like to thank you, our fellow shareholders, for your support. No company can make promises about its success in the future. But I can assure you that we will continue to concentrate the full measure of our efforts and our energy on increasing the value of our Company now and in the next millennium.

 

Very truly yours,

Robert R. Bennett

Robert R. Bennett
President & Chief Executive Officer
May 20, 1999

 

Stock Performance

On March 9, 1999, Tele-Communications, Inc. completed its merger with AT&T. Prior to the merger, Liberty Media Group Series A and Series B Common Stock were tracking stocks of TCI and traded on the Nasdaq Stock Market under the symbols LBTYA and LBTYB. Also on March 9, 1999, TCI Ventures Group was combined with Liberty Media Group. Upon completion of the AT&T merger and the Liberty/Ventures combination, each share of TCI Liberty Media Group Series A and Series B Common Stock was exchanged on a one-for-one basis for shares of new Liberty Media Group Class A and Class B Common Stock which are tracking stocks of AT&T. Each share of TCI Ventures Group Series A and Series B Common Stock was exchanged for 0.52 of a share of the new Liberty Media Group Class A and Class B Common Stock. The new Liberty Media Group Stock trades on the New York Stock Exchange under the symbols LMG.A and LMG.B.

The following graphs illustrate the performance of the Liberty Media Group Class A Common Stock since it was initially issued by TCI in August of 1995, and a comparison of the performance of the Liberty Media Group Class A Common Stock with the performance of the S&P 500.

Stock Price History

Appreciation Compared to S&P 500

 

Company Profile

Liberty Media holds interests in a broad range of video programming, communications, technology and Internet businesses in the United States, Europe, South America and Asia. Liberty Media’s principal assets include interests in Encore Media Group, Discovery Communications, Inc., Time Warner Inc., QVC Inc., USA Networks, Inc., Telewest Communications plc, TV Guide, Inc., General Instrument Corporation, Sprint PCS Group and The News Corporation Limited (assuming completion of the proposed transaction to exchange Liberty’s interest in Fox/Liberty Sports for an interest in News Corp.). Liberty Media Group also has interests in certain other domestic and international programming networks and businesses included in the table below.

The following table sets forth Liberty’s assets that are held directly and indirectly through partnerships, joint ventures, common stock investments and instruments convertible into common stock. Ownership percentages in the table are approximate and, where applicable, assume conversion to common stock by Liberty and, to the extent known by Liberty, other holders. In some cases, Liberty’s interest may be subject to buy/sell procedures, repurchase rights or, under certain circumstances, dilution.

 

CABLE, SATELLITE & BROADCAST TELEVISION NETWORKS

ENTITY

SUBSCRIBERS AT

3/31/99

(000’s)

YEAR

LAUNCHED

ATTRIBUTED

OWNERSHIP AT

5/20/99

       
       

BET Holdings II, Inc.

 

 

35%

BET Cable Network

56,700  

1980

 

BET Action Pay-Per-View

8,700(1)

1990

 

BET on Jazz

4,500  

1996

 
       

Canales ñ

5(2)

1998

100%

       

Court TV

32,677  

1991

50%

       

Discovery Communications, Inc.

 

 

49%

Discovery Channel

76,020  

1985

 

The Learning Channel

68,626  

1980

 

Animal Planet

47,948  

1996

 

Discovery People

10,000  

1997

 

Travel Channel

28,650  

1987

 

Discovery Digital Services

3,818(2)

   

Discovery Civilization

 

1996

 

Discovery Health

 

1998

 

Discovery Home & Leisure

 

1996

 

Discovery Kids

 

1996

 

Discovery Science

 

1996

 

Discovery Wings

 

1998

 

Discovery en Español

 

1998

 

Animal Planet Asia

411  

1998

25%

Animal Planet Europe

7,673  

1998

 

Animal Planet Latin America

4,349  

1998

25%

Discovery Asia

32,067  

1994

 

Discovery India

9,500  

1996

 

CABLE, SATELLITE & BROADCAST TELEVISION NETWORKS (Cont.)

ENTITY

SUBSCRIBERS AT

3/31/99

(000’s)

YEAR

LAUNCHED

ATTRIBUTED

OWNERSHIP AT

5/20/99

       

Discovery Communications, Inc. (cont.)  

     

Discovery Japan(3)  

935  

1996

 

Discovery Europe  

17,388  

1989

 

Discovery Turkey  

600  

1997

 

Discovery Germany  

341  

1996

25%

Discovery Italy/Africa  

849  

1996

 

Discovery Latin America  

10,889  

1996

 

Discovery Latin America Kids Network

7,232  

1996

 

People & Arts (Latin America)  

8,015  

1995

25%

Discovery Channel Online  

Online  

1995

 

 

     

Encore Media Group  

 

 

100%

Encore  

13,179  

1991

 

MOVIEplex  

7,397  

1995

 

Thematic Multiplex (aggregate units)  

19,826(2)

1994

 

Love Stories  

     

Westerns  

     

Mystery  

     

Action  

     

True Stories  

     

WAM! America’s Kidz Network  

     

STARZ!  

9,160  

1994

 

STARZ! Multiplex (aggregate units)  

5,310(2)

   

STARZ! Theater  

 

1996

 

BET Movies/STARZ!  

 

1997

88%

STARZ! Family  

 

1999

 

STARZ! cinema  

 

1999

 

 

     

E! Entertainment Television  

54,702  

1990

10%

Style  

3,036  

1998

 

 

     

Flextech p.l.c. (UK)  

 

 

37%

(LN(4) :FLXT)  

     

Bravo  

4,822  

1985

37%

Challenge TV  

5,113  

1993

37%

HSN Direct  

N/A  

1994

42%

KinderNet  

5,751  

1988

12%

Living  

5,733  

1993

37%

SMG  

N/A  

1957

7%

Trouble  

4,807  

1984

37%

TV Travel Shop  

4,199  

1998

37%

UK Arena (UKTV)  

1,733  

1997

18%

UK Gold (UKTV)  

5,992  

1992

18%

UK Gold Classics (UKTV)  

439  

1999

18%

UK Horizons (UKTV)  

4,193  

1997

18%

UK Style (UKTV)  

1,788  

1997

18%

UK Play (UKTV)  

968  

1998

18%

 

     

Fox Kids Worldwide, Inc.  

 

 

(5)

 

     

International Channel  

7,416  

1990

90%

CABLE, SATELLITE & BROADCAST TELEVISION NETWORKS (Cont.)

ENTITY

SUBSCRIBERS AT

3/31/99

(000’s)

YEAR

LAUNCHED

ATTRIBUTED

OWNERSHIP AT

5/20/99

       

Jupiter Programming Co., Ltd. (Japan)

   

50%

Cable Soft Network

2,136

1989

50%

CNBC Asia/Business News Japan

N/A

1997

10%

Golf Network

1,511

1996

35%

Discovery Japan

935

1996

49%

J-Sports

382

1998

67%

The Shop Channel

2,900

1996

41%

       

MacNeil/Lehrer Productions

N/A

N/A

67%

       

MultiTh matiques, S.A.

   

30%

Canal Jimmy (France)

2,079

1991

 

Canal Jimmy (Italy)

419

1997

 

Cin Cin mas (France)

663

1991

 

Cin Cin mas (Italy)

157

1997

 

Cin Classics (France)

598

1991

 

Cin Classics (Spain)

152

1995

15%

Cin Classics (Italy)

157

1997

 

Forum Plan te (France)

1,155

1997

 

Plan te (France)

2,770

1988

 

Plan te (Poland)

1,623

1996

 

Plan te (Germany)

341

1997

 

Plan te (Italy)

419

1997

 

Seasons (France)

97

1996

 

Seasons (Spain)

26

1997

 

Seasons (Germany)

9

1997

 

Seasons (Italy)

32

1997

 
       

The News Corporation Limited(6)

   

8%(6)

(NYSE:NWS.A; ASX(4) :NCPDP)

     
       

Odyssey

22,156

1988

33%

       

Pramer S.C.A. (Argentina)

   

100%

America Sports

2,374

1990

 

BIG

2,366

1992

 

Canal a

1,578

1996

 

Cineplatea

2,051

1997

 

CV SAT

3,942

1988

 

IDEAS

790

1991

 

Magic Kids

3,875

1995

 

P&E

790

1996

 
       

The Premium Movie Partnership

751

1995

20%

(Australia)

     
       

QVC Inc.

   

43%

QVC Network

65,386

1986

 

QVC-The Shopping Channel (UK)

7,350

1993

 

QVC-Germany

14,672

1996

 

iQVC

Online

1995

 

CABLE, SATELLITE & BROADCAST TELEVISION NETWORKS (Cont.)

ENTITY

SUBSCRIBERS AT

3/31/99

(000’s)

YEAR

LAUNCHED

ATTRIBUTED

OWNERSHIP AT

5/20/99

       

     

     

     

Telemundo Network

(7)  

 

50%

Telemundo Station Group

(8)  

 

25%

       
       

Torneos y Competencias, S.A.

N/A  

N/A

40%

(Argentina)

     
       
       

Time Warner Inc. (NYSE: TWX)(9)

 

 

9%

       
       

TV Guide, Inc.

 

 

44%

(Nasdaq: TVGIA)

     

TV Guide Channel

49,964  

1988

 

TV Guide Interactive

(2)  

1998

 

TV Guide Sneak Prevue

34,278  

1991

32%

UVTV

59,632(10)

N/A

 

Superstar

1,103  

N/A

 

TV Guide Magazine

11,800(11)

N/A

 

TV Guide Online

Online  

   

The Television Games Network

N/A  

1999

 
       
       

USA Networks, Inc. (Nasdaq: USAI)

 

 

21%(12)

HSN

71,061(15)

1985

 

America’s Store

9,342(13)

1986

 

ISN

Online  

1995

 

HSN en Español

2,700  

1998

11%

HOT (Germany)

19,443  

1996

9%

Shop Channel (Japan)

2,900  

1996

(3)

SciFi Channel

54,449  

1992

 

USA Network

75,317  

1980

 

USA Broadcasting

(14)  

1986

 

TicketMaster

N/A  

   

Studios USA

N/A  

   

TicketMaster City Search

Online  

1998

14%

(Nasdaq: TMCS)

     

INTERNET/INTERACTIVE TELEVISION SERVICES

ENTITY

 

DESCRIPTION

ATTRIBUTED

OWNERSHIP

AT 5/20/99  

 

   

Liberty Digital, Inc.

   

 

   

TCI Music, Inc. (Nasdaq: TUNE/TUNEP)

 

94%(15)

 

   

DMX

Programs, markets, and distributes the premium

Digital audio service, Digital Music Express  

 

THE BOX

Interactive music video television networks

 

THE BOX SET

   

THE BOX—International

   

 

   

SonicNet

Internet music network, consisting of music

 

Addicted to Noise 

Web sites

 

Streamland  

   

 

   

AT&T Access Agreement

Rights to provide interactive networks to of

AT&T cable systems

100%

 

   

Academic Systems Corporation

Provider of higher education multimedia

instruction manuals

5%

 

   

ACTV, Inc.

(Nasdaq: IATV)

Producer of tools for interactive programming

For television and internet platforms

12%(16)

 

   

Digital Health Group

Health and wellness content development

100%

 

   

drugstore.com, Inc.

Online pharmacy and sundries

2%

 

   

HomeGrocer.com, Inc.

Online grocery store

2%

 

   

iBeam Broadcasting Corporation

Satellite delivery of streaming media from

programmers to Internet Service Providers

7%

   

Interactive Pictures Corporation

Interactive photographic technology for the

Internet

4%

 

   

iVillage, Inc.

(Nasdaq:IVIL)

Internet and on-line provider of branded communications and information services for adult women

3%

 

   

KPCB Java Fund, L.P.

Investor in Java application development

5%

 

   

The Lightspan Partnership, Inc.

Developer of educational programming

8%

 

   

priceline.com Incorporated

(Nasdaq:PCLN)

E-commerce service allowing consumers to

make offers on products and services

2%

 

   

Sportsline USA, Inc.

(Nasdaq: SPLN)

Internet provider of branded interactive sports

information, programming and merchandise

3%

 

   

Total Entertainment Network, Inc.

Online game service targeting family Internet

game players

19%

CABLE, TELEPHONY & SATELLITE

 

ENTITY

HOMES IN

SERVICE AREA

3/31/99(17)

(000)

HOMES

PASSED

3/31/99(18)

(000)

BASIC

SUBS

3/31/99(19)

(000)

ATTRIBUTED

OWNERSHIP

AT 5/20/99  

         

Bresnan International Partners

     

100%

(Chile) L.P.

       
         

Metrópolis-Intercom, S.A.

1,600

1,045

278

30%

         
         

Cablevisión S.A.

4,000

3,350

1,463

28%

(Argentina)

       
         
         

Jupiter Telecommunications Co., Ltd.

2,786

1,655

228

40%

(Japan)

       
         
         

Princes Holdings Limited (Ireland)

490

379

153

50%

         
         

Sky Latin America(20)

   

697

10%

         
         

Sprint PCS Group

     

24%(21)

(NYSE: PCS)

       
         
         

TCI Cablevisión of Puerto Rico, Inc.

392

264

96

100%

         
         

Telewest Communications plc (UK)

6,074

4,410

1,075

22%

(LN(4) : TWT) (Nasdaq: TWSTY)

       

 

TECHNOLOGY & MANUFACTURING

ENTITY

 

DESCRIPTION

ATTRIBUTED

OWNERSHIP

AT 5/20/99  

     

Antec Corporation

(Nasdaq: ANTC)

Manufacturer of products for hybrid

fiber/coaxial broadband networks

19%

     

General Instrument Corporation

(NYSE: GIC)

World-wide supplier of systems and equipment

for high performance networks delivering

video, voice and data/Internet services

21%(22)

PUBLIC STOCK INVESTMENTS

COMPANY

CLASS

SHARES AT 5/20/99  

     

ACTV, Inc.

Common

5,500,000(16)  

(Nasdaq: IATV)

Warrants

7,500,000(23)  

     

Antec Corporation

Common

6,827,000  

(Nasdaq: ANTC)

Options

854,000(25)  

     

The Associated Group, Inc.

Class A Common

45,000  

(Nasdaq: AGRPA/AGRPB)

Class B Common

45,000  

     

Cablevision Systems Corporation

Common

1,040,000  

(AMEX: CVC)

   
     

Flextech p.l.c.

Ordinary

57,889,032  

(LN: FLXT)

   
     

General Instrument Corporation

Common

31,356,000  

(NYSE: GIC)

Warrants

21,356,000(22)  

     
     

iVillage, Inc.

Common

753,864  

(Nasdaq:IVIL)

   
     

The News Corporation Limited

Non-Voting ADRs

79,886,111(6)  

(NYSE: NWS.A)(ASX: NCPDP)

   
     

priceline.com Incorporated

Common

3,125,000  

     

Sportsline USA, Inc.

Common

533,334  

(Nasdaq: SPLN)

   
     

Sprint PCS Group

Series 2 Common

98,563,924(20)  

(NYSE: PCS)

Warrants

6,291,315(26)  

   

108,865,890(24)  

     
     

TCI Music, Inc.

A Common

11,704,471  

(Nasdaq: TUNE/TUNEP)

B Common

191,255,360(15)  

   

203,212,556(15)(24)

     
     

Telewest Communications plc

ADRs

46,343,896(28)  

(Nasdaq: TWSTY)(LN: TWT)

   
     
     

Time Warner Inc.

Series LMCN-V Common

114,123,884(24)  

(NYSE: TWX)

   
     

TV Guide, Inc.

A Common

29,036,520  

(Nasdaq: TVGIA)

B Common

37,496,588  

     
     

USA Networks, Inc.

Common

43,517,981(12)  

(Nasdaq: USAI)

B Common

25,599,998  

   

69,117,979(24)  

(1) Number of subscribers to whom service is available.

(2) Digital services.

(3) Liberty’s attributed ownership interest in this entity is listed under Jupiter Programming Co., Ltd. of which Liberty Media International, Inc. owns 50%.

(4) LN – London Stock Exchange; ASX – Australian Stock Exchange.

(5) Liberty’s interest consists of shares of 30-year 9% preferred stock which have a stated aggregate value of $345 million and are not convertible into common stock.

(6) Assumes completion of proposed transactions in which (i) News Corp. will acquire Liberty’s 50% interest in Fox/Liberty Sports in exchange for approximately 51.8 million shares of non-voting News Corp. American Depository Receipts (‘‘ADRs’’); and (ii) Liberty has agreed to purchase 28.1 million additional non-voting ADRs from News Corp. for $695 million. Both transactions are expected to close by the end of June upon fulfillment of certain customary conditions, including regulatory and shareholder approval. News Corp. has operations in the United States, Canada, the United Kingdom, Australia, Latin America and the Pacific Basin. These include U.S. cable networks, FX, FXM, Fox Family, Fox News and the Fox/Liberty regional and national sports networks. News Corp.’s businesses also include Fox Broadcasting Network, 20th Century Fox, satellite platforms B Sky B in the United Kingdom and J Sky B in Japan, and the publication of newspapers, magazines and books.

(7) Telemundo Network is a 24-hour broadcast network serving 61 markets in the United States, including the 37 largest Hispanic markets.

(8) Telemundo Station Group owns and operates eight full power UHF broadcast stations and 15 low power television stations serving the some of largest Hispanic markets in the United States and Puerto Rico.

(9) Time Warner has interests in filmed entertainment; television production; television broadcasting; recorded music and music publishing; book and magazine publishing; cable television systems reaching over 12 million subscribers; and cable television programming which includes the following networks; CNN, Cartoon Network, Headline News, TNT, Turner Classic Movies, TBS Superstation, CNNfn, CNN/SI, CNN International, TNT, Latin America, Cartoon Network Latin America, TNT & Cartoon Network Europe, TNT and Cartoon Network Asia, HBO, Cinemax, Comedy Central, HBO Ole, HBO Asia, TVKO and WB Television Network.

(10) Aggregate number of units. UVTV uplinks three superstations (WGN, WPIX, KTLA) and six Denver broadcast stations. One household subscribing to six services would be counted as six ‘‘units.’’

(11) Magazine circulation – includes subscription and newsstand distribution.

(12) Liberty owns direct and indirect interests in various USAI and Home Shopping Network, Inc. securities which may be converted or exchanged for USAI common stock. Assuming the conversion or exchange of such securities, the conversion or exchange of certain securities owned by Universal Studios, Inc. and certain of its affiliates for USAI common stock Liberty would own approximately 21% of USAI.

(13) Includes broadcast households and cable subscribers.

(14) A group of UHF and low power television stations which operate in 12 of the country’s top 22 broadcast markets including in 7 of the top 10 markets which reach approximately 31% of TV households in the U.S.

(15) Liberty has proposed a transaction between Liberty and TCI Music whereby Liberty would contribute substantially all of its directly owned internet and interactive television assets to TCI Music in exchange for approximately 128.8 million newly issued shares of TCI Music Series B common stock, increasing Liberty’s ownership of TCI Music from 86% to 94%. Upon completion of the transaction, TCI Music would change its name to Liberty Digital, Inc. The assets listed in this section assume completion of the transaction which is subject to approval of the TCI Music shareholders and receipt of an opinion form TCI Music’s financial advisor to the effect that the transaction is fair to the TCI Music stockholders (other than Liberty and its affiliates) from a financial point of view.

(16) Liberty has agreed to exercise existing warrants to purchase 2,500,000 shares of ACTV common stock and to purchase 500,000 shares of common stock, which transactions are subject to regulatory approval. Liberty will also receive warrants to purchase an additional 7,500,000 shares of common stock. Assuming completion of the current warrant exercise and the purchase of the additional shares, Liberty would own approximately 12% of ACTV. Exercise of the additional warrants would bring Liberty’s ownership to approximately 25%.

(17) Homes in Service Area: The number of homes to which the relevant operating company is permitted by law to offer its services. Not all service areas are granted exclusively to the respective operating company.

(18) Homes Passed: Homes that can be connected to a cable distribution system without further extension of the distribution network.

(19) Basic Subscribers: A subscriber to a cable or other television distribution system who receives the basic television service and who is usually charged a flat monthly rate for a specific number of channels.

(20) Sky Latin America (‘‘Sky’’) is a satellite-delivered television platform currently serving Mexico, Brazil, Chile and Columbia.

(21) Less than 1% of voting power. Liberty holds securities of Sprint which are exercisable for or convertible into Sprint PCS Stock.

(22) In addition to its common stock holdings in GI, Liberty owns warrants to purchase approximately 21.4 million additional shares of GI common stock at $14.25 per share, subject to certain vesting requirements. Warrants to purchase 4.9 million shares are currently vested. The 21% ownership interest assumes exercise of all vested warrants.

(23) Options exercisable at prices ranging from $8 to $15 over a five-year period.

(24) Common equivalent shares.

(25) Options with an average exercise price of $6.86.

(26) Warrants exercisable at $24.02; expire 11/13/03.

(27) $123,314,991 face value convertible at $30.75 into shares of Series 2 PCS Stock.

(28) Telewest ADRs, represent 1/10th of the ordinary shares which trade on the London Stock Exchange.

Financial Information

On March 9, 1999, AT&T acquired Tele-Communications, Inc. by merger. In conjunction with the completion of the AT&T merger, the TCI Ventures Group and the Liberty Media Group of TCI were combined. Immediately prior to the closing of the AT&T Merger, in exchange for $5.5 billion in cash TCI Ventures transferred to the TCI Group its interest in At Home Corporation, National Digital Television Center, Inc., Western Tele-communications, Inc. and approximately 47 million shares of AT&T common stock.

The results of the combined Liberty/Ventures Group for the year ended 1998 are included in the AT&T Form 8-K which was filed with the Securities and Exchange Commission on March 22, 1999. The results of the Liberty Media Group for the first quarter of 1999 are included in the AT&T Form 10-Q which was filed with the Securities and Exchange Commission on May 17, 1999. These documents may be obtained without charge by contacting Liberty’s Transfer Agent, EquiServe, whose address is listed on the back cover of this report, or through Liberty’s Web site at www.libertymedia.com. Liberty’s press releases which provide additional information regarding Liberty’s year end 1998 and first quarter 1999 results can also be obtained by accessing Liberty’s Web site.

Corporate Data

Board of Directors

John C. Malone
Chairman of the Board
Liberty Media Corporation

Robert R. Bennett
President and
Chief Executive Officer
Liberty Media Corporation

Paul A. Gould
Managing Director
Allen & Company

Leo J. Hindery, Jr.
President and
Chief Executive Officer
AT&T Broadband and
Internet Services

Gary S. Howard
Executive Vice President and Chief Operating Officer
Liberty Media Corporation

Jerome H. Kern
Chairman
Linkshare Corporation

John C. Petrillo
Executive Vice President
AT&T Corp.

Larry E. Romrell
Consultant

Daniel E. Somers
Senior Executive Vice President and Chief Financial Officer
AT&T Corp.

Officers

John C. Malone
Chairman of the Board

Robert R. Bennett
President and
Chief Executive Officer

Gary S. Howard
Executive Vice President and Chief Operating Officer

David B. Koff
Senior Vice President

Charles Y. Tanabe
Senior Vice President
and General Counsel

Peter N. Zolintakis
Senior Vice President

David Beddow
Vice President

Gary B. Blaylock
Vice President

Vivian J. Carr
Vice President and
Secretary

Kathryn S. Douglass
Vice President and
Controller

David J.A. Flowers
Vice President and
Treasurer

David A. Jensen
Vice President

Corporate Headquarters

9197 South Peoria Street
Englewood, CO 80112
(720) 875-5400

Stock Information

Liberty Media Group Class A and Class B Common Stock
(ticker symbols LMG.A and LMG.B) are listed on the New York Stock Exchange.

CUSIP Numbers
LMG.A—001957 20 8
LMG.B—001957 30 7

Transfer Agent
Liberty Shareholder Services
c/o Equiserve
P.O. Box 8035
Phone: 781-575-4724
Fax: 781-828-8813

Investor Relations

Vivian Carr
720-875-5406
vivian@libertymedia.com

Julie Gleichmann
720-875-5420
julie@libertymedia.com

Liberty on the Internet
Visit Liberty’s Web site at
www.libertymedia.com

Financial Statements

Liberty Media Group financial statements are filed with the Securities and Exchange Commission by AT&T Corp. Copies of these financial statements can be obtained by contacting the Transfer Agent or through Liberty’s Web site.

 

Liberty Media Corporation
9197 South Peoria Street
Englewood, CO 80112
720.875.5400
www.libertymedia.com