LIBERTY MEDIA CORPORATION
(Exact name of Registrant as specified in its charter)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes o No ý

The number of outstanding shares of Liberty Media Corporation's common stock as of April 30, 2009 was:

Series A Liberty Capital common stock 89,874,371 shares;
Series B Liberty Capital common stock 6,024,724 shares;
Series A Liberty Interactive common stock 566,728,452 shares;
Series B Liberty Interactive common stock 29,398,683 shares;
Series A Liberty Entertainment common stock 494,616,028 shares; and
Series B Liberty Entertainment common stock 23,697,987 shares.

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

			March 31, 2009

			amounts in millions
Assets
Current assets:
	Cash and cash equivalents		$	4,658		3,135
	Trade and other receivables, net			1,329		1,563
	Inventory, net			967		1,032
	Program rights			476		497
	Financial instruments (note 8)			1,581		1,157
	Other current assets			163		235

		Total current assets		9,174		7,619

Investments in available-for-sale securities and other cost investments, including $387 million and $392 million pledged as collateral for share borrowing arrangements (note 6)				2,815		2,859
Long-term financial instruments (note 8)				824		1,328
Investments in affiliates, accounted for using the equity method (note 7)				14,599		14,490
Property and equipment, at cost				1,997		2,027
Accumulated depreciation				(724	)	(696	)

				1,273		1,331

Intangible assets not subject to amortization (note 9):
	Goodwill			6,518		6,550
	Trademarks			2,510		2,511
	Other			158		158

				9,186		9,219

Intangible assets subject to amortization, net (note 9)				3,353		3,489
Other assets, at cost, net of accumulated amortization				1,683		1,568

		Total assets	$	42,907		41,903

			March 31, 2009

			amounts in millions
Liabilities and Equity
Current liabilities:
	Accounts payable		$	433		550
	Accrued interest			68		103
	Other accrued liabilities			728		999
	Financial instruments (note 8)			551		553
	Current portion of debt (note 10)			2,455		868
	Accrued stock compensation			212		196
	Current deferred income tax liabilities			888		781
	Other current liabilities			114		98

		Total current liabilities		5,449		4,148

Long-term debt, including $1,921 million and $1,691 million measured at fair value (note 10)				11,634		11,359
Long-term financial instruments (note 8)				187		189
Deferred income tax liabilities				4,538		4,900
Other liabilities				1,640		1,550

		Total liabilities		23,448		22,146

Equity
	Stockholders' equity (note 11):
		Preferred stock, $.01 par value. Authorized 50,000,000 shares; no shares issued		—		—
		Series A Liberty Capital common stock, $.01 par value. Authorized 2,000,000,000 shares; issued and outstanding 89,874,323 shares at March 31, 2009 and 90,042,840 shares at December 31, 2008		1		1
		Series B Liberty Capital common stock, $.01 par value. Authorized 75,000,000 shares; issued and outstanding 6,024,724 shares at March 31, 2009 and 6,024,724 shares at December 31, 2008		—		—
		Series A Liberty Entertainment common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 494,597,535 shares at March 31, 2009 and 493,256,228 shares at December 31, 2008		5		5
		Series B Liberty Entertainment common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 23,705,487 shares at March 31, 2009 and 23,706,209 shares at December 31, 2008		—		—
		Series A Liberty Interactive common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 566,724,594 shares at March 31, 2009 and 564,385,343 shares at December 31, 2008		6		6
		Series B Liberty Interactive common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 29,402,423 shares at March 31, 2009 and 29,441,916 shares at December 31, 2008		—		—
		Additional paid-in capital		25,066		25,132
		Accumulated other comprehensive earnings (loss), net of taxes		(3	)	70
		Accumulated deficit		(5,748	)	(5,612	)

		Total stockholders' equity		19,327		19,602
	Noncontrolling interests in equity of subsidiaries			132		155

		Total equity		19,459		19,757

Commitments and contingencies (note 13)
		Total liabilities and equity	$	42,907		41,903

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements Of Operations

(unaudited)

			Three months ended March 31,

			2009			2008
			amounts in millions, except per share amounts
Revenue:
	Net retail sales		$	1,831			1,950
	Communications and programming services			494			401

				2,325			2,351

Operating costs and expenses:
	Cost of sales			1,183			1,238
	Operating			456			441
	Selling, general and administrative, including stock-based compensation (note 3)			273			265
	Depreciation and amortization			178			177

				2,090			2,121

		Operating income		235			230
Other income (expense):
	Interest expense			(154	)		(166	)
	Dividend and interest income			31			59
	Share of earnings (losses) of affiliates, net (note 7)			(66	)		45
	Realized and unrealized losses on financial instruments, net (note 8)			(244	)		(285	)
	Gains (losses) on dispositions, net (note 7)			(2	)		3,682
	Other, net			(47	)		(2	)

				(482	)		3,333

		Earnings (loss) before income taxes		(247	)		3,563
Income tax benefit				120			1,906

		Net earnings (loss)		(127	)		5,469
Less net earnings attributable to the noncontrolling interests				9			12

Net earnings (loss) attributable to Liberty Media Corporation shareholders			$	(136	)		5,457

Net earnings (loss) attributable to Liberty Media Corporation shareholders:
	Liberty Capital common stock		$	(160	)		(105	)
	Liberty Entertainment common stock			81			35
	Liberty Interactive common stock			(57	)		125
	Old Liberty Capital common stock			—			5,402

			$	(136	)		5,457

		Three months ended March 31,

		2009			2008
		amounts in millions, except per share amounts
Basic net earnings (loss) attributable to Liberty Media Corporation shareholders per common share (note 4):
	Series A and Series B Liberty Capital common stock	$	(1.67	)		(.81	)
	Series A and Series B Liberty Entertainment common stock	$	.16			.07
	Series A and Series B Liberty Interactive common stock	$	(.10	)		.21
	Old Series A and Series B Liberty Capital common stock	$	—			41.88
Diluted net earnings (loss) attributable to Liberty Media Corporation shareholders per common share (note 4):
	Series A and Series B Liberty Capital common stock	$	(1.67	)		(.81	)
	Series A and Series B Liberty Entertainment common stock	$	.16			.07
	Series A and Series B Liberty Interactive common stock	$	(.10	)		.21
	Old Series A and Series B Liberty Capital common stock	$	—			41.55

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements Of Comprehensive Earnings (Loss)

(unaudited)

			Three months ended March 31,

			2009			2008
			amounts in millions
Net earnings (loss)			$	(127	)		5,469

Other comprehensive earnings (loss), net of taxes:
		Foreign currency translation adjustments		(87	)		94
		Unrealized holding losses arising during the period		(2	)		(644	)
		Recognition of previously unrealized losses (gains) on available-for-sale securities, net		1			(2,273	)
		Share of other comprehensive earnings (loss) of equity affiliates		(15	)		(1	)
		Other		17			(48	)

		Other comprehensive loss		(86	)		(2,872	)

Comprehensive earnings (loss)				(213	)		2,597
	Less comprehensive earnings (loss) attributable to the noncontrolling interests			(4	)		24

	Comprehensive earnings (loss) attributable to Liberty Media Corporation shareholders		$	(209	)		2,573

Comprehensive earnings (loss) attributable to Liberty Media Corporation shareholders:
	Liberty Capital common stock		$	(157	)		(107	)
	Liberty Entertainment common stock			80			33
	Liberty Interactive common stock			(132	)		(169	)
	Old Liberty Capital common stock			—			2,816

			$	(209	)		2,573

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements Of Cash Flows

(unaudited)

						Three months ended March 31,

						2009			2008
						amounts in millions
Cash flows from operating activities:
	Net earnings (loss)					$	(127	)		5,469
	Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
		Depreciation and amortization					178			177
		Stock-based compensation					28			16
		Cash payments for stock-based compensation					—			(12	)
		Noncash interest expense					35			—
		Share of losses (earnings) of affiliates, net					66			(45	)
		Cash receipts from returns on equity investments					28			—
		Realized and unrealized losses on financial instruments, net					244			285
		Losses (gains) on disposition of assets, net					2			(3,682	)
		Deferred income tax benefit					(201	)		(2,103	)
		Other noncash charges, net					66			19
		Changes in operating assets and liabilities, net of the effects of acquisitions and dispositions:
				Current assets			226			74
				Payables and other current liabilities			(300	)		(174	)

					Net cash provided by operating activities		245			24

Cash flows from investing activities:
	Cash proceeds from dispositions						71			15
	Proceeds from settlement of financial instruments						61			12
	Cash received in exchange transactions						—			465
	Investments in and loans to cost and equity investees						(418	)		(387	)
	Capital expenditures						(39	)		(54	)
	Net sales of short term investments						35			67
	Net decrease in restricted cash						12			140
	Other investing activities, net						3			(19	)

			Net cash provided (used) by investing activities				(275	)		239

Cash flows from financing activities:
	Borrowings of debt						1,970			1,102
	Repayments of debt						(355	)		(498	)
	Repurchases of Liberty common stock						(3	)		(75	)
	Other financing activities, net						(22	)		(61	)

				Net cash provided by financing activities			1,590			468

Effect of foreign currency exchange rates on cash							(37	)		20

				Net increase in cash and cash equivalents			1,523			751
				Cash and cash equivalents at beginning of period			3,135			3,135

				Cash and cash equivalents at end of period		$	4,658			3,886

Available-for-sale security exchanged for consolidated subsidiaries, equity investment and cash						$	—			10,143

		Stockholders' Equity

				Common stock
								Liberty Entertainment				Liberty Interactive
				Liberty Capital															Accumulated other comprehensive earnings (loss)						Noncontrolling interest in equity of subsidiaries
		Preferred stock		Liberty Capital												Additional paid-in capital						Accumulated deficit						Total equity
		Preferred stock		Series A		Series B		Series A		Series B		Series A		Series B		Additional paid-in capital						Accumulated deficit						Total equity
		amounts in millions
Balance at January 1, 2009		$	—		1		—		5		—		6		—		25,132			70			(5,612	)		155			19,757
	Net earnings (loss)		—		—		—		—		—		—		—		—			—			(136	)		9			(127	)
	Other comprehensive loss		—		—		—		—		—		—		—		—			(73	)		—			(13	)		(86	)
	Stock compensation		—		—		—		—		—		—		—		9			—			—			—			9
	Series A Liberty Capital stock repurchases		—		—		—		—		—		—		—		(3	)		—			—			—			(3	)
	Distribution to noncontrolling interest		—		—		—		—		—		—		—		—			—			—			(18	)		(18	)
	Effect of accounting change by equity affiliate		—		—		—		—		—		—		—		(72	)		—			—			—			(72	)
	Other		—		—		—		—		—		—		—		—			—			—			(1	)		(1	)

Balance at March 31, 2009		$	—		1		—		5		—		6		—		25,066			(3	)		(5,748	)		132			19,459

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

The accompanying condensed consolidated financial statements include the accounts of Liberty Media Corporation and its controlled subsidiaries (collectively, "Liberty" or the "Company" unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation.

Liberty, through its ownership of interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce, media, communications and entertainment industries in North America, South America, Europe and Asia.

Effective January 1, 2009, Liberty adopted Statement of Financial Accounting Standards No. 160, "Noncontrolling Interests in Consolidated Financial Statements" ("Statement 160"). Statement 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary, commonly referred to as minority interest. Among other matters, Statement 160 requires (a) the noncontrolling interest be reported within equity in the balance sheet and (b) the amount of consolidated net income attributable to the parent and to the noncontrolling interest to be clearly presented in the statement of income. Statement 160 and EITF Topic 08-6 also require that SAB 51 Gains for subsidiaries be recorded in equity and SAB 51 Gains for equity affiliates be recorded in earnings. Liberty has applied the provisions of Statement 160 prospectively, except for the presentation and disclosure requirements, which have been applied retrospectively for all periods presented.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. The results of operations for any interim period are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Liberty's Annual Report on Form 10-K for the year ended December 31, 2008, as amended.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Liberty considers (i) fair value measurement, (ii) accounting for income taxes, (iii) assessments of other-than-temporary declines in fair value of its investments and (iv) estimates of retail-related adjustments and allowances to be its most significant estimates.

Liberty holds investments that are accounted for using the equity method. Liberty does not control the decision making process or business management practices of these affiliates. Accordingly, Liberty relies on management of these affiliates to provide it with accurate financial information prepared in accordance with GAAP that Liberty uses in the application of the equity method. In addition, Liberty relies on audit reports that are provided by the affiliates' independent auditors on the financial statements of such affiliates. The Company is not aware, however, of any errors in or possible

misstatements of the financial information provided by its equity affiliates that would have a material effect on Liberty's condensed consolidated financial statements.

Prior to March 3, 2008, Liberty had two tracking stocks—Liberty Interactive common stock and Liberty Capital common stock, which were intended to track and reflect the economic performance of the Interactive Group and the Capital Group, respectively. On March 3, 2008, Liberty completed a reclassification (the "Reclassification") of its Liberty Capital common stock (herein referred to as "Old Liberty Capital common stock") whereby each share of Old Series A Liberty Capital common stock was reclassified into four shares of Series A Liberty Entertainment common stock and one share of new Series A Liberty Capital common stock, and each share of Old Series B Liberty Capital common stock was reclassified into four shares of Series B Liberty Entertainment common stock and one share of new Series B Liberty Capital common stock. The Liberty Entertainment common stock is intended to track and reflect the economic performance of the Entertainment Group. The Reclassification did not change the businesses, assets and liabilities attributed to the Interactive Group.

Tracking stock is a type of common stock that the issuing company intends to reflect or "track" the economic performance of a particular business or "group," rather than the economic performance of the company as a whole. While the Interactive Group, the Entertainment Group and the Capital Group have separate collections of businesses, assets and liabilities attributed to them, no group is a separate legal entity and therefore cannot own assets, issue securities or enter into legally binding agreements. Holders of tracking stocks have no direct claim to the group's stock or assets and are not represented by separate boards of directors. Instead, holders of tracking stock are stockholders of the parent corporation, with a single board of directors and subject to all of the risks and liabilities of the parent corporation.

The term "Interactive Group" does not represent a separate legal entity, rather it represents those businesses, assets and liabilities which Liberty has attributed to that group. The assets and businesses Liberty has attributed to the Interactive Group are those engaged in video and on-line commerce, and include its interests in QVC, Inc. ("QVC"), Provide Commerce, Inc. ("Provide"), Backcountry.com, Inc. ("Backcountry"), Bodybuilding.com, LLC ("Bodybuilding"), BuySeasons, Inc. ("BuySeasons"), Expedia, Inc. ("Expedia"), HSN, Inc. ("HSN"), Interval Leisure Group, Inc. ("Interval"), Ticketmaster Entertainment, Inc. ("Ticketmaster"), Tree.com, Inc. ("Lending Tree") and IAC/InterActiveCorp ("IAC"). In addition, Liberty has attributed $2,253 million principal amount (as of March 31, 2009) of its public debt to the Interactive Group. The Interactive Group will also include such other businesses, assets and liabilities that Liberty's board of directors may in the future determine to attribute to the Interactive Group, including such other businesses and assets as Liberty may acquire for the Interactive Group.

Similarly, the term "Entertainment Group" does not represent a separate legal entity, rather it represents those businesses, assets and liabilities which Liberty has attributed to that group. The Entertainment Group focuses primarily on video programming, communications businesses and the direct-to-home satellite distribution business and includes Liberty's ownership interest in The DIRECTV Group, Inc. ("DIRECTV"), as well as an equity collar on 98.75 million of shares of DIRECTV common stock and $1,999 million of borrowings against the put value of such equity collar. Liberty has also attributed to the Entertainment Group its subsidiaries, Starz Entertainment, LLC ("Starz Entertainment"), FUN Technologies, Inc. ("FUN"), three regional sports television networks ("Liberty Sports Group") and PicksPal, Inc. and equity interests in Game Show Network, LLC ("GSN") and WildBlue Communications, Inc. In addition, Liberty has attributed $760 million of

corporate cash to the Entertainment Group. The Entertainment Group will also include such other businesses, assets and liabilities that Liberty's board of directors may in the future determine to attribute to the Entertainment Group, including such other businesses as Liberty may acquire for the Entertainment Group.

The term "Capital Group" also does not represent a separate legal entity, rather it represents all of Liberty's businesses, assets and liabilities other than those which have been attributed to the Interactive Group or the Entertainment Group. The assets and businesses attributed to the Capital Group include Liberty's subsidiaries: Starz Media, LLC ("Starz Media"), Atlanta National League Baseball Club, Inc. ("ANLBC"), Leisure Arts, Inc. ("Leisure Arts"), TruePosition, Inc. ("TruePosition") and WFRV and WJMN Television Station, Inc. ("WFRV TV Station"); and its interests in Time Warner Inc., Time Warner Cable Inc. and Sprint Nextel Corporation. In addition, Liberty has attributed $2,845 million of cash, including subsidiary cash and $6,451 million principal amount (as of March 31, 2009) of its exchangeable senior debentures and other parent debt to the Capital Group. The Capital Group will also include such other businesses, assets and liabilities that Liberty's board of directors may in the future determine to attribute to the Capital Group, including such other businesses and assets as Liberty may acquire for the Capital Group.

See Exhibit 99.1 to this Quarterly Report on Form 10-Q for unaudited attributed financial information for Liberty's tracking stock groups.

During the fourth quarter of 2008, the Board of Directors of Liberty approved a plan to redeem a portion of the outstanding shares of Liberty's Entertainment Group tracking stock for all of the outstanding shares of a newly formed subsidiary of Liberty, Liberty Entertainment, Inc. ("LEI"), (the "Redemption"). The Redemption and resulting separation of LEI from Liberty are referred to as the "Split Off."

If the Redemption is completed, Liberty will redeem 90% of the outstanding shares of each series of Liberty Entertainment common stock for 100% of the outstanding shares of the same series of LEI, with cash in lieu of fractional shares, in each case, as of a date to be determined by the board of Liberty (the "Redemption Date"). Immediately following the Redemption Date, the holders of Liberty Entertainment common stock will own 100% of the outstanding equity of LEI. At the time of the Split Off, LEI will hold Liberty's interests in DIRECTV (and related collars and debt), Liberty Sports Group and GSN and $30 million in cash. In addition, Liberty and LEI have entered into a revolving credit facility pursuant to which Liberty will provide LEI with up to $300 million principal amount of loans. The Split Off is conditioned on, among other matters, receipt of stockholder approval and receipt of a private letter ruling from the IRS and a tax opinion from tax counsel and is expected to occur in the second half of 2009. The Split Off will be accounted for at historical cost due to the fact that the LEI common stock is to be distributed pro rata to holders of Liberty Entertainment tracking stock.

On May 3, 2009, Liberty and LEI entered into an Agreement and Plan of Merger (the "Merger Agreement") with DIRECTV and other parties named therein, pursuant to which, after Liberty completes the Split Off, LEI and DIRECTV will combine under a new parent company (the "Merger Transaction"). The Merger Transaction is subject to certain closing conditions.

Subsequent to the Split Off, the Entertainment Group will be renamed the Starz Group and will be comprised principally of Starz Entertainment and cash.

The Company has granted to its directors, employees and employees of its subsidiaries options and stock appreciation rights ("SARs") to purchase shares of Liberty common stock (collectively, "Awards"). The Company accounts for stock-based compensation pursuant to Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" ("Statement 123R"). Statement 123R generally requires companies to measure the cost of employee services received in exchange for an Award of equity instruments (such as stock options and restricted stock) based on the grant-date fair value of the Award, and to recognize that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). Statement 123R also requires companies to measure the cost of employee services received in exchange for an Award of liability instruments (such as stock appreciation rights that will be settled in cash) based on the current fair value of the Award, and to remeasure the fair value of the Award at each reporting date.

Included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation (amounts in millions):

During the three months ended March 31, 2009, Liberty granted primarily to QVC employees 6.7 million options to purchase shares of Series A Liberty Interactive common stock. Such options had a weighted average grant-date fair value of $.85.

The Company has calculated the grant-date fair value for all of its equity classified awards and any subsequent remeasurement of its liability classified awards using the Black-Scholes Model. The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. The volatility used in the calculation for Awards is based on the historical volatility of Liberty's stocks and the implied volatility of publicly traded Liberty options. The Company uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options.

The following table presents the number and weighted average exercise price ("WAEP") of options and SARs to purchase Liberty common stock granted to certain officers, employees and directors of the Company.

The following table provides additional information about outstanding options to purchase Liberty common stock at March 31, 2009.

		WAEP of outstanding options		Weighted average remaining life	Aggregate intrinsic value (000's)			WAEP of exercisable options		Aggregate intrinsic value (000's)

Series A Capital	4,017	$	10.82	4.6 years	$	4,314	2,277	$	13.57	$	264
Series B Capital	1,408	$	15.20	1.9 years	$	—	1,408	$	15.20	$	—
Series A Interactive	37,141	$	14.33	5.1 years	$	—	16,655	$	19.87	$	—
Series B Interactive	7,491	$	23.41	2.2 years	$	—	7,491	$	23.41	$	—
Series A Entertainment	15,923	$	19.76	4.6 years	$	25,541	8,855	$	20.25	$	12,666
Series B Entertainment	5,993	$	21.57	2.2 years	$	652	5,993	$	21.57	$	652

As of March 31, 2009, the total unrecognized compensation cost related to unvested Liberty equity Awards was approximately $85 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 2 years.

Subsequent to March 31, 2009, Liberty completed an exchange offer pursuant to which eligible employees of QVC and BuySeasons were offered the opportunity to exchange all (but not less than all) of their outstanding stock options to purchase shares of Series A Liberty Interactive common stock ("LINTA") with an exercise price greater than $7.00 for new options to acquire shares of LINTA. Eligible option holders tendered an aggregate of 11,311,787 shares of LINTA. In exchange, Liberty granted the tendering option holders an aggregate of 2,828,022 options to purchase shares of LINTA with an exercise price of $3.41 per share and 2,828,022 options to purchase shares of LINTA with an exercise price of $6.00 per share.

Basic earnings (loss) per common share ("EPS") is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented.

Old Liberty Capital basic EPS for the period from January 1, 2008 to the Reclassification, was computed by dividing the net earnings attributable to the Capital Group by the weighted average outstanding shares of Old Liberty Capital common stock for the period (129 million). Fully diluted EPS for the two months in 2008 includes 1 million common stock equivalents.

Liberty Interactive basic EPS for the three months ended March 31, 2009 and 2008 was computed by dividing the net earnings attributable to the Interactive Group by the weighted average outstanding shares of Liberty Interactive common stock for the period (594 million and 596 million, respectively). Due to the relative insignificance of the dilutive securities, their inclusion does not impact the EPS amounts. Excluded from diluted EPS for the three months ended March 31, 2009 are approximately 45 million potential common shares because their inclusion would be anti-dilutive.

Liberty Entertainment basic EPS for the three months ended March 31, 2009 and for the period from the Reclassification to March 31, 2008 was computed by dividing the net earnings attributable to the Entertainment Group by the weighted average outstanding shares of Liberty Entertainment common stock for the period (517 million and 516 million). Due to the relative insignificance of the dilutive securities, their inclusion does not impact the EPS amounts. Excluded from diluted EPS for the three months ended March 31, 2009 are approximately 18 million potential common shares because their inclusion would be anti-dilutive.

Liberty Capital basic EPS for the three months ended March 31, 2009 and for the period from the Reclassification to March 31, 2008 was computed by dividing the net earnings attributable to the Capital Group by the weighted average outstanding shares of Liberty Capital common stock for the period (96 million and 129 million). Excluded from diluted EPS for the three months ended March 31, 2009 are approximately 5 million potential common shares because their inclusion would be anti-dilutive.

Liberty uses the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("Statement 157") to account for assets and liabilities that are required to be reported at fair value. Statement 157 defines fair value, prescribes a framework for measuring fair value under GAAP and expands disclosures about fair value measurements.

Statement 157 provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.

The Company uses the Black Scholes Model to estimate fair value for the majority of its Level 2 financial instrument assets and liabilities using observable inputs such as exchange-traded equity prices, risk-free interest rates, dividend yields and volatilities obtained from pricing services. For the Company's debt instruments reported at fair value, the Company gets quoted market prices from pricing services or from evidence of observable inputs, some of which may be obtained using third-party brokers. However, the Company does not believe such instruments are traded on "active markets," as

defined in Statement 157. Accordingly, the debt instruments are reported in the foregoing table as Level 2 fair value.

Statement 157 requires the incorporation of a credit risk valuation adjustment in the Company's fair value measurements to estimate the impact of both its own nonperformance risk and the nonperformance risk of its counterparties. The Company estimates credit risk associated with its and its counterparties nonperformance primarily by using observable credit default swap rates for terms similar to those of the remaining life of the instrument, adjusted for any master netting arrangements or other factors that provide an estimate of nonperformance risk. These are Level 3 inputs. However, as the credit risk valuation adjustments were not significant, the Company continues to report its equity collars, interest rate swaps and put options as Level 2.

All marketable equity and debt securities held by the Company are classified as available-for-sale ("AFS") and are carried at fair value generally based on quoted market prices. Liberty accounts for certain of its AFS securities pursuant to Statement of Financial Accounting Standards No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115" ("Statement 159"). Statement 159 permits entities to choose to measure many financial instruments, such as AFS securities, and certain other items at fair value and to recognize the changes in fair value of such instruments in the entity's statement of operations. Liberty has entered into economic hedges for many of its non-strategic AFS securities (although such instruments are not accounted for as fair value hedges by the Company). Changes in the fair value of these economic hedges are reflected in Liberty's statement of operations as unrealized gains (losses). In order to better match the changes in fair value of the subject AFS securities and the changes in fair value of the corresponding economic hedges in the Company's financial statements, Liberty has elected to apply the provisions of Statement 159 to those of its AFS securities ("Statement 159 Securities") which it considers to be non-strategic. Accordingly, changes in the fair value of Statement 159 Securities, as determined by quoted market prices, are reported in realized and unrealized gain (losses) on financial instruments in the accompanying condensed consolidated statements of operations. The total value of AFS securities for which the Company has elected the fair value option aggregated $2,083 million as of March 31, 2009.

Investments in AFS securities and other cost investments are summarized as follows:

			March 31, 2009

			amounts in millions
Capital Group
	Time Warner Inc.(1)		$	661	1,033
	Time Warner Cable Inc.(2)			213	—
	Sprint Nextel Corporation ("Sprint")(3)			312	160
	Motorola, Inc.(4)			313	328
	Viacom, Inc.			132	145
	Embarq Corporation(5)			165	157
	Other AFS equity securities(6)			42	40
	Other AFS debt securities			265	224
	Other cost investments and related receivables			31	31

		Total attributed Capital Group		2,134	2,118

Interactive Group
	IAC/InterActiveCorp ("IAC")			549	638
	Other			130	101

		Total attributed Interactive Group		679	739

Entertainment Group
	Other			2	2

		Total attributed Entertainment Group		2	2

		Consolidated Liberty	$	2,815	2,859

Unrealized holding gains and losses related to investments in AFS securities are summarized below.

The aggregate fair value of securities with unrealized holding losses at March 31, 2009 was $549 million. None of these securities had unrealized losses for more than 12 continuous months.

Liberty has various investments accounted for using the equity method. The following table includes Liberty's carrying amount and percentage ownership of the more significant investments in affiliates at March 31, 2009 and the carrying amount at December 31, 2008:

		March 31, 2009					December 31, 2008

		Percentage ownership			Carrying amount		Carrying amount
					dollar amounts in millions
Entertainment Group
	DIRECTV		54	%	$	12,970		13,085
	Other		various			244		281
Interactive Group
	Expedia		24	%		557		559
	Other		various			225		342
Capital Group
	Sirius XM Radio Inc. ("Sirius")		40	%		387		—
	Other		various			216		223

					$	14,599		14,490

The following table presents Liberty's share of earnings (losses) of affiliates:

On February 27, 2008, Liberty completed a transaction with News Corporation (the "News Corporation Exchange") in which Liberty exchanged all of its 512.6 million shares of News Corporation common stock valued at $10,143 million on the closing date for a subsidiary of News Corporation that held an approximate 41% interest in DIRECTV, three regional sports television networks that now comprise Liberty Sports Group and $463 million in cash. In addition, Liberty incurred $21 million of acquisition costs. Liberty recognized a pre-tax gain of $3,666 million in the first quarter of 2008 based on the difference between the fair value and the cost basis of the News Corporation shares exchanged.

Liberty accounted for the News Corporation Exchange as a nonmonetary exchange under APB Opinion No. 29, "Accounting for Nonmonetary Transactions." Accordingly, Liberty recorded the assets received at an amount equal to the fair value of the News Corporation common stock given up. Such amount was allocated to DIRECTV and Liberty Sports Group based on their relative fair values as follows (amounts in millions):

Liberty estimated the fair values of Liberty Sports Group and DIRECTV's assets using a combination of discounted cash flows and market prices for comparable assets.

At the time of closing, the value attributed to Liberty's investment in DIRECTV exceeded Liberty's proportionate share of DIRECTV's equity by $8,022 million. Due to additional purchases of DIRECTV stock by Liberty and stock repurchases by DIRECTV, such excess basis has increased to $10,517 million as of March 31, 2009. Such amount has been allocated within memo accounts used for equity accounting purposes to DIRECTV's assets and liabilities. Amortization related to the intangible assets with identifiable useful lives within the memo accounts is included in Liberty's share of earnings of DIRECTV in the accompanying condensed consolidated statement of operations and aggregated

$75 million and $23 million (net of related taxes) for the three months ended March 31, 2009 and for the one month ended March 31, 2008, respectively.

On April 3, 2008, Liberty purchased 78.3 million additional shares of DIRECTV common stock in a private transaction for cash consideration of $1.98 billion. Liberty funded the purchase with borrowings against a newly executed equity collar on 110 million DIRECTV common shares. As of May 5, 2008, Liberty's ownership in DIRECTV was approximately 47.9%, and Liberty and DIRECTV entered into a standstill agreement. Pursuant to the standstill agreement, in the event Liberty's ownership interest goes above 47.9% due to stock repurchases by DIRECTV Liberty has agreed to vote its shares of DIRECTV which represent the excess ownership interest above 47.9% in the same proportion as all DIRECTV shareholders other than Liberty. Accordingly, although Liberty's economic ownership in DIRECTV is above 50%, Liberty continues to account for such investment using the equity method of accounting. Liberty records its share of DIRECTV's earnings based on its economic interest in DIRECTV.

The market value of the Company's investment in DIRECTV was $12,505 million and $12,571 million at March 31, 2009 and December 31, 2008, respectively. Summarized unaudited financial information for DIRECTV is as follows:

		March 31, 2009

		amounts in millions
Current assets		$	4,035	4,044
Satellites, net			2,440	2,476
Property and equipment, net			4,179	4,171
Goodwill			3,760	3,753
Intangible assets			1,069	1,172
Other assets			923	923

	Total assets	$	16,406	16,539

Current liabilities		$	3,562	3,585
Deferred income taxes			562	524
Long-term debt			5,696	5,725
Other liabilities			1,743	1,749
Redeemable noncontrolling interest			325	325
Equity			4,518	4,631

	Total liabilities and equity	$	16,406	16,539

		Three months ended March 31,

		2009			2008
		amounts in millions
Revenue		$	4,901			4,591
Costs of revenue			(2,461	)		(2,288	)
Selling, general and administrative expenses			(1,350	)		(1,122	)
Depreciation and amortization			(666	)		(524	)

	Operating income		424			657
Interest expense			(101	)		(63	)
Other income, net			13			19
Income tax expense			(124	)		(230	)

	Net earnings	$	212			383

The market value of the Company's investment in Expedia was $629 million and $570 million at March 31, 2009 and December 31, 2008, respectively. Summarized unaudited financial information for Expedia is as follows:

		March 31, 2009

		amounts in millions
Current assets		$	1,091	1,199
Property and equipment			240	248
Goodwill			3,520	3,539
Intangible assets			818	833
Other assets			80	75

	Total assets	$	5,749	5,894

Current liabilities		$	2,041	1,566
Deferred income taxes			199	190
Long-term debt			895	1,545
Other liabilities			214	212
Equity			2,400	2,381

	Total liabilities and equity	$	5,749	5,894

		Three months ended March 31,

		2009			2008
		amounts in millions
Revenue		$	636			688
Cost of revenue			(144	)		(152	)

	Gross profit		492			536
Selling, general and administrative expenses			(381	)		(428	)
Amortization			(9	)		(18	)
Restructuring charges			(9	)		—

	Operating income		93			90
Interest expense			(22	)		(16	)
Other income (expense)			(4	)		6
Income tax expense			(27	)		(29	)

	Net earnings	$	40			51

IAC completed the spin off of HSN, Interval, Ticketmaster and Lending Tree (the "IAC Spin Off Companies") on August 21, 2008. Liberty received an approximate 30% ownership interest in each of the IAC Spin Off Companies. Liberty allocated its carrying value in IAC prior to the spin off among IAC and the IAC Spin Off Companies based on their relative fair values at the time of the spin off. Liberty received no super voting shares in and has no special voting arrangements with respect to any of the IAC Spin Off Companies (other than with respect to the election of directors), and therefore, accounts for its interests using the equity method of accounting. Liberty has elected to record its share of earnings/losses for each of the IAC Spin Off Companies on a three month lag due to timeliness considerations. Liberty's share of losses of the IAC Spin Off Companies aggregated $104 million for the three months ended March 31, 2009.

During the first quarter of 2009, Liberty made investments/commitments in Sirius totaling approximately $579 million. Liberty's initial investment was the open market purchase of Sirius bonds for $18 million. Such bonds are accounted for by Liberty as AFS debt securities and are marked to market each reporting period. On February 17, 2009, Liberty and Sirius entered into a senior secured loan agreement (the "Senior Loan") whereby Liberty loaned Sirius $250 million at an interest rate of 15% and made a commitment to loan an additional $30 million to fund qualifying expenditures by Sirius. In exchange for making the Senior Loan, Liberty received a $30 million origination fee. Liberty has accounted for the origination fee as a discount to the Senior Loan and is amortizing it to interest income over the term of the Senior Loan. On March 6, 2009, Liberty (i) purchased $100 million of a new senior loan facility of a subsidiary of Sirius ("Subsidiary Senior Loan"), (ii) purchased $61 million of bank debt of such subsidiary directly from the lending group and (iii) committed to make a loan of $150 million to such subsidiary in December 2009 ("Subsidiary Commitment"). In addition, Liberty received voting preferred stock of Sirius, which has substantially the same rights and preferences as

common shareholders of Sirius, for a cash payment of $12,500. This preferred stock is convertible into common stock equal to 40% of fully diluted equity.

Liberty has allocated the total consideration paid for the Subsidiary Loan, the Subsidiary Commitment and the preferred stock to each of the instruments based on the relative fair values of such instruments.

Since the amount of bank debt purchased from the lending group was a transaction with an outside third party and not with Sirius directly, this investment has not been included in the allocation, but has initially been recorded at the amount invested ($61 million).

Based on Liberty's voting rights and its conclusion that the preferred stock is in-substance common stock in accordance with the criteria in EITF 02-14, Liberty accounts for its investment in the Sirius preferred stock using the equity method of accounting. Liberty has elected to record its share of earnings/losses for Sirius on a three-month lag due to timing considerations. As of March 31, 2009, such preferred stock had a market value of $905 million based on the value of the common stock into which it is convertible.

Type of financial instrument		March 31, 2009			December 31, 2008

		amounts in millions
Assets
	Equity collars(1)	$	2,302		$	2,392
	Other		103			93

			2,405			2,485
	Less current portion		(1,581	)		(1,157	)

		$	824		$	1,328

Liabilities
	Borrowed shares	$	387		$	392
	Other		351			350

			738			742
	Less current portion		(551	)		(553	)

		$	187		$	189

Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:

Amortization expense for intangible assets with finite useful lives was $129 million and $131 million for the three months ended March 31, 2009 and 2008, respectively. Based on its amortizable intangible assets as of March 31, 2009, Liberty expects that amortization expense will be as follows for the next five years (amounts in millions):

						Carrying value

				Outstanding principal March 31, 2009		Carrying value
				Outstanding principal March 31, 2009		March 31, 2009			December 31, 2008
				amounts in millions
Capital Group
	Exchangeable senior debentures
		3.125% Exchangeable Senior Debentures due 2023		$	1,264		998			918
		4% Exchangeable Senior Debentures due 2029			869		291			256
		3.75% Exchangeable Senior Debentures due 2030			810		254			241
		3.5% Exchangeable Senior Debentures due 2031			495		180			138
	Liberty bank facility				750		750			750
	Liberty derivative loan				2,263		2,263			625
	Subsidiary debt				108		108			135

			Total attributed Capital Group debt		6,559		4,844			3,063

Interactive Group
	Senior notes and debentures
		7.875% Senior Notes due 2009			104		104			104
		7.75% Senior Notes due 2009			13		13			13
		5.7% Senior Notes due 2013			803		801			801
		8.5% Senior Debentures due 2029			287		284			284
		8.25% Senior Debentures due 2030			505		501			501
		3.25% Exchangeable Senior Debentures due 2031			541		198			138
	QVC bank credit facilities				5,225		5,225			5,230
	Other subsidiary debt				70		70			60

			Total attributed Interactive Group debt		7,548		7,196			7,131

Entertainment Group
	DIRECTV Collar Loan				1,999		1,999			1,981
	Subsidiary debt				50		50			52

			Total attributed Entertainment Group debt		2,049		2,049			2,033

		Total consolidated Liberty debt		$	16,156		14,089			12,227

		Less current maturities					(2,455	)		(868	)

		Total long-term debt				$	11,634		$	11,359

Subsequent to March 31, 2009, the Company voluntarily settled total return swaps with respect to $400 million principal amount of its 4% Exchangeable Senior Debentures and $350 million principal amount of its 3.75% Exchangeable Senior Debentures and retired such debt.

During the first quarter of 2009, Liberty made additional net borrowings of $1,638 million against the present value of its Sprint derivatives. Such debt is due when the derivatives expire in 2009 and 2010 and is expected to largely offset the proceeds to be received by Liberty upon expiration of the derivatives.

QVC is party to an unsecured $3.5 billion bank credit facility dated March 3, 2006 (the "March 2006 Credit Agreement"). The March 2006 Credit Agreement is comprised of two $800 million U.S. dollar term loans, a $600 million multi-currency term loan that was drawn in U.S. dollars, a $650 million U.S. dollar revolving loan and a $650 million multi-currency revolving loan. Substantially all revolving loans were fully drawn as of March 31, 2009. The foregoing multi-currency loans can be made, at QVC's option, in U.S. dollars, Japanese yen, U.K. pound sterling or euros. All loans are due and payable on March 3, 2011.

QVC is party to a second credit agreement dated October 4, 2006, as amended on March 20, 2007 (the "October 2006 Credit Agreement"), which provides for an additional unsecured $1.75 billion credit facility, consisting of an $800 million initial term loan and $950 million of delayed draw term loans, all of which has been drawn. The loans are scheduled to mature on October 4, 2011.

All loans under the March 2006 Credit Agreement and the October 2006 Credit Agreement bear interest at a rate equal to (i) LIBOR for the interest period selected by QVC plus a margin that varies based on QVC's leverage ratio or (ii) the higher of the Federal Funds Rate plus 0.50% or the prime rate announced by the respective Administrative Agent from time to time. QVC is required to pay a commitment fee quarterly in arrears on the unused portion of the commitments. Such fees have not been significant to date.

The credit agreements contain restrictive covenants, which require among other things, the maintenance of certain financial ratios and include limitations on indebtedness, liens, encumbrances, dispositions, guarantees and dividends. QVC was in compliance with its debt covenants at March 31, 2009.

QVC is party to ten separate interest rate swap arrangements with an aggregate notional amount of $2,200 million to manage the cash flow risk associated with interest payments on its variable rate debt. The swap arrangements provide for QVC to make fixed payments at rates ranging from 4.9575% to 5.2928% and to receive variable payments at 3 month LIBOR. All of the swap arrangements expire in March 2011 contemporaneously with the maturity of the March 2006 Credit Agreement. Until December 2008, Liberty accounted for the swap arrangements as cash flow hedges with the effective portions of changes in the fair value reflected in other comprehensive earnings in the accompanying condensed consolidated balance sheet. In December 2008, QVC elected interest terms under its credit facilities that do not effectively match the terms of the swap arrangements. As a result, the swaps no longer qualify as cash flow hedges under Statement No. 133. Accordingly, changes in the fair value of the swaps are now reflected in realized and unrealized gains or losses on financial instruments in the accompanying condensed consolidated statements of operations.

QVC is also party to two interest rate swap arrangements with an aggregate notional amount of $600 million. These swap arrangements, which expire in October 2010, provide for QVC to make fixed

payments at 3.07% and to receive variable payments at 3 month LIBOR. These swap arrangements do not qualify as cash flow hedges under Statement 133.

In April 2008, Liberty entered into an equity collar (the "DIRECTV Collar") for 110 million shares of DIRECTV common stock and a related credit facility (the "Collar Loan") against the present value of the put value of such collar. At the time of closing, Liberty borrowed $1,977 million. The Collar Loan is due as the DIRECTV Collar terminates in six tranches from June 2009 through August 2012. Each tranche is repayable during a six-month period based upon a formula that factors in several variables including the market price of DIRECTV common stock. Interest accrues at an effective weighted average interest rate of 3.5% and is due and payable as each tranche matures. Borrowings are collateralized by the puts underlying the Collar Loan and 170 million shares of DIRECTV common stock owned by Liberty.

In November 2008, Liberty chose to unwind 50% of the first tranche of the DIRECTV Collar. The first tranche expires in 2009 and originally had 22.5 million DIRECTV shares underlying it. As part of this transaction, Liberty repaid the portion of the Collar Loan ($228.4 million) associated with the shares that were unwound. Such repayment was funded with (1) proceeds from the collar unwind ($45.5 million), (2) funds borrowed from the remaining capacity of the Collar Loan ($181.1 million) and (3) cash on hand ($1.8 million). As a result of this transaction, the amount of the Collar Loan due in 2009 is approximately $258 million including accrued interest.

The DIRECTV Collar contains a provision that allows the counterparty to terminate a portion of the DIRECTV Collar if the total number of shares of DIRECTV underlying the DIRECTV Collar exceeds 20% of the outstanding public float of DIRECTV common stock. In the event the counterparty chooses to terminate a portion of the DIRECTV Collar, the repayment of the corresponding debt would be accelerated. The counterparty has agreed to waive its right to terminate a portion of the DIRECTV Collar until early June 2009, subject to the condition that the total number of shares underlying the DIRECTV Collar does not exceed 23% of the outstanding public float of DIRECTV common stock. As of March 31, 2009, the total number of shares underlying the DIRECTV Collar did not exceed the 23% limit.

Other subsidiary debt at March 31, 2009 is comprised of capitalized satellite transponder lease obligations and bank debt of certain subsidiaries.

Liberty estimates the fair value of its debt based on the quoted market prices for the same or similar issues or on the current rate offered to Liberty for debt of the same remaining maturities. The fair value of Liberty's publicly traded debt securities that are not reported at fair value in the accompanying condensed consolidated balance sheet at March 31, 2009 is as follows (amounts in millions):

Due to the low risk nature of the Collar Loan, Liberty believes that the carrying amount approximates fair value. Due to its variable rate nature, Liberty believes that the carrying amount of its subsidiary debt and other parent debt, approximated fair value at March 31, 2009.

As of March 31, 2009, there were 4.0 million and 1.4 million shares of Series A and Series B Liberty Capital common stock, respectively, reserved for issuance under exercise privileges of outstanding stock options.

As of March 31, 2009, there were 37.1 million and 7.5 million shares of Series A and Series B Liberty Interactive common stock, respectively, reserved for issuance under exercise privileges of outstanding stock options.

As of March 31, 2009, there were 15.9 million and 6.0 million shares of Series A and Series B Liberty Entertainment common stock, respectively, reserved for issuance under exercise privileges of outstanding stock options.

In addition to the Series A and Series B Liberty Capital common stock, the Series A and Series B Liberty Interactive common stock and the Series A and Series B Liberty Entertainment common stock, there are 2.0 billion, 4.0 billion and 4.0 billion shares of Series C Liberty Capital, Series C Liberty Interactive and Series C Liberty Entertainment common stock, respectively, authorized for issuance. As of March 31, 2009, no shares of any Series C common stock were issued or outstanding.

During the three months ended March 31, 2009, the Company settled put options on Series A Liberty Capital common stock for cash payments of $5 million. As of March 31, 2009, put options with respect to 12.6 million shares of LINTA with a weighted average put price of $16.54 remained outstanding. Such put options expire on or before December 31, 2009.

The Company accounts for the foregoing put options pursuant to Statement of Financial Accounting Standards No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." Accordingly, the put options are recorded in financial instrument liabilities at fair value, and changes in the fair value are included in realized and unrealized gains (losses) on financial instruments in the accompanying condensed consolidated statements of operations.

During the three months ended March 31, 2009 and the one month ended March 31, 2008, subsidiaries of Liberty recognized aggregate revenue of $84 million and $25 million, respectively, from DIRECTV for distribution of their programming. In addition, subsidiaries of Liberty made aggregate payments of $8 million and $3 million to DIRECTV for carriage and marketing.

Starz Entertainment, a wholly-owned subsidiary of Liberty, provides premium video programming distributed by cable operators, direct-to-home satellite providers, telephone companies, other distributors and the Internet throughout the United States. Starz Entertainment has entered into agreements with a number of motion picture producers which obligate Starz Entertainment to pay fees ("Programming Fees") for the rights to exhibit certain films that are released by these producers. The unpaid balance of Programming Fees for films that were available for exhibition by Starz Entertainment

at March 31, 2009 is reflected as a liability in the accompanying condensed consolidated balance sheet. The balance due as of March 31, 2009 is payable as follows: $60 million in 2009, $11 million in 2010 and $2 million thereafter.

Starz Entertainment has also contracted to pay Programming Fees for films that have been released theatrically, but are not available for exhibition by Starz Entertainment until some future date. These amounts have not been accrued at March 31, 2009. Starz Entertainment's estimate of amounts payable under these agreements is as follows: $330 million in 2009; $245 million in 2010; $98 million in 2011; $94 million in 2012; $84 million in 2013 and $211 million thereafter.

In addition, Starz Entertainment is also obligated to pay Programming Fees for all qualifying films that are released theatrically in the United States by studios owned by The Walt Disney Company ("Disney") through 2012 and all qualifying films that are released theatrically in the United States by studios owned by Sony Pictures Entertainment ("Sony") through 2016. Films are generally available to Starz Entertainment for exhibition 10-12 months after their theatrical release. The Programming Fees to be paid by Starz Entertainment are based on the quantity and the domestic theatrical exhibition receipts of qualifying films. As these films have not yet been released in theatres, Starz Entertainment is unable to estimate the amounts to be paid under these output agreements. However, such amounts are expected to be significant. In February 2009, Disney announced that it has agreed to enter into a long-term distribution arrangement with DreamWorks Studios. Under the terms of this arrangement, Disney will handle distribution and marketing for approximately six DreamWorks films each year. As a result of this arrangement, the number of qualifying films under Starz Entertainment's output agreement with Disney may be higher than it would have been otherwise.

In connection with an option exercised by Sony to extend the Sony contract through 2013, Starz Entertainment has agreed to pay Sony a total of $190 million in four annual installments of $47.5 million beginning in 2011. Starz Entertainment's payments to Sony will be amortized ratably as programming expense over the three-year period beginning when Starz Entertainment receives the first qualifying film released theatrically by Sony in 2011. In December 2008, Starz Entertainment entered into a new agreement with Sony for theatrical releases through 2016. Under the extension, Starz Entertainment has agreed to pay Sony $120 million in three equal annual installments beginning in 2015. Such payments will be amortized ratably as programming expense over the three-year period beginning when Starz Entertainment receives the first qualifying film released theatrically by Sony in 2014.

Liberty guarantees Starz Entertainment's obligations under certain of its studio output agreements. At March 31, 2009, Liberty's guarantees for obligations for films released by such date aggregated $720 million. While the guarantee amount for films not yet released is not determinable, such amount is expected to be significant. As noted above, Starz Entertainment has recognized the liability for a portion of its obligations under the output agreements. As this represents a direct commitment of Starz Entertainment, a consolidated subsidiary of Liberty, Liberty has not recorded a separate indirect liability for its guarantee of these obligations.

In connection with agreements for the sale of certain assets, Liberty typically retains liabilities that relate to events occurring prior to its sale, such as tax, environmental, litigation and employment matters. Liberty generally indemnifies the purchaser in the event that a third party asserts a claim against the purchaser that relates to a liability retained by Liberty. These types of indemnification guarantees typically extend for a number of years. Liberty is unable to estimate the maximum potential

liability for these types of indemnification guarantees as the sale agreements typically do not specify a maximum amount and the amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time. Historically, Liberty has not made any significant indemnification payments under such agreements and no amount has been accrued in the accompanying condensed consolidated financial statements with respect to these indemnification guarantees.

Liberty Sports Group has entered into agreements with various professional and collegiate sports teams and leagues to purchase the rights to broadcast games through 2020. At March 31, 2009, such commitments aggregated $1,514 million and are due as follows: $117 million in 2009; $134 million in 2010; $133 million in 2011; $121 million in 2012; $105 million in 2013 and $904 million thereafter.

The Atlanta Braves and certain of their players and coaches have entered into long-term employment contracts whereby such individuals' compensation is guaranteed. Amounts due under guaranteed contracts as of March 31, 2009 aggregated $231 million, which is payable as follows: $80 million in 2009, $63 million in 2010, $49 million in 2011 and $39 million in 2012. In addition to the foregoing amounts, certain players and coaches may earn incentive compensation under the terms of their employment contracts.

Liberty and its subsidiaries lease business offices, have entered into satellite transponder lease agreements and use certain equipment under lease arrangements.

Liberty has contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business. Although it is reasonably possible Liberty may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying condensed consolidated financial statements.

Liberty, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce, media, communications and entertainment industries. Liberty has attributed each of its businesses to one of three groups: the Interactive Group, the Entertainment Group and the Capital Group. Each of the businesses in the tracking stock groups is separately managed. Liberty identifies its reportable segments as (A) those consolidated subsidiaries that represent 10% or more of its consolidated revenue, pre-tax earnings or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of Liberty's pre-tax earnings. The segment presentation for prior periods has been conformed to the current period segment presentation.

Liberty evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per customer equivalent. In addition,

Liberty reviews nonfinancial measures such as subscriber growth, penetration, website visitors, conversion rates and active customers, as appropriate.

Liberty defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation). Liberty believes this measure is an important indicator of the operational strength and performance of its businesses, including each business's ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, stock-based compensation, separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Liberty generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

For the three months ended March 31, 2009, Liberty has identified the following businesses as its reportable segments:

Liberty's reportable segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the segments that are also consolidated subsidiaries are the same as those described in the Company's summary of significant policies.

		Three months ended March 31,

		2009					2008
		Revenue		Adjusted OIBDA			Revenue		Adjusted OIBDA
		amounts in millions
Interactive Group
	QVC	$	1,593		319			1,765		387
	Corporate and other		238		22			185		14

			1,831		341			1,950		401

Entertainment Group
	Starz Entertainment		296		108			273		74
	Corporate and other		73		24			37		7

			369		132			310		81

Capital Group
	Starz Media		102		5			62		(24	)
	Corporate and other		23		(37	)		29		(35	)

			125		(32	)		91		(59	)

	Consolidated Liberty	$	2,325		441			2,351		423

Equity Affiliate
	DIRECTV	$	4,901		1,090			4,591		1,181

		March 31, 2009

		Total assets			Investments in affiliates		Capital expenditures
		amounts in millions
Interactive Group
QVC		$	13,427			8		25
	Corporate and other		3,509			774		5

			16,936			782		30

Entertainment Group
	Starz Entertainment		1,434			—		—
	Corporate and other		14,851			13,214		4

			16,285			13,214		4

Capital Group
	Starz Media		598			—		—
	Corporate and other		9,337			603		5

			9,935			603		5

Inter-group eliminations			(249	)		—		—

	Consolidated Liberty	$	42,907			14,599		39

Equity Affiliate
	DIRECTV	$	16,406					539

The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) before income taxes:

		Three months ended March 31,

		2009			2008
		amounts in millions
Consolidated segment Adjusted OIBDA		$	441			423
Stock-based compensation			(28	)		(16	)
Depreciation and amortization			(178	)		(177	)
Interest expense			(154	)		(166	)
Share of earnings (losses) of affiliates			(66	)		45
Realized and unrealized losses on financial instruments, net			(244	)		(285	)
Gains (losses) on dispositions, net			(2	)		3,682
Other, net			(16	)		57

	Earnings (loss) before income taxes	$	(247	)		3,563

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business, product and marketing strategies; new service offerings; revenue growth and subscriber trends at QVC, Inc. and Starz Entertainment, LLC; QVC's ability to comply with the covenants contained in its credit facilities; anticipated programming and marketing costs at Starz Entertainment; the recoverability of our goodwill and other long-lived assets; counterparty performance under our derivative arrangements; our projected sources and uses of cash; the estimated value of our derivative instruments; and the anticipated non-material impact of certain contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated:

For additional risk factors, please see Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Quarterly Report, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.

The following discussion and analysis provides information concerning our results of operations and financial condition. This discussion should be read in conjunction with our accompanying condensed consolidated financial statements and the notes thereto and our Annual Report on Form 10-K for the year ended December 31, 2008, as amended.

We own controlling and non-controlling interests in a broad range of video and on-line commerce, media, communications and entertainment companies. Our more significant operating subsidiaries, which are also our principal reportable segments, are QVC, Inc. and Starz Entertainment, LLC. QVC markets and sells a wide variety of consumer products in the United States and several foreign countries, primarily by means of televised shopping programs on the QVC networks and via the Internet through its domestic and international websites. Starz Entertainment provides premium programming distributed by cable operators, direct-to-home satellite providers, telephone companies, other distributors and the Internet throughout the United States.

Our "Corporate and Other" category includes our other consolidated subsidiaries and corporate expenses. Our other consolidated subsidiaries include Provide Commerce, Inc., Backcountry.com, Inc., Bodybuilding.com, LLC, Starz Media, LLC, FUN Technologies, Inc., Atlanta National League Baseball Club, Inc., Liberty Sports Holdings, LLC, Leisure Arts, Inc., TruePosition, Inc., BuySeasons, Inc. and WFRV and WJMN Television Station, Inc. Provide operates an e-commerce marketplace of websites for perishable goods, including flowers and fruits and desserts, as well as upscale personalized gifts. Backcountry operates eight websites offering outdoor and backcountry sports gear and clothing. Bodybuilding manages two websites related to sports nutrition, body building and fitness. Starz Media develops, acquires, produces and distributes live-action, and animated films and television productions for the theatrical, home video, television and other ancillary markets in the United States and internationally. FUN operates websites that offer casual skill games and fantasy sports services. ANLBC owns the Atlanta Braves, a major league baseball club, as well as certain of the Atlanta Braves' minor league clubs. Liberty Sports Group is comprised of three regional sports television networks—FSN Rocky Mountain, FSN Northwest and FSN Pittsburgh. Leisure Arts publishes and markets needlework, craft, decorating, entertaining and other lifestyle interest "how-to" books. TruePosition provides equipment and technology that deliver location-based services to wireless users. BuySeasons operates BuyCostumes.com and CelebrateExpress.com, online retailers of costumes, accessories, décor and party

supplies. WFRV TV Station is a CBS broadcast affiliate that serves Green Bay, Wisconsin and Escanaba, Michigan.

In addition to the foregoing businesses, we hold an approximate 54% ownership interest in The DIRECTV Group, Inc. and a 24% ownership interest in Expedia, Inc., which we account for as equity method investments, and we continue to maintain investments and related financial instruments in public companies such as Time Warner, Time Warner Cable, IAC/InterActiveCorp and Sprint Nextel Corporation, which are accounted for at their respective fair market values and are included in corporate and other.

Prior to March 3, 2008, we had two tracking stocks outstanding, Liberty Interactive common stock and Liberty Capital common stock. On March 3, 2008, we completed a reclassification pursuant to which our Liberty Capital common stock was reclassified into two new tracking stocks, one retaining the designation Liberty Capital common stock and the other designated Liberty Entertainment common stock. The Liberty Entertainment common stock is intended to track and reflect the separate economic performance of the Entertainment Group, which has attributed to it a portion of the businesses, assets and liabilities that were previously attributed to the Capital Group.

The term "Interactive Group" does not represent a separate legal entity, rather it represents those businesses, assets and liabilities which we have attributed to it. The assets and businesses we have attributed to the Interactive Group are those engaged in video and on-line commerce, and include our subsidiaries QVC, Provide, Backcountry, Bodybuilding and BuySeasons and our interests in Expedia, HSN, Inc., Interval Leisure Group, Inc., Ticketmaster Entertainment, Inc., Tree.com, Inc. and IAC. In addition, we have attributed $2,253 million principal amount (as of March 31, 2009) of our public debt to the Interactive Group. The Interactive Group will also include such other businesses that our board of directors may in the future determine to attribute to the Interactive Group, including such other businesses as we may acquire for the Interactive Group.

Similarly, the term "Entertainment Group" does not represent a separate legal entity, rather it represents those businesses, assets and liabilities which we have attributed to it, including our subsidiaries Starz Entertainment, FUN and Liberty Sports Group, our equity interests in DIRECTV, Game Show Network, LLC and WildBlue Communications, Inc. and approximately $760 million of corporate cash (as of March 31, 2009). In addition, we have attributed an equity collar on 98.75 million shares of DIRECTV common stock and $1,999 million of borrowings against the put value of such equity collar.

During the fourth quarter of 2008, our board of directors approved a plan to redeem a portion of the outstanding shares of our Entertainment Group tracking stock for all of the outstanding shares of a newly formed subsidiary of our company, Liberty Entertainment, Inc. The Redemption and resulting separation of LEI from our company are referred to as the "Split Off."

If the Redemption is completed, we will redeem 90% of the outstanding shares of each series of Liberty Entertainment common stock for 100% of the outstanding shares of the same series of LEI, with cash in lieu of fractional shares, in each case, as of a date to be determined by our board of directors. Immediately following the Redemption Date, the holders of Liberty Entertainment common stock will own 100% of the outstanding equity of LEI. At the time of the Split Off, LEI will hold our interests in DIRECTV (and related collars and debt), Liberty Sports Group and GSN and $30 million in cash. In addition, we and LEI have entered into a revolving credit facility pursuant to which we will provide LEI with up to $300 million principal amount of loans. The Split Off is conditioned on, among other matters, receipt of stockholder approval and receipt of a private letter ruling from the IRS and a tax opinion from tax counsel and is expected to occur in the second half of 2009.

Subsequent to the Split Off, our Entertainment Group will be renamed the Starz Group and will be comprised principally of Starz Entertainment and cash.

The term "Capital Group" also does not represent a separate legal entity, rather it represents all of our businesses, assets and liabilities which we have attributed to it. The Capital Group has attributed to it all of our businesses, assets and liabilities not attributed to the Interactive Group or the Entertainment Group, including our subsidiaries Starz Media, ANLBC, Leisure Arts, TruePosition and WFRV TV Station, and minority equity investments in Time Warner Inc. and Sprint Nextel Corporation. In addition, we have attributed $2,845 million of cash, including subsidiary cash, and $6,451 million principal amount (as of March 31, 2009) of our exchangeable senior debentures and other parent debt to the Capital Group. The Capital Group will also include such other businesses that our board of directors may in the future determine to attribute to the Capital Group, including such other businesses as we may acquire for the Capital Group.

See Exhibit 99.1 to this Quarterly Report on Form 10-Q for unaudited attributed financial information for our tracking stock groups.

General. We provide in the tables below information regarding our Consolidated Operating Results and Other Income and Expense, as well as information regarding the contribution to those items from our reportable segments categorized by tracking stock group. The "corporate and other" category for each tracking stock group consists of those assets or businesses which do not qualify as a separate reportable segment. For a more detailed discussion and analysis of the financial results of the principal reporting segments of each tracking stock group, see "Interactive Group", "Entertainment Group" and "Capital Group" below.

				Three months ended March 31,

				2009			2008
				amounts in millions
*Revenue*
	Interactive Group
		QVC		$	1,593			1,765
		Corporate and other			238			185

					1,831			1,950

	Entertainment Group
		Starz Entertainment			296			273
		Corporate and other			73			37

					369			310

	Capital Group
		Starz Media			102			62
		Corporate and other			23			29

					125			91

			Consolidated Liberty	$	2,325			2,351

*Adjusted OIBDA*
	Interactive Group
		QVC		$	319			387
		Corporate and other			22			14

					341			401

	Entertainment Group
		Starz Entertainment			108			74
		Corporate and other			24			7

					132			81

	Capital Group
		Starz Media			5			(24	)
		Corporate and other			(37	)		(35	)

					(32	)		(59	)

			Consolidated Liberty	$	441			423

*Operating Income (Loss)*
	Interactive Group
		QVC		$	178			250
		Corporate and other			6			7

					184			257

	Entertainment Group
		Starz Entertainment			95			60
		Corporate and other			9			2

					104			62

	Capital Group
		Starz Media			2			(27	)
		Corporate and other			(55	)		(62	)

					(53	)		(89	)

			Consolidated Liberty	$	235			230

Revenue. Our consolidated revenue decreased $26 million or 1.1% for the three months ended March 31, 2009, as compared to the corresponding prior year period. Such decrease is due primarily to a $172 million decrease for QVC offset by increases for our e-commerce businesses ($53 million), Starz Media ($40 million), Liberty Sports Group ($36 million) and Starz Entertainment ($23 million). The increase for Liberty Sports Group is the result of having a full quarter of revenue in 2009, as compared with one month in 2008. See Management's Discussion and Analysis for the Interactive Group and the Entertainment Group below for a more complete discussion of QVC's and Starz Entertainment's results of operations.

Adjusted OIBDA. We define Adjusted OIBDA as revenue less cost of sales, operating expenses and selling, general and administrative ("SG&A") expenses (excluding stock compensation). Our chief operating decision maker and management team use this measure of performance in conjunction with other measures to evaluate our businesses and make decisions about allocating resources among our businesses. We believe this is an important indicator of the operational strength and performance of our businesses, including each business's ability to service debt and fund capital expenditures. In addition, this measure allows us to view operating results, perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes such costs as depreciation and amortization, stock-based compensation, separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. See note 14 to the accompanying condensed consolidated financial statements for a reconciliation of Adjusted OIBDA to Earnings (Loss) Before Income Taxes.

Consolidated Adjusted OIBDA increased $18 million or 4.3% for the three months ended March 31, 2009, as compared to the corresponding prior year period. Such increase is due primarily to increases for Starz Entertainment ($34 million), Starz Media ($29 million) and Liberty Sports Group ($21 million) partially offset by a $68 million decrease for QVC. Starz Media's revenue and Adjusted OIBDA increased in 2009 primarily due to the timing of theatrical and home video revenue and related expenses associated with films released by Overture Films. Theatrical print costs and advertising expenses related to the release of a film are recognized at the time the advertisements are run and generally exceed the theatrical revenue earned from the film. In addition, amortization of film production costs begins when revenue recognition begins. Although there can be no assurance, the expectation when films are approved for production or acquisition is that the ultimate revenue to be earned from theatrical release, home video and pay-per-view and premium television distribution, which revenue may be earned over several years, will exceed the costs associated with the film.

Stock-based compensation. Stock-based compensation includes compensation related to (1) options and stock appreciation rights ("SARs") for shares of our common stock that are granted to certain of our officers and employees, (2) phantom stock appreciation rights ("PSARs") granted to officers and employees of certain of our subsidiaries pursuant to private equity plans and (3) amortization of restricted stock grants.

We recorded $28 million and $16 million of stock compensation expense for the three months ended March 31, 2009 and 2008, respectively. The increase in stock compensation expense in 2009 relates to our liability awards and is due to an increase in our stock prices. As of March 31, 2009, the total unrecognized compensation cost related to unvested Liberty equity awards was approximately $85 million. Such amount will be recognized in our consolidated statements of operations over a weighted average period of approximately 2 years.

Operating income. Our consolidated operating income increased $5 million or 2.2% for the three months ended March 31, 2009, as compared to the corresponding prior year period. Such increase is the net result of the increases for Starz Entertainment and Starz Media, partially offset by the decrease for QVC.

Components of Other Income (Expense) are presented in the table below: The attribution of these items to our tracking stock groups assumes the Reclassification had occurred as of January 1, 2008.

				Three months ended March 31,

				2009			2008
				amounts in millions
Interest expense
	Interactive Group			$	(96	)		(121	)
	Entertainment Group				(18	)		(7	)
	Capital Group				(40	)		(38	)

		Consolidated Liberty		$	(154	)		(166	)

Dividend and interest income
	Interactive Group			$	4			6
	Entertainment Group				1			3
	Capital Group				26			50

		Consolidated Liberty		$	31			59

Share of earnings (losses) of affiliates
	Interactive Group			$	(95	)		12
	Entertainment Group				37			43
	Capital Group				(8	)		(10	)

		Consolidated Liberty		$	(66	)		45

Realized and unrealized gains (losses) on financial instruments, net
		Interactive Group		$	(72	)		(37	)
		Entertainment Group			27			(5	)
		Capital Group			(199	)		(243	)

			Consolidated Liberty	$	(244	)		(285	)

Gains (losses) on dispositions, net
	Interactive Group			$	(2	)		—
	Entertainment Group				—			3,667
	Capital Group				—			15

		Consolidated Liberty		$	(2	)		3,682

Other, net
	Interactive Group			$	(12	)		1
	Entertainment Group				(35	)		—
	Capital Group				—			(3	)

		Consolidated Liberty		$	(47	)		(2	)

Interest expense. Consolidated interest expense decreased 7.2% for the three months ended March 31, 2009, as compared to the corresponding prior year period. Such decrease is due primarily to the 2008 retirement of certain of our senior notes and debentures attributed to the Interactive Group and lower rates on our variable rate debt, partially offset by borrowings against our derivative positions.

Dividend and interest income. Interest income decreased in 2009 due to lower interest rates.

Share of earnings (losses) of affiliates. The following table presents our share of earnings (losses) of affiliates:

As previously described, we acquired a 41% ownership interest in DIRECTV upon consummation of the News Corporation Exchange in February 2008. We subsequently purchased additional shares of DIRECTV for approximately $1.98 billion. Such purchase, coupled with DIRECTV's stock repurchases, has increased our ownership percentage to 54% as of March 31, 2009. Due to a voting arrangement with DIRECTV that limits our ability to control DIRECTV, we continue to account for our investment using the equity method. Our share of earnings of DIRECTV for the three months ended March 31, 2009 includes $75 million of amortization (net of related taxes) of identifiable intangibles included in our excess basis as described in note 7 to the accompanying condensed consolidated financial statements. Summarized results of operations information for DIRECTV derived from its historical financial statements are as follows:

DIRECTV achieved growth in revenue in 2009 due primarily to a larger subscriber base in 2009, partially offset by lower pay-per-view, premium movie channel and advertising revenue. DIRECTV's average revenue per subscriber was relatively flat in 2009, as compared to 2008. The revenue growth was offset by higher subscriber acquisition, upgrade and retention costs, as well as higher programming costs, which resulted in lower operating income. For a more detailed discussion of DIRECTV's results of operations, please see their Quarterly Report on Form 10-Q for the three months ended March 31,

2009 as filed with the Securities and Exchange Commission (the "SEC"). We have had no part in the preparation of DIRECTV's filings with the SEC and are not incorporating by reference any such filing in this Quarterly Report on Form 10-Q.

Our "other" share of losses attributed to the Interactive Group in 2009 include $46 million for Ticketmaster and $48 million for HSN. As we record our share of losses for these affiliates on a three month lag, the losses reflected in our first quarter 2009 results include our share of goodwill impairment charges recorded by Ticketmaster and HSN in the fourth quarter of 2008 that are in excess of other than temporary impairment charges that we recorded on these investments in the fourth quarter of 2008.

Realized and unrealized gains (losses) on financial instruments. Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:

Gains (losses) on dispositions. Gains on dispositions in 2008 include $3,666 million related to the News Corporation Exchange.

Income taxes. Our effective tax rate in 2009 is 49% and exceeds the U.S. federal income tax rate of 35% due to state tax benefits. In 2008, we had pre-tax income of $3,563 million and an income tax benefit of $1,906 million. The News Corporation Exchange completed in 2008 qualifies as an IRC Section 355 transaction, and therefore does not trigger federal or state income tax obligations. In addition, upon consummation of this exchange transaction, deferred tax liabilities previously recorded for the difference between our book and tax bases in our News Corporation investment in the amount of $1,791 million were reversed with an offset to income tax benefit.

Net earnings (loss). Our net earnings (loss) were $(127) million and $5,469 million for the three months ended March 31, 2009 and 2008, respectively, and were the result of the above-described fluctuations in our revenue and expenses.

While the Interactive Group, the Entertainment Group and the Capital Group are not separate legal entities and the assets and liabilities attributed to each group remain assets and liabilities of our consolidated company, we manage the liquidity and financial resources of each group separately. Keeping in mind that assets of one group may be used to satisfy liabilities of one of the other groups, the following discussion assumes, consistent with management expectations, that future liquidity needs of each group will be funded by the financial resources attributed to each respective group.

As of March 31, 2009, substantially all of our cash and cash equivalents are invested in U.S. Treasury securities, other government securities or government guaranteed funds, AAA rated money market funds and A1/P1 rated commercial paper.

The following are potential sources of liquidity for each group to the extent the identified asset or transaction has been attributed to such group: available cash balances, cash generated by the operating activities of our privately-owned subsidiaries (to the extent such cash exceeds the working capital needs of the subsidiaries and is not otherwise restricted), proceeds from asset sales, monetization of our public investment portfolio (including derivatives), debt and equity issuances, and dividend and interest receipts.

Standard & Poor's Ratings Services and Moody's Investors Services have each notified us that upon completion of our proposed Split Off of LEI, they expect to lower their rating on our corporate credit. In the event we need to obtain external debt financing, such downgrades could hurt our ability to obtain financing and could increase the cost of any financing we are able to obtain.

Interactive Group. During the three months ended March 31, 2009, the Interactive Group's primary cash flows were $107 million of cash provided by operating activities, which is net of $71 million of intercompany tax payments to the Capital Group, $70 million of cash proceeds from the sale of shares of IAC and $30 million for capital expenditures. As of March 31, 2009, the Interactive Group had a cash balance of $939 million.

The projected uses of Interactive Group cash for the remainder of 2009 include approximately $200 million for interest payments on QVC debt and parent debt attributed to the Interactive Group, $180 million for capital expenditures, $117 million to repay our public debt that matures in 2009, additional tax payments to the Capital Group and payments to settle outstanding put options on Liberty Interactive Group common stock. In addition, we may make additional repurchases of Liberty Interactive common stock and additional investments in existing or new businesses and attribute such investments to the Interactive Group. However, we do not have any commitments to make new investments at this time.

We expect that the Interactive Group will fund its 2009 cash needs with cash on hand and cash provided by operating activities. As the QVC credit facilities are substantially fully drawn at March 31, 2009, they are no longer a source of liquidity for the Interactive Group.

QVC was in compliance with its debt covenants as of March 31, 2009. While we currently believe QVC will comply with its debt covenants throughout 2009, continued erosion of its revenue and operating cash flow (as defined in its credit facilities) due to adverse economic conditions could cause QVC to violate a debt covenant. In such a case, we believe we have adequate financial resources to cure such a violation including (i) using available cash to pay down QVC's debt, (ii) using the cash flow and/or assets of other subsidiaries attributed to the Interactive Group to borrow funds to pay down QVC's debt or (iii) using cash of one of our other groups to pay down QVC's debt. The transfer of any such cash from another group would be treated as an inter-group interest or an inter-group loan at the discretion of our board of directors.

Entertainment Group. As of March 31, 2009, the Entertainment Group had a cash balance of $874 million.

In April 2008, we entered into an equity collar for 110 million shares of DIRECTV common stock and a related credit facility against the present value of the put value of such collar. At the time of closing, we borrowed $1,977 million and used such proceeds to purchase 78.3 million shares of DIRECTV common stock. The Collar Loan is due as the DIRECTV Collar terminates in six tranches from June 2009 through August 2012. Each tranche is repayable during a six-month period based upon a formula that factors in several variables including the market price of DIRECTV common stock. Interest accrues at an effective weighted average interest rate of 3.5% and is due and payable as each tranche matures. Borrowings are collateralized by the puts underlying the Collar Loan and 170 million shares of DIRECTV common stock owned by us.

In November 2008, we chose to unwind 50% of the first tranche of the DIRECTV Collar. The first tranche expires in 2009 and originally had 22.5 million DIRECTV shares underlying it. As part of this transaction, we repaid the portion of the Collar Loan ($228.4 million) associated with the shares that were unwound. Such repayment was funded with (1) proceeds from the collar unwind ($45.5 million), (2) funds borrowed from the remaining capacity of the Collar Loan ($181.1 million) and (3) cash on hand ($1.8 million). As a result of this transaction, the amount of the Collar Loan due in 2009 is approximately $258 million including accrued interest.

The DIRECTV Collar contains a provision that allows the counterparty to terminate a portion of the DIRECTV Collar if the total number of shares of DIRECTV underlying the DIRECTV Collar exceeds 20% of the outstanding public float of DIRECTV common stock. In the event the counterparty chooses to terminate a portion of the DIRECTV Collar, the repayment of the corresponding debt would be accelerated. We expect that we would fund any such required repayment with available cash, proceeds from the sale of DIRECTV shares that we own, or a combination of the foregoing. The counterparty has agreed to waive its right to terminate a portion of the DIRECTV Collar until early June 2009, subject to the condition that the total number of shares underlying the DIRECTV Collar does not exceed 23% of the outstanding public float of DIRECTV common stock. As of March 31, 2009, the total number of shares underlying the DIRECTV Collar did not exceed the 23% limit.

The projected uses of Entertainment Group cash in 2009 include $258 million to repay the first tranche of the Collar Loan, tax payments to the Capital Group and $20 million for capital expenditures. In addition, we may make additional investments in existing or new businesses and attribute such investments to the Entertainment Group. However, we do not have any significant commitments to make new investments at this time. We expect that we will be able to use a combination of cash on hand and cash from operations to fund Entertainment Group cash needs in 2009.

In addition, the second tranche of the Collar Loan in the amount of $366 million is scheduled to mature in the first half of 2010. If the Entertainment Group does not have sufficient cash to fund such maturity, we may obtain the necessary funds through sales of DIRECTV shares, borrowings against unencumbered DIRECTV shares, inter-group loans or a combination of the foregoing.

If the Split Off is completed as currently contemplated, LEI would become a separate public company, and our Entertainment Group would be renamed the Starz Group and would be comprised principally of our interest in Starz Entertainment and cash.

Capital Group. During the three months ended March 31, 2009, the Capital Group's primary use of cash was $404 million to purchase debt and equity instruments of Sirius as more fully described in note 8 to the accompanying condensed consolidated financial statements.

In addition, we had net borrowings of $1,638 million against certain of our derivative positions attributed to the Capital Group, bringing our total borrowings against such derivatives to $2,263 million as of March 31, 2009. We expect that as these derivatives terminate in 2009 and 2010, the proceeds due to us upon termination will be substantially offset by our borrowings.

In April 2007, we borrowed $750 million of bank financing with an interest rate of LIBOR plus an applicable margin. We intend to invest such proceeds in a portfolio of selected debt and mezzanine-level instruments of companies in the telecommunications, media and technology sectors that we believe have favorable risk/return profiles. Due to the investment restrictions contained in the agreements related to these borrowings, the remaining cash balance of $538 million as of March 31, 2009 is included in other assets in our condensed consolidated balance sheet.

From time to time we enter into debt swaps and swap arrangements with respect to our or third-party public and private indebtedness. Under these arrangements, we initially post collateral with the

counterparty equal to a contractual percentage of the value of the referenced securities. We earn interest income based upon the face amount and stated interest rate of the referenced securities, and we pay interest expense at market rates on the amount funded by the counterparty. In the event the fair value of the underlying debt securities declines more than a pre-determined amount, we generally are required to post cash collateral for the decline, and we record an unrealized loss on financial instruments. The cash collateral is further adjusted up or down for subsequent changes in fair value of the underlying debt security.

At March 31, 2009, the aggregate notional amount of debt securities referenced under our debt swap arrangements, which related to $750 million principal amount of certain of our exchangeable senior debentures, was $188 million. As of such date, we had posted cash collateral equal to $37 million. Subsequent to March 31, 2009, we voluntarily paid an additional $150 million to settle these swap arrangements and retire the total $750 million of exchangeable debt.

In addition to the voluntary retirement of debt previously noted, the projected uses of Capital Group cash in 2009 include $110 million for interest payments and approximately $130 million by Starz Media for the acquisition and production of films and television productions. We may also make additional investments in existing or new businesses and attribute such investments to the Capital Group. In addition, we expect to generate taxable income and that we will make related federal tax payments.

We expect that the Capital Group's investing and financing activities will be funded with a combination of cash on hand, borrowings under Overture Films' credit facility, tax payments from the Interactive Group and the Entertainment Group and dispositions of non-strategic assets. At March 31, 2009, the Capital Group's sources of liquidity include $2,845 million in cash and $1,451 million of non-strategic AFS securities including related derivatives. To the extent the Capital Group recognizes any taxable gains from the sale of assets or the expiration of derivative instruments, we may incur current tax expense and be required to make tax payments, thereby reducing any cash proceeds attributable to the Capital Group.

See note 14 to the accompanying condensed consolidated financial statements for a discussion of our commitments and contingencies.

The Interactive Group consists of our subsidiaries QVC, Provide, Backcountry, Bodybuilding and BuySeasons, our interests in IAC/InterActiveCorp, Expedia, HSN, Interval, Ticketmaster, Tree.com and GSI Commerce, Inc. and $2,253 million principal amount (as of March 31, 2009) of our publicly-traded debt.

The following discussion and analysis provides information concerning the results of operations of the Interactive Group. This discussion should be read in conjunction with (1) our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and (2) the Unaudited Attributed Financial Information for Tracking Stock Groups filed as Exhibit 99.1 to this Quarterly Report on Form 10-Q.

		Three months ended March 31,

		2009			2008
		amounts in millions
*Revenue*
	QVC	$	1,593			1,765
	e-commerce businesses		238			185
	Corporate and other		—			—

		$	1,831			1,950

*Adjusted OIBDA*
	QVC	$	319			387
	e-commerce businesses		25			22
	Corporate and other		(3	)		(8	)

		$	341			401

*Operating Income (Loss)*
	QVC	$	178			250
	e-commerce businesses		12			14
	Corporate and other		(6	)		(7	)

		$	184			257

QVC. QVC is a retailer of a wide range of consumer products, which are marketed and sold primarily by merchandise-focused televised shopping programs and via the Internet. In the United States, QVC's live programming is aired through its nationally televised shopping network 24 hours a day ("QVC-US"). Internationally, QVC's program services are based in the United Kingdom ("QVC-UK"), Germany ("QVC-Germany") and Japan ("QVC-Japan"). QVC-UK broadcasts 24 hours a day with 17 hours of live programming, and QVC-Germany and QVC-Japan each broadcast live 24 hours a day.

		Three months ended March 31,

		2009			2008
		amounts in millions
Net revenue		$	1,593			1,765
Cost of sales			(1,033	)		(1,120	)

	Gross profit		560			645
Operating expenses			(158	)		(169	)
SG&A expenses (excluding stock-based compensation)			(83	)		(89	)

	Adjusted OIBDA		319			387
Stock-based compensation			(4	)		(5	)
Depreciation and amortization			(137	)		(132	)

	Operating income	$	178			250

QVC's net revenue decreased 9.7% for the three months ended March 31, 2009, as compared to the corresponding prior year period. Such decrease is comprised of $210 million due to a 11.5% decrease in the number of units shipped, $56 million due to unfavorable foreign currency rates and $21 million due to lower shipping and handling revenue. These decreases were partially offset by a $76 million increase due to a 5.4% increase in the average sales price per unit ("ASP") and $39 million due to a decrease in estimated product returns. Returns as a percent of gross product revenue decreased from 19.9% to 18.9% and reflect a shift in the mix from jewelry to home products, which typically have lower return rates.

During the three months ended March 31, 2009, the changes in revenue and expenses were impacted by changes in the exchange rates for the UK pound sterling, the euro and the Japanese yen. In the event the U.S. dollar strengthens against these foreign currencies in the future, QVC's revenue and operating cash flow will be negatively impacted. The percentage increase (decrease) in revenue for each of QVC's geographic areas in dollars and in local currency is as follows:

Revenue of QVC-US continues to be negatively impacted in 2009 by a slow retail environment with weakness experienced in the jewelry, apparel and accessories categories. The home area was able to maintain its prior year sales level due to growth in the electronics and kitchen product categories. QVC-US has experienced a decrease in shipping and handling revenue due to an increase in promotional offers. QVC-UK showed a decline in net revenue in local currency primarily due to a decline in the sales of jewelry and home products, offset slightly by an increase in sales of apparel products. QVC-Germany's net revenue in local currency increased during the three months ended March 31, 2009 due to efforts to grow the beauty business. While QVC-Germany experienced a decline in sales in the home, jewelry and apparel categories, the accessories category, which includes beauty products, increased from 15% to 24% of the total product sales mix. QVC-Japan has shown an increase in net revenue in local currency due primarily to an increase in jewelry and fashion accessories. Japan continues to show weakness in the health and beauty product categories due to the heightened regulatory focus on such products.

The QVC service is already received by substantially all of the cable television and direct broadcast satellite homes in the U.S. and Germany. In addition, the rate of growth in households is expected to diminish in the UK and Japan. Therefore, future sales growth will primarily depend on additions of new customers from homes already receiving the QVC service and growth in sales to existing customers. QVC's future sales may also be affected by (i) the willingness of cable and satellite distributors to continue carrying QVC's programming service, (ii) QVC's ability to maintain favorable channel positioning, which may become more difficult as distributors convert analog customers to digital, (iii) changes in television viewing habits because of personal video recorders, video-on-demand and IP television and (iv) general economic conditions.

QVC's gross profit percentage decreased from 36.5% to 35.2% during the three months ended March 31, 2009, as compared to the corresponding prior year period. Such decrease is primarily due to lower initial product margins for jewelry, home and apparel products.

QVC's operating expenses are principally comprised of commissions, order processing and customer service expenses, credit card processing fees, telecommunications expense and production costs. Operating expenses decreased 6.5% for the three months ended March 31, 2009, as compared to the corresponding prior year period. As a percentage of net revenue, operating expenses were 9.9% and 9.6% in 2009 and 2008, respectively. The 2009 increase in operating expenses as a percent of revenue is due primarily to production costs, which are generally fixed costs.

QVC's SG&A expenses include personnel, information technology, provision for doubtful accounts, credit card income and marketing and advertising expenses. Such expenses decreased 6.7% during the three months ended March 31, 2009, as compared to the corresponding prior year period. This decrease is primarily due to lower personnel expenses of $9 million and increased credit card income of $4 million. Personnel expenses decreased primarily related to a reduction in workforce administered in the fourth quarter of 2008 as well as lower bonus accruals. These decreases were partially offset by a $6 million increase in the bad debt provision. QVC has experienced an increase in write-offs and reserves related to its installment receivables and private label credit card. Such increases in bad debt are due to an increase in customer use of the installment payment plan offered by QVC and to the recessionary economic conditions.

e-commerce businesses. Our e-commerce businesses are comprised of Provide, Backcountry, Bodybuilding and BuySeasons. Revenue for this group increased 28.6% for the three months ended March 31, 2009, as compared to the corresponding prior year period, as each company reported an increase in revenue. Approximately $21 million of the increase in revenue is due to small acquisitions made by our e-commerce businesses in 2008. Adjusted OIBDA for the e-commerce businesses increased 13.6% in 2009 and represented 10.5% of revenue in 2009, as compared to 11.9% in 2008. The percentage increase in Adjusted OIBDA was lower than the percentage increase in revenue due to a lower gross margin percentage and higher sales and marketing expenses as a percent of revenue.

The Entertainment Group is comprised of our subsidiaries Starz Entertainment, Liberty Sports Group and FUN, as well as equity interests in DIRECTV, GSN and WildBlue Communications, approximately $760 million of corporate cash, an equity collar on 98.75 million shares of DIRECTV common stock and $1,999 million of borrowings against the put value of such collar.

The following discussion and analysis provides information concerning the attributed results of operations of the Entertainment Group and is presented as though the Reclassification had been completed on January 1, 2008. This discussion should be read in conjunction with (1) our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and (2) the Unaudited Attributed Financial Information for Tracking Stock Groups filed as Exhibit 99.1 to this Quarterly Report on Form 10-Q.

		Three months ended March 31,

		2009		2008
		amounts in millions
*Revenue*
	Starz Entertainment	$	296		273
	Corporate and other		73		37

		$	369		310

*Adjusted OIBDA*
	Starz Entertainment	$	108		74
	Corporate and other		24		7

		$	132		81

*Operating Income*
	Starz Entertainment	$	95		60
	Corporate and other		9		2

		$	104		62

Revenue. The Entertainment Group's revenue increased $59 million or 19.0% for the three months ended March 31, 2009, as compared to the corresponding prior year period. Such increase is primarily due to our acquisition of Liberty Sports Group in March 2008.

Adjusted OIBDA. The Entertainment Group's Adjusted OIBDA increased $51 million or 63.0% for the three months ended March 31, 2009, as compared to the corresponding prior year period. In addition to the increase for Starz Entertainment in 2009, Liberty Sports Group's Adjusted OIBDA increased from $10 million to $31 million resulting from a full three months of operations in 2009.

Operating income. Operating income for the Entertainment Group increased $42 million or 67.7% in 2009 due primarily to Starz Entertainment and Liberty Sports Group. These increases were partially offset by increased corporate general and administrative and stock compensation expenses.

Starz Entertainment. Starz Entertainment provides premium programming distributed by cable operators, direct-to-home satellite providers, telephone companies, other distributors and the Internet throughout the United States. Substantially all of Starz Entertainment's revenue is derived from the delivery of movies to subscribers under affiliation agreements with television video programming distributors. Some of Starz Entertainment's affiliation agreements provide for payments to Starz Entertainment based on the number of subscribers that receive Starz Entertainment's services. Starz Entertainment also has fixed-rate affiliation agreements with certain of its customers. Pursuant to these agreements, the customers pay an agreed-upon rate regardless of the number of subscribers. The agreed-upon rate is contractually increased annually or semi-annually as the case may be. The affiliation agreements expire in 2009 through 2013. During the three months ended March 31, 2009, 57.8% of Starz Entertainment's revenue was generated by its three largest customers, Comcast, DIRECTV and Dish Network, each of which individually generated more than 10% of Starz Entertainment's revenue for such period. Subsequent to March 31, 2009, Starz Entertainment and DIRECTV extended their affiliation agreement until June 30, 2013 with substantially the same economic terms as the existing affiliation agreement. Notwithstanding the June 2013 termination date, each of DIRECTV and Starz Entertainment can cause the affiliation agreement to expire if the Merger Agreement is terminated for certain specified reasons. If the affiliation agreement expires under these circumstances, Starz Entertainment and DIRECTV would revert to the previous affiliation agreement

which would continue on a month-to-month basis unless terminated by either party upon 60 days written notice. Comcast's affiliation agreement to distribute Encore expires in September 2009. DISH Network's affiliation agreement expires in June 2009.

Starz Entertainment's revenue increased 8.4% for the three months ended March 31, 2009, as compared to the corresponding prior year period. Such increase in revenue is comprised of $13 million due to a higher effective rate for Starz Entertainment's services and $10 million due to growth in the weighted average number of subscriptions.

The Starz movie service and Encore and the Encore thematic multiplex channels ("EMP") movie service are the primary drivers of Starz Entertainment's revenue. Starz average subscriptions increased 8.1% in 2009; and EMP average subscriptions increased 2.4% in 2009. The effects on revenue of these increases in subscriptions units are somewhat mitigated by the fixed-rate affiliation agreements that Starz Entertainment has entered into in recent years. In this regard, approximately 36.9% of Starz Entertainment's revenue in 2009 was earned under its fixed-rate affiliation agreements.

Starz Entertainment's operating expenses decreased 3.6% for the three months ended March 31, 2009, as compared to the corresponding prior year period. Such decrease is due primarily to a reduction in license fees, which decreased from $157 million in 2008 to $149 million in 2009. Such decrease in license fees is due to a decrease in the percentage of first-run movie exhibitions (which have a relatively higher cost per title) as compared to the number of library product exhibitions ($17 million), partially offset by higher effective rates ($6 million) and the amortization of production costs for original series ($3 million).

Starz Entertainment's SG&A expenses decreased 15.6% for the three months ended March 31, 2009, as compared to the corresponding prior year period. Such decrease is due primarily to lower personnel costs.

Starz Entertainment has outstanding phantom stock appreciation rights held by its former chief executive officer. Starz Entertainment also has a long-term incentive plan for certain members of its current management team. Compensation relating to the PSARs and the long-term incentive plan has been recorded based upon the estimated fair value of Starz Entertainment. The amount of expense associated with the PSARs and the long-term incentive plan is generally based on the change in the fair value of Starz Entertainment.

The Capital Group is comprised of our subsidiaries and assets not attributed to the Interactive Group or the Entertainment Group, including controlling interests in Starz Media, ANLBC, TruePosition, Leisure Arts and WFRV TV Station, as well as minority investments in Time Warner Inc.,

Time Warner Cable Inc., Sprint Nextel Corporation and other public and private companies. In addition, we have attributed $6,451 million principal amount (as of March 31, 2009) of our exchangeable senior debentures and other parent debt to the Capital Group.

The following discussion and analysis provides information concerning the attributed results of operations of the Capital Group. The following discussion is presented as though the Reclassification had been completed on January 1, 2008. This discussion should be read in conjunction with (1) our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and (2) the Unaudited Attributed Financial Information for Tracking Stock Groups filed as Exhibit 99.1 to this Quarterly Report on Form 10-Q.

		Three months ended March 31,

		2009			2008
		amounts in millions
*Revenue*
	Starz Media	$	102			62
	Corporate and other		23			29

		$	125			91

*Adjusted OIBDA*
	Starz Media	$	5			(24	)
	Corporate and other		(37	)		(35	)

		$	(32	)		(59	)

*Operating Income (Loss)*
	Starz Media	$	2			(27	)
	Corporate and other		(55	)		(62	)

		$	(53	)		(89	)

Revenue. The Capital Group's combined revenue increased 37.4% for the three months ended March 31, 2009, as compared to the corresponding prior year period. The increase in Starz Media's revenue in 2009 is due primarily to a $38 million increase in home video revenue, which is almost entirely due to home video sales of movies released theatrically by Overture Films in 2008. Included in Capital Group's corporate and other revenue are payments from CNBC related to a revenue sharing agreement between our company and CNBC. The agreement has no termination date, and payments aggregated $6 million for each of the three month periods ended March 31, 2009 and 2008.

Adjusted OIBDA. The Capital Group's Adjusted OIBDA loss decreased $27 million for the three months ended March 31, 2009, as compared to the corresponding prior year period. Starz Media's Adjusted OIBDA improved $29 million in 2009 primarily due to the timing of theatrical and home video revenue and related expenses associated with films released by Overture Films. Theatrical print costs and advertising expenses related to the release of a film are recognized at the time the advertisements are run and generally exceed the theatrical revenue earned from the film. In addition, amortization of film production costs begins when revenue recognition begins. Although there can be no assurance, the expectation when films are approved for production or acquisition is that the ultimate revenue to be earned from theatrical release, home video and pay-per-view and premium television distribution, which revenue may be earned over several years, will exceed the costs associated with the film.

Operating loss. The Capital Group's operating loss decreased in 2009 due to the aforementioned timing of films released by Overture in the theatrical and home video markets.

The following discussion regarding Fair Value Measurements of our Non-Financial Instruments is intended to supplement our critical accounting estimates included in our Annual Report on Form 10-K for the year ended December 31, 2008.

As of December 31, 2008, our goodwill for each of our significant reporting units was as follows (amounts in millions):

We perform our annual assessment of the recoverability of our goodwill and other nonamortizable intangible assets as of December 31 in accordance with the provisions of Statement of Financial Accounting Standards No. 142. With respect to QVC, which holds a substantial majority of our goodwill, we performed the Step 1 Test using a discounted cash flow analysis prepared as of December 31, 2008. The cash flow projections (the "2008 Cash Flow Projections") used in our analysis were prepared by QVC management and represent management's estimate of the future cash flows to be generated by QVC's operations during 2009 through 2014 (Years 1-6). For the 5 years ended December 31, 2008, QVC's revenue grew at a compound annual growth rate of approximately 8.4%, including growth of 4.6% in 2007 and a decrease of 1.3% in 2008. Similarly, QVC's Adjusted OIBDA grew at a compound annual growth rate of approximately 8.2% for the 5 years ended December 31, 2008, including decreases of .2% in 2007 and 9.1% in 2008. Given the downturn in the economy in 2008, as well as the fact that QVC's international operations are becoming more mature, QVC determined that it was prudent to adjust the growth rates used in the 2008 Cash Flow Projections. Therefore, the 2008 Cash Flow Projections include growth rates which are lower than QVC's historical growth rates and lower than the growth rates used in our 2007 cash flow projections. The growth rates used in the 2008 Cash Flow Projections are considered by management to be appropriate and reflect the current state of the domestic and world wide economies. The 2008 Cash Flow Projections include many assumptions, including assumptions regarding the timing of an economic recovery and the impact of any such recovery on QVC's operations. In this regard, the 2008 Cash Flow Projections are based on the economy stabilizing and growing modestly in the second half of 2009 and through 2010 and that the economy is somewhat more normalized in the years beyond 2010.

The projected cash flows were discounted using a blended discount rate of 13.5%, which represents an estimate of the weighted average cost of capital for QVC's domestic and international locations. The weighted average cost of capital incorporates risk premiums that reflect the current economic environments and locations where QVC has operations. Such discount rate is higher than the rate used in prior years due to changes in the marketplace for credit and risk premiums. Terminal growth rates after Year 6 consider the above noted factors for the initial six years forecasted cash flows and forecasted CPI increases.

We also used a market approach to validate the fair value of QVC determined by our discounted cash flow analysis. In our market approach, we identified publicly traded companies whose business and financial risks are comparable to those of QVC. We then compared the market values of those companies to the calculated value of QVC. We also identified recent sales of companies in lines of business similar to QVC and compared the sales prices in those transactions to the calculated value of

QVC. The range of values determined in our market approach corroborated the value calculated in our discounted cash flow analysis for QVC.

The estimated fair value of QVC determined in the foregoing Step 1 Test was clearly in excess of our carrying value for QVC, and accordingly no Step 2 Test was performed and no impairment charge was recorded. We note that if our fair value estimate for QVC was 10% lower, we would still not have triggered a Step 1 failure and no impairment charge would be taken.

The foregoing impairment test requires a high degree of judgment with respect to estimates of future cash flows and discount rates as well as other assumptions. Therefore, any value ultimately derived from QVC may differ from our estimate of fair value. Further if the retail environment continues to experience recessionary pressures for an extended period of time, our cash flow projections will need to be revised downward and we could have impairment charges in the future. In this regard, we estimate that if we were to use a compound annual growth rate for QVC's revenue that is approximately 25% lower than the rate currently used in the 2008 Cash Flow Projections and that QVC achieved the margins assumed in the 2008 Cash Flow Projections, we would fail the Step 1 Test and would be required to perform the Step 2 Test to measure any impairment of QVC's goodwill.

We are exposed to market risk in the normal course of business due to our ongoing investing and financial activities and the conduct of operations by our subsidiaries in different foreign countries. Market risk refers to the risk of loss arising from adverse changes in stock prices, interest rates and foreign currency exchange rates. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage our exposure to such risks.

We are exposed to changes in interest rates primarily as a result of our borrowing and investment activities, which include investments in fixed and floating rate debt instruments and borrowings used to maintain liquidity and to fund business operations. The nature and amount of our long-term and short-term debt are expected to vary as a result of future requirements, market conditions and other factors. We manage our exposure to interest rates by maintaining what we believe is an appropriate mix of fixed and variable rate debt. We believe this best protects us from interest rate risk. We have achieved this mix by (i) issuing fixed rate debt that we believe has a low stated interest rate and significant term to maturity, (ii) issuing variable rate debt with appropriate maturities and interest rates and (iii) entering into interest rate swap arrangements when we deem appropriate. As of March 31, 2009, and considering the effects of our interest rate swap agreements, our debt is comprised of the following amounts.

Each of our tracking stock groups is exposed to changes in stock prices primarily as a result of our significant holdings in publicly traded securities. We continually monitor changes in stock markets, in general, and changes in the stock prices of our holdings, specifically. We believe that changes in stock prices can be expected to vary as a result of general market conditions, technological changes, specific industry changes and other factors. We use equity collars and other financial instruments to manage

market risk associated with certain investment positions. These instruments are recorded at fair value based on option pricing models.

At March 31, 2009, the fair value of our AFS securities attributed to the Capital Group was $2,103 million. Had the market price of such securities been 10% lower at March 31, 2009, the aggregate value of such securities would have been $210 million lower. Such decrease would be partially offset by an increase in the value of our AFS Derivatives. Our exchangeable senior debentures are also subject to market risk. Because we mark these instruments to fair value each reporting date, increases in the stock price of the respective underlying security generally result in higher liabilities and unrealized losses in our statement of operations.

The Interactive Group is exposed to foreign exchange rate fluctuations related primarily to the monetary assets and liabilities and the financial results of QVC's foreign subsidiaries. Assets and liabilities of foreign subsidiaries for which the functional currency is the local currency are translated into U.S. dollars at period-end exchange rates, and the statements of operations are generally translated at the average exchange rate for the period. Exchange rate fluctuations on translating foreign currency financial statements into U.S. dollars that result in unrealized gains or losses are referred to as translation adjustments. Cumulative translation adjustments are recorded in other comprehensive earnings (loss) as a separate component of stockholders' equity. Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses, which are reflected in income as unrealized (based on period-end translations) or realized upon settlement of the transactions. Cash flows from our operations in foreign countries are translated at the average rate for the period. Accordingly, the Interactive Group may experience economic loss and a negative impact on earnings and equity with respect to our holdings solely as a result of foreign currency exchange rate fluctuations.

We periodically assess the effectiveness of our derivative financial instruments. With regard to interest rate swaps, we monitor the fair value of interest rate swaps as well as the effective interest rate the interest rate swap yields, in comparison to historical interest rate trends. We believe that any losses incurred with regard to interest rate swaps would be offset by the effects of interest rate movements on the underlying debt facilities. With regard to equity collars, we monitor historical market trends relative to values currently present in the market. We believe that any unrealized losses incurred with regard to equity collars and swaps would be offset by the effects of fair value changes on the underlying assets. These measures allow our management to evaluate the success of our use of derivative instruments and to determine when to enter into or exit from derivative instruments.

Our derivative instruments are executed with counterparties who are well known major financial institutions with high credit ratings. While we believe these derivative instruments effectively manage the risks highlighted above, they are subject to counterparty credit risk. Counterparty credit risk is the risk that the counterparty is unable to perform under the terms of the derivative instrument upon settlement of the derivative instrument. To protect ourselves against credit risk associated with these counterparties we generally:

In addition, to the extent we borrow against a derivative instrument, we have a right of offset with respect to our borrowings and amounts due from the counterparty under the derivative, thereby reducing our counterparty credit risk.

Due to the importance of these derivative instruments to our risk management strategy, we actively monitor the creditworthiness of each of these counterparties. Based on our analysis, we currently consider nonperformance by any of our counterparties to be unlikely.

In accordance with Exchange Act Rules 13a-15 and 15d-15, the Company carried out an evaluation, under the supervision and with the participation of management, including its chief executive officer, principal accounting officer and principal financial officer (the "Executives"), of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Executives concluded that the Company's disclosure controls and procedures were effective as of March 31, 2009 to provide reasonable assurance that information required to be disclosed in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

There has been no change in the Company's internal control over financial reporting that occurred during the three months ended March 31, 2009 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

For information regarding institution of, or material changes in, material legal proceedings that have been reported this fiscal year, reference is made to Part I, Item 3 of our Annual Report on Form 10-K filed on February 26, 2009. There have been no material developments in such legal proceedings during the three months ended March 31, 2009.

In connection with the reclassification of Old Liberty's Capital Group stock into Entertainment Group stock and Capital Group stock, our board of directors approved a program to repurchase up to $300 million of Liberty Capital common stock. In August 2008, our board of directors approved an additional $300 million of Liberty Capital common stock repurchases. We may alter or terminate the program at any time.

In addition to the shares listed in the table above, 5,618 shares of Series A Liberty Capital common stock, 13,078 shares of Series A Liberty Interactive common stock and 22,313 shares of Series A Liberty Entertainment common stock were surrendered in the first quarter of 2009 by certain of our officers and employees to pay withholding taxes and other deductions in connection with the vesting of their restricted stock.

Listed below are the exhibits which are filed as a part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Listed below are the exhibits which are filed as a part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2009
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to


State of Delaware (State or other jurisdiction of incorporation or organization)		84-1288730 (I.R.S. Employer Identification No.)
12300 Liberty Boulevard Englewood, Colorado (Address of principal executive offices)		80112 (Zip Code)


Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o (do not check if smaller reporting company)		Smaller reporting company o

	Series A

	Liberty Capital			WAEP		Liberty Interactive			WAEP		Liberty Entertainment			WAEP
	numbers of options in thousands
Outstanding at January 1, 2009		4,031		$	10.83		31,361		$	16.48		15,978		$	19.77
Granted		1		$	5.14		6,700		$	4.30		4		$	17.32
Exercised		—					—					(14	)	$	15.31
Forfeited		(15	)	$	13.89		(920	)	$	14.72		(45	)	$	22.23

Outstanding at March 31, 2009		4,017		$	10.82		37,141		$	14.33		15,923		$	19.76

Exercisable at March 31, 2009		2,277		$	13.57		16,655		$	19.87		8,855		$	20.25


Fixed rate senior notes	$	727
Senior debentures	$	426

	Fair Value Measurements at March 31, 2009 Using

Description	Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
			amounts in millions
Available-for-sale securities	$	2,776		2,538		238		—
Financial instrument assets	$	2,405		—		2,405		—
Financial instrument liabilities	$	738		387		351		—
Debt	$	1,921		—		1,921		—

	March 31, 2009					December 31, 2008

	Equity securities			Debt securities		Equity securities			Debt securities
	amounts in millions
Gross unrealized holding gains	$	33			3		9			—
Gross unrealized holding losses	$	(22	)		—		(4	)		—


Cash		$	463
DIRECTV			10,765
Liberty Sports Group			448
Deferred tax liability			(1,512	)

	Total	$	10,164

		QVC

		amounts in millions
Balance at January 1, 2009		$	5,363		132	1,055		6,550
	Foreign currency translation adjustments		(30	)	—	—		(30	)
	Other		—		—	(2	)	(2	)

Balance at March 31, 2009		$	5,333		132	1,053		6,518

	Percentage increase (decrease) in net revenue

	Three months ended March 31, 2009
	U.S. dollars			Local currency
QVC-US		(10.5	)%		(10.5	)%
QVC-UK		(32.0	)%		(5.6	)%
QVC-Germany		(10.4	)%		2.8	%
QVC-Japan		19.0	%		5.9	%

	Variable rate debt					Fixed rate debt

	Principal amount		Weighted avg interest rate			Principal amount		Weighted avg interest rate
	dollar amounts in millions
Interactive Group	$	2,447		<1	%	$	5,101		5.6	%
Capital Group	$	3,120		1.2	%	$	3,439		3.6	%
Entertainment Group	$	—		N/A		$	2,049		3.6	%

		Series A Liberty Capital Common Stock

Period		(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be purchased Under the Plans or Programs
January 1-31, 2009			4,600	$	4.73		4,600	$	122.2 million
February 1-28, 2009			—	$	—		—	$	122.2 million
March 1-31, 2009			555,556	$	6.05		555,556	$	118.8 million

	Total		560,156				560,156


10.1		Liberty Media Corporation 2002 Nonemployee Director Incentive Plan (As Amended and Restated Effective August 15, 2007)*
31.1		Rule 13a-14(a)/15d-14(a) Certification*
31.2		Rule 13a-14(a)/15d-14(a) Certification*
31.3		Rule 13a-14(a)/15d-14(a) Certification*
32		Section 1350 Certification**
99.1		Attributed Financial Information for Tracking Stock Groups*


	LIBERTY MEDIA CORPORATION
Date: May 8, 2009	By:	/s/ GREGORY B. MAFFEI Gregory B. Maffei President and Chief Executive Officer
Date: May 8, 2009	By:	/s/ DAVID J.A. FLOWERS David J.A. Flowers Senior Vice President and Treasurer (Principal Financial Officer)
Date: May 8, 2009	By:	/s/ CHRISTOPHER W. SHEAN Christopher W. Shean Senior Vice President and Controller (Principal Accounting Officer)