| Investments In Affiliates Accounted For Using The Equity Method |
(9) Investments in Affiliates Accounted for Using the Equity Method
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 December 31, 2017 and the carrying amount at December 31, 2016:
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December 31, 2017
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December 31, 2016
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Percentage
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Market
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Carrying
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Carrying
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ownership
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value
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amount
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amount
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dollars in millions
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QVC Group
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HSNi (1)
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100
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%
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$
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NA
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$
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NA
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184
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Other
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various
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NA
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40
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40
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Total QVC Group
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40
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224
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Ventures Group
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FTD (2)
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37
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%
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$
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73
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73
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216
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LendingTree (3)
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27
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%
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1,098
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115
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31
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Other (4)
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various
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NA
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81
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110
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Total Ventures Group
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269
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357
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Consolidated Liberty
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$
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309
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581
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The following table presents Liberty's share of earnings (losses) of affiliates:
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Years ended December 31,
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2017
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2016
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2015
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amounts in millions
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QVC Group
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HSNi (1)
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$
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40
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48
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64
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Other
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(2)
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(6)
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(9)
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Total QVC Group
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38
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42
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55
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Ventures Group
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FTD (2)
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(146)
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(41)
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(83)
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LendingTree (3)
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7
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12
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2
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Other (4)
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(99)
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(81)
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(152)
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Total Ventures Group
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(238)
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(110)
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(233)
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Consolidated Liberty
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$
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(200)
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(68)
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(178)
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(1)
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As discussed in note 5, on December 29, 2017, the Company acquired the approximately 62% of HSNi it did not already own in an all-stock transaction making HSNi a wholly-owned subsidiary, attributed to the QVC Group tracking stock group. Therefore the Company no longer has an equity method investment in HSNi as of December 31, 2017. In addition, HSNi paid dividends of $28 million, $28 million, and $228 million during the years ended December 31, 2017, 2016 and 2015, respectively, which were recorded as reductions to the investment balances, and recorded as a cash inflow from operations in the Cash receipts from returns on equity investments line item in the consolidated statements of cash flows. Dividends from HSNi during the year ended December 31, 2015 included a special dividend of $10 per share from which Liberty received approximately $200 million in cash, which was recorded as a cash inflow from investing activities in the Cash receipts from returns of equity investments line item in the consolidated statements of cash flows.
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(2)
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The carrying value of Liberty’s investment in FTD was written down to its fair value (based on the closing price (Level 1)) as of December 31, 2017 and December 31, 2015.
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(3)
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During the year ended December 31, 2017, the Company purchased an additional 450 thousand shares of LendingTree common stock (“TREE”). In order to purchase the additional shares, Ventures Holdco, LLC, a wholly owned subsidiary of the Company executed a 2-year postpaid variable forward with a notional value of $110 million. The company pledged 642,850 shares of TREE and purchased the delta underlying of 450,000 shares for $77 million. Changes in the fair value of the derivative are reflected in the Realized and unrealized gains (losses) on financial instruments, net line item in the consolidated statements of operations. For the period ended December 31, 2017, the Company recorded an unrealized loss of $95 million.
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(4)
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The Other category for the Ventures Group is comprised of alternative energy investments and other investments. The alternative energy investments generally operate at a loss but provide favorable tax attributes recorded through the income tax (expense) benefit line item in the consolidated statements of operations. During the year ended December 31, 2015, Liberty recorded an impairment of approximately $98 million, based on a discounted cash flow valuation (Level 3), related to one of its alternative energy investments which had underperformed operationally.
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Investment in Liberty Broadband
As discussed in note 2, in connection with the merger of Charter and TWC, on May 18, 2016, Liberty invested $2.4 billion in Liberty Broadband Series C nonvoting shares. As of December 31, 2017, Liberty has a 23.5% economic ownership interest in Liberty Broadband. Due to overlapping boards of directors and management, Liberty has been deemed to have significant influence over Liberty Broadband for accounting purposes, even though Liberty does not have any voting rights. Liberty has elected to apply the fair value option for its investment in Liberty Broadband (Level 1) as it is believed that the Company’s investors value this investment based on the trading price of Liberty Broadband. Liberty recognizes changes in the fair value of its investment in Liberty Broadband in realized and unrealized gains (losses) on financial instruments, net in the consolidated statements of operations.
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