(In first paragraph of next to last paragraph, Fitch corrects
"QVC" to "The consolidated entity.")

(The following statement was released by the rating
agency)

June 17 - Fitch Ratings has taken the following rating
actions on Liberty Media LLC (LINTA.O: Quote, Profile, Research) (LLC) and its
subsidiary, QVC, Inc. (QVC):
Liberty Media LLC:
--Issuer Default Rating (IDR) downgraded to 'BB-' from 'BB';
--Senior unsecured debt downgraded to 'BB-' from 'BB'.
QVC, Inc.:
--IDR affirmed at 'BB';
--Bank Facility affirmed at 'BBB-'.
All ratings are removed from Rating Watch Negative where they
were placed on Sept. 3, 2008.
In addition, Fitch assigns a 'BBB-' rating to QVC's Term Loan B
offering. The Rating Outlook is Negative.
While there is now a difference in IDRs between LLC and QVC,
the difference is currently limited to one notch as Fitch
believes default risk will remain relatively correlated as cash
can still travel throughout all entities relatively easily.
Historically, Fitch equalized the IDRs of the two issuing
entities based on the belief that resources at QVC would be
used to support LLC if ever needed and vice versa. Fitch
believed that the strength and resources of QVC and LLC
(excluding QVC) were generally similar, and the residual value
at each entity would justify using the other entities'
resources if ever needed as equity holders would be unlikely to
risk losing specific assets to lenders if it could be avoided
by using other group member resources.
Fitch still believes this to be the case, albeit to a lesser
degree relative to historical periods. The reduction in asset
value at LLC via the expected split-off of Liberty
Entertainment, Inc. and reduction in non-core equity values, in
addition to new features with the QVC bank facility (mandatory
amortization, stricter Restricted Payments basket, etc), result
in a weaker IDR at LLC relative to QVC. While LLC bondholders
currently subordinate LLC management and equity holders from
QVC, the indenture only restricts asset spins to 'all or
substantially all' of the assets making future asset spins a
continued risk for LLC bondholders.
QVC's 'BB' IDR reflects its individual business profile and
credit metrics that would likely warrant an IDR greater than
'BB' on a stand-alone basis; however, it also takes into
account the reliance on QVC to service a large portion of the
debt at LLC. In addition to general event risk, the Negative
Outlook reflects the weak global economic environment and its
impact on QVC's results. QVC registered positive growth in the
previous two economic downturns (early 90's and post 9/11) and
until the 3rd quarter of 2008 never had a quarterly revenue
decline. However, worldwide revenue for the last three quarters
has decreased by 3%, 8% and 10%, respectively. The U.S. has
been the weakest environment while Japan and Germany have
actually registered strong positive growth in local currency.
The U.K. is also weak but outpacing the U.S. Japan's economy
has lagged the U.S. and U.K., so Fitch would expect to see some
weakness in that region over the next few quarters. Fitch
believes the weakness is predominantly due to the general
cyclicality expected in such a weak economic environment and
not due to secular changes of the business. In order to manage
through the downturn, the company has reduced its employee base
by 900 and continues to manage down its inventory levels. The
'BBB-' rating on the QVC bank facility and Term Loan B take
into account placement in the capital structure.
The downgrade of Liberty Media LLC's IDR to 'BB-' and Negative
Outlook assignment take into account the weakened metrics after
the expected split-off of Liberty Entertainment, Inc.,
mandatory amortization at QVC (which could result in greater
pressure on LLC assets should QVC free cash not be sufficient
to organically meet amortization payments) and overall event
risk related to ultimate asset composition and capital
structure. While LLC's unsecured debt has qualitative
attributes that could be reflective of a 'B' category rating
(namely, event risk of further asset spins and/or
subordination), Fitch believes QVC's liquidity, asset coverage,
and existing seniority to Liberty shareholders (of QVC) provide
financial flexibility and incentive to support the servicing of
financial commitments consistent with the current rating. 'B'
category ratings exhibit more vulnerability to economic
weakness, whereas Fitch believes Liberty management possesses
the resources and incentive to meet its obligations while
enduring a downturn.
Pro forma for the Entertainment split-off, net leverage through
the senior unsecured debt at LLC (including equity stakes and
LCAPA tax liabilities) should remain inside of 4.0 times (x),
which is consistent with the current rating. Clearly further
asset spins could change Fitch's view of the LLC securities.
The new restricted payments basket at QVC has no restrictions
on dividends specifically for principal and interest of debt
allocated to Liberty Interactive (LINTA). Otherwise, dividends
are restricted if QVC leverage is greater than 3.5x with
step-downs to 3.0x over the next few years. Fitch does not
believe this is material enough to differentiate bonds
allocated to LCAPA with a notch versus bonds allocated to LINTA
as the LCAPA bonds still have various other resources to
service their issuances (which are generally low coupon and
long-dated). Liberty's ratings continue to be supported by
operating cash flows (predominantly through QVC) that cover
total cash interest over 2.5x, with further bondholder
protection through asset coverage (excluding operating
businesses) of net debt and deferred tax liabilities of over
0.5x.
The consolidated entity's liquidity is strong and supported by
approximately $3.7 billion in cash pro forma March 31, 2009 for
the $750 million pay down of QVC bank debt and the early
retirement on certain exchangeable notes. Additionally,
liquidity is supported by net investment and financial
securities of approximately $5.5 billion. While the QVC bank
amendment extends the company's near-term maturity schedule,
Liberty still has some significant maturities over the next
five years. Including the mandatory amortization at QVC,
approximate maturities will be $500 million in 2010, $700
million in 2011 (including non-consenting lenders), $400
million in 2012, $2.5 billion in 2013 (including $800 million
of LLC's 5.7% senior notes and $1.3 billion of puttable Time
Warner Exchangeable notes), and $2.5 billion in 2014 (before
factoring in today's $500 million Term Loan B offering that
would mature in 2015 and be used to reduce the 2014 bullet).
Given QVC's operational issues, Liberty's portfolio of cash and
marketable securities could become ever more important over the
intermediate term to handle these maturities and offset loan
reductions, tight credit markets, and higher interest expense.
The mandatory amortization schedule forces management to focus
on debt reduction. Between QVC cash flows and remaining assets
at LLC, Fitch believes the company has the ability to meet this
maturity schedule organically.
The rating actions take into account Fitch's expectations for
the split-off of Liberty Entertainment, Inc. Depending on the
specific circumstances, should the split-off not occur, it is
likely the ratings would remain the same.
Contact: Jamie Rizzo, CFA +1-212-908-0548, New York; or Mike
Simonton, CFA +1-312-368-3138, Chicago.
(New York Ratings Team)