Liberty Media Posts First Quarter 2011 Financial Results.

Liberty Media Corp. reported first quarter results for Liberty Capital group, Liberty Interactive group and Liberty Starz group.

"We are pleased with QVC's results, particularly in light of the challenging economic environment for consumers and the tragedies in Japan," stated Greg Maffei, Liberty President and CEO. "At Starz, we posted strong financial results with robust subscriber growth and continue to execute on our original content strategy with solid viewership for both Spartacus: Gods of the Arena and Camelot. We were extremely gratified to receive a favorable ruling from the Court regarding our split-off of Liberty Capital and Liberty Starz and plan to have our shareholder vote on May 23rd. Pending a final, non-appealable ruling from the Court, we expect to complete the split-off this summer."

In a release on May 6, the Company noted that highlights include:

-Received favorable ruling from Delaware Court of Chancery on proposed split-off of Liberty Capital and Liberty Starz

-Proxy statement declared effective and set shareholder vote for May 23rd

-Grew consolidated QVC revenue by 4 percent with particular strength in Germany and the UK

-Adjusted OIBDA(2) decreased less than 1 percent, but excluding the effects of the new agreement with GE Money Bank and Italy launch, adjusted OIBDA grew 4 percent

-Operating income decreased 3 percent

-Set a premiere viewership record for STARZ original series Camelot

-Increased STARZ and ENCORE subscriptions by 10 percent and 6 percent, respectively

-Value of Liberty's stake in SiriusXM increased to $5.5 billion as of May 5,

-Repurchased $31 million of Liberty Capital stock, from February 1st through April 29th,

Liberty Interactive group's revenue increased 7 percent to $2.2 billion and adjusted OIBDA decreased 1 percent to $378 million, while operating income decreased 2 percent to $213 million. The decrease in adjusted OIBDA and operating income was primarily due to the impact of the earthquake and related disasters in Japan on QVC's business during the quarter, QVC's new agreement with GE Money Bank and the launch of QVC Italy.

QVC's consolidated revenue increased 4 percent in the first quarter to $1.8 billion and adjusted OIBDA decreased less than 1 percent to $363 million.

"QVC drove solid revenue growth of 4 percent against a challenging prior year comparison," stated Mike George, QVC President and CEO. "While our consolidated adjusted OIBDA declined slightly from the prior year, this was driven by three extraordinary events: our Italy start-up, the change in our QCard program with GE Money Bank and the impact of the tragedies in Japan. In the US, our 3 percent revenue growth in the first quarter contributed to a 14 percent two year growth rate, placing us among the faster growing large retailers in the US. Exceptional revenue growth from new customers and eCommerce, inclusive of mobile, in the US, Germany and the UK, are the leading factors in this quarter's performance. We are committed to creating highly immersive shopping experiences with differentiated products, engaging personalities, high levels of community involvement and simultaneous engagement over multiple platforms - an experience that cannot be replicated by either store based or internet retailers. A perfect example of this was March's Red Carpet event celebrating the Oscars, where we engaged our customer over multiple platforms through the creation of behind the scenes video blogs, contests on Facebook and QVC.com and live streaming tweets."

QVC's US revenue increased 3 percent in the first quarter to $1.2 billion and adjusted OIBDA was relatively flat. Sales of electronics, beauty and accessories increased while jewelry sales declined. The average selling price for the first quarter increased 7 percent from $51.16 to $54.83 while total units sold decreased 3 percent to 24 million. Returns as a percent of gross product revenue decreased from 18.6 percent to 18.2 percent for the quarter. QVC.com sales as a percentage of US sales grew from 32 percent in the first quarter of 2010 to 36 percent in the first quarter of 2011. Overall, US adjusted OIBDA was negatively impacted by $10 million for the quarter due to the change in terms of our arrangement with GE Money Bank for our QCard that was effective in August 2010 as previously disclosed. Excluding the negative impact of this arrangement, US adjusted OIBDA increased 3 percent for the first quarter. The US adjusted OIBDA margin decreased 77 basis points to 21.8 percent for the quarter primarily due to the previously disclosed change in our QCard arrangement and a decrease in initial margins due to growth in electronics.

On March 11, there was a significant earthquake and related disasters in Japan. As a result, QVC Japan experienced an interruption of its business and was off-air for 12 days. The distribution center suffered moderate damage. QVC maintains insurance coverage for property damage and certain business interruption circumstances, subject to approximately a $12 million deductible. QVC has not yet determined the complete financial impact of the property damage, the impact to its future operations or the value, if any, of a related insurance claim. Due to the nature of the events that caused QVC Japan to suspend their operations for a time in March, we estimate that approximately $24 million in revenue was lost based on prior year revenue during the same period. Since QVC Japan has resumed its broadcast, sales have been running approximately 10 percent below prior year sales, due to the disruption in the country. We cannot determine at this time when QVC Japan will return to sales levels we were experiencing before the earthquake and related disasters in Japan. Additionally, management enacted a temporary employee pay policy to continue to pay employees during the off-air period, effectively causing QVC Japan's variable labor costs to be fixed for a period of time. These events described above negatively impacted QVC Japan's and QVC's consolidated adjusted OIBDA margin.

Despite this event, QVC's international revenue increased 7 percent in the first quarter to $643 million including the impact of unfavorable exchange rates in Germany and Italy and favorable exchange rates in the UK and Japan. International adjusted OIBDA decreased 2 percent to $103 million for the quarter. Included in QVC's international first quarter results is $10 million of adjusted OIBDA loss compared to $4 million in the prior year, related to QVC Italy operations that launched as planned in October 2010. Excluding the effects of Italy, international adjusted OIBDA would have increased 4 percent for the quarter. International adjusted OIBDA margins decreased 145 basis points for the quarter due primarily to the negative impact of QVC Italy's early stage operations and the temporary suspension of QVC Japan operations. Excluding Italy, international adjusted OIBDA margin would have decreased 45 basis points.

QVC UK's revenue grew 5 percent in local currency due primarily to the increased sales of electronics. QVC UK's average selling price in local currency increased 3 percent and units sold increased 4 percent for the quarter. QVC UK's adjusted OIBDA increased 11 percent in local currency for the quarter with the adjusted OIBDA margin increasing 26 basis points due primarily to lower obsolescence expense and freight savings.

QVC Germany's revenue grew 13 percent in local currency for the quarter through increased sales in apparel, health and fitness and accessories. QVC Germany's average selling price in local currency increased 3 percent for the quarter with units sold increasing 13 percent. QVC Germany's adjusted OIBDA increased 18 percent in local currency and the adjusted OIBDA margin increased 78 basis points for the quarter due primarily to lower inventory obsolescence expense.

QVC Japan's revenue and adjusted OIBDA decreased 9 percent and 19 percent, respectively, in local currency for the quarter due to the suspension of operations related to the earthquake and related disasters. In addition, the results were impacted by QVC's decision to pay all employees during the off-air period and the negative leverage impact of QVC's fixed fee broadcasting distribution arrangements. QVC Japan also contributed close to $2 million to local charitable restoration efforts.

QVC Italy continues to ramp up its operations with its sales coming primarily from the beauty and home product categories. QVC Italy's revenue for the quarter was $4 million with an adjusted OIBDA loss of $10 million as mentioned above.

QVC's outstanding bank and bond debt was $2.8 billion at March 31.

In the aggregate, the eCommerce businesses increased revenue 21 percent to $324 million for the quarter as each company reported an increase in revenue for the three-month period. Adjusted OIBDA increased 61 percent to $29 million for the quarter and operating income increased 100 percent to $8 million. The three months ended March 31, 2010 included the results of a start-up that was deconsolidated in the third quarter of 2010. Excluding the results of the start-up for the three months ended March 31, 2010, adjusted OIBDA increased 32 percent, and operating income was flat due to the revenue increase and leveraging of fixed costs.

There were no repurchases of Liberty Interactive stock from February 1, through April 29. Liberty has approximately $740 million remaining under its Liberty Interactive stock repurchase authorization.

The businesses and assets attributed to Liberty Interactive group are engaged in, or are ownership interests in companies that are engaged in, video and on-line commerce, and currently include Liberty's subsidiaries QVC, Provide Commerce, Backcountry.com, Bodybuilding.com, Celebrate Interactive, CommerceHub, and The Right Start, and its interests in, HSN, Tree.com, Interval Leisure Group, Expedia and Lockerz. Liberty has identified wholly-owned QVC as the principal operating segment of the Liberty Interactive group.

Results for Liberty Starz group primarily represent results of Starz, LLC. The following discussion regarding the results of Starz, LLC include the legacy Starz Entertainment and the legacy Starz Media businesses for the three months ended March 31. The historical results for Starz for the three months ended March 31, 2010 only include the historical results for the legacy Starz Entertainment business, as the change in attribution of Starz Media from Liberty Capital to Liberty Starz became effective as of September 30, 2010.

Starz, LLC's revenue increased 28 percent to $391 million for the first quarter, an increase of $86 million. The additional revenue from the legacy Starz Media businesses contributed approximately $65 million of such increase. The remaining increase in the period can be attributed to the legacy Starz Entertainment business as a result of a $4 million increase due to higher effective rates for the channels and $6 million due to growth in the average number of subscriptions. Additionally, there was approximately $11 million in additional ancillary revenue related to television rights and home video for STARZ original content. Revenue associated with the legacy Starz Media businesses was significantly less than the corresponding prior year period primarily due to the wide release of two theatrical films in the first quarter of 2010 and no theatrical releases in the current period along with the release on home video of three significant theatrical films in the prior year as compared to only one in the current period.

Starz, LLC's adjusted OIBDA increased 24 percent to $131 million, a $25 million increase and operating income increased 25 percent to $124 million. Approximately $15 million of the adjusted OIBDA increase was contributed by the legacy Starz Media businesses. As discussed above, the reduced theatrical and home video releases resulted in lower revenue which was more than offset by no current period spending on marketing, advertising, production and acquisition costs associated with the theatrical exhibition of such productions. STARZ' subscription units increased 10 percent and ENCORE subscriptions increased 6 percent compared to the first quarter of 2010.

"The first quarter marked another period of solid results and new highs in subscriptions to the STARZ and ENCORE flagship channels," said Chris Albrecht, Starz, LLC, President and CEO. "Performance of our current original dramatic series, Camelot, has surpassed expectations and continued our momentum with successful original programming. The legacy Starz Media businesses had positive results in the first quarter, with Anchor Bay benefitting from improved operational performance. Anchor Bay is positioned for the future to benefit from a home video distribution pipeline that now includes content from The Weinstein Company, Starz Originals, and such titles as The Walking Dead, which we are distributing for AMC."

There were no repurchases of Liberty Starz stock from February 1, through April 29. Liberty has approximately $447 million remaining under its Liberty Starz stock repurchase authorization.

The businesses and assets attributed to Liberty Starz group are primarily engaged in the production and distribution of video programming and related businesses.

Liberty Capital group's revenue increased to $581 million while adjusted OIBDA and operating income increased to $358 million and $343 million, respectively, for the first quarter. The increase in revenue is primarily due to the impact of a one-time recognition of previously deferred revenue and cost at TruePosition, partially offset by the change in attribution of Starz Media from Liberty Capital to Liberty Starz which was effective September 30, 2010. The increase in adjusted OIBDA is primarily due to the one-time recognition of previously deferred revenue and cost at TruePosition.

From February 1, through April 29, Liberty repurchased approximately 430,000 shares of Series A Liberty Capital common stock at an average cost per share of $72.34 for total cash consideration of $31.1 million. Since the reclassification of Liberty Capital on March 4, 2008 through April 29, Liberty has repurchased 50.9 million shares at an average cost per share of $25.35 for total cash consideration of $1.3 billion. These repurchases represent 39.4 percent of the shares outstanding. Liberty had approximately $310.6 million remaining under its Liberty Capital stock repurchase authorization on April 29.

The businesses and assets attributed to Liberty Capital group are all of Liberty's businesses and assets other than those attributed to the Liberty Interactive group and Liberty Starz group and include its subsidiaries Starz Media (through September 30, 2010), TruePosition, Atlanta National League Baseball Club (the owner of the Atlanta Braves), its interests in SiriusXM, and minority interests in Live Nation, Time Warner, and Viacom.

Liberty Media Corp. operates and owns interests in a broad range of video and on-line commerce, media, communications and entertainment businesses.

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