Liberty Media Corp and Liberty Interactive Corp at Deutsche Bank Media, Internet & Telecom Conference

Mar 07, 2016 AM EST
FWONA - Liberty Media Corp
Liberty Media Corp and Liberty Interactive Corp at Deutsche Bank Media, Internet & Telecom Conference
Mar 07, 2016 / 09:45PM GMT 

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Corporate Participants
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   *  Greg Maffei
      Liberty Media Corporation - President & CEO

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Presentation
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 Greg Maffei,  Liberty Media Corporation - President & CEO   [1]
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 How long have you guys had this conference? Three years, four years?

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Unidentified Participant   [2]
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 I believe it's been at Deutsche Bank since 2009, 2008 or 2009.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [3]
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 Wow, longer than that. Didn't CSFB have it for about a week? It was Bear Sterns and then CFSB for a very short period. Somebody was smart. Mr. Gabelli is nodding. One year? Yes.

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Unidentified Participant   [4]
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 (Conference instructions). With that, I would love introduce Greg Maffei. A lot of titles here; President and CEO of Liberty Media and Liberty Interactive; Chairman of Live Nation, Sirius XM, Starz, and TripAdvisor; Director of Charter and Zillow. Did I miss any? Close enough?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [5]
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 Close enough.

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Unidentified Participant   [6]
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 Okay, alright. Well, thanks, Greg, for coming today.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [7]
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 We just keep subdividing. That's the problem.

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Questions and Answers
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Unidentified Participant   [1]
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 We won't get into the trackers until they're actually out there. So, look, why don't we start with your major operating companies? Maybe if you could just talk about your assessment of the recent performance across the Liberty portfolio and your major holdings; QVC, Sirius, Charter, Trip, Live, Starz, whichever ones you'd like to focus on.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [2]
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 So, I think, you know, QVC had a good quarter, continued good growth internationally, obviously challenged by currency, but in constant currency, well. U.S. was solid. I'm a little surprised at how the market reacted as negatively as it did to that quarter particularly when you look at how HSN moved on what I thought were weaker numbers. But that's your guys' job.

 And Sirius had a very strong quarter. You know, it was up against a tough number because the Q3 was just such a blowout. Q4 was very, very solid, but it was a tough, probably not comparable, but the expectation-beating was tough to match. But that business continues to perform well.

 TripAdvisor had a good quarter, though it was cautious in noting it's obviously in the middle of a big transition as it moves from multiple windows to meta to instant book. There is a crossing-the-chasm, in effect, nature to the business. And so, there's a lot of transition particularly in the first half of the year that's occurring. And I think we'll see easier comps, in effect, in the second half of the year at Trip.

 Which one, Live? Live had a solid quarter. You know, I think, in general, most of our businesses had pretty good numbers. We are somewhat lucky that our businesses in general are domestic. There are some exceptions. Obviously, QVC and Trip have large international operations. But, generally domestic, generally targeting the upper half of the socioeconomic group, who are largely prospering. We have somewhat of a two-tiered economy. We're lucky to be in the top tier where things are going reasonably well.

 What other businesses would you like me to comment -- those are sort of the biggest units. What else is in there?

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Unidentified Participant   [3]
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 I had Starz on my list.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [4]
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 Starz. Starz had a good quarter. It traded up nicely on how it performed and what its expectations were going forward for things such as its launch on Amazon, its continued new program rollout, original programming rollout, all having been well received and what's on the slate ahead. So, I think it's pretty well positioned as well.

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Unidentified Participant   [5]
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 And you've got the upcoming Liberty Media tracker issuance.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [6]
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 Yes.

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Unidentified Participant   [7]
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 You want to talk, maybe just give people an update on the timing.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [8]
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 Sure. The vote is on April 11th. They'll probably trade when issued slightly before that and then actually start trading on a true basis two, three days after.

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Unidentified Participant   [9]
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 Okay, great. And then the other major transaction you have coming up obviously is the Charter Time Warner Cable Bright House merger.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [10]
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 That's going to close on -- No, I'm just kidding. That one's a little harder to predict. Obviously, the FCC is still an open item that we're having discussions with and then the PUC in California has moved itself at least from a June deadline to a May deadline. So, that's probably the outside.

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Unidentified Participant   [11]
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 I think Liberty Broadband has the right to flex down the participation of the third-party investors by 25%.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [12]
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 Yes.

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Unidentified Participant   [13]
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 Is there a deadline by which you have to make that election?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [14]
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 It's a funny deadline. It's 90 days before close. But since no one knows when close is that's a funny deadline.

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Unidentified Participant   [15]
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 I'm just trying to back into the closing date by --

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [16]
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 Yes, you can't get that. When it was written, the contract with our partners and those partners, Liberty Broadband's partners on that investment include not only some Liberty Broadband capital, but four other institutions as well as Liberty Ventures. I don't think anyone thought that they would be quite so variable.

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Unidentified Participant   [17]
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 So, have you elected to flex that down?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [18]
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 We have not, but, again, I don't know what the close date is.

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Unidentified Participant   [19]
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 Okay.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [20]
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 And, look. The general thought about that, just so you understand, when we put that in place, is if the stock were $120, the Charter stock, we probably wouldn't have flexed it down. If the stock were $250, we might very well have flexed down with the logic that we could probably find cheaper financing, Liberty Broadband could find cheaper financing to the benefit of everybody in that investment group, equally. They would all be flexed equally down and that they would get the benefit of investing less capital but probably generating already having a good mark and higher rates of return.

 The way that deal is struck is they invest into Liberty Ventures at a fixed price that was the net asset value on the day that we signed the deal. So, now, the time we signed the deal, Charter, the blended Charter purchase price was $176.95. Charter is something like -- I don't know -- where did it close? $185? So, we're through the NAV. Now, whether Liberty Broadband is actually trading to that NAV is another matter, but we're through the underlying NAV. So, it's attractive on an NAV basis.

 But I'm not sure it's so attractive, we're not at $200 or $250, that we would use that flex right. We'll see. And this is a negotiation with our partners on the -- we're not trying to disadvantage them. We're trying to do something that's attractive for all of us collectively.

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Unidentified Participant   [21]
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 When you look across all the public equities you're involved in, including Liberty stocks themselves, where do you think the greatest disconnects are between how they're being valued by the market today and the intrinsic value that you see?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [22]
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 Well, we've got NAV discounts in lots of places. Depending on how you look at, the NAV discount at Liberty Media is 15-plus%, which is higher than it's been for quite a while, which is a little perverse in that a little more than a month from now we're going to theoretically see how that gets distributed across three securities. And one would guess, one would hope, with better transparency and clarity on some of the pieces, particularly the Braves and Sirius XM, that the discount in general would decrease. But, at the minimum, I think it will shift and move around. So, we'll see what happens there.

 There's a pretty good discount, as well, on Liberty Broadband's discount to its NAV, its underlying Charter stock. And that makes relatively little sense, to my mind, because it's a very clean transaction. I mean 95%, 97%, 98% of the assets of Liberty Broadband is Charter stock and there are a bunch of reasons why Liberty Broadband has a series of rights vis a vis Charter, which you would think would give it relative attractiveness to Charter at some point to collapse at NAV or higher. No guarantees, no timeframe, but just look at it and say; we've got a preemptive right. We've got governance rights. We've got board seats. Those would be things that you would -- most companies would be willing to work to try and eliminate.

 There has been a discount at various times. Liberty Trip has traded at a premium and I think now it's trading at a little discount. But that's not of the same magnitude as some of these others.

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Unidentified Participant   [23]
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 Any comment on any of the underlying businesses? I mean whether it's Starz or Sirius --

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [24]
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 Whether they're attractive?

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Unidentified Participant   [25]
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 Yes.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [26]
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 Well, they're all beautiful.

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Unidentified Participant   [27]
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 You love them all?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [28]
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 You know, Starz got very cheap and I think it's still relatively attractive. But it obviously got very cheap when it got down under $21, $22. Sort of in tandem with some others that it drove it very cheaply. That was a big discount to what would seem to be some sort of intrinsic value.

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Unidentified Participant   [29]
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 Can you remind us -- I think a lot of people are always asking us questions around where you have opportunities to invest, where you have cash, and where the investments could come from. Can you remind us where you have capacity for further investments, pro forma for the pending transactions, as well as the Vivendi settlement that you announced in your earnings call?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [30]
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 Well, we don't have a lot of, huge amounts of cash lying around, other than at Ventures, though that's largely committed for the Broadband purchase, Liberty Broadband purchase.

 We do have a lot of borrowing capacity. There's borrowing capacity at Broadband. There's borrowing capacity probably in the remade tracker for Sirius XM, which will literally have no debt or virtually no debt. There's some cash at Liberty Media Group, the pro forma new tracker.

 The Braves is relatively under-capitalized. There's not a ton of available cash, but I don't see, having set in place the financing for the new stadium and the mixed-use facility related to that, I don't see a ton of things we'd want to do there. As I mentioned, there's some cash at Ventures and borrowing capacity there. And QVC is relatively under-levered itself. I think it's still got room if we found something highly appealing.

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Unidentified Participant   [31]
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 Once the Sirius tracker is out there, as you said there's no debt there, I would think you'd be able to -- you can margin against Sirius debt -- I mean the Sirius equity position.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [32]
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 Yes.

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Unidentified Participant   [33]
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 So, that becomes another, I guess, significance for financing.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [34]
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 Absolutely.

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Unidentified Participant   [35]
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 I mean, given the decline in asset values we've seen, do you think we're at a point where there might be some opportunities for you to find attractive new investments for the portfolio?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [36]
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 You know, I've been asked this and I think what always happens is buyers get excited early and sellers take a while to adjust to what may be a new reality. And so, it never happens quite as fast as you like.

 And one of the things is you really need to get a situation, if you want to do something large, where you're dealing with the company. You know, the nature of our structure is, because we're corporate-level tax we need to have sort of have buy-in, get influence, or have some position where we have a long-term say. We're not guys who really can go in and buy 3% or 5% of a company, look for a relatively quicker pop, and take the gain because the corporate-level tax is onerous. You're a structure, many of you hedge funds or other kind of partnerships, where you can just pass those through to the LPs. It's far more attractive and tax efficient.

 That leads us to do kind of deals where we're more influential, longer-term, and probably larger size so we can have influence on the exit. And that means, in general, you have to do deals with the company rather than trying to do them in the market. Not always, but in general. And that just takes longer to get realization that those companies come to; oh, it's a new world if I'm going to finance I've got to find something like Liberty, which may not be the lowest-cost alternative.

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Unidentified Participant   [37]
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 When you look at the high-yield market are there particular situations that you're waiting out that you think could be distress situations?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [38]
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 You know, that's a great example; where things just take a long time. We watched some of these bonds get hammered. Some of them got hammered earlier. And you know there were issuances by some of our brethren in the cable space which were 10-plus% and those are pretty attractive. But you couldn't buy anything in size to end up with a position that would be meaningful. We could do something. We flirted around the edges, sure. But we couldn't do anything that was really going to a game-changer or significant.

 So, there have been none of those yet. We've looked at lots of things which are restructuring and there's some that are more like that. But the drop in the market itself doesn't cause -- it's a great example -- doesn't cause enough. It isn't long enough to allow you to do something.

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Unidentified Participant   [39]
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 Most of the businesses that are in your portfolio tend to have pretty interesting growth stories attached to them. How do you think about the relative attractiveness of companies that have seemingly cheap valuations and strong cash flow characteristics, but not very attractive growth prospects? So, very mature businesses. Are these types of assets attractive to Liberty?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [40]
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 Well, they can be. But, in general, the market does not accord them great numbers and if you're a long-term story, to be part of us, that's a different story.

 And so, in some cases, look at QVC, we've done a lot to try and accelerate the growth potential. The U.S. business grows at a reasonable rate, but it's not a fast-grower by any stretch of the imagination. But when you throw in incrementally less-penetrated new markets overseas, internationally, like China, hopefully France becomes a growth story from a zero base, Italy, you make it more appealing. And, obviously, then, when you throw a faster grower like Zulily, hopefully you're able to change the multiple and the story.

 We haven't done that yet. And I think if you look at the relative attractiveness of QVC versus HSN, given its cheaper multiple, higher free cash flow yield, and much better growth prospects, it's a head-scratcher to me. But we own 38% of the one so God bless you all.

 The other thing is, is we've tended to try and make returns on those things more attractive, obviously, with a certain amount of leverage and have a levered shrink, share-shrink model, such that, even if it's modest growth on the revenue and the EBITDA side, combined with a tax shield and a share shrink model and relatively low-cost debt environment that we're in, you can generate reasonable equity returns. But that's a tougher public market story.

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Unidentified Participant   [41]
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 Yes. Are you really focused on the international side? I mean just given the currency fluctuations? I mean those, combined with the asset value depreciation we've seen. I mean --

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [42]
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 Yes. Though, it's very tough. We've flirted with some things in Brazil. We've done some little things there. We've looked at larger things there. But trying to find the bottom in the real and trying to find what you think is really going to happen to that economy and then trying to find local borrowing; all those were very difficult. So, it's a nice theory, maybe more realistic in Europe, but it's not obvious, it's not easy to come up and pull up some of those.

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Unidentified Participant   [43]
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 What about I mean when you look across your investible universe, which I guess I generally think of as TNT, are there particular areas where you think the valuations are still kind of frothy?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [44]
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 You know, a lot of things have come in, but there are a lot of high-fliers in still the more internet portion of that that are still pretty high-fliers in our minds.

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Unidentified Participant   [45]
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 Yes. Let's shift over, maybe a question on cable. A lot of investors kind of ask us about the regulatory risk on cable, long term, on the back of Title II reclassification. Now we're seeing attempts to open set-top boxes to retail competition.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [46]
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 Yes.

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Unidentified Participant   [47]
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 Who knows what's next. How do you get comfortable with that regulatory risk as a long-term investor in the cable industry?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [48]
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 You know, it's not easy to say you know how to forecast that. I would point out; it's never perfect. You can look and say; it's so good you're going to get regulatory risk.

 On the other hand, there are big players, Google. Though, there have been recently some articles suggesting Google Fiber is not as meaningful or hasn't been as meaningful. But Google is a hell of a player. You know, I was at Microsoft when we were sort of in the phase where Google is now, where everything is going right, you're making money hand over fist, and you start deploying it into other businesses. And the line I've used is; we were really good at entering new businesses and screwing up the other guy's profitability, not so good at making money ourselves. And we'll see what happens with Google on that.

 If you listen to what the large telcos, AT&T, Verizon, they're just talking about 5G and what it's capabilities are. It certainly suggests there is real competition, real potential for change. Maybe that's not great for the business, but maybe it helps mitigate some of those regulatory risks around price regulation, usage-based pricing caps, even perhaps net neutrality on the back end in terms of interconnects. So, we'll see.

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Unidentified Participant   [49]
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 Yes. Do you think broadband, someday, let's say it were to become a price-regulated utility, does that necessarily make it a bad place to be invested?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [50]
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 It would not be our preference.

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Unidentified Participant   [51]
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 What about on the wireless side? I mean how do you think about --

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [52]
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 I mean all kidding aside. I mean how many regulated industries where they have pricing do you see true investment and growth and innovation? That's just -- how many industries do we see that where that really is occurring? And I actually think there's been a lot. We just talked about 5G. We talked about some of these potentials. I don't think you'd have a lot of those things happening if you looked at a regulated price environment for broadband in the United States.

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Unidentified Participant   [53]
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 Yes. What about on the wireless side? I mean how do you think about the opportunity for the cable industry in wireless? Do you think that they need to have their own ubiquitous coverage through macrocell networks and have spectrum? I mean just at a high level. Or do you think MVNOs and Wi-Fi are probably an adequate strategy for a cable company?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [54]
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 I think it's a; we'll see. I think you'll see MVNOs -- Wi-Fi first, MVNOs come along. How far and how deep the cable industry goes, I think it's a little bit of a; to be demonstrated over time how successful that is.

 We, in cable, have enormous advantages on some of the network issues in terms of a fully-distributed network that has the ability to interoperate and do Wi-Fi with others, the ability to reach into homes and do a lot of interesting things. On the other hand, the brands of cable are not necessarily the most consumerly well-received brands or perceived in the world. When you look at where cable is sold, it's not sold in fancy, shiny retail stores where the world thinks of it. And that may not help the brand either. So, we're not really developed to have a retail presence in the same way.

 Some of the issues which make wireless a difficult business include the strength of major handset manufacturers like Apple, like Samsung. We wouldn't evade that problem. We'd have the same issues why it is less attractive or some of the reasons why the business could be less attractive.

 So, while we have a host of advantages, there are a host of disadvantages, some of which are endemic to the wireless business and some of which are unique to cable's challenges, which don't tell me we're going to enter tomorrow and be taking AT&T on. We'll see.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [55]
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 Let's shift to content. So, we just had an interesting discussion with Michael Burns of Lions Gate. They recently filed disclosing that they were going to discuss a potential combination with Starz. How should we think about the declines in the stock prices for both Lions Gate and Starz as obstacles to reaching a merger agreement? Or does the fact that both stocks declined kind of neutralize this issue from where you stand?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [56]
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 Well, I think I said earlier that sellers have a harder time coming to grips with that reality than buyers so we'll see.

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Unidentified Participant   [57]
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 Do you see opportunities for the other Liberty entities to invest in the content space? Or do you see kind of the Liberty extended family of companies investing in content primarily through Lions Gate and Starz?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [58]
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 Well, I won't speak for LGI or Discovery. They obviously have done what they've done through Lions Gate and you know. And I can't say that there's no chance Charter is ever in the content business in some form or other. But I think the odds that we are, we the Liberty entities participate in some way, other than through Starz, in some big kind of content consolidation, I don't see the easy path for that and I don't see the obvious path for that other than through Starz.

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Unidentified Participant   [59]
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 Okay. And when you look at valuations --

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [60]
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 I'd point out we're in a different kind of content. You know, TripAdvisor is very big in the content business. It just happens to be UGC. It's a very different form of content. And that's somewhat indicative of how the world of content is changing. You don't think about, one might not think about Trip as a content company, but it obviously is. And its ability to, much the way that Microsoft went out to make it easier for developers to develop software for its platforms, Trip spends an awful lot of time trying to make it easier for you, me, as consumers, to develop and build content for its platform. So, we're in different kinds of content, but we're not, when we think of the traditional content that is spoken about by Michael Burns or if it's Starz, it's not obvious where the play is for Liberty from here.

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Unidentified Participant   [61]
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 Okay. That's helpful. What do you think of media valuations? Do you think the market is being too pessimistic or not pessimistic enough about the future of these businesses?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [62]
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 I think it depends on the business, honestly. I don't think you'd say -- I don't have a blanket statement. It's obviously come in much more so, in general, valuations are more realistic. But there are some that still, I think, look attractive and others maybe less.

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Unidentified Participant   [63]
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 Could you elaborate on that?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [64]
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 No. That's your job.

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Unidentified Participant   [65]
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 Alright. Fair enough. What about -- actually, scratch that. Broadly speaking -- you weren't the guy for that. No, but as you look at the pay TV industry, though, and as playing in different parts of that through some of your companies already, obviously, how do you expect the business to evolve? When you think about subscribers shrinking --

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [66]
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 Which part of the pay TV business?

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Unidentified Participant   [67]
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 The pay TV business in the sense of the market --

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [68]
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 Content player or the MSOs?

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Unidentified Participant   [69]
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 The products that people are buying.

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [70]
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 Yes. I think they're going to continue to be bundled for a long time. Will there be more flexibility in those bundles? You're already seeing some of that. If you look at the penetrations of where ESPN was like in the Time Warner and Comcast five years ago, three years ago, and where they are today, you know they've come down. And I think that's a reflection of the move towards taking some of the highest-priced content out of the bundle and giving consumers more choice. And I think you'll see those trends continue. I don't think these things fall off a cliff. I think they're more gradual.

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Unidentified Participant   [71]
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 Do you see a scenario where, through any of your companies, not that you're going to know which one, I think you've already narrowed it down, you would invest in any of the ad-supported cable networks?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [72]
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 I think I answered. I just don't see that as obvious from what we do right at the moment.

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Unidentified Participant   [73]
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 Okay. Alright. Do you have any view on the -- I mean since you're in a lot of businesses, do you have any view on the outlook for the U.S. and the global economy?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [74]
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 You know, I think I touched on a little of this in my opening statement; that, in general, the businesses that we're in, which target higher-end consumers, are doing pretty well and I think that's pretty bullish. I think if you're not in that upper quadrant, I think it's a little tougher market. And I think there's a little two-tiered aspect where -- and, you know, some of the arguably populist sentiment we're seeing in the presidential race goes to that. If you're in the back, bottom half of the economy it's not been a great ride for the last several years and I think for the top half it's been pretty good.

 Fortunately, for our businesses, most of them are sort of affordable luxuries. They're not -- you know, Sirius XM at $15 a month is not going to break the bank for many in this room, but, for a lot of people in the United States, it's a luxury they don't need. And that matters a lot. And you see it in where we're penetrating the top cars. You see it in the amount of sub-prime loans in cars, you see it how the average length of those loans has been stretched out. There's a real two-tiered market. Everything in our experiences in our company says that.

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Unidentified Participant   [75]
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 Okay. So, actually, that's a good segue to Sirius. I mean how do you see, how do you assess Sirius' long-term prospects in the context of they're growing installed base, but some level of underlying secular pressure?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [76]
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 Well, I think we're near and I don't think we have massive upside in the SAR or the new car market. Not Sirius, but the new car market is probably not going to go to 25 million cars a year or something like that anywhere in the near term. So, we've gone from 9% to closer to 18%. It's been a heck of a run.

 But the growth in Sirius has got a long tail because the used car market in terms of how we penetrate in our installed base is not going to peak out until 2025, 2027, maybe 2030. There's a much longer tail. So, there's a long term ability to convert cars, which are preinstalled with Sirius XM and they're either on second user or a third user, or third buyer rather, or more and were never -- or were never signed up for Sirius XM. The ability to light those up and convert them into paying subscribers is an attractive opportunity that's got a long tail. So, I'm very bullish on that.

 I think I'm bullish on the opportunities that the connected vehicle, where Sirius XM has a real growing presence in a market that we don't know how big it's going to be, but I think we have real strength among almost all the international players and Chrysler. So, I think a very interesting opportunity. Other opportunities around the value of our spectra and the value of our satellites that are interesting. So, I think Sirius has got a long growth trend.

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Unidentified Participant   [77]
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 What about on Live Nation? I mean what do you see as the big opportunities for Live over the next, say, three to five years, taking a long-term view? And how long is that runway for growth in their businesses?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [78]
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 You know, they've gained a lot of share organically by being bigger and stronger and being able to distribute and sell tickets better and promote better. There's probably not massive amounts of organic share left in that sense. But where they can do quite well and fill in, and they have been, is on the global tour. They have the most reach, as it is, in the world on their own footprint, but they still need to use partners and outsource parts of that depending on what part of the world you're in.

 There's a long-term trend where more and more of the tour value is overseas, non-U.S., and their opportunity to buy their Brazilian partner or their Thai partner or they most recently bought their South African partner; that opportunity to continue to fill out their portfolio is interesting. And, with that increasing scale, they've had a heck of a run on gaining e-commerce, gaining sponsorship, being able to do things technologically that no other ticket provider can, no other concert provider can, because of their scale. So, I think they have real good growth prospects in front of them even if it's not sort of gaining share among the top-25 tours.

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Unidentified Participant   [79]
------------------------------
 Question on Starz. One of the things that we hear from investors is that they're concerned about affiliate renewal risk. And I think there's a perception that there's a large, very large renewal, coming up this year. How would you size up that affiliate renewal risk from where you sit? And is that something that the market should be focused on?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [80]
------------------------------
 Well, it's a fact that, as cable has consolidated, as the satellite companies have consolidated, you're talking about a relatively small handful of distributors who make the difference. I think the positive for Starz is that its new content, the originals that it has done, have been very well received. There's a lot of traction. That makes it very appealing for distributors.

 Also, in a world where you're just trying to cut to save if you're an MSO, premiums have a little different model. Most of them are on consignment; meaning you sell another unit, you make more money as a distributor and Starz makes more money. And the model is much more about trying to do and grow share together. And most of the money that has been made or lost over the last five years in that space is not because you whack someone's rate. It's because you either sold more or less and how effective you were in distributing the product.

 And, frankly, if you look, the satellite companies, one satellite company in particular, was very effective at it. When they couldn't sell broadband because they didn't have a broadband footprint, they sold the heck out of premiums and made a lot of money. And I think that's the real opportunity in the premium space, is to work together with our distributors and make a better product, which we're doing with our originals, and sell it better together with them and both of us make more dough.

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Unidentified Participant   [81]
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 About Starz new distribution relationship with Amazon, do you think this is something that can actually be meaningful? Or is this sort of a putting one step in that direction?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [82]
------------------------------
 Yes. I think the potential to reach and flip the pyramid; not every customer, even in a world of skinny bundles, is able to buy a full cable package and then subsequently buy a premium. The opportunity to flip the period for people who are not cable subscribers, who may be Amazon Prime or other kinds of direct-to-consumer plays, who, instead of having to buy through all of that sports programming, buy through those other stuff that they may not want or may not be able to afford our product after that, the opportunity to put it in front of them on a reasonable basis is very attractive. We would love to be able to do that with many more distributors, including our MSO/MPVD partners because we think we have a good product and we think we can make more money together with those partners on that basis.

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Unidentified Participant   [83]
------------------------------
 Do you have any thoughts on what Amazon's aspirations are in the long term for their video business? And --

------------------------------
 Greg Maffei,  Liberty Media Corporation - President & CEO   [84]
------------------------------
 You know, I've generally found that Amazon doesn't have very big aspirations in most of the things they're in. So, I think they're probably just flirting here. I think Jeff likes it and will be deep into the content business, deeper and deeper.

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Unidentified Participant   [85]
------------------------------
 And it feels like Starz is on the right side of the secular trends, right? I mean it's premium content. It's advertising-free. It's on-demand. It sounds like you agree with this.

------------------------------
 Greg Maffei,  Liberty Media Corporation - President & CEO   [86]
------------------------------
 We're going to put you on the road. Thank you. Yes, I agree with all those points.

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Unidentified Participant   [87]
------------------------------
 What are the impediments, in your mind, then, in driving both unit and pricing growth for Starz going forward?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [88]
------------------------------
 You know, I think if you wanted to look at the risks, we're in a world where there's a lot of great content being produced. A lot of it is how much time do people have to watch it and how much time do they have to know about it because the promotion capabilities of many of these players is very large. And can Starz get a high enough profile that people are really clamoring for some of the great content that's out there?

 Now, many of them have. And, in certain segments, like Power among African Americans, or Outlander among women, they've definitely developed a niche following, etc. But one of the challenges for us is having the scale and having enough reach to make sure our content is understood, wanted, desired, and recognized as the quality it is.

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Unidentified Participant   [89]
------------------------------
 A couple questions on the online travel space. So, TripAdvisor now entering another product transition with the rollout of instant book, which you mentioned. So, you've got this monetization headwind in the short term as they roll it out to more geographies. But what gives you the confidence that instant book will ultimately monetize better than meta search? And where do you see Trip in two to three years?

------------------------------
 Greg Maffei,  Liberty Media Corporation - President & CEO   [90]
------------------------------
 I think if you think about the business model for Trip, it has the largest funnel of travelers in the world, 375 million uniques a month, just a massive funnel. The opportunity for Trip, the challenge for Trip is converting them from being just lookers into bookers. And there's a lot that Trip is doing and can do, because of its unique capabilities, to make that a better experience for travelers.

 Some of those include filling out things that others -- where there's really not a lot of competition. There is some competition on restaurants, but if you get outside the United States, there's not nearly as much. Where are you going to eat? There's very little competition in attractions and a lot of that people don't even know what they're going to do on their trip. But the opportunity for Trip to not only explain to you what's exciting to do, but help you book that trip around the Louvre, down the Rhine, to some temple; those are things that Trip has a nearly unique position to do on a global basis.

 And then, lastly, and you mentioned instant book, the opportunity for us to not only have our hotelier partners providing attractive pricing, but what we can do direct with our travel partners in the hotel space and our ability to make that a more appealing transaction and effective, I think, is very good. And integrate that whole thing.

 If you think about that funnel, that massive funnel, if we can move the conversion needle, if we can make that experience better that travelers want to book through us, we have an opportunity to be the low-cost producer of every transaction dollar. And we have the opportunity to touch as many parts of that transaction as possible.

 So, I think Trip is in a very interesting position. Does it have to prove the model out? Absolutely. But I think the elements are there for them to do it.

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Unidentified Participant   [91]
------------------------------
 And when you look at the online travel landscape broadly, it seems to be shifting with Expedia going on an acquisition binge, Priceline moving into travel software with Booking Suite. You have Trip moving into instant booking and Airbnb becoming more mainstream. When you look at the industry at a high level, I mean is there enough room for all these companies to have a good businesses or do you think some of these are going to be winners and losers?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [92]
------------------------------
 Well, I think you touched on the four biggest players, obviously, in online travel. And the online travel space has just been a massive market. So, that's one.

 I think you've touched on an interesting point, though. With all the consolidation that's occurred because of the share that booking took for a long time, Priceline booking took, and then the acquisitions that Expedia has done, HomeAway, Orbitz, Travelocity, I think it was important, if not critical, for Trip to build its own capabilities to do the instant booking because it absolutely de-risked a huge part of our business by not having the same reliance on that booking relationship with the lead relationship with Priceline, Expedia, and how much of that business has consolidated.

 So, I think our opportunity to build our own funnel and guarantee our funnel uniquely is one of the things that's important about instant book as well as making a better travel experience. It was a better model for us.

 That having been said, this is a huge market. And there's a reason why Priceline buys from us and Expedia buys from us, in terms of leads, because it's a huge market with lots of opportunity to make money and lots of opportunity to have coopetition across the whole thing. So, I'm still relatively bullish on online travel.

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Unidentified Participant   [93]
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 We've got about five minutes left. So, why don't we see if anyone in the audience has any questions? Anyone?

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 Greg Maffei,  Liberty Media Corporation - President & CEO   [94]
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 Larry.

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Unidentified Participant   [95]
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 We have one right here. If you could just wait one second for the mic. I'm sorry. Coming right behind you. Sorry.

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Unidentified Audience Member   [96]
------------------------------
 QVC and HSN have a made a very nice living out of developing proprietary merchandise. And one of the merchandising tools that's used is to compare this proprietary merchandise to a list price of something or other that's sold somewhere or other. The government recently is getting very exercised that these reference prices are not realistic. If, in fact, regulation would change the ability to use reference prices or regular prices, how would the business model change? Would the consumer adjust to this or be a little bit; there's been a fair amount of ripping off going on?

------------------------------
 Greg Maffei,  Liberty Media Corporation - President & CEO   [97]
------------------------------
 I think you're right, Larry, that the government is looking at this. Honestly, I think QVC -- I can't speak that I know HSN policies as well -- but QVC is a massively conservative organization about these kind of issues. And I'm not so worried that they don't have legitimate reference prices that they're using. They're not using made-up process. QVC is pretty good.

 And, as you know, the QVC model kind of flips it on its head, right? The lowest price we offer is that TSV, today's special value. And we have a discounted price then it moves to full price. So, we try and flip on the head the traditional model that department stores and the like have used, where you start at full price and discount further and further. I don't think we have huge risk at QVC on that, but, honestly, when the government gets involved in anything, who knows where it goes. But I think QVC is pretty conservative on those sort of issues.

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Unidentified Participant   [98]
------------------------------
 Anyone else have any questions in the audience? Okay. Let me go back to --

------------------------------
 Greg Maffei,  Liberty Media Corporation - President & CEO   [99]
------------------------------
 You could let them go for drinks early.

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Unidentified Participant   [100]
------------------------------
 Alright. One more and then we'll go to drinks. So, just let's talk about TV production.

------------------------------
 Greg Maffei,  Liberty Media Corporation - President & CEO   [101]
------------------------------
 Yes.

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Unidentified Participant   [102]
------------------------------
 We just had the session with Michael and obviously there's discussion around Starz and Lions Gate getting together. What do you think of content production as a business? And do you think it's a business that's still getting better? It has, obviously, over the last five years. And how do you think about scale in that business?

------------------------------
 Greg Maffei,  Liberty Media Corporation - President & CEO   [103]
------------------------------
 I think, traditionally, we thought it was a hard business to scale. I, frankly, give Lions Gate a lot of credit because they've shown amazing ability to build on the success that they've had and build a bigger and bigger television business out of that.

 You know, it's obviously a good time to be in that space with more distributors, more people competing, more people wanting to make a name for themselves. 200 original shows, four years ago. 400 original shows, last year, Netflix going from six hours of originals in 2012 to 600 hours in 2016. It sounds like you're on the right side of the angels if you're in the content production business. The ability to scale it, the ability to make it a big business has historically been very difficult, but there are players who have built pretty good niches at it.

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Unidentified Participant   [104]
------------------------------
 Okay. Alright. Mario?

------------------------------
 Greg Maffei,  Liberty Media Corporation - President & CEO   [105]
------------------------------
 Mario. God, Mario, I've got to answer your question. Thank you.

------------------------------
Unidentified Participant   [106]
------------------------------
 It's right behind you. There you go.

------------------------------
Unidentified Audience Member   [107]
------------------------------
 Let's assume I'm Kazary (ph). I want to sell Columbia Pictures. Would you buy a minority interest?

------------------------------
 Greg Maffei,  Liberty Media Corporation - President & CEO   [108]
------------------------------
 I think it's tough to buy a minority interest in a private company.

------------------------------
Unidentified Audience Member   [109]
------------------------------
 But the notion of owning a studio like that with a lot of historical library. I've used his example as opposed to some others that might have presented earlier today.

------------------------------
 Greg Maffei,  Liberty Media Corporation - President & CEO   [110]
------------------------------
 You know, I think we have been in the movie business several times to no avail, to poor avail. Now, we may have been with the wrong guys. The movie business is this perverse business, right? If you look back 75 years ago and take most industries and say are the top six players the same top six players, you'd be hard pressed to find that. In the movie business, the same top six players are largely the same top six players, though Lions Gate may say they've slipped out knocked six out, whatever. But the stability has been amazing. And there is a relatively unique nature to those properties.

 On the other hand, I talked earlier; we're not really in the content play today. We're not really in that game. And I think being a minority partner would be tough for anyone of them. Thank you.

------------------------------
Unidentified Participant   [111]
------------------------------
 Alright, thank you.




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