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To: Champolion who wrote (1329)	4/7/1999 7:22:00 AM
From: Steve Hausser	Read Replies (1) \| Respond to of 13157

Liberty Media Plans to Combine Internet Assets Into TCI Music By LESLIE CAULEY Staff Reporter of THE WALL STREET JOURNAL Liberty Media Corp. plans to transfer its interactive and Internet assets into TCI Music Inc., a publicly traded company it controls, in a move aimed at creating a currency that can be used for Internet and media deals. In tune with the current Internet frenzy among investors, Wall Street heartily embraced the proposed deal, pushing up TCI Music's stock from about $8 to more than $30 in heavy trading on the Nasdaq Stock Market, before closing at $29.5625. The combined operations will adopt the name Liberty Digital, the existing name of Liberty Media's interactive unit. Liberty Digital will trade under TCI Music's existing stock symbol, TUNE, on the Nasdaq. Cable programming veteran Lee Masters, whose resume includes the E! Entertainment cable network, will move from his post as head of Liberty Digital to become chief executive officer of the reconfigured company. Mr. Masters said the assets of the combined company would have a value of around $1 billion -- $650 million of that from the interactive and Internet assets that Liberty Digital would contribute. Liberty is the media investment arm of John Malone, the former chairman of cable giant Tele-Communications Inc., which was acquired last year by AT&T Corp. The proposed plan would shift some of Liberty Media's most attractive assets outside the corporate empire of AT&T, which technically owns Liberty Media as part of its purchase of TCI. Liberty Media executives insisted that wresting free of AT&T's grasp wasn't a goal, but acknowledged that would be one effect of the new structure. Liberty Media trades as a tracking stock of AT&T, and operates with almost complete autonomy from AT&T. Over time, Mr. Masters said Liberty Digital hopes "to be to new media and the Internet what Liberty was for cable programming," a nod to Liberty Media's pivotal role in helping nurture along, at various times, such media hits as Discovery and At Home Corp., the high-speed data service. He said Liberty Digital, armed with its new trading currency, intends to go trolling for new opportunities in the Internet and interactive sectors. "Publicly traded currency is a wonderful currency to do transactions with," Mr. Masters noted. TCI Music, New York, to date has garnered little attention within the Liberty Media empire. The company's principal assets include DMX, a satellite-delivered digital-music service; the Box, an interactive music-video service; and SonicNet (www.sonicnet.com1), an Internet network of music Web sites. Those assets have a combined value of about $400 million, Liberty estimates. 2News Corp. to Buy Rest of Fox/Liberty Networks Under the proposed plan, Liberty Digital would fold its growing stable of Internet and interactive assets into TCI Music. Those assets include equity investments in such ventures as priceline.com, iVillage, Sportsline USA and Drugstore.com. Liberty Digital also would contribute its rights to provide interactive-video services to TCI's cable systems. Those rights, which were part of the AT&T-TCI merger agreement, essentially guarantee the holder a chunk of channel space on TCI's upgraded cable-TV lines, and hence a guaranteed customer base of more than 12 million for new digital services. Mr. Masters day called those rights "beachfront property," and said Liberty Digital is well on its way to coming up with a development plan. He said the company is working on, among other things, plans for a 24-hour digital-TV channel that features "very simple, one-click interactivity." In exchange for contributing its Internet and interactive assets to TCI Music, Liberty Media would get 128.7 million newly issued shares of TCI Music's Series B common stock. Liberty Media said the transaction would push up its interest in TCI Music to 94% from 86% of the shares outstanding of TCI Music's Series A common stock and Series B common stock. TCI Music also would assume about $50 million in debt related to its new assets, and Liberty would lend TCI Music as much as $50 million "pursuant to a convertible note on terms to be mutually agreed." Liberty Media said debt currently owed by TCI Music to Liberty also would become convertible debt, on the same terms.

To: Champolion who wrote (1329)	4/7/1999 7:26:00 AM
From: Steve Hausser	Read Replies (1) \| Respond to of 13157

Malone extends Liberty's reach By Roger Fillion Denver Post Business Writer April 7 - Two titans of telecommunications announced a deal Tuesday that will create one of the world's most muscular partnerships. Media mogul Rupert Murdoch agreed Tuesday to buy John Malone's share in a joint cableTV venture for $1.4 billion. The deal gives Malone's Liberty Media Group an 8 percent stake in Murdoch's News Corp. The transaction also strengthens Murdoch and Malone's business ties while giving Liberty access to a big chunk of News Corp. shares at an attractive price. But Malone's dealmaking didn't end there. He proposed Tuesday to hand over Liberty Media's Internet and interactive television assets to TCI Music Inc. in exchange for more control of the video-music company. TCI Music's shares surged more than 250 percent on the news. The deal is expected to give Liberty Media a vehicle for investing in the Internet. Under terms of the Liberty Media-News Corp. deal, which has been rumored for the past week, News Corp. will gain control of Fox Sports Net, which reaches more than 62 million households, as well as FX, a cable entertainment channel that reaches 39 million. Greenwood Village-based Liberty Media, whose $35 billion in assets include cable TV programming, high-tech and international media holdings, will receive about 51.8 million U.S.-listed shares of News Corp. - now worth about $1.7 billion based on Tuesday's closing stock prices. Liberty's Class A stock closed Tuesday at $59, up $3.125. Its Class B stock gained $3.25 to land at $59.50. News Corp's stock, which trades in this country as American Depositary Receipts, closed Tuesday at $34, up 19 cents. Liberty Media became an affiliate of AT&T Corp. after the phone giant's recent purchase of cable titan Tele-Communications Inc. Liberty Media also plans to buy half of MCI WorldCom Inc.'s 5 percent stake in News Corp. for about $700 million. The entire transaction will make Liberty Media the No. 2 shareholder in Murdoch's media conglomerate, second only to the Murdoch family's 30 percent holding. News Corp., a big player in the Asian and British satellite TV business, controls the Fox TV network, the 20th Century Fox film studio, the Los Angeles Dodgers, and a raft of British and Australian newspapers. Malone said News Corp.'s stock was "significantly undervalued'' and that it has "great potential upside.'' "We have long believed - indeed, since we first partnered with News Corp. in 1996 to form Fox/Liberty Networks - that it is one of the best managed and positioned global entertainment companies in the world,'' Malone said. Fox and Liberty Media will remain partners in International Sports Programming Partners, with Liberty retaining its 50 percent interest. On the video front, Liberty Media proposed Tuesday to put its Internet and interactive TV assets into TCI Music. In exchange, Liberty would boost its stake in the videomusic company to 94 percent from 86 percent. The assets to be swapped would include equity stakes in various Internet companies, including priceline.com, iVillage and Sportsline USA, as well as drugstore.com. TCI Music - once a part of cable giant Tele-Communications Inc. - delivers audio and video music programs to customers via satellite, TV and the Internet. TCI Music would change its name to Liberty Digital, and analysts predict Liberty Media would use Digital to make Internet-related investments. "This is the "son of Liberty' in the Internet business,'' said analyst Salvatore Muoio of S. Muoio & Co. in New York. "This will be how they play the Internet.'' On another front, Liberty Media said Monday it will spend $280 million to boost its stake to 18 percent from 12 percent in General Instrument Corp., a Philadelphia maker of cable set-top boxes. What's more, Liberty Media also may be eyeing one of Ascent Entertainment Group Inc.'s major assets: its 57 percent stake in On Command Corp. Amid speculation that Ascent's Denver Nuggets, Colorado Avalanche and the under-construction Pepsi Center could be sold to Missouri billionaire Bill Laurie for at least $400 million, On Command Corp. also may be in play, sources said. One prospective buyer, according to sources, is Liberty Media. Its cable-industry roots would tie nicely into the highly profitable On Command, which funnels pay-perview movies to more than 1 million hotel rooms around the world. Industry observers, however, say On Command's best growth prospects could lie in delivering Internet-access, on-screen shopping, video game, out-of-market sports events and other digitally based services - areas that Liberty Media's Malone has been following for years. Malone already has strong ties to On Command. Peter Barton, a Malone protege who ran Liberty Media when it was a Tele-Communications Inc. unit, sits on Ascent's board. And a long-time Malone lieutenant at TCI - J.C. Sparkman - is on On Command's board of directors. Ascent's stock, which hit a 52week high last May 29, closed Tuesday at $11.875, up 6.25 cents. On Command's shares closed at $9.50, up 37.5 cents.

To: Champolion who wrote (1329)	4/7/1999 8:04:00 AM
From: Steve Hausser	Read Replies (1) \| Respond to of 13157

TCI Music Shares Skyrocket On Plan With Liberty Media By LISA BRANSTEN THE WALL STREET JOURNAL INTERACTIVE EDITION SAN FRANCISCO -- If John Malone's goal in restructuring the relationship between TCI Music and its majority stakeholder Liberty Media Group was to unlock shareholder value, then his plan appears to be working. Shares of TCI Music more than tripled Tuesday on news that Liberty Media plan to turn over its Internet and interactive television assets to TCI Music in return for a bigger ownership stake in the company. The proposal by TCI Music calls for the Malone-led Liberty Media to turn over assets such as its stakes in Internet companies such as iVillage, Priceline.com, Sportsline.com and Drugstore.com in return for 128.8 million shares of TCI Music. The additional shares will boost Liberty Media Group's stake in TCI Music to 94% from 86%. TCI Music will change its name to Liberty Digital and will be headed by Lee Masters, a media executive credited with building the E! Entertainment Television cable channel. "This company is going to be Liberty Media's and John Malone's primary vehicle for investing in new media, the Internet and related technologies," Mr. Masters said. The plan is to both take small investments in Internet companies and also to acquire and operate some companies, Mr. Masters said. Liberty Media is the programming unit of Tele-Communications Inc., which was recently acquired by AT&T. The company shares trade as a tracking stock to AT&T. TCI Music already runs companies such as SonicNet, a network of music Web sites, and the Box Worldwide, an interactive music television network. But shares of TCI Music have foundered as the Box never took off with television users and its other holdings have failed to develop the kind of traffic seen on the most successful Web sites. Before Tuesday, the 52-week high for the shares was the 9 15/16 they hit last May -- and since then have traded as low as 2 11/32. Under the deal, Liberty Media will get the shares of TCI Music for about $600 million -- or $4.66 a share. The price was based on the average value of the shares in the 30 days before the proposal was made. The value of the stakes in publicly held companies that Liberty Media will turn over to the new company comes to about $300 million. Liberty Media will also contribute some of the space that Liberty was granted on the TCI cable lines when it did the deal with AT&T and with that Liberty Digital will develop 12 interactive cable channels, Mr. Masters said. TCI Music shareholders are expected to vote on the proposed transaction later this month. Keith Benjamin, an analyst at BancBoston Robertson Stephens, said the move is part of a trend of old-line companies hoping to capture the new-line valuations now being afforded Internet companies. "Everyone wants to monetize their Internet value," he said. Last week, for example, Ziff-Davis created an Internet tracking stock, ZDNet, out of its Internet holdings and investment bank Donaldson Lufkin & Jenrette has filed to do the same. Jessica Reif Cohen, an analyst at Merrill Lynch, said there was no way to determine if TCI Music shares deserved the jump they got. She added that Mr. Malone "is a terrific investor and cable is going to be the gatekeeper of the delivery system" so it makes sense for him to be focusing on Internet media and commerce.