4MAY200910502646 4MAY200910391515 25APR200800584296 4MAY200910402601 4MAY200910405042 2008 Annual Report Clockwise from the top left hand corner QVC, Inc. QVC, Inc., one of the largest multimedia retailers in the world, broadcasts live 24 hours a day, 364 days a year. Reaching more than 166 million cable and satellite homes worldwide, QVC is committed to providing its customers with thousands of the most innovative and contemporary beauty, fashion, jewelry and home products. Last year, QVC received more than 100 million phone calls in the United States alone, and shipped 160 million units worldwide. QVC presents more than 1,150 products every week—288 of these products are brand new to the QVC customer. Photo is of QVC’s Rocky Mount, N.C., distribution center where a 1-megawatt solar array was installed in 2008. This system produces solar power that results in a 3.1 million pound reduction in carbon emissions—the equivalent of removing 259 cars from the road each year. DIRECTV DIRECTV, the nation’s #1 satellite television service, presents the finest television experience available to more than 18 million customers in the United States and is leading the HD revolution with more than 130 HD channels—more quality HD channels than any other television provider. Each day, DIRECTV subscribers enjoy access to over 265 channels of 100% digital picture and sound, exclusive programming, industry-leading customer satisfaction (which has surpassed all national cable companies for eight years running) and superior technologies that include advanced DVR and HD-DVR services and the most state-of-the-art interactive sports packages available anywhere. Provide Commerce Provide Commerce operates an eCommerce marketplace that offers high-quality perishable products and unique and personalized gifts. The sales through ProFlowers.com continue to be Provide Commerce’s most significant source of revenue comprising of 83% of its sales in 2008. In 2008, ProFlowers.com shipped its 25 millionth order and on Valentine’s Day celebrated its 10th year in business. Provide Commerce works with a network of suppliers primarily throughout North and South America to consistently deliver fresh, high quality products direct from the supplier to the customer. Photo is of a Tea Rose grown at a flower farm located just outside of Bogota, Colombia. Starz LLC Starz LLC is the parent company of Starz Entertainment and Starz Media. Starz Entertainment is a premium movie service provider operating in the United States. It offers 16 movie channels including the flagship Starz and Encore brands with approximately 18.1 million and 31.9 million subscribers, respectively. Starz Entertainment airs more than 1,000 movies per month across its pay TV channels. Starz Media is a programming production and distribution company operating worldwide. Its units create animated and live-action programming—including theatrical films—and programming created under contract for other media companies. This photo is of Starz LLC’s headquarters located in Englewood, Colorado. CONTENTS Letter to Shareholders 1 Stock Performance 6 Company Profile 9 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; QVC’s ability to comply with the covenants contained in its credit facilities; 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 for the next two to three years; 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: • our ability to complete the proposed split-off of a majority of the assets and liabilities of the Entertainment Group and the proposed, related business combination with DIRECTV; • 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 group of telecom, media, and technology (TMT) businesses and investments. Some of these we started, others we purchased, and some we inherited from our former parent, TCI. Our strategy over the last few years has been to create greater transparency and provide investors more choice by spinning out or forming tracking stocks of logically grouped assets. This has allowed some of our former businesses to build concentrated scale, such as Liberty Global and Discovery Communications. We have also tax-efficiently reduced