Wherever you see it, hear it, play it or buy it... 2009 Annual Report 115,000,000+ phone calls handled worldwide by QVC in 2009 th 30,000,000 ProFlowers order shipped 18,944,199 SIRIUS XM subscribers 14,200,000 members on Lockerz.com and adding 75,000 a day 2,632,289 Backcountry.com orders fulfilled in 2009 2,373,631 fans watched the Atlanta Braves at Turner field 1,000,000 unique visitors to QVC.com on Cyber Monday 2009 536,497 active BodySpace Profiles at BodyBuilding.com 50,000+ videos on average available at QVC.com 1,000+ movies and original series air on Starz and Encore each month 133 Braves radio stations, the largest radio network in all of sports 130+ channels of satellite radio available on SIRIUS XM 3.8 packages per second are delivered across the U.S. by QVC #1 among all Friday premium programs for 13 straight weeks - Spartacus CONTENTS Letter to Shareholders 1 Stock Performance 8 Company Profile 12 Financial Information F-1 Corporate Data Inside Back Cover Certain statements in this Annual Report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business, product and marketing strategies; new service offerings; our tax sharing arrangement with AT&T Corp. and estimated amounts payable under that arrangement; revenue growth and subscriber trends at QVC, Inc. and Starz Entertainment, LLC; the expected timing of QVC’s programming launch in Italy and losses to be incurred by QVC-Italy; anticipated programming and marketing costs at Starz Entertainment; the recoverability of our goodwill and other long-lived assets; counterparty performance under our derivative arrangements; our expectations regarding Starz Media’s results of operations; our projected sources and uses of cash; the estimated value of our derivative instruments; and the anticipated non-material impact of certain contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business. In particular, statements in our ‘‘Letter to Shareholders’’ and under ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and ‘‘Quantitative and Qualitative Disclosures About Market Risk’’ contain forward-looking statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated: • customer demand for our products and services and our ability to adapt to changes in demand; • competitor responses to our products and services, and the products and services of the entities in which we have interests; • uncertainties inherent in the development and integration of new business lines and business strategies; • uncertainties associated with product and service development and market acceptance, including the development and provision of programming for new television and telecommunications technologies; • our future financial performance, including availability, terms and deployment of capital; • our ability to successfully integrate and recognize anticipated efficiencies and benefits from the businesses we acquire; • the ability of suppliers and vendors to deliver products, equipment, software and services; • the outcome of any pending or threatened litigation; • availability of qualified personnel; • changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission, and adverse outcomes from regulatory proceedings; • changes in the nature of key strategic relationships with partners, vendors and joint venturers; • general economic and business conditions and industry trends including the current economic downturn; • consumer spending levels, including the availability and amount of individual consumer debt; • disruption in the production of theatrical films or television programs due to strikes by unions representing writers, directors or actors; • continued consolidation of the broadband distribution and movie studio industries; • changes in distribution and viewing of television programming, including the expanded deployment of personal video recorders, video on demand and IP television and their impact on home shopping networks; • increased digital TV penetration and the impact on channel positioning of our networks; • rapid technological changes; • capital spending for the acquisition and/or development of telecommunications networks and services; • the regulatory and competitive environment of the industries in which we, and the entities in which we have interests, operate; • threatened terrorist attacks and ongoing military action in the Middle East and other parts of the world; and • fluctuations in foreign currency exchange rates and political unrest in international markets. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Annual Report, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based. When considering such forward-looking statements, you should keep in mind any risk factors identified and other cautionary statements contained in this Annual Report. Such risk factors and statements describe circumstances which could cause actual results to differ materially from those contained in any forward-looking statement. This Annual Report includes information concerning public companies in which we have non-controlling interests that file reports and other information with the SEC in accordance with the Securities Exchange Act of 1934. Information contained in this Annual Report concerning those companies has been derived from the reports and other information filed by them with the SEC. If you would like further information about these companies, the reports and other information they file with the SEC can be accessed on the Internet website maintained by the SEC at www.sec.gov. Those reports and other information are not incorporated by reference in this Annual Report. Dear Fellow Shareholders: Liberty Media holds a diverse set of telecom, media and technology (TMT) businesses and investments, largely as a legacy of our founding as the ‘‘content arm’’ of TCI. Our principal aim is to build value for our shareholders and this has led us to create tracking stock groups that provide choice and greater transparency, spin-out logically grouped assets to further our business objectives, efficiently monetize our investments in non-core, non-consolidated, less attractive businesses and investments, and opportunistically reinvest our cash. Where We Excel Last year we mentioned Liberty’s strengths, but it is worth restating them. We believe that we: • Have a shareholder-centric culture – We think like owners and are focused on long-term gains rather than short-term results. The compensation structure of our management team is closely tied to our stock price, more than is typical for our peers; • Are forward-looking – We seek to take advantage of the benefits and minimize the risks associated with the digital transition in the industries in which we invest; • Empower management – We invest in strong teams, provide strategic input and capital, and work to empower our teams; • Are nimble – Our structure and focus allow us to move quickly when opportunities arise and we can be creative in our deal structures; and • Demonstrate financial expertise – We have experience in mergers, divestitures, investing, capital deployment, credit analysis and setting capital structures. The Economic Climate Entering 2009, we were concerned about the state of the economy – the depressed stock market, the instability of financial institutions, rising unemployment and the future effects of government spending to name a few. Many of our operations were challenged. It was an uncertain time, but also an opportunity that we attempted to take advantage of. We sought to buy or invest in new companies, increase our existing equity stakes, and invest in debt of TMT companies through our debt fund. We also repurchased Liberty’s debentures when they were trading at steep discounts to face value. What We Did Well We completed two major transactions in 2009 that created substantial value for our shareholders. In March 2009, with a weak US car market and limited access to capital, SIRIUS XM appeared headed for bankruptcy. We saw many aspects of the satellite radio business that we liked: a large customer base, a subscription-based model, cost savings produced from the merger of SIRIUS and XM, the potential rebound of the US car market, 1 and a strong management team led by Mel Karmazin. We structured a deal to help ensure SIRIUS XM’s financial health by giving the company more time to realize the synergies of the SIRIUS and XM merger. We agreed to invest up to $530 million in senior debt of SIRIUS XM and received preferred stock convertible into 40% of the common equity. We were able to invest in a way that minimized our downside risk while