[BAKER BOTTS L.L.P. LETTERHEAD]
August 27, 2009
Via EDGAR and By Hand
Securities and Exchange Commission
100 F Street NE, Mail Stop 3720
Washington, D.C. 20549
Attention: Paul Fischer, Attorney-Advisor
Liberty
Entertainment, Inc.
Schedule 13E-3
Amendment No. 3 to Form S-4 (File No. 333-158795)
Dear Mr. Fischer:
Liberty Media Corporation ("Liberty Media") hereby electronically files under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Amendment No. 2 to its preliminary Schedule 14A (the "Proxy Statement/Prospectus"), originally filed on June 8, 2009 and amended by Amendment No. 1 filed on July 30, 2009. Liberty Entertainment, Inc. ("LEI") hereby electronically files under the Exchange Act, Amendment No. 3 to its Registration Statement on Form S-4 (the "Form S-4") originally filed on April 24, 2009, as amended by Amendment No. 1 filed on June 8, 2009 and Amendment No. 2 ("Amendment No. 2") filed on July 30, 2009, of which the Proxy Statement/Prospectus forms a part. Liberty Media and LEI together hereby electronically file under the Exchange Act Rule 13E-3 Transaction Statement on Schedule 13E-3.
Set forth below are responses to the comments contained in your letter to Liberty Media, dated August 17, 2009 (the "SEC Letter"), regarding the Proxy Statement/Prospectus and Amendment No. 2. For your convenience, each of our responses is preceded by the Staff's comment. The numbered paragraphs below correspond to the numbered paragraphs in the SEC Letter. All section references refer to the corresponding sections of the Proxy Statement/Prospectus unless otherwise noted. Defined terms used and not otherwise defined in this letter have the meanings ascribed to them in the Proxy Statement/Prospectus.
General
Response: As indicated above, we are filing the Schedule 13E-3 concurrently with the filing of the Proxy Statement/Prospectus and Amendment No. 2 and have included the related disclosure in the applicable locations throughout the Proxy Statement/Prospectus.
Dear Stockholder Letter, page ii
Delaware law or the company's charter, and briefly explain why the company is seeking shareholder ratification.
Response: We have revised the disclosure in response to the Staff's comment.
DTV Business Combination, page 24
Response: We have included additional disclosure throughout the Proxy Statement/Prospectus addressing the impact of the transactions on the disinterested holders of Liberty Entertainment common stock.
Background of the DTV Business Combination, page 83
Response: We have revised the disclosure in response to the Staff's comment.
Response: The nonemployee director plan (the plan) is intended to encourage the directors to increase their proprietary interest in Liberty Media's businesses and their personal interest in the continued success and progress of the Liberty Media. The plan is further intended to attract and retain qualified individuals to serve as nonemployee directors of Liberty Media. The plan vests the Liberty Media board, as the administrator of the plan, with broad and exclusive authority to interpret the plan. Section 3.3 of the plan states, in pertinent part, that "each action and determination made or taken pursuant to the Plan by the Board, including any interpretation or construction of the Plan, shall be final and conclusive for all purposes and upon all Persons."
During the structuring of the DTV Business Combination, it came to light that Mr. Bennett's position as a director of Liberty Media and his significant equity interest in Liberty Media (particularly with respect to the high-vote Series B shares) required that Mr. Bennett either resign from the board and agree to limited restrictions relating to his Liberty Entertainment common stock or remain on the board and agree to significant restrictions relating to his Liberty Entertainment common stock, in either such case, to assist in the preservation of the tax-free treatment of the overall transaction. In light of Mr. Bennett's extensive knowledge of Liberty Media and the value he contributes as a director, the Liberty Media board (with Mr. Bennett abstaining) determined that it would be preferable to negotiate the more onerous restrictions related to Mr. Bennett's equity ownership rather than lose Mr. Bennett as a member of the board. To achieve this end, Mr. Bennett was required to agree to make the bulk of his investment in Liberty Entertainment common stock illiquid prior to the closing of the DTV
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Business Combination and to forfeit his rights to acquire any high-vote shares upon the exercise of his fully-vested stock options, among other things. To compensate Mr. Bennett for his potential economic losses, the board determined to grant Mr. Bennett an award of options to acquire LMDIA shares with a Black-Scholes value of approximately $2.5 million. The board chose to make this grant under the plan because the grant enabled Liberty Media to retain Mr. Bennett's services as a director while also enabling him to hold a proprietary interest in Liberty Media's businesses and a personal interest in its success and progress. The board believed the grant was a proper exercise of its authority consistent with the terms of the plan.
Opinion of Financial Advisor to the Liberty Media Board, page 99
Response: We have revised the disclosure in response to the Staff's comment.
The Split-Off, page 112
Accounting Treatment, page 120
In regards to your response, it appears that you have established a much higher threshold in your analysis of whether the multiple arrangements should be viewed as a single transaction. When looking at the guidance, as provided by item (c), one indication that you should view the arrangements as a single transaction is that the business combination is dependent on the completion of the split-off. Another indication that you should view the arrangements as a single transaction, as provided by item (a), is that the split-off and merger were "entered into at the same time or in contemplation of one another." This conclusion is based upon the discussion included in your January 22nd preliminary proxy statement under Background and Reasons for the Redemption Proposal. A third indication, as provided by item (b), is that the two arrangements appear to "form a single transaction designed to achieve an overall commercial effect." The overall commercial effect is that the transaction: clarifies DIRECTV's capital structure, reduces its shares outstanding, eliminates stock overhang and arbitrage issues, and provides DIRECTV with strategic content businesses. In addition, the transaction offers value to Liberty's shareholders by eliminating the discount in their tracking stock structure and allows them to continue to participate directly in the strong performance of DIRECTV.
In summary, we believe there are strong indications that your arrangements should be viewed as one, and that the weight of these indications is greater than the competing indications articulated in your prior response. Please address our concerns or revise your accounting if necessary.
Response: It is our understanding that this comment has been resolved following the Staff's review of correspondence supplementally provided by Liberty Media on August 19, 2009.
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Response: It is our understanding that this comment has been resolved following the Staff's review of correspondence supplementally provided by Liberty Media on August 19, 2009.
Agreements Relating to the DTV Business Combination, page 139
Merger Agreement, page 139
Response: Liberty Media acknowledges that it is responsible for considering whether any additional specific disclosures of material information regarding material contractual provisions are required to make the statements included in the Proxy Statement/Prospectus not misleading and has determined that no such additional disclosures are required.
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If you have any questions with respect to the foregoing responses to the SEC Letter or require further information, please contact the undersigned at (212) 408-2503.
Very truly yours, |
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/s/ RENEE L. WILM |
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Renee L. Wilm |
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Liberty Media Corporation
Charles Y. Tanabe
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