Liberty Media Corp

Content

1. Corporate Overview Liberty Media Corporation (LMC) is a diversified American media and entertainment company. The company operates in three segments: interactive, networks, and technology/ventures. 1.1 Corporate History In 1991, Liberty Media is traded for the first time on NASDAQ. In 2005, Liberty Media announced spin off of its ownership in Ascent Media Group and Discovery Communications. 1.2 Key Facts Revenue (2005)-US$7.96 billion 1.3 Subsidiaries/Affiliates 1.4 Organizational Chart 1.5 Profiles of Key People Chairman- John Malone President & CEO - Gregory B. Maffei CEO of QVC- Douglas S. Briggs 1.6 Recent Developments In July 2006, Liberty Media decides to acquire BUYSEASONS Inc. In April 2006, Liberty Media decides to acquire IDT Entertainment. 2. Business Description 2.1 Business Segments QVC SEG Corporate & Others 2.1.1 Products/Services Home Shopping Channel Entertainment Programs 2.2 Geographical Segmentation In 2005, the US contributed the highest 75.6% to the total revenue of LMC. 2.3 Key Partnerships/Alliances IDT Corporation Will be attributed to the Liberty Capital Group. Mobile Streams Would operate as a mobile entertainment partner. 3. SWOT Analysis 3.1 Strengths Dominant presence in home shopping segment Strong position in gaming market 3.2 Weaknesses High operating costs of Starz 3.3 Opportunities Booming casual gaming market Growing Asian pay TV market 3.4 Threats Emerging trend towards free TV net 4. Key Business Strategies Disaggregating Businesses Inorganic Growth Focus on Innovation 5. Financial Performance 5.1 Financial Highlights In 2005, LMCs revenues increase by 3.6% y-o-y, while Operating Income increased 28.1% y-o-y in the same year. 5.2 Five-Year Financial Summary The revenues of Liberty Media reached US$7.96 billion in 2005 at a CAGR of 40.2% from US$2.06 billion in 2001. 5.3 Ratio Analysis In 2005, gross margins of Liberty Media fell to 48.3% in 2005 from 53.2% in 2004. The operating margins of the company improved 216 basis points, while the net profit margins declined to (0.4%) in 2005, from 0.6% in 2004. 5.4 Market Indicators 5.4.1 Stock Chart Liberty Media stocks have been in the range of US$7.6 to US$8.7 in past two years, outperforming the benchmark index. 5.4.2 Earnings Estimates For 2006, Liberty expects Liberty Interactive revenue to grow by a low double-digit percentage. 6. Competitive Landscape 6.1 Industry Overview Global cosmetics industry is being driven by increasing demand of natural cosmetics, direct sales model, power brands and shifting focus towards the young consumers. 6.1.1 Industry Definition and Segmentation 6.1.2 Key Drivers Increase in Digital Networks and HDTV Increase in Broadband Subscribers 6.1.3 Major Trends Growth of Reality TV Growth in Online Home Shoppers Focus Shifting Towards Customer Retention 6.1.4 Outlook Demand for oil and gas is expected to rise through 2010 at the annual rate of about 2% for oil, and 3% for gas. 6.2 Competition CBS Corporation Charter Communications CableVision Systems 6.2.1 Competitive Positioning Liberty Media has the largest non-US operations amongst its competitors at 24.4%. 6.2.2 Geographical Coverage CBS Corporation earns 88.1% of its revenues from the US, while the remaining two competitors of Liberty Media, Charter Communications and CableVision Systems operate only in the US. 6.2.3 Client Base 6.3 Financial Assessment In 2005, LMC ranked second among its competitors in terms of Revenue, but had the highest CAGR of 40.2%. Net Income - Estee Lauder reported a net income of US$406.1 million in FY05, compared to US$342.1 in the previous year due to better performance of skin care, make up and fragrance products. 6.4 Stock Market Performance Liberty Medias stock got de-listed in May 2006, with the formation of two tracking stocks Liberty Interactive and Liberty Capital. 7. Outlook 7.1 Company View Owing to operational efficiencies from Liberty Interactives QVC and Provide Commerce, the company has a positive outlook and anticipates a double-digit revenue growth till 2010 for QVC. It expects operating cash flow and income to grow at the same rate. 7.2 Analyst View Analysts maintain reservations regarding the success of the structure adopted by the company. They maintain that the company has had a mixed performance over the last few years. Appendices Appendix I Income Statement, 2003-2005 Appendix II Balance Sheet, 2003-2005 List of Tables/Figures Table 1.1 Key Facts Table 1.2 Subsidiaries/Affiliates Table 1.3 Profiles of Key People (2005) Table 1.4 Recent Developments (2006) Table 2.1 Products/Services Table 2.2 Key Partnerships/Alliances (2006) Table 5.1 Financial Highlights (2004-2005) Table 6.1 Competitors Table 6.2 Competitive Positioning Table 6.3 Client Base Figure 1.1 Organizational Chart Figure 2.1 Business Segment Revenue Break-up (2005) Figure 2.2 Revenue Share by Geography (2005) Figure 3.1 US Home Shopping TV Market Share (2005) Figure 3.2 Programming Costs (2003-2005) Figure 5.1 Segment-wise Revenue & Operating Income (2005) Figure 5.2 Revenue Growth (2001-2005) Figure 5.3 Operating Income (2001-2005) Figure 5.4 Net Income (2001-2005) Figure 5.5 Profitability Ratios (2004-2005) Figure 5.6 Performance Ratios (2004-2005) Figure 5.7 Stock Performance (Sep 2004 to Aug 2006) Figure 5.8 Sales & Net Income Estimates (2005-2007) Figure 6.1 Home Broadband Users in US (2003-2005) Figure 6.2 CBS Revenue by Geographical Segmentation (2004-2005) Figure 6.3 QVC Revenues by Geography (2004-2005) Figure 6.4 Revenues (2005) Figure 6.5 Net Income (2005) Figure 6.6: Stock Market Performance (Sep2004-Aug 2006) Table 5.1 IT Vendor-Technology/ Infrastructure Provided