Fitch: Liberty Media Ratings Not Impacted by DTV Collar Transaction

NEW YORK -- Fitch Ratings stated today that the 'BB' Issuer Default Rating and senior unsecured rating of Liberty Media LLC (Liberty) are not impacted by today's announcement by the company that it will purchase 78.3 million shares in DirecTV Group Inc. (DirecTV) increasing its stake to 48% from 41%. To fund the purchase Liberty borrowed approximately $2 billion against collars on 110 common shares of DirecTV (the loan is therefore collateralized by the shares).

Fitch views this transaction as neutral from an economic/financial standpoint as the $2 billion increase in debt is offset by the additional equity position in DirecTV. The move does give Liberty greater voting control of DirecTV. Fitch estimates that the put strike price on the 110 collared shares would be sufficient to cover the $2 billion loan in a worst case scenario.

The derivatives and loans come due over the next four years. Fitch believes Liberty has various alternatives to redeem these obligations including cash, sale of non-core assets, loans against other assets (in which case Fitch would attribute the net market value to its asset coverage metrics on any incremental leverage), and possible dividends from DirecTV in the future. The sale of the 78.3 million shares would also be an alternative for repayment in the future, however, not likely at this time as it would eliminate the voting increase.

Liberty's ratings continue to be supported by operating cash flows (predominantly through QVC) that cover cash interest at approximately 3 times (x), with further bondholder protection through strong asset coverage metrics of over 4x before deferred tax liabilities.

Please see Fitch's report on Liberty Media dated Jan. 31, 2008 at www.fitchratings.com for additional information.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

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