Liberty Media Corp at Goldman Sachs Communacopia Conference

THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT LMCA - Liberty Media Corp at Goldman Sachs Communacopia Conference

EVENT DATE/TIME: SEPTEMBER 25, 2013 / 3:20PM GMT

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CORPORATE PARTICIPANTS Greg Maffei Liberty Media Corporation - President & CEO

CONFERENCE CALL PARTICIPANTS Drew Borst Goldman Sachs - Analyst

PRESENTATION Drew Borst - Goldman Sachs - Analyst Thanks, everyone. Get started with our next session. I'm Drew Borst, Media Analyst at Goldman.

I'm pleased to welcome Greg Maffei to the stage, he's President and CEO of Liberty Media. Greg has served as CEO since February 2006. He's also Chairman of Liberty associated companies; Live Nation, Sirius XM, Starz, and TripAdvisor. He's also a Director at Barnes & Noble, Charter, Zillow, which are also Liberty investments. So there's plenty --

Greg Maffei - Liberty Media Corporation - President & CEO No, Zillow is not.

Drew Borst - Goldman Sachs - Analyst Excuse me, Zillow is not.

Greg Maffei - Liberty Media Corporation - President & CEO Zillow is a PA.

Drew Borst - Goldman Sachs - Analyst So as in my introduction, I mentioned you have a number of investments across the TMT landscape from distributors like Charter and Sirius XM to content creators like Starz to Internet like TripAdvisor. As you think about the growing portfolio, what are the governing principles behind your investments? What types of TMT businesses are you most interested in today?

Greg Maffei - Liberty Media Corporation - President & CEO We're way too naive or non-strategic to have such a goal. I mean historically we have liked subscription businesses. I think we understand subscription businesses. We are probably more comfortable utilizing financial leverage on top of businesses that appear more secure and being able to ratchet that rather than operating leverage.

So those high margin subscription businesses where we add to the returns by putting financial leverage on, those have been our bread and butter. But if you look at something like Trip, we love Trip, it doesn't fit that model; it has incredibly great cash flow conversion, but really doesn't fit that model.

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Drew Borst - Goldman Sachs - Analyst As you look at the portfolio, I've noticed that there's a couple examples where you have investments in potential competitors or companies that are in the same arena, like Expedia and TripAdvisor is one example, QVC and HSN is another. Is that a unique part of your strategy or is it just more a coincidence and it's just value and --?

Greg Maffei - Liberty Media Corporation - President & CEO It's usually coincidence. So as you know Expedia bought Trip, had them together as one company, then spun it off, and we ended up with the two pieces. It wasn't by our design.

QVC and HSN, we had parts of both for a long time and we ended up in -- two autonomous companies buying their actions; and then we ended up buying, taking our 43% of QVC up to 100% back in like 2003. So I don't think it was a design. We do like holding QVC and HSN, I think it gives us a better sense of the market and I think it keeps market stability in that case as probably a positive.

Drew Borst - Goldman Sachs - Analyst You've mentioned you're a believer in the judicious use of leverage on the balance sheet. Can you talk about how you think about what's the appropriate leverage at Liberty given that you have relatively modest free cash flow production directly at Liberty Media?

Greg Maffei - Liberty Media Corporation - President & CEO So when you say -- and the screen says Liberty Interactive, that's a very different entity, right? We'll talk about that for one second. High free cash flow generation at QVC, we're talking about a fairly high level, and arguably could go higher, level of leverage there on the operating asset. Then we have a bunch of non-cash flow generating assets like an HSN; and just because we don't consolidate it and we don't control the balance sheet, you're probably not willing to put as high a leverage level on that.

Flip over to Liberty Media, historically Liberty Media has had very low leverage because, as you rightly point out, we don't have a lot of free cash flow generating assets unless the Braves win the World Series.

Today we sit with about $1.1 billion of margin debt against a lot of equity positions; we probably have, I don't know, $500 million of cash something like that or maybe less, $350 million of cash. We have quite a lot of leverage at some of the operating entities like a Sirius, like a Charter; but we are less likely, given the low cash flow generation from those assets up to us, to put much leverage on Liberty Media. And I suspect that -- that margin loan has only an 18-month maturity, at some point we will either through dividends up from Sirius, or share sales of Sirius, or some other kind of longer refinancing mechanism, reduce that margin debt and term it out in some way.

Drew Borst - Goldman Sachs - Analyst Notwithstanding the comments about the free cash flow production at Liberty Media, you did recently implement a share repurchase for Liberty Media shares. So I guess I'm wondering how you think about the opportunity of repurchasing your shares versus other investments outside of Liberty?

Greg Maffei - Liberty Media Corporation - President & CEO Well, we've been lucky enough to -- if you take the last seven years -- do a lot of both. We put money in things like a Sirius or we upped our stake in DIRECTV, but in addition we bought back something like 45% of Liberty Media. When it was first spun out as Liberty Capital and now it changed

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©2013 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. SEPTEMBER 25, 2013 / 3:20PM, LMCA - Liberty Media Corp at Goldman Sachs Communacopia Conference its name to Liberty Media, we've bought back something like 45% of the company at something like $35 a share. And if you put the pieces back together of Starz and Liberty Media, you're talking about stock being over $170 so that's been a great return.

During a lot of that time we've had discounts to net asset value in the range of 30% plus, a long time at 20%. Today, I don't think we have those kind of discounts and we don't have the free cash. I think I've come to this conference every year and said -- oh yes, one of our big problems is too much cash at Liberty Media and not enough good ideas of what to do with it.

That's not true anymore. We've invested quite a lot in Charter, it's worked out well so far. We bought back all that stock, we don't have as much free cash at Liberty Media.

So I actually think given the reduced discount, given the lack of cash, we've said we're -- and we did not buy any stock in the last quarter; we're probably not going to have the share repurchase barring some special situations, and we did talk about one obliquely in our earnings release. Barring some special situations, we're not going to have in-the-market share repurchase in the same way at the same volume we've had over the last seven years.

Drew Borst - Goldman Sachs - Analyst Within the Liberty family, there's really two entities that focus on equity investments, Liberty Media as well as Liberty Interactive -- Liberty Active Ventures, excuse me. How do you manage the potential conflict between where you put these investments?

Greg Maffei - Liberty Media Corporation - President & CEO Potter Stewart said I know pornography when I see it. Generally we know which side goes on which, which fits in.

It's not perfect. But I think if it's a more traditional media asset, it's more likely to go into Liberty Media; and if it's something off the rack and differentiated, it's likely to go in Ventures; and if it's an ecommerce company, it's likely to go into Interactive. But I agree it's not a bright line.

Drew Borst - Goldman Sachs - Analyst Okay. Maybe I'll go through a series of questions on some of your investments. Maybe the one that's top of mind for everybody, you mentioned it, is the 27% equity stake in Charter, which is the fourth largest cable MSO in the US. Can you talk about the opportunities you see at Charter for increased value?

Greg Maffei - Liberty Media Corporation - President & CEO Well, the reason we put our investment in Charter is we saw several very positive attributes. First, at a relatively small, modest premium to market, we were able to garner significant influence in board seats; and like-minded investors feel like if we didn't have control, we had a modicum of influence that made it near control.

Secondly, we saw territories which had lower levels of the most difficult competition -- primarily things like FiOS, and I think we're only a 4% FiOS territory -- and against historical levels of underinvestment because of the financial distress that Charter had been through. So, we saw a relatively benign competitive environment and an underinvested territory.

Third, we saw a great manager and a great team that Tom Rutledge had assembled that knew how to improve ARPU, knew how to improve triple play rates, knew how to move people from basic to extended basic, knew how to drive up penetration rates on pay-per-view and the like or premiums. So excellent management in an underpenetrated territory.

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Fourth, the declining costs of connecting those rural systems. Historically the rural systems have been viewed as less attractive; you wanted big clustered systems. I think our view today would be that attracts only more competition and that means it's not as attractive a place to be. The cost of connecting those rural systems has fallen as networking costs have declined, making some of the disadvantages historically in those rural systems now advantages. Low broadband penetration and the runway on that made it attractive.

And lastly, attractive debt structure, 5 times leverage, now 4.8 after Bresnan, and with a tranched out series of maturities and an NOL, a lot of attributes that we saw positive. So the base business plan that we saw Tom and his team were under was very attractive.

With that, other ability to add incremental value through acquisitions created optionality and you've already seen the first of those in Bresnan, a relatively smaller acquisition, but one that had I think very attractive incremental rates of return; and the potential as yet unrealized, but out there, for other kinds of acquisitions.

Drew Borst - Goldman Sachs - Analyst You mentioned that the opportunity for horizontal cable consolidation; it has gotten a lot of attention in the press.

Greg Maffei - Liberty Media Corporation - President & CEO Certainly has.

Drew Borst - Goldman Sachs - Analyst Can you talk about the case for why it makes sense for Charter to lead the charge on consolidation?

Greg Maffei - Liberty Media Corporation - President & CEO Well, I'm not sure we have to lead the charge. I would just note that scale around programming costs, around networking costs, around marketing, around G&A, around a host of factors make scale horizontal consolidation attractive. Our participation whether as buying a Bresnan or doing something larger all have I think very good, positive rates of return. Obviously at some price, it becomes non-economic, but it offers a lot of opportunities for synergies that are attractive.

Drew Borst - Goldman Sachs - Analyst You mentioned the leverage at Charter was 5 and I guess down to 4.8 now.

Greg Maffei - Liberty Media Corporation - President & CEO Yes.

Drew Borst - Goldman Sachs - Analyst What is the proper amount of leverage for this business? Do you think that's it or do you think there's room to maybe put a little bit more on in the short term if need be?

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Greg Maffei - Liberty Media Corporation - President & CEO I think you could in the short term go higher. I mean we are in a very benign rate environment, a very attractive rate environment for high yield both as to rate and to size, and the cable business is one that is well received. But I think at 5 is probably a good target leverage.

Drew Borst - Goldman Sachs - Analyst Wanted to ask you a couple questions about issues in the cable space or the content space. One of them is about usage based pricing in broadband. Do you think the time has come for either Charter or the industry just broadly to move forward on changing the pricing towards usage based?

Greg Maffei - Liberty Media Corporation - President & CEO I hope that's something that gets experimented with and more aggressively, because clearly over the long term as you move to more and more data based services, whether it be consumption for video or other things, it seems only logical and fair that usage based pricing for consumers who pay more for using more seems like a reasonable proposition. And testing that and getting consumers attuned to that sooner rather than later would be a good thing.

Drew Borst - Goldman Sachs - Analyst Another issue has been the rising cost of programming in the cable networks and in particular sports networks have gotten a lot of attention. Obviously you have an interesting perspective, you own the Atlanta Braves and so they have been benefiting from this trend.

Greg Maffei - Liberty Media Corporation - President & CEO Not much as much as they should.

Drew Borst - Goldman Sachs - Analyst And then obviously Charter's on the receiving end, paying higher wholesale rates. Some people are concerned that this has gotten way out of hand and it's reaching a tipping point. Do you agree with that point of view?

Greg Maffei - Liberty Media Corporation - President & CEO I think you have a very wonderful ecosystem in the TV business, dual revenue streams. Even though there are tensions, a long-term partnership between MSOs and cable networks that has been very effective for the benefit of both parties.

Clearly when you see what's going on in places like LA with eight regional sports networks, including the Spanish language, and the rising cost of sports programming, I think you threaten that benign and very positive feedback loop and that's not a good thing. So yes, I think it's out of control. I don't know if that's the word I'd use or the tipping point, but it's reached. It is clearly going to stress the system and it's been a very powerful system for all parties.

Drew Borst - Goldman Sachs - Analyst So tiering is maybe one option or maybe not -- complete a la carte is probably a little bit too extreme in terms of across all channels; but maybe carving out sports may be one response.

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Greg Maffei - Liberty Media Corporation - President & CEO If you don't have some market based sensitivity, I think you do risk having intervention on a regulatory perspective. The consumers are not going to -- are going to respond, but we'll see.

Drew Borst - Goldman Sachs - Analyst There's obviously the McCain a la carte bill that's been introduced again. Do you think that that is likely to be the path or you think the industry can sort this out through just regular old market based solutions?

Greg Maffei - Liberty Media Corporation - President & CEO I don't know if Senator McCain's bill will pass, but I think there are many positive attributes to it.

Drew Borst - Goldman Sachs - Analyst Okay. Maybe we'll move over to Sirius XM now. What do you see as the main opportunities and challenges for Sirius over the next few years?

Greg Maffei - Liberty Media Corporation - President & CEO I think we have a very attractive business model with good control of costs, particularly content costs. Unlike what's happening on the MSO side, Sirius has its cost structure on content well in hand, a longer-term attractive set of reductions in other costs. I mean if you look since the merger, they've taken headcount down dramatically, they've taken all sorts of networking costs, connectivity costs down, many positives.

On top of that, you've got rising SAAR cars, you've got potential for price increases, which we had one last year. It's a very attractive business model with rising margins and even faster rising free cash flow. So that's the near-term tailwind or medium-term tailwind.

Longer term, you're going to see a world of connected cars and the opportunity there is also a threat. Some of our satellite uniqueness may be reduced, but our ability to sell more into those cars; whether it be incremental services and telematics around news, sports, weather, traffic, restaurant reviews, stock quotes; all of those things into cars is a positive for us. You're seeing us try and extend our nascent efforts there with the Agero acquisition. So connected car has risks, but also has a lot of opportunities for incremental revenue for us.

Drew Borst - Goldman Sachs - Analyst You mentioned the SAAR and it certainly has been a great tailwind, but we're now sort of at the point where it's back to pre-recession levels.

Greg Maffei - Liberty Media Corporation - President & CEO Yes. Maybe just a little short, but close, yes.

Drew Borst - Goldman Sachs - Analyst Are you concerned that growth may be starting to slow as the new vehicle sales probably plateau here or do you think there's still a decent amount of runway on it?

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Greg Maffei - Liberty Media Corporation - President & CEO If you look, we still have good growth in our addressable market even as that SAARs, is because if you look compared to what we were rolling off seven, eight, 10 years ago versus what's coming on, we still have much more addressable growth.

Another opportunity I didn't discuss, which is there are 50 to 55 million cars which are now Sirius XM enabled, we only have 25 million subscribers. There may be 13 million, something like that, that have churned off; and that is because either they chose to end the service or because maybe they sold the car and the second owner didn't pick it up.

But there's a big unaddressed market of used cars, which are Sirius XM enabled, and we've really just begun in the last year to go after those and had beginnings of success. I think over the longer term that's going to be a real opportunity for us. So even as that SAAR slows, there is a whole 'nother market for us to go after in attacking these previously owned cars that are already Sirius XM enabled.

Drew Borst - Goldman Sachs - Analyst And you touched on the telematics and the recent acquisition, how do you see that unfolding over the next couple of years? What types of services? What's the business model? Is that a separate charge for that? Can you talk about how that may play out?

Greg Maffei - Liberty Media Corporation - President & CEO I think you're already seeing some of that where I mentioned some of the services out there; stock, news, weather, traffic, restaurant reviews, find this, find that. I think those things are already being offered and you're seeing it offered as an incremental service with some sort of sharing with the OEM.

And it's a model we're very familiar with, a model that we know how to operate in. Some free trial, attempt to convert the customer from their pre-installation, and then, as I said, convert it into a self-pay model. It's a model with which we have familiarity and have had success at Sirius XM.

Drew Borst - Goldman Sachs - Analyst So you view it as a separate service in addition to the radio service?

Greg Maffei - Liberty Media Corporation - President & CEO Or at least a premium tier, right.

Drew Borst - Goldman Sachs - Analyst Yes. And does that -- when do you think you start seeing traction on that? I mean is that a five-year or is that --?

Greg Maffei - Liberty Media Corporation - President & CEO I think in the next three to four years, it could contribute to our bottom line in a noticeable fashion or our operating line.

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Drew Borst - Goldman Sachs - Analyst Okay. Couple of financial questions about Sirius. They obviously generate a very significant amount of free cash flow. What do you see as the priorities for deploying it, using it?

Greg Maffei - Liberty Media Corporation - President & CEO We announced at the beginning of the year a $2 billion share buyback or just maybe at the end of last year $2 billion and we're well on our way. We were actually ahead of that pace through Q2.

Incrementally in addition, they announced the planned Agero acquisition so that will be $2.5 billion of cash accounted for. Those seem to be the two priorities over the near term and I think you'll likely see some renewal of the share repurchase program once this $2 billion number is consumed.

Drew Borst - Goldman Sachs - Analyst And then on the debt side, the balance sheet side, fairly decent margin expansion opportunities, decent visibility into the future cash flows. Do you see upside to the current 3.5 times leverage?

Greg Maffei - Liberty Media Corporation - President & CEO Well, I think we're still below that.

Drew Borst - Goldman Sachs - Analyst Oh, I'm sorry; the target.

Greg Maffei - Liberty Media Corporation - President & CEO Yes, the target. So I think let's get to the target and see how we get there. I think there's still some residual institutional discomfort given the financial traumas the company went through back in the 2008, 2009 time frame. But I think the 3.5 times net leverage target is a pretty attractive one and we're still well below.

Drew Borst - Goldman Sachs - Analyst And is it your intention to participate in the Sirius share repurchase?

Greg Maffei - Liberty Media Corporation - President & CEO We were prohibited for a bunch of technical reasons on our own from doing it until July. We have not come out and said about our intent. But I think over the long term we have said our intent is. We spent effectively about negative $65 million when you look at the retirement of debt and the fees we got in the OID to get the first 40.4% of the company, so we had taken money off the table. And then the subsequent 11% cost $1.7 billion, so we didn't like averaging up so much.

I think our goal would be to try and get that $1.7 billion back over time at least. And so I don't think we've announced what date we'll start, but somewhere down the road we are going to participate and get our bait back.

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Drew Borst - Goldman Sachs - Analyst And just longer-term goals, do you see you want to be kind of a long-term holder of Sirius?

Greg Maffei - Liberty Media Corporation - President & CEO Yes, we think it's a great business. We haven't ruled out that somewhere down the road there's an RMT or Reverse Morris Trust and in the sense of our shareholders, they're long-term holders; but it's not a business we're looking to get out of.

Drew Borst - Goldman Sachs - Analyst Okay. Maybe we'll shift over to Live Nation. What do you see as the key drivers of value creation at Live Nation?

Greg Maffei - Liberty Media Corporation - President & CEO Well, 2013 has been a great year both on an operating basis and for the stock. And I think it's the market recognizing we have had a good touring season and on top of that, probably a little bit more benign competitive environment for some of the tours.

Concert promotions is the big wheel that moves slowly, generates a lot of revenue, but low margins. And around that, we have several businesses which are clearly related like sponsorships, like e-commerce, like ticketing that all generate much higher margins. And we've capitalized on the success of the tour with those revenue opportunities and those have grown faster and that's been attractive.

I think you've seen increasing focus on free cash flow and greater growth in free cash flow even than EBITDA there.

I think you've seen progress on the secondary resale ticket market, TicketMaster-Plus, and I think you'll see more of that at our Investor Day. If some of you attend, you'll see Mike Rapino talk about and show examples of how that's working and how much liquidity in the ticket market we're building in the secondary market.

And I think you're seeing progress on our big technology upgrade, Jetson, which is going to markedly improve our margins and markedly improve what we can offer both venues and consumers and our pricing strategy. So, a lot of positives around that.

And lastly small business, but still I think you've seen stability in the management business, Artist Nation. And I expect to see further progress on that in the coming months.

Drew Borst - Goldman Sachs - Analyst I want to follow up with your point about the strength of the summer concert season, which has, as you alluded to, been one of the best in a while. Do you think this is just a cyclical phenomenon and just better overall economy or is there something else secular that may be driving it or something maybe Live Nation has done in terms of its content at concerts?

Greg Maffei - Liberty Media Corporation - President & CEO Well, I think it's a little of each. I think we've definitely seen a good touring, just cyclical touring season. I also think the improving economy is helping.

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I think you've seen greater awareness among artists of the appeal of touring and of pricing at attractive numbers so there's more realism in the artist side as well, which is making a better experience for us.

And I think Live Nation has had a market share gain and done well just in terms of where its artists are. It's always hard to assess that because what artist did what, but I think in general as I said perhaps a little more benign, less competitive environment on that side.

Drew Borst - Goldman Sachs - Analyst The TicketMaster-Plus platform is now in beta tests I believe, it's been a pretty long development cycle. Can you talk about what you're seeing, what you've learned so far, and how impactful will it likely be for Live Nation's business?

Greg Maffei - Liberty Media Corporation - President & CEO Well, I think first, real appreciation from the leagues who have been our first people. Not every team in all of the leagues, but a lot of the baseball teams, NBA, have been very responsive to being able to control, prevent fraud, show their customers a full experience. And as I said, I think Michael at our Investor Day on the 10th, Rapino will show how that looks and why it's attractive.

We're seeing building liquidity in the amount of tickets so that's very good. We're still well behind some of the other used or secondary market sale companies. But I think we have a lot of things where we can provide it very attractively to a customer. Which is, show you a screen, show you the price; the ones that are primary sale are tagged in blue, the ones that are secondary sale are tagged in red. And you're indifferent because you know that the ticket is legit, you know what the price is, and you know where the seat is. And that opportunity to see that all mapped and being different between primary and secondary I think is very appealing for consumers.

So ultimately not only is this an incremental revenue opportunity for us, it's a better improved customer experience, it's a better experience for the leagues with whom we work, it's a better experience potentially for concerts. I think there's a lot of synergies around all parties finding it attractive.

Drew Borst - Goldman Sachs - Analyst Live Nation has been making some strategic acquisitions although they're fairly small in terms of dollar size. As you think about prioritizing free cash flow, how do acquisitions fit into the mix?

Greg Maffei - Liberty Media Corporation - President & CEO Well, I think the primary one they've made was controlling interest in Insomniac, one of the EDM, electronic dance music festivals. That's very attractive, it's a hot space, and our share in EDM has gone up dramatically through Insomniac and other actions we've taken. If you look out there, there are other festivals, whether they are EDM or other festivals, that are attractive and could potentially be part of a larger strategy as I said of not only getting the promotion, but the ticketing and the like and more sponsorship.

When you weigh that against other uses of capital, we've already seen through some of the actions both reduced interest costs; we did a refinancing in the last couple months. We caught some very attractive rates. We reduced not only our interest cost, but in some cases have reduced our leverage.

And EBITDA has been growing nicely over the last couple years and free cash flow growing even more. I think there's a real focus from Mike Rapino and his team to improve the free cash flow line. So there will be cash I think available both for holding or even reducing the debt levels and still being able to doing these tuck-in important acquisitions.

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Drew Borst - Goldman Sachs - Analyst Let's move over to LINTA, Liberty Interactive. Can you talk about the growth drivers there?

Greg Maffei - Liberty Media Corporation - President & CEO Well, the Big Kahuna is QVC. It has been a strong grower and has solidified its position over time by moving from I think when I joined it was about 15% or less. Internet now in the United States is over 44%, showing growth in mobile. Of that Internet portion, over 25%, I think it's about 28% or 29% is now mobile. So shown an ability to move the platform and grow it in new ways, had steady and consistent cash flow growth, and then has faster growth opportunities in new markets like Italy and China, and we continue to look at new markets to roll out including France, Spain, and Brazil. So those are all growth drivers for the business.

In addition, we have an important toehold in HSN, it's had a nice run; and we have a series of ecommerce companies which had great growth until about 2012. Had a bunch of hiccups last year, we've had a bunch of talent upgrades and a bunch of changes, and appear to have gotten moving again and are growing faster than QVC. So that is a small piece, but I think an important piece in terms of driving growth.

Drew Borst - Goldman Sachs - Analyst I'm wondering what you're seeing through QVC in terms of US consumer, in terms of the health of it. Are you seeing anything interesting in terms of categories or any trends on the US side of QVC's business?

Greg Maffei - Liberty Media Corporation - President & CEO Our customer remains very value conscious, very aware of what's full dollar value and what's attractive. I would say the US consumer is still relatively tepid.

We haven't seen some of the challenges we saw early in the year. There were months that were -- you could definitely feel the spigot turned off. That hasn't been the case recently, but the business is certainly not. I think the US consumer, she is cautious and at least the ones we see.

Drew Borst - Goldman Sachs - Analyst And then you're in Japan, Germany, UK, Italy, and China. Are there any observations about how the consumer is behaving in those markets?

Greg Maffei - Liberty Media Corporation - President & CEO England surprisingly strong, I just think obviously we've had austerity there, but we're comping pretty well, partly because last year we had things like the Olympics that were causing us not to have poor results. The lack of that Olympics this year is causing UK to be very good, relatively surprisingly.

Japan's still challenged and Germany sort of moderate. Italy growing reasonably well, hard to measure what the consumer is doing there because we're so low penetrated and so early that we're share taking not really measuring the consumer success.

And China growing very well mostly because we're getting incremental carriage, something we're not really getting in other markets in the same way. But just given how early we are in China, we've got incremental carriage is driving a lot of value.

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Drew Borst - Goldman Sachs - Analyst Just gaining market share. In terms of new markets, what kind of criteria are you using to assess new markets expansion?

Greg Maffei - Liberty Media Corporation - President & CEO Our first criteria has traditionally been having -- being able to get carriage, sufficient TV distribution, pay households that we're able to expose our information, content, community that we offer consumers on the television set, being able to expose it to enough consumers.

Secondarily, you want to see sufficient GDP; GDP per household, rising GDP per household. Those are not absolute metrics, but you'd like to understand those and hopefully have them headed in the right direction. And then some ability to actually be able to distribute the product physically, those are all factors.

Drew Borst - Goldman Sachs - Analyst And is there some sort of number of new markets that you want push into or there's not some sort of --?

Greg Maffei - Liberty Media Corporation - President & CEO No, I don't think there's number. There's probably a reality of an absorption we can't do. We would probably be stretched to do one a year, but one every other year is certainly a doable proposition.

Drew Borst - Goldman Sachs - Analyst Okay. I wonder with the investment in HSN, is the long-term goal here to maybe find some synergies between these two companies? It does seem like it's a business that has some scale benefits, is that kind of your long-term view?

Greg Maffei - Liberty Media Corporation - President & CEO I think our long-term view is that there might be those synergies. At the moment HSN trades at a premium to us and we would have to offer a larger premium yet; and given the structure of the deal we live under with them, we really don't have an ability to force their hand.

So providing an attractive offer that's high enough to draw them would probably not be an attractive offer relative to our returning capital to our shareholders directly, repurchasing more of our own stock. And that's been our focus, so we'll see.

Drew Borst - Goldman Sachs - Analyst Okay. Maybe we'll see if there is any questions from the audience.

Greg Maffei - Liberty Media Corporation - President & CEO There's one over here I think, raised hand.

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QUESTIONS AND ANSWERS Unidentified Audience Member On the Charter side, you mentioned that with Bresnan you had some success linking together some of the rural stations using technology. I guess as you look at consolidation there, does consolidation have to involve one or two large-scale deals? Or could you go about this -- would you achieve those same synergies you referred to by maybe rolling up some of the smaller rural providers?

Greg Maffei - Liberty Media Corporation - President & CEO Well, obviously buying or merging with a 12 million sub MSO is different than the 1 million sub MSO. I mean (inaudible) you've got construction issue. You got Comcast; we'll assume they're pretty much on their own for the moment. Our takeover capability of Brian is probably reduced.

Then you've got Time Warner. You've got a couple of threes and fours which we're in that category, threes and fours, in that range; and then you've got a whole bunch of ones. And so very different structure about what you do on those and how much impact it has on your programming cost for example if you're doing a 1 million versus a 12 million.

Drew Borst - Goldman Sachs - Analyst Any other questions?

Unidentified Audience Member Can you just elaborate again on your ownership outlook for Live Nation?

Greg Maffei - Liberty Media Corporation - President & CEO The history is we were about 30% of TicketMaster. It merged with Live Nation, we were merged down to about 14%. We were 29% and we went to 14%. We bought our way over the last sort of 12, 15 months up to 27.3%. We are prohibited without permission of the Board from going over 35%.

At various times we were interested in buying more, but as you may recall, they had a CTS lawsuit or arbitration that was going on, so a $900 million [prayer] from CTS. And the nature of that was from November of 2011 till the ruling came down a few months ago, we would get periodic warnings -- the ruling is going to come down. It was supposed to come down in November 2011, but it didn't, the wheels of justice ground slowly.

And various times, we got frozen out from buying more stock. We did as I say buy a whole bunch of stock at windows when we could, but at various times we were frozen from buying stock on the fear that there was imminent information coming out and we would be perceived as front running it. The stock has since run from $10-ish to $17 over the last eight months so it's had a pretty nice run.

Drew Borst - Goldman Sachs - Analyst Any other questions? Sure, over here. Wait for the mic, please.

Unidentified Audience Member Could you speak a little bit on your plans for deploying capital at Liberty Ventures? What kind of hurdle rate you're targeting? What the timetable on that might be?

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And then separately on the whole OTA/Meta discussion, what's been your take on the turbulence with Expedia vis-a-vis Trip?

Greg Maffei - Liberty Media Corporation - President & CEO So on Ventures, we would love to find a great strategic business that fit all of our criteria. I told you about our predilection towards subscription models. As a practical matter we haven't found that yet. We continue to look.

We did deploy capital attractively by buying back control or repurchasing various proxy and that's turned out very well. We've done a few little green deals. We continue to look at more.

Will we someday be presented with an opportunity to buy control of Expedia? Maybe. I'm not thinking that's tomorrow. But could that happen somewhere down the road? That's an opportunity potentially.

We continue to search out there. We look for significant equity rates of return recognizing the risk, but it very much depends on the nature of the project. And on these green deals, we've been able to get deals at 20%-plus rates of return with relatively low risk. So we like those. But they've not been scale and they are not really strategic, but they're nice uses of capital in the interim.

Switching gears over to the OTAs and Metasearch, I think Trip has made great progress by instituting what was absolutely needed and the right consumer experience around Meta. The monetization has gotten better and better. It's not yet up to exactly where we were, but I think we'll get there.

Expedia just on the basis of their public statements, not any news, seem to have been less adjusted to understanding how to bid into that new Meta system or didn't bid as aggressively because they didn't find it attractive. Their growth rates seem to reflect that.

Priceline's growth rate and Trip's growth rate appeared more aligned and it appeared that Priceline bid more aggressively and understood how to bid or wanted to bid more aggressively. It found it more attractive to bid into the Meta product. So it seems like that's been changing, but we'll see what the next few quarters' results bring.

Unidentified Audience Member Is it possible that Ventures could play a role in cable consolidation in partnership with a Charter?

Greg Maffei - Liberty Media Corporation - President & CEO If we don't see an opportunity that's great at Ventures and there's an incremental need for capital at LMCA, and the Board of Directors of Liberty Interactive, which has overlap but has independent members from the Liberty Media Board, thought that was an attractive investment and could be justified, yes, that could happen certainly. We've had short-term loans across the various companies for a while, but we have not had more permanent structures, but it's not inconceivable.

Unidentified Audience Member And then final question, Expedia versus Trip, which business do you like more? Which is the better business?

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Greg Maffei - Liberty Media Corporation - President & CEO We'll see. I think the Trip business model is awesome and Trip has got great experience with consumers and may have greater consumer ownership, it appears. On the other hand, last time I looked, the multiple kind of reflected a lot of those very positive attributes so it's not as if that wonderful nature of the business model isn't reflected or unknown by the marketplace.

Drew Borst - Goldman Sachs - Analyst Any last questions from the audience?

Greg Maffei - Liberty Media Corporation - President & CEO Great. Thank you.

Drew Borst - Goldman Sachs - Analyst Thank you, Greg.

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