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Quarterly report pursuant to Section 13 or 15(d)

Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments

 v2.3.0.11
Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments
6 Months Ended
Jun. 30, 2011
Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments Ìý
Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments

(13)ÌýÌýÌýÌýÌý Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments

Liberty, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce, media, communications and entertainment industries.Ìý Liberty has attributed each of its businesses to one of three groups:Ìý the Interactive Group, the Starz Group and the Capital Group.Ìý Each of the businesses in the tracking stock groups is separately managed.Ìý Liberty identifies its reportable segments as (A) those consolidated subsidiaries that represent 10% or more of its consolidated annual revenue, annual pre-tax earnings or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of Liberty's annual pre-tax earnings.Ìý The segment presentation for prior periods has been conformed to the current period segment presentation.

Ìý

Liberty evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per customer equivalent.Ìý In addition, Liberty reviews nonfinancial measures such as subscriber growth, penetration, website visitors, conversion rates and active customers, as appropriate.

Ìý

Liberty defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation).Ìý Liberty believes this measure is an important indicator of the operational strength and performance of its businesses, including each business's ability to service debt and fund capital expenditures.Ìý In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance.Ìý This measure of performance excludes depreciation and amortization, stock-based compensation, separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP.Ìý Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP.Ìý Liberty generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

Ìý

As discussed in NoteÌý2, effective SeptemberÌý30, 2010, the Company's board of directors approved a change in attribution of Starz Media from the Capital Group to the Starz Group to better align the remaining businesses of Starz Media with the legacy Starz Entertainment business to formÌýa combined Starz entity that we refer to as Starz,ÌýLLC. The Starz Media Reattribution did not have any impact on the consolidated results of Liberty and was reflected on prospective basis for Tracking Stock purposes. This change in attribution of Starz Media changed how these entities are reviewed and operated from the Liberty consolidated view point and thus gives rise to a new presentation for segment reporting purposes for both the current and prior year periods.

Ìý

Prior to its reattribution the biggest driver of the Starz Media business unit was its theatrical production business which is no longer being operated except for the exploitation of its existing film library in home video, non-pay television and other ancillary markets. As a result, we do not expect the effect of the remaining Starz Media businesses in future periods to materially change Starz,ÌýLLC's operations prospectively. Based on this lack of comparability and the importance of maintaining the integrity of the historical tracking stock results we have included a segment reclassification adjustment for both the Starz Group and the Capital Group in order to reconcile to the historical attributed results for each group.

Ìý

For the six months ended June 30, 2011, Liberty has identified the following businesses as its reportable segments:

Ìý

·QVC—consolidated subsidiary attributed to the Interactive Group that markets and sells a wide variety of consumer products in the United States and several foreign countries, primarily by means of itsÌýtelevised shopping programs on the QVC networks and via the Internet through its domestic and international websites.

Ìý

·Starz, LLC—consolidated subsidiary attributed to the Starz Group that provides premium networks distributed by cable operators, direct-to-home satellite providers, telephone companies and other distributors in the United States and develops, produces and acquires entertainment content and distributes such content to consumers in a wide variety of formats in the United States and throughout the world.

Ìý

Liberty's reportable segments are strategic business units that offer different products and services.Ìý They are managed separately because each segment requires different technologies, distribution channels and marketing strategies.Ìý The accounting policies of the segments that are also consolidated subsidiaries are the same as those described in the Company's summary of significant policies.

Ìý

Performance Measures

Ìý

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý Six months ended June 30,ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Ìý

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 2011ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 2010ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Ìý

Ìý

ÌýAdjustedÌýÌýÌýÌýÌýÌýÌýÌýÌý

Ìý

Ìý Adjusted

Ìý

Revenue

ÌýÌýÌý OIBDAÌý

Revenue

ÌýÌýÌý OIBDAÌý

Ìý

amounts in millions

Interactive Group

Ìý

Ìý

Ìý

Ìý

ÌýÌýÌýÌý QVC

$ÌýÌýÌýÌý 3,733

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 781

ÌýÌýÌýÌýÌýÌý 3,515

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 769

ÌýÌýÌýÌý Corporate and other

ÌýÌýÌýÌýÌýÌýÌýÌý 671

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 47

ÌýÌýÌýÌýÌýÌýÌýÌý 563

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 40

Ìý

ÌýÌýÌýÌýÌý 4,404

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 828

ÌýÌýÌýÌýÌýÌý 4,078

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 809

Starz Group

Ìý

Ìý

Ìý

Ìý

ÌýÌýÌýÌý Starz, LLC

ÌýÌýÌýÌýÌýÌýÌýÌý 794

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 249

ÌýÌýÌýÌýÌýÌýÌýÌý 841

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 152

ÌýÌýÌýÌý Corporate and other

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 1

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (6)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 5

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (7)

ÌýÌýÌýÌý Adjustment for tracking stock purposes (1)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌý (228)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 61

Ìý

ÌýÌýÌýÌýÌýÌýÌýÌý 795

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 243

ÌýÌýÌýÌýÌýÌýÌýÌý 618

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 206

Capital Group

Ìý

Ìý

Ìý

Ìý

ÌýÌýÌýÌý Corporate and other

ÌýÌýÌýÌýÌýÌýÌýÌý 716

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 365

ÌýÌýÌýÌýÌýÌýÌýÌý 138

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (41)

ÌýÌýÌýÌý Adjustment for tracking stock purposes (1)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌý 228

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (61)

Ìý

ÌýÌýÌýÌýÌýÌýÌýÌý 716

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 365

ÌýÌýÌýÌýÌýÌýÌýÌý 366

ÌýÌýÌýÌýÌýÌýÌýÌýÌý (102)

Ìý

Ìý

Ìý

Ìý

Ìý

ÌýÌýÌýÌý Consolidated Liberty

$ÌýÌýÌýÌý 5,915

ÌýÌýÌýÌýÌýÌýÌý 1,436

ÌýÌýÌýÌýÌýÌý 5,062

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 913

Ìý

(1)As discussed above due to the change in segments the prior periods have been changed to reflect the current segment presentation. The adjustment is necessary to align the tracking stock subtotals to the Unaudited Attributed Financial Information for tracking stock groups found in ExhibitÌý99.1, wherein this change in attribution has been reflected prospectively.


Ìý

Ìý

Ìý

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý Three months ended June 30,ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Ìý

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 2011ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 2010ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Ìý

Ìý

ÌýAdjustedÌýÌýÌýÌýÌýÌýÌýÌýÌý

Ìý

Ìý Adjusted

Ìý

Revenue

ÌýÌýÌý OIBDAÌý

Revenue

ÌýÌýÌý OIBDAÌý

Ìý

amounts in millions

Interactive Group

Ìý

Ìý

Ìý

Ìý

ÌýÌýÌýÌý QVC

$ÌýÌýÌýÌý 1,898

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 418

ÌýÌýÌýÌýÌýÌý 1,758

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 403

ÌýÌýÌýÌý Corporate and other

ÌýÌýÌýÌýÌýÌýÌýÌý 347

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 32

ÌýÌýÌýÌýÌýÌýÌýÌý 295

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 25

Ìý

ÌýÌýÌýÌýÌý 2,245

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 450

ÌýÌýÌýÌýÌýÌý 2,053

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 428

Starz Group

Ìý

Ìý

Ìý

Ìý

ÌýÌýÌýÌý Starz, LLC

ÌýÌýÌýÌýÌýÌýÌýÌý 403

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 118

ÌýÌýÌýÌýÌýÌýÌýÌý 392

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 53

ÌýÌýÌýÌý Corporate and other

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (1)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 3

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (4)

ÌýÌýÌýÌý Adjustment for tracking stock purposes (1)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌý (84)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 54

Ìý

ÌýÌýÌýÌýÌýÌýÌýÌý 403

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 117

ÌýÌýÌýÌýÌýÌýÌýÌý 311

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 103

Capital Group

Ìý

Ìý

Ìý

Ìý

ÌýÌýÌýÌý Corporate and other

ÌýÌýÌýÌýÌýÌýÌýÌý 135

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 7

ÌýÌýÌýÌýÌýÌýÌýÌý 116

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (5)

ÌýÌýÌýÌý Adjustment for tracking stock purposes (1)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 84

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (54)

Ìý

ÌýÌýÌýÌýÌýÌýÌýÌý 135

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 7

ÌýÌýÌýÌýÌýÌýÌýÌý 200

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (59)

Ìý

Ìý

Ìý

Ìý

Ìý

ÌýÌýÌýÌý Consolidated Liberty

$ÌýÌýÌýÌý 2,783

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 574

ÌýÌýÌýÌýÌýÌý 2,564

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 472

Other Information

Ìý

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý June 30, 2011ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Ìý

Ìý

Investments

Ìý

Ìý

ÌýÌýÌý TotalÌýÌýÌý

ÌýÌýÌýÌýÌýÌý inÌýÌýÌýÌýÌýÌýÌý

ÌýÌýÌýÌý CapitalÌýÌýÌý

Ìý

ÌýÌý assetsÌýÌý

ÌýÌý affiliatesÌýÌý

expenditures

Ìý

amounts in millions

Interactive Group

Ìý

Ìý

Ìý

ÌýÌýÌýÌý QVC

$ÌýÌý 13,401

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 2

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 80

ÌýÌýÌýÌý Corporate and other

ÌýÌýÌýÌýÌýÌý 4,168

ÌýÌýÌýÌýÌýÌýÌýÌýÌý 1,016

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 23

Ìý

ÌýÌýÌýÌý 17,569

ÌýÌýÌýÌýÌýÌýÌýÌýÌý 1,018

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 103

Starz Group

Ìý

Ìý

Ìý

ÌýÌýÌýÌý Starz, LLC

ÌýÌýÌýÌýÌýÌý 1,941

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 2

ÌýÌýÌýÌý Corporate and other

ÌýÌýÌýÌýÌýÌýÌýÌý 820

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

Ìý

ÌýÌýÌýÌýÌýÌý 2,761

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 2

Capital Group

Ìý

Ìý

Ìý

ÌýÌýÌýÌý Corporate and other

ÌýÌýÌýÌýÌýÌý 6,515

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 460

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 4

Ìý

ÌýÌýÌýÌýÌýÌý 6,515

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 460

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 4

Ìý

Ìý

Ìý

Ìý

Inter-group eliminations

ÌýÌýÌýÌýÌýÌýÌý (267)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌý Consolidated Liberty

$ÌýÌý 26,578

ÌýÌýÌýÌýÌýÌýÌýÌýÌý 1,478

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 109


Ìý

The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) from continuing operations before income taxes:

Ìý

Ìý

ÌýÌýÌýÌýÌý Three months ended

ÌýÌýÌýÌýÌýÌýÌý Six months ended

Ìý

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý June 30,ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý June 30,ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Ìý

ÌýÌýÌý 2011ÌýÌýÌý

ÌýÌýÌý 2010ÌýÌýÌý

ÌýÌýÌý 2011ÌýÌýÌý

ÌýÌýÌý 2010ÌýÌýÌý

Ìý

amounts in millions

Ìý

Ìý

Ìý

Ìý

Ìý

Consolidated segment Adjusted OIBDA

$ÌýÌýÌýÌýÌýÌýÌý 574

ÌýÌýÌýÌýÌýÌýÌýÌýÌý 472

ÌýÌýÌýÌýÌýÌý 1,436

ÌýÌýÌýÌýÌýÌýÌýÌýÌý 913

Stock-based compensation

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (24)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (21)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (51)

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (60)

Gain on legal settlement

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 7

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

Depreciation and amortization

ÌýÌýÌýÌýÌýÌýÌýÌý (168)

ÌýÌýÌýÌýÌýÌýÌýÌý (164)

ÌýÌýÌýÌýÌýÌýÌýÌý (338)

ÌýÌýÌýÌýÌýÌýÌýÌý (326)

Interest expense

ÌýÌýÌýÌýÌýÌýÌýÌý (110)

ÌýÌýÌýÌýÌýÌýÌýÌý (174)

ÌýÌýÌýÌýÌýÌýÌýÌý (227)

ÌýÌýÌýÌýÌýÌýÌýÌý (344)

Share of earnings of affiliates, net

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 15

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 39

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 7

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 48

Realized and unrealized gains (losses) on financial instruments, net

ÌýÌýÌýÌýÌýÌýÌýÌýÌý 143

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (81)

ÌýÌýÌýÌýÌýÌýÌýÌýÌý 186

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 86

Gains (losses) on dispositions, net

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 25

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý (2)

ÌýÌýÌýÌýÌýÌýÌýÌýÌý 388

Other, net

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 29

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 2

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 72

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý --

ÌýÌýÌýÌýÌý Earnings from continuing operations before income taxes

$ÌýÌýÌýÌýÌýÌýÌý 459

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý 98

ÌýÌýÌýÌýÌýÌý 1,090

ÌýÌýÌýÌýÌýÌýÌýÌýÌý 705