Amended: Fitch Assigns a 'BBB-' Senior Unsec Rtg to Liberty Media Corp.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 24, 2003

(This is an amended version of a press release which reflects a revised estimated $2.6 billion cash balance and a pro forma cash balance of approximately $4.1 billion.)

Fitch Ratings has assigned a 'BBB-' rating to Liberty Media Corp.'s proposed $1.5 billion 20-year 0.75% Senior Exchangeable Debt issuance. The investors have the option to exchange the debentures into common shares of AOL Time Warner, Inc. (AOLTW) based on a conversion premium of approximately 52% above Thursday's $11.46 closing price for AOLTW's shares. In addition, the issuance has put options allowing investors to sell the debt back to Liberty Media in years 5, 10 and 15. Liberty Media could settle the put with common shares of AOLTW, Liberty Media, cash or any combination. Fitch estimates that Liberty Media currently owns approximately 171.5 million shares of AOLTW of which 113.5 million shares are not hedged.

Fitch anticipates that proceeds from the debt offering will provide the company liquidity to pursue acquisition opportunities including QVC, DirecTV and Vivendi Universal's domestic entertainment assets. If the company is unable to successfully execute on those transactions, Fitch anticipates that the company will use the excess cash to repay or refinance higher-cost debt. While each of the transaction opportunities will have materially different business risk and financial characteristics including free cash flow, earnings growth and leverage, the 'BBB-' rating reflects Fitch's belief that Liberty Media remains committed to operating with credit metrics consistent with its rating category. Fitch will reevaluate the rating implication of any acquisition should a transaction appear more likely and disclosure by the company of a financing plan.

Liberty Media currently has a significant amount of liquidity with 'in-the-money' hedges of approximately $5 billion plus public equity investments of approximately $13 billion at year-end 2002. The company also has a significant private equity investment portfolio which comprised approximately 50% of the company's total asset value. At year-end 2002, the company had approximately $2.6 billion in cash and total consolidated debt adjusted to reflect the face amount of approximately $7.2 billion which included about $3.1 billion of exchangeable debt, $2.8 billion of straight debt at the parent company and $1.3 billion of subsidiary debt. The proposed $1.5 billion debt issuance will increase total consolidated debt to approximately $8.7 billion. Excluding a pro forma cash balance of approximately $4.1 billion, Liberty Media's public investments including the hedges covered $8.7 billion of debt approximately 2.1 times(x). Though Liberty Media's interest coverage (EBITDA plus dividend and interest income to interest expense) in the mid-one times range is low for its 'BBB-' rating, Fitch believes the company will continue to manage its liquidity to meet its debt service requirements.

On March 3, 2003, Liberty Media triggered an exit process related to Liberty Media's and Comcast Corp.'s 42.5% and 57.5% ownership interests, respectively, in QVC, Inc. After completion of a valuation process for QVC, Comcast will have the right of first refusal to purchase QVC at the appraised price, followed by Liberty Media's option to buyout Comcast's interest. If both parties do not agree to a buyout, QVC can than be sold to a third party.

Fitch considers Starz Encore Group LLC as one of the company's most significant consolidated assets representing approximately 46% of Liberty Media's fiscal 2002 consolidated revenues. Following Comcast's acquisition of AT&T Broadband in November 2002, Comcast initiated a lawsuit against Starz Encore to break an existing 25-year affiliation agreement expiring in 2022 between Starz Encore and AT&T Broadband. As the outcome of the litigation is highly uncertain, Starz Encore changed the revenues recognized from the AT&T Broadband systems to reflect the Comcast affiliation agreement, rather than of AT&T Broadband. For the year ending December 31, 2003, the estimated difference in revenues as calculated under the AT&T Broadband and Comcast agreements, respectively, will be approximately $80 million. Despite the potential for lower cash flow from Starz Encore, Fitch anticipates that Liberty Media will continue to maintain adequate liquidity to meet debt service requirements at the current rating level.