Excerpt from LMG's April 2000 Letter To Shareholders
As mentioned in last year's letter, we folded certain of our interactive television, Internet and music assets into a new company called Liberty Digital. This transaction was announced in April and completed in September 1999. Liberty Digital has a dual mandate: to develop applications and services under the bandwidth agreement we negotiated as part of the AT&T merger, and to make venture capital investments in the fields of interactive television and Internet content. Exploitation of the bandwidth agreement is dependent on deployment by AT&T and other cable operators of next-generation set-top devices. Since such devices will probably not be deployed in scale for at least another year, Liberty Digital has focused on a steady stream of investments and acquisitions.
We began to assemble Liberty Livewire in July 1999 with the announced acquisition of Todd-AO, followed by acquisitions of SounDelux and Four Media. When assembled, Liberty Livewire will function as a third-party service company offering an end-to-end package of post-production services and video and Internet distribution services to studios, television programmers and advertisers. These services will facilitate the efficient production and networking of interactive programming and advertising bound for the consumer's TV and PC via cable, DSL and broadcast television distribution, addressing both the narrow band and broadband needs of our customers.
Liberty Livewire is still in its infancy, but could emerge as a very important business as the nature and delivery of video and Internet content continue to evolve. Liberty Livewire not only offers the potential for significant economic opportunity, but it should also add to the value of our other programming businesses by providing a cost-efficient infrastructure for the development of interactive programming services.
We also orchestrated three large merger transactions, all of which demonstrate the transition of our holdings into larger companies. Each transaction offered different benefits to Liberty.
In September 1999, General Instrument announced a merger agreement with Motorola, a leader in wireless communications, networking and semiconductor technology. This transaction brought the value of Motorola's technology resources, brand name and business diversification to GI. The merger made Liberty one of the largest shareholders in Motorola and it also substantially increased the liquidity of Liberty's ownership position, enabling us to use the asset to finance other activities while continuing to benefit from the future growth of Motorola's businesses.
In October 1999, TV Guide announced its agreement to merge with Gemstar International Group. Upon completion of the merger, expected in the second quarter of 2000, our 44 percent interest in TV Guide will convert to approximately 20 percent of the new TV Guide International. Liberty—together with News Corporation, which holds a similar interest—will be the largest shareholders and will continue our active roles in the management of the Company. The objective of the merger is to combine TV Guide's strengths in providing viewer guide information to consumers through its magazine and passive and interactive cable services, with Gemstar's preeminent global position with broadcasters and consumer electronics manufacturers. The scale provided by the combination will also increase the potential audience size available to advertisers and present opportunities for cost savings. |
