Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : IATV-ACTV Digital Convergence Software-HyperTV -- Ignore unavailable to you. Want to Upgrade?

To: art slott who wrote (6111)	8/15/1999 4:57:00 PM
From: Steve Hausser	Respond to of 13157

Good job Art. I'm going to post an expanded version.

To: art slott who wrote (6111)	8/15/1999 5:01:00 PM
From: Steve Hausser	Read Replies (4) \| Respond to of 13157

Goldman Sachs - Liberty Media Group "John Malone's Sandbox" 1-A Truly Unique Investment Vehicle. Liberty Media, in our opinion, represents a truly unique investment opportunity. It is essentially a hybrid private/public equity investment fund managed by one of the most successful entrepreneurs and investors of our time, John Malone, and his highly talented associate, Dob Bennett, with no fees or overrides and offering complete liquidity. The company's investments focus on video programming, communications, the Internet, and related technology businesses. The relationships between the investments help enhance their value. The company mission is to pursue no goal other than the maximization of shareholder value without regard to being the leader in an industry or being concerned about market share and so on. 2-Core Assets Incredibly Well Positioned for Growth. Liberty Media has a handful of what we regard as very large core assets that cut across video programming, diversified media, the Internet, and other communications. These assets also reflect a balance of privately owned assets and public companies. The common thread across virtually all of the assets is outstanding growth. (We note 1998 EBTIDA growth in parenthesis following the described assets). In terms of value the largest single asset is Liberty's ownership position in Time Warner (14%), followed by its ownership position in the newly formed Liberty Digital (just formed), which houses the company's nascent Internet and interactive television businesses. Liberty also has an ownership position in Sprint PCS (still negative EBITDA). The company has three very large privately held assets, the two largest being Discovery Communications (172%, 36% for its developed assets) and QVC (29%), followed by Encore Media Group, (a $28 million loss to a $100 million positive EBITDA). As a result of the AT&T transaction and restructuring of Liberty Media and TCI Ventures into a tracking stock of AT&T, Liberty now has more than $4 billion of case, an asset that the company has already begun to deploy successfully into additional investments. 3-AT&T Relationship - All Benefits, No Real Cost.. . . Liberty's status as an AT&T tracking stock confers significant benefits on Liberty without any real disadvantages. AT&T tax consolidates Liberty, and as a result, the two companies negotiated a tax-sharing arrangement, under which AT&T compensates Liberty for the tax losses it generates for AT&T. Liberty is compensated fully on a present value basis for the losses, rather than having losses that it might never be able to use. . . . At the same time AT&T exercises essentially no management control of the company, other than having some board representation. Liberty is effectively controlled by John Malone. Dr. Malone has an enormously powerful incentive to build value for Liberty Media shareholders since, by our last calculation, he owned roughly 53 million shares and equivalents of stock. His equity is primarily in the form of the supervoting Class B shares. Company CEO Dob Bennett's equity stake is not publicly disclosed, but it is believed to be substantial. 4-The Importance of the Agreement with AT&T Should Not Be Underestimated.. . . There are two key elements to the agreements, the preferred vendor status and the agreement on interactive video services. Both in our judgement, particularly the latter, are potentially of enormous value to Liberty Media and its shareholders. 5-Preferred Vendor. Under this agreement, Liberty is granted a preferred status with respect to access, timing, and placement of new programming services. AT&T must use its reasonable best effort to provide carriage on the digital basic tier of new services developed by Liberty, on a "most favored nation" basis . . . In effect, Liberty and its programming affiliates go to the front of the line with respect to programmers wanting access to AT&T cable systems. 6-Interactive Video Services - The Famous 6 MHz Access Deal - Liberty's Beachfront Property. Liberty was able to negotiate a particularly unique, and we believe, highly valuable agreement with AT&T for access to the AT&T cable systems for new interactive programming. . . . For a five-year period, renewable for an additional four-year period, and then on most favored nation terms, AT&T will make available to Liberty Media and its affiliates guaranteed access to a full 6 MHz channel (in digital form, and including interactive enablement and first-screen access and hot links to relevant Web sites) for the purposes of transmitting interactive, category-specific video channels offering entertainment, information, and merchandising programming. 7-Liberty Digital - The Most Open Ended Opportunity. The activity that has been most exciting recently and has attracted the most attention of Liberty watchers was the creation of Liberty Digital as a separate publicly traded, but almost entirely owned subsidiary of Liberty Media. Liberty Digital Public Assets Contributed by Liberty Media ACTV (IATV) 13 million shares Priceline (PCLN) 3.1 million shares iVilliage (IVIL) .8 million shares Sportsline (SPLN) .5 million shares Liberty Digital Private Assets Contributed by Liberty Media AT&T Access Agreement 100% Digital Health Group 100% Total Entertainment Network 19% MTV Networks Online Venture 10% The Lightspan Partnership 8% iBeam Broadcasting Corp. 7% Academic Systems Corp. 5% KPCB Java Fund 5% Interactive Pictures Corp. 4% Drugstore.com 2% HomeGrocer.com 2%