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TABLE OF CONTENTS
ANNEX B: FINANCIAL INFORMATION

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

        The information in this proxy statement/prospectus is not complete and may be changed. We may not sell the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction where an offer or solicitation is not permitted.

Subject to completion, dated August 24, 2007

LIBERTY MEDIA CORPORATION
12300 Liberty Boulevard
Englewood, Colorado 80112
(720) 875-5400

                                  , 2007

Dear Stockholder:

        You are cordially invited to attend a special meeting of stockholders of Liberty Media Corporation to be held at [            ] a.m., local time, on [            ], 2007, at [                        ], telephone [(    )    -            ]. A notice of the special meeting, a proxy card, and a proxy statement/prospectus containing important information about the matters to be acted on at the special meeting accompany this letter.

        At the special meeting you will be asked to consider and vote on a group of related proposals, which we refer to as the reclassification proposals, to amend and restate our certificate of incorporation to reclassify our existing Liberty Capital common stock, which we refer to as the Old Liberty Capital common stock, into two new tracking stocks, one to retain the designation Liberty Capital common stock, which we refer to as the Liberty Capital common stock, and the other to be designated the Liberty Entertainment common stock. If the reclassification proposals are approved and our charter is amended and restated, holders of Liberty Capital common stock and Liberty Interactive common stock will have different rights than holders of Old Liberty Capital common stock and Liberty Interactive common stock under our current charter. The businesses, assets and liabilities that are currently tracked by Old Liberty Capital common stock would be tracked by either the Liberty Capital common stock or the Liberty Entertainment common stock as explained below and described in more detail in the accompanying proxy statement/prospectus. The businesses, assets and liabilities that are currently tracked by our Liberty Interactive common stock would not change under the reclassification proposals.

        The reclassification proposals would provide our board of directors with discretion, among other things, to take actions regarding the conversion of the common stock related to any group into common stock of another group without a further stockholder vote.

        If the reclassification proposals are approved and the reclassification is implemented, each outstanding share of Series A Old Liberty Capital common stock would be changed into one share of Series A Liberty Capital common stock and four shares of Series A Liberty Entertainment common stock, and each outstanding share of Series B Old Liberty Capital common stock would be changed into one share of Series B Liberty Capital common stock and four shares of Series B Liberty

Entertainment common stock. The number of shares of Liberty Interactive common stock held by our stockholders would not be affected by the reclassification.

        If the reclassification proposals are approved and the reclassification is implemented, the Liberty Entertainment common stock would be intended to track and reflect the separate economic performance of a newly designated Entertainment Group. The businesses and assets initially to be attributed to the Entertainment Group would include our subsidiaries Starz Entertainment, LLC and FUN Technologies, Inc., our equity interests in GSN, LLC and WildBlue Communications, Inc., and approximately $500 million of additional cash and cash equivalents. In addition, we would attribute to this new group the approximate 40% interest in The DirecTV Group, Inc., three regional sports television networks and approximately $588 million in cash that we will receive if our previously announced exchange transaction with News Corporation is completed. We would also attribute to this new group $551 million principal amount (as of June 30, 2007) of our publicly-traded debt.

        While we expect the exchange transaction with News Corporation to be completed before the end of this year, if by the date specified in our agreement with News Corporation we ultimately are unable to obtain all required governmental approvals and a favorable tax ruling and opinion we or News Corporation may terminate that transaction. The implementation of the reclassification is contingent upon our closing the exchange transaction with News Corporation; if our exchange transaction with News Corporation is not completed we will not implement the reclassification even if the reclassification proposals are approved by our stockholders.

        The businesses, assets and liabilities to be attributed to the Entertainment Group are currently attributed to our existing Capital Group, which we refer to as the Old Capital Group. If the reclassification proposals are approved and the reclassification is implemented, then immediately following the reclassification the Capital Group, which as so reclassified we refer to as the Capital Group, would initially have attributed to it the remaining businesses and assets that are currently attributed to the Old Capital Group. Those businesses and assets include our subsidiaries Starz Media, LLC, Atlanta National League Baseball Club, Inc. (owner of the Atlanta Braves major league baseball franchise), Leisure Arts, Inc., TruePosition, Inc., and WFRV and WJMN Television Station Inc., and minority equity investments in Time Warner Inc. and Sprint Nextel Corporation we currently attribute to the Old Capital Group. In addition, the Capital Group would have attributed to it $3.93 billion principal amount (as of June 30, 2007) of our publicly-traded debt and $750 million principal amount (as of June 30, 2007) of our bank debt.

        The reclassification proposals are intended to provide us with greater flexibility with regard to making acquisitions and raising capital with equity securities relating to the Entertainment Group. We also believe implementation of the reclassification will further clarify our capital structure and result in greater market recognition of the value of both the Capital Group and the Entertainment Group, thereby enhancing stockholder value over the long term.

        It is important to note that holders of the Liberty Capital common stock and the Liberty Entertainment common stock will not have an investment in any of the businesses or assets attributed to the groups to which those stocks relate. Rather, an investment in the Liberty Capital common stock and the Liberty Entertainment common stock would represent an ownership interest in our company as a whole just as an investment in our Old Liberty Capital common stock and Liberty Interactive common stock today represents an ownership interest in our company as a whole rather than an ownership interest in the businesses and assets attributed to the groups to which those shares of stock relate.

        Our restated certificate of incorporation would also authorize the issuance of Series C Liberty Entertainment common stock, none of which would initially be issued.

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        We have applied to list Series A Liberty Entertainment common stock and Series B Liberty Entertainment common stock on the Nasdaq Global Select Market under the symbols "[    ]A" and "[    ]B," respectively. Our Series A Liberty Capital common stock and Series B Liberty Capital common stock would continue to be listed under the symbols "LCAPA" and "LCAPB," respectively.

        Our board has approved all of the reclassification proposals and recommends that you vote "FOR" each of them.

        Your vote is important, regardless of the number of shares you own. Whether or not you plan to attend the special meeting, please vote as soon as possible to make sure that your shares are represented.

        Thank you for your cooperation and continued support and interest in Liberty Media Corporation.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the reclassification proposals or the securities being offered in the reclassification or has passed upon the adequacy or accuracy of the disclosure in this booklet. Any representation to the contrary is a criminal offense.

        Investing in our securities involves risks. See Risk Factors beginning on page [    ].

        The accompanying proxy statement/prospectus is dated [                        ], 2007 and is first being mailed on or about [                        ], 2007 to our stockholders of record as of 5:00 p.m., New York City time, on [                        ] , 2007.

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HOW YOU CAN FIND ADDITIONAL INFORMATION

        We are subject to the information and reporting requirements of the Securities Exchange Act of 1934 and, in accordance with the Exchange Act, we file periodic reports and other information with the Securities and Exchange Commission. In addition, this proxy statement/prospectus incorporates important business and financial information about us from other documents that are not included in or delivered with this proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain copies of documents filed by us with the Securities and Exchange Commission, including the documents incorporated by reference in this proxy statement/prospectus, through the Securities and Exchange Commission website at http://www.sec.gov or by contacting us by writing or telephoning the office of Investor Relations:

Liberty Media Corporation
12300 Liberty Boulevard
Englewood, Colorado 80112
Telephone: (877) 772-1518

        If you would like to request any documents from us please do so by [            ], 2007 in order to receive them before the special meeting. If you request any documents, they will be mailed to you by first class mail, or another equally prompt means, within one business day after your request is received.

        See "Additional Information—Where You Can Find More Information" beginning on page [    ].

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LIBERTY MEDIA CORPORATION
12300 Liberty Boulevard
Englewood, Colorado 80112
(720) 875-5400

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
to be Held on [                        ], 2007

        NOTICE IS HEREBY GIVEN of the special meeting of stockholders of Liberty Media Corporation to be held at [          ] a.m., local time, on [                        ], 2007, at the [                                                 ], telephone [(      )      -        ], to consider and vote on the following proposals:

•

a proposal (which we refer to as the new tracking stock proposal) to amend and restate our certificate of incorporation: to reclassify our Old Liberty Capital common stock into two new tracking stocks, one to retain the designation Liberty Capital common stock and the other to be designated the Liberty Entertainment common stock; to provide for the reattribution of the businesses, assets and liabilities currently attributed to the Old Capital Group between the Capital Group and the Entertainment Group; and to make limited, related changes to the terms of the Liberty Interactive common stock;



•

a proposal (which we refer to as the recapitalization proposal) to change each outstanding share of Series A Old Liberty Capital common stock into one share of Series A Liberty Capital common stock and four shares of Series A Liberty Entertainment common stock and to change each outstanding share of Series B Old Liberty Capital common stock into one share of Series B Liberty Capital common stock and four shares of Series B Liberty Entertainment common stock;



•

a proposal (which we refer to as the optional conversion proposal) to amend and restate our certificate of incorporation, in connection with the reclassification of the Old Liberty Capital common stock into two new tracking stocks, to provide the board of directors with discretion to convert shares of our common stock intended to track the performance of any of the Capital Group, the Entertainment Group or the Interactive Group into common stock intended to track the performance of one of such other groups; and



•

a proposal (which we refer to as the group disposition proposal) to amend and restate our certificate of incorporation, in connection with the reclassification of the Old Liberty Capital common stock into two new tracking stocks, to provide the board of directors with discretion to permit the sale of all or substantially all of the assets attributed to the Capital Group and/or the Entertainment Group without the vote of the stockholders of that group, if the net proceeds of such sale are distributed to the holders of that stock by means of a dividend or redemption, that stock is converted into stock of another group or a combination of the foregoing is effected.

        We refer to these proposals collectively as the reclassification proposals. Each of the new tracking stock proposal, the recapitalization proposal, the optional conversion proposal, and the group disposition proposal is dependent on the others, and none of them will be implemented unless they are all approved at the special meeting. Implementation of the reclassification is further contingent upon the closing of our previously announced exchange transaction with News Corporation and the receipt by us of a favorable opinion from our tax counsel as to certain tax implications of the reclassification.

        We encourage you to read the accompanying proxy statement/prospectus in its entirety before voting. Our proposed amended and restated certificate of incorporation is included as Annex C to this proxy statement/prospectus.

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        Holders of Series A Liberty Interactive common stock, par value $.01 per share, Series B Liberty Interactive common stock, par value $.01 per share, Series A Old Liberty Capital common stock, par value $.01 per share, and Series B Old Liberty Capital common stock, par value $.01 per share, in each case outstanding as of 5:00 p.m., New York City time, on [                        ], 2007, the record date for the special meeting, may vote at the special meeting or at any adjournment or postponement thereof. A list of stockholders entitled to vote at the special meeting will be available at our offices in Englewood, Colorado for review by our stockholders for any purpose germane to the special meeting, for at least 10 days prior to the special meeting.

        Each of the reclassification proposals requires the affirmative vote of each of (1) a majority in voting power of the outstanding shares of Series A Old Liberty Capital common stock, Series B Old Liberty Capital common stock, Series A Liberty Interactive common stock and Series B Liberty Interactive common stock, voting together as a single class, which we refer to as the combined vote, (2) a majority in voting power of the outstanding shares of Series A Old Liberty Capital common stock and Series B Old Liberty Capital common stock, voting together as a separate class, which we refer to as the separate LCAP vote and (3) a majority in voting power of the outstanding shares of Series A Liberty Interactive common stock and Series B Liberty Interactive common stock, voting together as a separate class, which we refer to as the separate LINT vote, in each case held of record on the record date. A vote cast by a holder of record of Old Liberty Capital common stock will be counted towards both the combined vote and the separate LCAP vote and a vote cast by a holder of record of Liberty Interactive common stock will be counted towards both the combined vote and the separate LINT vote. Votes may be cast in person or by proxy at the special meeting or prior to the meeting by telephone or via the Internet.

        Our board of directors has carefully considered and approved all of the reclassification proposals and recommends that you vote "FOR" each of them.

        YOUR VOTE IS IMPORTANT.    We urge you to vote as soon as possible by telephone, Internet or mail.

        By order of the board of directors,

Please execute and return the enclosed proxy promptly, whether or not you intend to be present at the special meeting.

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TABLE OF CONTENTS

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QUESTIONS AND ANSWERS

        The questions and answers below highlight only selected information about the special meeting and how to vote your shares. You should read carefully the entire proxy statement/prospectus, including the Annexes and the additional documents incorporated by reference herein, to fully understand the reclassification proposals.

Q:  When and where is the special meeting?

A:   The special meeting will be held at [            ] a.m., local time, on [            ,2007] at the [                        ], telephone [(    )     -            ].

Q:  What is the record date for the special meeting?

A:   The record date for the special meeting is 5:00 p.m., New York City time, on [            , ] 2007.

Q:  What is the purpose of the special meeting?

A:   To consider and vote on the reclassification proposals, which are a group of four related proposals to amend and restate our certificate of incorporation: to reclassify our Old Liberty Capital common stock into two new tracking stocks, one to retain the designation Liberty Capital common stock and the other to be designated the Liberty Entertainment common stock; to provide for reattribution of the businesses, assets and liabilities currently attributed to the Old Capital Group between the Capital Group and the Entertainment Group; to make limited, related changes to the terms of the Liberty Interactive common stock; to provide for the ratios in which a share of Old Liberty Capital common stock will be reclassified into shares of Liberty Capital common stock and Liberty Entertainment common stock; and to provide our board of directors with discretion to take actions regarding, among others, the conversion of any of the Liberty Capital common stock, the Liberty Entertainment common stock or the Liberty Interactive common stock into the common stock of another group, and the disposition of all or substantially all of the assets of the Capital Group or the Entertainment Group without a further stockholder vote.

Q:  What stockholder vote is required to approve each of the reclassification proposals?

A:   Each of the reclassification proposals requires the affirmative vote of each of:

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a majority in voting power of the outstanding shares of Series A Old Liberty Capital common stock, Series B Old Liberty Capital common stock, Series A Liberty Interactive common stock and Series B Liberty Interactive common stock, voting together as a single class, which we refer to as the combined vote,



•

a majority in voting power of the outstanding shares of the Series A Old Liberty Capital common stock and Series B Old Liberty Capital common stock, voting together as a separate class, which refer to as the separate LCAP vote; and



•

a majority in voting power of the outstanding shares of the Series A Liberty Interactive common stock and Series B Liberty Interactive common stock, voting together as a separate class, which we refer to as the separate LINT vote, in each case held of record on the record date. A vote cast by a holder of record of Old Liberty Capital common stock will be counted towards both the combined vote and the separate LCAP vote and a vote cast by a holder of record of Liberty Interactive common stock will be counted towards both the combined vote and the separate LINT vote.

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Q:  How many votes do stockholders have?

A:   At the special meeting:

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holders of Series A Old Liberty Capital common stock will have one vote per share;



•

holders of Series B Old Liberty Capital common stock will have ten votes per share;



•

holders of Series A Liberty Interactive common stock will have one vote per share; and



•

holders of Series B Liberty Interactive common stock will have ten votes per share;

for purposes of (1) the combined vote, (2) with respect to our Old Liberty Capital common stock, the separate LCAP vote, and (3) with respect to our Liberty Interactive common stock, the separate LINT vote, on each reclassification proposal. Only shares owned as of the record date are eligible to vote at the special meeting.

As of [            ], 2007, the record date for the special meeting, our directors and executive officers beneficially owned approximately [    ] % of the total voting power of our outstanding shares of common stock, [    ]% of the total voting power of our outstanding shares of Old Liberty Capital common stock and [    ]% of the total voting power of our outstanding shares of Liberty Interactive common stock.

Q:  What if some of the reclassification proposals are approved, but not all of them?

A:   If any of the reclassification proposals are not approved by the requisite vote of our stockholders at the special meeting, then none of the reclassification proposals will be implemented and the Old Liberty Capital common stock will not be reclassified into Liberty Capital common stock and Liberty Entertainment common stock.

Q:  Are there any conditions to the implementation of the reclassification proposals?

A:   Yes. In addition to receipt of the requisite vote of our stockholders, implementation of the reclassification is conditioned on the closing of our previously announced exchange transaction with News Corporation and the receipt by us of a favorable opinion from our tax counsel as to certain tax implications of the reclassification.

Q:  What do stockholders need to do to vote on the reclassification proposals?

A:   After carefully reading and considering the information contained in this proxy statement/prospectus, stockholders should complete, sign and date their proxy cards and mail them in the enclosed return envelope, or vote by the telephone or through the Internet, in each case as soon as possible so that their shares are represented and voted at the special meeting. Stockholders who have shares registered in the name of a broker, bank or other nominee should follow the voting instruction card provided by their broker, bank or other nominee in instructing them how to vote their shares.

Q:  If shares are held in "street name" by a broker, bank or other nominee, will the broker, bank or other nominee vote those shares for the beneficial owner on the reclassification proposals?

A:   If you hold your shares in street name and do not provide voting instructions to your broker, bank or other nominee, your shares will not be voted on the reclassification proposals. Accordingly, your broker, bank or other nominee will vote your shares held in "street name" only if you provide instructions on how to vote. You should follow the directions your broker, bank or other nominee provides to you regarding how to vote your shares.

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Q:  May stockholders change their vote on the reclassification proposals after returning a proxy card or voting by telephone or over the Internet?

A:   Yes. Before the start of the special meeting, stockholders who want to change their vote on the reclassification proposals may do so by telephone or over the Internet (if they originally voted by telephone or over the Internet), by voting in person at the special meeting or by delivering a signed proxy revocation or a new signed proxy with a later date to Liberty Media Corporation, c/o Computershare Trust Company, N.A., [P.O. Box 8078], Edison, NJ 08818.

Any signed proxy revocation or new signed proxy must be received before the start of the special meeting. Your attendance at the special meeting will not, by itself, revoke your proxy. If your shares are held in an account by a broker, bank or other nominee who you previously contacted with voting instructions, you should contact your broker, bank or other nominee to change your vote.

Q:  When will the reclassification be implemented?

A:   Implementation of the reclassification will occur after the last to occur of the following:

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approval of the reclassification proposals by the requisite vote of stockholders at the special meeting;



•

the closing of our previously announced exchange transaction with News Corporation; and



•

the receipt by us of a favorable opinion from our tax counsel as to certain tax implications of the reclassification.

We currently expect that at such time as all three conditions are satisfied, we will file an amended and restated charter with the Secretary of State of the State of Delaware and complete the reclassification. However, our board of directors has the right to abandon the reclassification at any time before we file the amended and restated charter, even after the reclassification proposals have been approved by our stockholders and the other conditions to the reclassification have been satisfied.

Q:  What do I do if I have additional questions?

A:   If you have any questions prior to the special meeting or if you would like copies of any document we refer to or that we incorporate by reference in this document, please call Investor Relations at (877) 722-1518.

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SUMMARY

        The following summary includes information contained elsewhere in this proxy statement/prospectus. This summary does not contain all of the important information that you should consider before voting on the reclassification proposals. You should read the entire proxy statement/prospectus, including the Annexes and the documents incorporated by reference herein, carefully.

General

        At the special meeting you will be asked to vote on the reclassification proposals, a group of four related proposals which, if approved and implemented, would result in the reclassification of our Old Liberty Capital common stock into two new tracking stocks, one to retain the designation Liberty Capital common stock and the other to be designated the Liberty Entertainment common stock. The Liberty Entertainment common stock would be intended to track and reflect the separate economic performance of a newly designated Entertainment Group, which would initially have attributed to it a portion of the businesses, assets and liabilities that are currently attributed to the Old Capital Group. The business and assets to be attributed to the Entertainment Group would include our subsidiaries Starz Entertainment, LLC and FUN Technologies, Inc., our equity interests in GSN, LLC and WildBlue Communications, Inc., and approximately $500 million of cash and cash equivalents. We would also attribute to this new group approximately $551 million principal amount (as of June 30, 2007) of our publicly-traded debt which is currently attributed to the Old Capital Group.

        In addition, we would attribute to this new group the approximate 40% interest in The DirecTV Group, Inc., three regional sports television networks and approximately $588 million in cash that we will receive if our previously announced exchange transaction with News Corporation is completed. While we expect that transaction to be completed before the end of this year, the closing is conditioned on receipt of certain governmental approvals and a favorable tax ruling and opinion. As the businesses and assets to be received in our exchange transaction with News Corporation form one of the primary reasons for the creation of the Entertainment Group, we will not implement the reclassification unless and until we close that transaction.

        All of the other businesses, assets and liabilities that are currently attributed to the Old Capital Group would be attributed to the Capital Group. The Liberty Capital common stock would be intended to track and reflect the economic performance of this new, smaller group the businesses and assets of which would include our subsidiaries Starz Media, LLC, Atlanta National League Baseball Club, Inc. (owner of the Atlanta Braves major league baseball franchise), Leisure Arts, Inc., TruePosition, Inc., and WFRV and WJMN Television Station Inc., and minority equity investments in Time Warner Inc. and Sprint Nextel Corporation. In addition, the Capital Group would have attributed to it $3.93 billion principal amount (as of June 30, 2007) of our existing publicly-traded debt and $750 million principal amount (as of June 30, 2007) of our bank debt.

        The reclassification would not change the businesses, assets and liabilities currently attributed to our Interactive Group.

        Tracking stock is a type of common stock that the issuing company intends to reflect or "track" the economic performance of a particular business or "group," rather than the economic performance of the company as a whole. While the Interactive Group and the Old Capital Group have, and after the reclassification the Interactive Group, the Capital Group and the Entertainment Group would have, separate collections of businesses, assets and liabilities attributed to them, none of those groups are, or will be, separate legal entities and therefore cannot own assets, issue securities or enter into legally binding agreements. Holders of tracking stocks have no direct claim to the group's assets and are not represented by a separate board of directors. Instead, holders of tracking stock are stockholders of the parent corporation, with a single board of directors and subject to all of the risks and liabilities of the parent corporation.

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        If all of the reclassification proposals are approved and the reclassification is implemented, the reclassification would be effected by filing an amended and restated certificate of incorporation in the form of Annex C hereto, which we refer to as our amended charter, with the Secretary of State of the State of Delaware. Following such filing:

•

each share of Series A Old Liberty Capital common stock would change into one share of Series A Liberty Capital common stock and four shares of Series A Liberty Entertainment common stock; and



•

each share of Series B Old Liberty Capital common stock would change into one share of Series B Liberty Capital common stock and four shares of Series B Liberty Entertainment common stock.

The number of shares of Series A Liberty Interactive common stock and Series B Liberty Interactive common stock our stockholders hold would not change as a result of the reclassification. Holders of Liberty Interactive common stock have different rights under our current charter than they would have under our amended charter, and holders of Old Liberty Capital common stock have different rights under our current charter than holders of Liberty Capital common stock and Liberty Entertainment common stock would have under our amended charter. These differences are described under "The Reclassification Proposals—Description of Liberty Interactive Common Stock Under Our Amended Charter and Comparison to Liberty Interactive Common Stock Under Our Current Charter" and "—Description of Liberty Capital Common Stock and Liberty Entertainment Common Stock Under Our Amended Charter and Comparison to Old Liberty Capital Common Stock Under Our Current Charter."

        Our amended charter would also authorize the issuance of a Series C Liberty Entertainment common stock, none of which would initially be issued.

Liberty Media Corporation

        We are a holding company which, through our ownership of interests in subsidiaries and other companies, is primarily engaged in video and online commerce, media, communications and entertainment businesses. We currently attribute our businesses, assets and liabilities to two tracking stocks: our Liberty Interactive common stock and our Old Liberty Capital common stock.

        Our principal executive offices are located at 12300 Liberty Boulevard, Englewood, Colorado 80112. Our main telephone number is (720) 875-5400, and our company website is located at www.libertymedia.com. The information contained on our website is not a part of this proxy statement/prospectus.

Interactive Group

        Our shares of Liberty Interactive common stock relate to our Interactive Group, which does not represent a separate legal entity. Rather, it represents those businesses, assets and liabilities of our company which we have attributed to that group. The assets and businesses attributed to the Interactive Group are those engaged in video and online commerce and media, and include our subsidiaries QVC, Inc., Provide Commerce, Inc., BuySeasons, Inc. and Backcountry.com, Inc., and our interests in IAC/InterActiveCorp and Expedia, Inc. In addition, we have attributed $3.11 billion principal amount (as of June 30, 2007) of our publicly-traded debt to the Interactive Group. The reclassification proposals, if approved, would not change the assets, businesses and liabilities attributed to our Interactive Group.

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Old Capital Group

        Our shares of Old Liberty Capital common stock relate to our Old Capital Group, which also does not represent a separate legal entity. Rather, it represents all of our businesses, assets and liabilities which we have not attributed to our Interactive Group. Those assets and businesses include: our subsidiaries Starz Entertainment, LLC, Starz Media, LLC, Atlanta National League Baseball Club, Inc. (owner of the Atlanta Braves major league baseball franchise), Leisure Arts, Inc., TruePosition, Inc., FUN Technologies, Inc., and WFRV and WJMN Television Station Inc.; our equity affiliates GSN, LLC and WildBlue Communications, Inc.; and our minority interests in News Corporation, Time Warner Inc. and Sprint Nextel Corporation. In addition, we have attributed $4.48 billion principal amount (as of June 30, 2007) of our existing publicly-traded debt and $750 million principal amount (as of June 30, 2007) of our bank debt to the Old Capital Group. If the reclassification is implemented, the assets, businesses and liabilities we currently attribute to the Old Capital Group would be reattributed to either the Capital Group or the Entertainment Group, as described below.

The Reclassification Proposals

        The reclassification proposals are a group of related proposals that consist of the new tracking stock proposal, the recapitalization proposal, the optional conversion proposal and the group disposition proposal. If all four of these proposals are adopted and the reclassification is implemented, our certificate of incorporation would be amended and restated to provide for the reclassification of the Old Liberty Capital common stock into two new tracking stocks, one to retain the designation Liberty Capital common stock and the other to be designated the Liberty Entertainment common stock. Holders of Old Liberty Capital common stock and Liberty Interactive common stock have different rights under our current charter than they will have if the reclassification proposals are approved and the reclassification is implemented. The terms of the Liberty Capital common stock, the Liberty Entertainment common stock and the Liberty Interactive common stock are set forth in Annex C. If any of the four reclassification proposals is not approved at the special meeting, we do not receive a favorable tax opinion from our tax counsel regarding certain tax implications of the reclassification or if we do not close our exchange transaction with News Corporation, then the reclassification would not be implemented, our certificate of incorporation (which we refer to as our current charter) would not be amended and restated, the Old Liberty Capital common stock would not be reclassified into the Liberty Capital common stock and the Liberty Entertainment common stock and the rights of holders of the Old Liberty Capital common stock and Liberty Interactive common stock would not change.

        Each of the reclassification proposals is described below. While each proposal is conditioned on approval of the other three proposals, we have "unbundled" them so that you may communicate your view to the board of directors as to each proposal being voted on.

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Matters Relating to the Reclassification Proposals

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Summary Attributed Historical Financial Data

Liberty Media Corporation

        The following table sets forth our historical financial data for the six months ended June 30, 2007 and 2006 and for each of the years in the three-year period ended December 31, 2006, and for each period presented pro forma earnings (loss) from continuing operations attributable to the Entertainment Group and the Capital Group, and the earnings (loss) per common share attributable to the Liberty Interactive common stock, the Liberty Entertainment common stock and the Liberty Capital common stock. Such information should be read in conjunction with, our unaudited financial statements for the six months ended June 30, 2007 and our audited financial statements and the notes thereto for the years ended December 31, 2006, 2005 and 2004 included in Part 1 of Annex B to this proxy statement/prospectus.

(1)

Effective January 1, 2007, we adopted Statement of Financial Accounting Standards No. 155, "Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133

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and 140" ("Statement 155"). Statement 155, among other things, amends Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("Statement 133"), and permits fair value remeasurement of hybrid financial instruments that contain an embedded derivative, such as our senior exchangeable debentures, that otherwise would require bifurcation. Under Statement 133, we reported the fair value of the call option feature of our senior exchangeable debentures separate from the long-term debt. The long-term debt portion was reported as the difference between the face amount of the debenture and the fair value of the call option feature on the date of issuance and was accreted through interest expense to its face amount over the expected term of the debenture. Pursuant to the provisions of Statement 155, we now account for our senior exchangeable debentures at fair value rather than bifurcating such instruments into a debt instrument and a derivative instrument. Upon adoption of Statement 155, we increased the carrying value of our long-term debt by $1,848 million, which represented the difference between the fair value of our exchangeable debentures and their carrying value immediately prior to adoption.

(2)

Pro forma basic earnings (loss) from continuing operations per common share attributable to the Entertainment Group and the Capital Group for all periods presented has been calculated based on 516.4 million shares of Liberty Entertainment common stock and 129.1 million shares of Liberty Capital common stock, which are the number of shares that would have been issued if the reclassification had been completed on June 30, 2007. The reclassification would not change the historical basic earnings from continuing operations per common share for the Interactive Group.

Interactive Group

        The following table supplementally sets forth selected historical attributed financial data for the Interactive Group for the six months ended June 30, 2007 and 2006 and for each of the years in the three-year period ended December 31, 2006 and is presented as though our 2006 restructuring had been completed on January 1, 2004. The following information is qualified in its entirety by, and should be read in conjunction with, our financial statements and notes thereto for the six months ended June 30, 2007 and 2006 and for the years ended December 31, 2006, 2005 and 2004 included in Part 1 of Annex B to this proxy statement/prospectus as well as the attributed financial information included in Parts 2 and 3 of Annex B to this proxy statement/prospectus.

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Entertainment Group

        The following table supplementally sets forth selected historical attributed financial data for the Entertainment Group for the six months ended June 30, 2007 and 2006 and for each of the years in the three-year period ended December 31, 2006 and is presented as though the reclassification had been completed on January 1, 2004. The following information is qualified in its entirety by, and should be read in conjunction with, our financial statements and notes thereto for the six months ended June 30, 2007 and 2006 and for the years ended December 31, 2006, 2005 and 2004 included in Part 1 of Annex B to this proxy statement/prospectus as well as the attributed financial information included in Parts 2 and 3 of Annex B to this proxy statement/prospectus.

(1)

We acquired a controlling interest in FUN Technologies, Inc. in March 2006. The results of operations of FUN have been included in the Entertainment Group since its date of acquisition.

(2)

Subsequent to our acquisition of FUN, the market value of FUN's stock declined significantly due to the performance of certain of FUN's subsidiaries and uncertainty surrounding government legislation of Internet gambling which we believe the market perceived as potentially impacting FUN's skill gaming business. In connection with our 2006 annual evaluation of the recoverability of FUN's goodwill, we received a third-party valuation, which indicated that the carrying value of FUN's goodwill exceeded its market value. Accordingly, we recognized a $111 million impairment charge related to goodwill and a $2 million impairment charge related to trademarks in the fourth quarter of 2006.

(3)

In 2005, we recognized a $351 million other-than-temporary decline in the fair value of our investment in News Corporation.

(4)

In 2004, we exchanged certain of our non-voting News Corporation shares for voting News Corporation shares and we sold certain of our other non-voting News Corporation shares. We recognized an aggregate pre-tax gain of $843 million on these transactions.

(5)

In 2004, we recognized $201 million of realized and unrealized gains on our derivative instruments.

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Capital Group

        The following table supplementally sets forth selected historical attributed financial data for the Capital Group for the six months ended June 30, 2007 and 2006 and for each of the years in the three-year period ended December 31, 2006 and is presented as though the reclassification had been completed as of January 1, 2004. The following information is qualified in its entirety by, and should be read in conjunction with, our financial statements and notes thereto for the six months ended June 30, 2007 and 2006 and for the years ended December 31, 2006, 2005 and 2004 included in Part 1 of Annex B to this proxy statement/prospectus as well as the attributed financial information included in Parts 2 and 3 of Annex B to this proxy statement/prospectus.

(1)

We acquired Starz Media in August 2006. The results of operations of Starz Media have been included in the Capital Group since its date of acquisition.

(2)

In 2007, we completed two separate exchange transactions. In the first, we exchanged our CBS Corporation Class B common stock for a subsidiary of CBS that holds WFRV and WJMN TV Station, Inc. and approximately $170 million in cash. In the second, we exchanged approximately 68.5 million shares of Time Warner common stock, subject to a working capital adjustment, for a subsidiary of Time Warner that holds Atlanta National League Baseball Club, Inc., Leisure Arts, Inc., and $984 million in cash. We recognized aggregate gains of $613 million upon completion of these transactions.

(3)

See note 1 to our consolidated historical financial data above.

(4)

In November 2006, TruePosition signed an amendment to its existing services contract with Cingular Wireless that requires TruePosition to develop and deliver additional software features. Because vendor specific objective evidence related to the value of these additional features does not exist, TruePosition is required to defer revenue recognition until all of the features have been delivered. TruePosition estimates that these features will be delivered in the first quarter of 2008.

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Accordingly, absent any further contractual changes, TruePosition will not recognize any revenue under this contract until 2008.

        For more detailed financial information regarding the Interactive Group, the Entertainment Group and the Capital Group, see the attributed financial information included in Parts 2 and 3 of Annex B to this proxy statement/prospectus, which includes managements' discussion and analysis of financial condition and results of operations for our company and each group for the periods presented above.

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RISK FACTORS

        In addition to the other information contained in, incorporated by reference in or included as an Annex to this proxy statement/prospectus, you should carefully consider the following risk factors in deciding whether to vote to approve the reclassification proposals.

        The risk factors described in this section have been separated into four groups:

•

risks that relate to the ownership of our common stock due to our tracking stock capitalization;



•

risks that relate to the businesses attributed or to be attributed to the Interactive Group, the Entertainment Group and the Capital Group;



•

risks that relate to our subsidiary QVC, Inc.; and



•

risks that relate to our ability to close our exchange transaction with News Corporation, and risks that relate to an investment in and the business of DirecTV.

        The risks described below and elsewhere in this proxy statement/prospectus are not the only ones that relate to the reclassification proposals, our tracking stocks or our businesses or the business of DirecTV. The risks described below are considered to be the most material. However, there may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that also could have material adverse effects on our company or the businesses attributed to any or all of the Interactive Group, the Entertainment Group and the Capital Group in the future. Past financial performance may not be a reliable indicator of future performance and historical trends may not foretell results or trends in future periods.

        If any of the events described below were to occur, the businesses, prospects, financial condition, results of operations and/or cash flows of our company and any or all of our tracking stock groups could be materially adversely affected. In any such case, the price of any or all of the Liberty Interactive common stock, the Liberty Entertainment common stock and the Liberty Capital common stock could decline, perhaps significantly.

        For the purposes of these risk factors, unless the context otherwise indicates, we have assumed that each of the reclassification proposals is approved and, except as regards the risks that relate to our ability to close our exchange transaction with News Corporation, that the reclassification has been implemented.

Risks Relating to the Ownership of Our Common Stock due to our Tracking Stock Capitalization

        The risks described below apply to the ownership of our Liberty Interactive common stock, our Liberty Entertainment common stock and our Liberty Capital common stock due to our tracking stock capitalization. Investors should note that many of these risks exist today, regardless of the reclassification.

        Holders of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock will be common stockholders of our company and are, therefore, subject to risks associated with an investment in our company as a whole, even if a holder does not own shares of common stock of all three of our groups.    Even though we have attributed, for financial reporting purposes, all of our consolidated assets, liabilities, revenue, expenses and cash flows to each of the Interactive Group, the Entertainment Group and the Capital Group in order to prepare the separate financial statement schedules included in this proxy statement/prospectus for each of those groups, we retain legal title to all of our assets and our capitalization does not limit our legal responsibility, or that of our subsidiaries, for the liabilities included in any set of financial statement schedules. Holders of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock will not have any legal rights related to specific assets attributed to the Interactive Group, the Capital Group or the

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Entertainment Group and, in any liquidation, holders of Liberty Interactive common stock, holders of Liberty Capital common stock and holders of Liberty Entertainment common stock will be entitled to receive a pro rata share of our available net assets based on their respective numbers of liquidation units. See Article IV, Section A.2.(h) of Annex C.

        We could be required to use assets attributed to one group to pay liabilities attributed to another group or groups.    The assets attributed to one group are potentially subject to the liabilities attributed to the other groups, even if those liabilities arise from lawsuits, contracts or indebtedness that are attributed to such other group(s). While our current management and allocation policies provide that transfers of assets between groups will result in the creation of an inter-group loan or an inter-group interest, no provision of our amended charter prevents us from satisfying liabilities of one group with assets of another group, and our creditors will not in any way be limited by our tracking stock capitalization from proceeding against any assets they could have proceeded against if we did not have a tracking stock capitalization.

        The market price of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock may not reflect the performance of the Interactive Group, the Entertainment Group and the Capital Group, respectively, as we intend.    We cannot assure you that the market price of the common stock of a group will, in fact, reflect the performance of the group of businesses, assets and liabilities attributed to that group. Holders of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock will be common stockholders of our company as a whole and, as such, will be subject to all risks associated with an investment in our company and all of our businesses, assets and liabilities. As a result, the market price of each series of stock of a group may simply reflect the performance of our company as a whole or may more independently reflect the performance of some or all of the group of assets attributed to such group. In addition, investors may discount the value of the stock of a group because it is part of a common enterprise rather than a stand-alone entity.

        The market price of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock may be volatile, could fluctuate substantially and could be affected by factors that do not affect traditional common stock.    We do not know how the market will react to the reclassification of the Old Liberty Capital common stock into the Liberty Entertainment common stock and the Liberty Capital common stock. In addition, to the extent the market prices of the Liberty Capital common stock and the Liberty Entertainment common stock track the performance of more focused groups of businesses, assets and liabilities than the Old Liberty Capital common stock does, the market prices of these new tracking stocks may be more volatile than the market price of the Old Liberty Capital common stock has historically been. We also do not know how the reclassification will affect the market price of the Liberty Interactive common stock. The market prices of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock may also be materially affected by, among other things:

•

actual or anticipated fluctuations in a group's operating results or in the operating results of particular companies attributable to such group;



•

potential acquisition activity by our company or the companies in which we invest;



•

issuances of debt or equity securities to raise capital by our company or the companies in which we invest and the manner in which that debt or the proceeds of an equity issuance are attributed to each of the groups;



•

changes in financial estimates by securities analysts regarding Liberty Interactive common stock, Liberty Capital common stock or Liberty Entertainment common stock or the companies attributable to any of those groups;

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•

the complex nature and the potential difficulties investors may have in understanding the terms of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock, as well as concerns regarding the possible effect of certain of those terms on an investment in the stock relating to any of those groups; and



•

general market conditions.

        We cannot assure you that the combined market value of Liberty Entertainment common stock and Liberty Capital common stock after the completion of the reclassification will equal or exceed the current market value of Old Liberty Capital common stock, or that such combined market value plus the market value of the Liberty Interactive common stock will equal or exceed the current combined market value of our Liberty Interactive common stock and Old Liberty Capital common stock. In addition, until an orderly trading market develops for Liberty Entertainment common stock and Liberty Capital common stock following completion of the reclassification, the trading prices of those stocks may fluctuate significantly.

        The market value of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock could be adversely affected by events involving the assets and businesses attributed to only one of such groups.    Because we will be the issuer of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock, an adverse market reaction to events relating to the assets and businesses attributed to one of our groups, such as earnings announcements or announcements of new products or services, acquisitions or dispositions that the market does not view favorably, may cause an adverse reaction to the common stock of our other groups. This could occur even if the triggering event is not material to us as a whole. In addition, the incurrence of significant indebtedness by us or any of our subsidiaries on behalf of one group, including indebtedness incurred or assumed in connection with acquisitions of or investments in businesses, could affect our credit rating and that of our subsidiaries and, therefore, could increase the borrowing costs of businesses attributable to our other groups or the borrowing costs of our company as a whole.

        We may not pay dividends equally or at all on Liberty Interactive common stock, Liberty Capital common stock or Liberty Entertainment common stock.    We do not presently intend to pay cash dividends on Liberty Interactive common stock, Liberty Capital common stock or Liberty Entertainment common stock for the foreseeable future. However, we will have the right to pay dividends on the shares of common stock of each group in equal or unequal amounts. In addition, any dividends or distributions on, or repurchases of, shares relating to any group will reduce our assets legally available to be paid as dividends on the shares relating to the other groups.

        Our tracking stock capital structure could create conflicts of interest, and our board of directors may make decisions that could adversely affect only some holders of our common stock.    Our tracking stock capital structure could give rise to occasions when the interests of holders of stock of one group might diverge or appear to diverge from the interests of holders of stock of one or both of the other groups. In addition, given the nature of their businesses, there may be inherent conflicts of interests between the Interactive Group, the Entertainment Group and the Capital Group. Our officers and directors owe fiduciary duties to all of our stockholders. The fiduciary duties owed by such officers and directors are to our company as a whole, and decisions deemed to be in the best interest of our company may not be in the best interest of a particular group when considered independently. Examples include:

•

decisions as to the terms of any business relationships that may be created between and among the Interactive Group, the Capital Group and/or the Entertainment Group or the terms of any transfers of assets between the groups;



•

decisions as to the allocation of consideration among the holders of Liberty Interactive common stock, Liberty Capital common stock and/or Liberty Entertainment common stock, or among the

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series of stocks relating to any of our groups, to be received in connection with a merger involving our company;

•

decisions as to the allocation of corporate opportunities between the groups, especially where the opportunities might meet the strategic business objectives of more than one group;



•

decisions as to operational and financial matters that could be considered detrimental to some groups but beneficial to others;



•

decisions as to the conversion of shares of common stock of one group into shares of common stock of another;



•

decisions regarding the creation of, and, if created, the subsequent increase or decrease of any inter-group interest that one group may own in another group;



•

decisions as to the internal or external financing attributable to business or assets attributed to any of our groups;



•

decisions as to the dispositions of assets of any of our groups; and



•

decisions as to the payment of dividends on the stock relating to any of our groups.

        In addition, if directors own disproportionate interests (in percentage or value terms) in Liberty Interactive common stock, Liberty Capital common stock or Liberty Entertainment common stock, that disparity could create or appear to create conflicts of interest when they are faced with decisions that could have different implications for the holders of Liberty Interactive common stock, Liberty Capital common stock or Liberty Entertainment common stock.

        Other than pursuant to the management and allocation policies described in this proxy statement/prospectus, we have not adopted any specific procedures for consideration of matters involving a divergence of interests among holders of shares of stock relating to our different groups, or among holders of different series of stock relating to a specific group.    See "The Reclassification Proposals—Management and Allocation Policies." Rather than develop additional specific procedures in advance, our board of directors intends to exercise its judgment from time to time, depending on the circumstances, as to how best to:

•

obtain information regarding the divergence (or potential divergence) of interests;



•

determine under what circumstances to seek the assistance of outside advisers;



•

determine whether a committee of our board of directors should be appointed to address a specific matter and the appropriate members of that committee; and



•

assess what is in our best interests and the best interests of all of our stockholders.

        Our board of directors believes the advantage of retaining flexibility in determining how to fulfill its responsibilities in any such circumstances as they may arise outweighs any perceived advantages of adopting additional specific procedures in advance.

        Holders of shares of stock relating to a particular group may not have any remedies if any action by our directors or officers has an adverse effect on only that stock, or on a particular series of that stock.    Principles of Delaware law and the provisions of our amended charter may protect decisions of our board of directors that have a disparate impact upon holders of shares of stock relating to a particular group, or upon holders of any series of stock relating to a particular group. Under Delaware law, the board of directors has a duty to act with due care and in the best interests of all of our stockholders, regardless of the stock, or series, they hold. Principles of Delaware law established in cases involving differing treatment of multiple classes or series of stock provide that a board of directors owes an equal duty to all common stockholders and does not have separate or additional duties to any subset of stockholders. Recent judicial opinions in Delaware involving tracking stocks have established that

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decisions by directors or officers involving differing treatment of holders of tracking stocks may be judged under the business judgment rule. The business judgment rule generally provides that a director or officer of our company may be deemed to have satisfied his or her fiduciary duties to our company if that person acts in a manner he or she believes in good faith to be in the best interests of our company as a whole, and not of any single group of our stockholders. As a result, in some circumstances, our directors or officers may be required to make a decision that is viewed as adverse to the holders of shares relating to a particular group or to the holders of a particular series of that stock. Therefore, under the principles of Delaware law referred to above and the business judgment rule, you may not be able to challenge decisions that you believe have a disparate impact upon the stockholders of one of our groups if our board of directors is disinterested, adequately informed with respect to their decisions and acts in good faith, on behalf of all of our stockholders.

        Our board of directors may change the management and allocation policies to the detriment of any group without stockholder approval.    Our board of directors has adopted certain management and allocation policies to serve as guidelines in making decisions regarding the relationships between and among the Interactive Group, the Entertainment Group and the Capital Group with respect to matters such as tax liabilities and benefits, inter-group loans, inter-group interests, attribution of assets acquired after the restructuring of a group, financing alternatives, corporate opportunities and similar items. See "The Reclassification Proposals—Management and Allocation Policies." Our board of directors may at any time change or make exceptions to these policies. Because these policies relate to matters concerning the day to day management of our company as opposed to significant corporate actions, such as a merger involving our company or a sale of substantially all of our assets, no stockholder approval is required with respect to their adoption or amendment. A decision to change, or make exceptions to, these policies or adopt additional policies could disadvantage one or more groups while advantaging the other(s).

        Stockholders will not vote on how to attribute consideration received in connection with a merger involving our company among holders of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock.    Our amended charter does not contain any provisions governing how consideration received in connection with a merger or consolidation involving our company is to be attributed to the holders of Liberty Interactive common stock, holders of Liberty Capital common stock and holders of Liberty Entertainment common stock or to the holders of different series of stock, and none of the holders of Liberty Interactive common stock, Liberty Capital common stock or Liberty Entertainment common stock will have a separate class vote in the event of such a merger or consolidation. Consistent with applicable principles of Delaware law, our board of directors will seek to divide the type and amount of consideration received in a merger or consolidation involving our company among holders of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock in a fair manner. As the different ways the board of directors may divide the consideration between holders of stock relating to the different groups, and among holders of different series of stock, might have materially different results, the consideration to be received by holders of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock in any such merger or consolidation may be materially less valuable than the consideration they would have received if they had a separate class vote on such merger or consolidation.

        We may dispose of assets of the Interactive Group, the Capital Group or the Entertainment Group without your approval.     Delaware law requires stockholder approval only for a sale or other disposition of all or substantially all of the assets of our company taken as a whole, and our amended charter does not require a separate class vote in the case of a sale of a significant amount of assets of any of our groups. As long as the assets attributed to the Interactive Group, the Capital Group or the Entertainment Group represent less than substantially all of our assets, we may approve sales and other dispositions of any amount of the assets of such group without any stockholder approval. Based on the

24

proposed composition of the groups immediately following the reclassification, we believe that a sale of all or substantially all of the assets of any group, on a stand alone basis, would not be considered a sale of substantially all of the assets of our company requiring stockholder approval.

        If we dispose of all or substantially all of the assets of any group (which means, for this purpose, assets representing 80% of the fair market value of the total assets of the disposing group, as determined by our board of directors), we would be required, if the disposition is not an exempt disposition under the terms of our amended charter, to choose one or more of the following three alternatives:

•

declare and pay a dividend on the disposing group's common stock;



•

redeem shares of the disposing group's common stock in exchange for cash, securities or other property; and/or



•

convert all of the disposing group's outstanding common stock into common stock of one of the other groups. See paragraphs (e)(ii), (f)(ii) and (g)(ii) of Article IV, Section A.2. of Annex C.

        In this type of a transaction, holders of the disposing group's common stock may receive less value than the value that a third-party buyer might pay for all or substantially all of the assets of the disposing group.

        Our board of directors will decide, in its sole discretion, how to proceed and is not required to select the option that would result in the highest value to holders of any group of our common stock.

        Holders of Liberty Interactive common stock, Liberty Capital common stock or Liberty Entertainment common stock may receive less consideration upon a sale of the assets attributed to that group than if that group were a separate company.    If the Interactive Group, the Capital Group or the Entertainment Group were a separate, independent company and its shares were acquired by another person, certain costs of that sale, including corporate level taxes, might not be payable in connection with that acquisition. As a result, stockholders of a separate, independent company with the same assets might receive a greater amount of proceeds than the holders of Liberty Interactive common stock, Liberty Capital common stock or Liberty Entertainment common stock would receive upon a sale of all or substantially all of the assets of the group to which their shares relate. In addition, we cannot assure you that in the event of such a sale the per share consideration to be paid to holders of Liberty Interactive common stock, Liberty Capital common stock or Liberty Entertainment common stock, as the case may be, will be equal to or more than the per share value of that share of stock prior to or after the announcement of a sale of all or substantially all of the assets of the applicable group.

        If we sell all or substantially all of the assets attributed to the Interactive Group, the Capital Group or the Entertainment Group, our board of directors may take actions with respect to the shares of common stock of that group which could result in a loss of value for stockholders.    We have the right to dispose of the assets of the Interactive Group, the Capital Group or the Entertainment Group, in whole or in part. If we dispose of all or substantially all of the assets of any group, then our board of directors can decide to: (i) dividend an amount equal to the net proceeds to holders of that group's common stock, on a pro rata basis; (ii) convert the shares of that group's common stock into shares of the other groups' common stock at a ratio of 110% of the market price of the common stock of the converted group divided by 100% of the market price of the common stock of the group into which shares are converted; (iii) redeem shares of that group's common stock for cash, securities or other assets with a fair value equal to such net proceeds; or (iv) do a combination of the foregoing. There is no requirement that the action taken by the board of directors be tax-free to the holders of the shares of common stock of that group. In any of the foregoing cases, stockholders could suffer a loss in the value of their investment in our company.

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        Our board of directors may in its sole discretion elect to convert the common stock relating to one group into common stock relating to one of our other groups, thereby changing the nature of your investment and possibly diluting your economic interest in our company, which could result in a loss in value to you.    Our amended charter will permit our board of directors, in its sole discretion, to convert all of the outstanding shares of common stock relating to any of our groups (including our Interactive Group) into shares of common stock of any of our other groups on the terms described in paragraphs (b)(ii)-(vii) of Article IV, Section A.2. of Annex C. A conversion would preclude the holders of stock in both groups involved in such conversion from retaining their investment in a security that is intended to reflect separately the performance of the relevant group. We cannot predict the impact on the market value of our stock of (1) our board of directors' ability to effect any such conversion or (2) the exercise of this conversion right by our company. In addition, our board of directors may effect such a conversion at a time when the market value of our stock could cause the stockholders of one group to be disadvantaged.

        Holders of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock will vote together and will have limited separate voting rights.    Holders of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock will vote together as a single class, except in certain limited circumstances prescribed by our amended charter and under Delaware law. Each share of Series B common stock of each group will have ten votes per share, and each share of Series A common stock of each group will have one vote per share. Holders of Series C common stock of any group will have no voting rights, other than those required under Delaware law. When holders of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock vote together as a single class, holders having a majority of the votes will be in a position to control the outcome of the vote even if the matter involves a conflict of interest among our stockholders or has a greater impact on one group than the other.

        Our capital structure as well as the fact that the Interactive Group, the Capital Group and the Entertainment Group are not independent companies may inhibit or prevent acquisition bids for the Interactive Group, the Capital Group or the Entertainment Group.    If the Interactive Group, the Entertainment Group and the Capital Group were separate independent companies, any person interested in acquiring the Interactive Group, the Capital Group or the Entertainment Group without negotiating with management could seek control of that group by obtaining control of its outstanding voting stock, by means of a tender offer, or by means of a proxy contest. Although we intend Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock to reflect the separate economic performance of the Interactive Group, the Entertainment Group and the Capital Group, respectively, those groups are not separate entities and a person interested in acquiring only one group without negotiation with our management could obtain control of that group only by obtaining control of a majority in voting power of all of the outstanding shares of common stock of our company. The existence of shares of common stock, and different series of shares, relating to different groups could present complexities and in certain circumstances pose obstacles, financial and otherwise, to an acquiring person that are not present in companies which do not have capital structures similar to ours.

        The reclassification will result in a dilution of the aggregate voting power held by the holders of Liberty Interactive common stock.    Although the per share voting rights of the Liberty Interactive common stock are the same under our current charter and our amended charter, the aggregate voting power in our company represented by the outstanding shares of Liberty Interactive common stock will decrease as a result of the exchange ratios applied in the reclassification. Under our current charter, based on the number of our shares outstanding on July 31, 2007, holders of Liberty Interactive common stock collectively direct approximately 83% of the aggregate voting power in our company, and the holders of Old Liberty Capital common stock collectively direct approximately 17% in the aggregate voting power in our company. Because (i) each share of Old Liberty Capital common stock is being reclassified as

26

one share of the corresponding series of Liberty Capital common stock and four shares of the corresponding series of Liberty Entertainment common stock and (ii) each share of Liberty Capital common stock and each share of Liberty Entertainment common stock will represent the same number of per share votes as the corresponding share of Old Liberty Capital common stock for which they were exchanged in the reclassification, holders of Old Liberty Capital common stock will hold five times as many votes after the reclassification as they held prior to the reclassification. As a result, immediately following the reclassification and based on the number of our shares outstanding on July 31, 2007, holders of Liberty Interactive common stock will collectively direct approximately 50% of the aggregate voting power in our company, while the holders of Liberty Capital common stock and Liberty Entertainment common stock will collectively direct approximately 50% in the aggregate voting power of our company.

        No IRS ruling has been obtained by us with respect to the tax consequences to you or us of the reclassification.    While we believe that no income, gain or loss will be recognized by you or us for U.S. federal income tax purposes as a result of the reclassification, there are no court decisions or other authorities bearing directly on the characterization of stock with features similar to the Liberty Entertainment common stock, the Liberty Capital common stock, and the Liberty Interactive common stock. In addition, the IRS has announced that it will not issue rulings on the classification of an instrument with terms similar to the Liberty Entertainment common stock, the Liberty Capital common stock, or the Liberty Interactive common stock. Therefore, the tax treatment of the reclassification is subject to some uncertainty.

        It is possible, therefore, that the IRS could successfully assert that the issuance of the Liberty Entertainment common stock or the Liberty Capital common stock or both in the reclassification in exchange for Old Liberty Capital common stock is taxable to holders of Old Liberty Capital common stock and/or to us. If Liberty Entertainment common stock or Liberty Capital common stock or both represent property other than stock of our company (Other Property), the receipt of Liberty Entertainment common stock or Liberty Capital common stock by holders of Old Liberty Capital common stock might be treated as a fully taxable dividend in an amount equal to the fair market value of such stock constituting Other Property (subject in the case of stockholders that are corporations, to any applicable dividends received deduction) or the receipt of both might be treated as a fully taxable exchange, in which case holders of Old Liberty Capital common stock could recognize dividend income or gain or loss with respect to their shares of Old Liberty Capital common stock held immediately prior to the reclassification. Furthermore, we or our subsidiaries would recognize a significant taxable gain as a result of the reclassification in an amount equal to the excess of the fair market value of such stock constituting Other Property over its federal income tax basis to us or our subsidiaries allocable to such Other Property. Pursuant to the management and allocation policies described under "The Reclassification Proposals—Management and Allocation Policies," the cash for the payment of these taxes would be drawn from funds attributed to the Capital Group; however, under U.S. treasury regulations, each member of our affiliated group for U.S. federal income tax purposes (including those that are attributed to the Entertainment Group or the Interactive Group) could be liable to the U.S. government for any U.S. federal income taxes, which are not discharged by the Capital Group. In addition, we may no longer be able to file a consolidated U.S. federal income tax return which includes eligible entities attributed to the Entertainment Group, the Capital Group, and the Interactive Group. These tax liabilities, if they arise, could have a material adverse effect on us and each group.

        It is also possible that the IRS could successfully assert that the Liberty Entertainment common stock, the Liberty Capital common stock, or the Liberty Interactive common stock is Section 306 stock, within the meaning of Section 306(c) of the Internal Revenue Code. If any of our stock were determined to be Section 306 stock, you could be required to recognize ordinary income on the subsequent sale or exchange of such Section 306 stock, or dividend income on the redemption of such Section 306 stock, without regard to your basis in such stock, and you generally would not be permitted to recognize any loss on such disposition.

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        Changes in the tax law or in the interpretation of current tax law may result in the cessation of the issuance of shares of Liberty Entertainment common stock, Liberty Capital common stock and/or Liberty Interactive common stock or our conversion of stock intended to track the performance of one group into stock intended to track the performance of another group.    If, due to a change in tax law or a change in the interpretation of current tax law, there are adverse tax consequences resulting from the issuance of Liberty Entertainment common stock, Liberty Capital common stock, and/or Liberty Interactive common stock it is possible that we would not issue additional shares of Liberty Entertainment common stock, Liberty Capital common stock, and/or Liberty Interactive common stock even if we would otherwise choose to do so. This possibility could affect the value of Liberty Entertainment common stock, Liberty Capital common stock, or Liberty Interactive common stock then outstanding. In addition, we may elect to convert stock intended to track the performance of one group into stock intended to track the performance of another group, thereby changing the nature of your investment, which could result in a loss in value.

        It may be difficult for a third party to acquire us, even if doing so may be beneficial to our stockholders.     Certain provisions of our amended charter and bylaws may discourage, delay or prevent a change in control of our company that a stockholder may consider favorable. These provisions include:

•

authorizing a capital structure with multiple series of common stock, a Series B common stock of each group that entitles the holders to ten votes per share, a Series A common stock of each group that entitles the holder to one vote per share, and a Series C common stock of each group that except as otherwise required by applicable law, entitles the holder to no voting rights;



•

authorizing the issuance of "blank check" preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt;



•

classifying our board of directors with staggered three-year terms, which may lengthen the time required to gain control of our board of directors;



•

limiting who may call special meetings of stockholders;



•

prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of the stockholders; and



•

establishing advance notice requirements for nominations of candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

        Our chairman, John C. Malone, has the power to direct approximately 30% of the aggregate voting power in our company, due to his beneficial ownership of approximately 90% of the outstanding shares of Series B Old Liberty Capital common stock and 90% of the outstanding shares of Series B Liberty Interactive common stock. If the reclassification is implemented, Mr. Malone will beneficially own approximately 90% of the Series B stock of each of our tracking stocks, and he will continue to have the power to direct approximately 30% of the aggregate voting power in our company.

Factors Relating to our Company, the Interactive Group, the Entertainment Group and the Capital Group

        The risks described below apply to our company and to the businesses and assets attributable to the Interactive Group, the Entertainment Group and the Capital Group.

        The historical financial information of the Interactive Group, the Entertainment Group and the Capital Group included in this proxy statement/prospectus may not necessarily reflect their results as separate companies.    One of the reasons for the creation of a tracking stock is to permit equity investors to apply more specific criteria in valuing the shares of a particular group, such as comparisons of earnings multiples with those of other companies in the same business sector. In valuing shares of Liberty

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Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock, investors should recognize that the historical financial information of the Interactive Group, the Entertainment Group and the Capital Group included in this proxy statement/prospectus has been extracted from our consolidated financial statements and may not necessarily reflect what the Interactive Group's, the Capital Group's and the Entertainment Group's results of operations, financial condition and cash flows would have been had the Interactive Group, the Entertainment Group and the Capital Group been separate, stand-alone entities pursuing independent strategies during the periods presented.

        We do not have the right to manage our business affiliates, which means we are not able to cause those affiliates to operate in a manner that is favorable to us.    We will not have the right to manage the businesses or affairs of any of our business affiliates (generally those companies in which we have less than a majority stake) attributed to the Interactive Group, the Capital Group or the Entertainment Group. Rather, our rights may take the form of representation on the board of directors or a partners' or similar committee that supervises management or possession of veto rights over significant or extraordinary actions. The scope of our veto rights vary from agreement to agreement. Although our board representation and veto rights may enable us to exercise influence over the management or policies of a business affiliate, enable us to prevent the sale of material assets by a business affiliate in which we own less than a majority voting interest or prevent us from paying dividends or making distributions to our stockholders or partners, they will not enable us to cause these actions to be taken.

        The liquidity and value of our interests in our business affiliates may be affected by market conditions beyond our control that could cause us to take significant impairment charges due to other than temporary declines in the market value of our available for sale securities.    Included among the assets attributable to each group are equity interests in one or more publicly-traded companies which are accounted for as available for sale securities. The value of these interests may be affected by economic and market conditions that are beyond our control. We are required by accounting principles generally accepted in the United States to determine, from time to time, whether a decline in the market value of any of those investments below the cost for that investment is other than temporary. If we determine that the decline is other than temporary, we are required to write down its cost to a new cost basis, with the amount of the write-down accounted for as a realized loss in the determination of net income for the period in which the write-down occurs. We have at times realized significant losses due to other than temporary declines in the fair value of certain of our available for sale securities, and our company and the Entertainment Group, the Capital Group or the Interactive Group may be required to realize further losses of this nature in future periods. A number of factors are used in determining the fair value of an investment and whether any decline in an investment is other than temporary. As the assessment of fair value and any resulting impairment losses requires a high degree of judgment and includes significant estimates and assumptions, the actual amount we may eventually realize for an investment could differ materially from our assessment of the value of that investment made in an earlier period. In addition, our ability to liquidate these interests without adversely affecting their value may be limited.

        A substantial portion of the consolidated debt attributed to each group is held above the operating subsidiary level, and we could be unable in the future to obtain cash in amounts sufficient to service that debt and our other financial obligations.    As of June 30, 2007, our wholly-owned subsidiary Liberty Media LLC had $7.6 billion principal amount of publicly-traded debt outstanding and $750 million principal amount of bank debt outstanding. Liberty Media LLC is a holding company for all of our subsidiaries and investments. Our ability to meet the financial obligations of Liberty Media LLC and our other financial obligations will depend upon our ability to access cash. Our sources of cash include our available cash balances, net cash from operating activities, dividends and interest from our investments, availability under credit facilities at the operating subsidiary level, monetization of our public investment portfolio and proceeds from asset sales. There are no assurances that we will maintain the

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amounts of cash, cash equivalents or marketable securities that we maintained over the past few years. The ability of our operating subsidiaries to pay dividends or to make other payments or advances to us or Liberty Media LLC depends on their individual operating results and any statutory, regulatory or contractual restrictions to which they may be or may become subject. Some of our subsidiaries are subject to loan agreements that restrict sales of assets and prohibit or limit the payment of dividends or the making of distributions, loans or advances to stockholders and partners. Neither we nor Liberty Media LLC will generally receive cash, in the form of dividends, loans, advances or otherwise, from our business affiliates. In this regard, we will not have sufficient voting control over most of our business affiliates to cause those companies to pay dividends or make other payments or advances to their partners or stockholders, including our company or Liberty Media LLC.

        Certain of our subsidiaries and business affiliates depend on a limited number of potential customers for carriage of their programming.    The cable television and direct-to-home satellite industries have been undergoing a period of consolidation. As a result, the number of potential buyers of the programming services attributable to these groups is decreasing. In this more concentrated market, there can be no assurance that our owned and affiliated program suppliers will be able to obtain or maintain carriage of their programming services by distributors on commercially reasonable terms or at all.

        Rapid technological advances could render the products and services offered by our groups' subsidiaries and business affiliates obsolete or non-competitive.    The subsidiaries and business affiliates attributed to each group must stay abreast of rapidly evolving technological developments and offerings to remain competitive and increase the utility of their services. These subsidiaries and business affiliates must be able to incorporate new technologies into their products in order to address the needs of their customers. There can be no assurances that they will be able to compete with advancing technology, and any failure to do so may adversely affect the group to which they are attributed.

        Certain of our subsidiaries and business affiliates depend on their relationships with third party distribution channels, suppliers and advertisers and any adverse changes in these relationships could adversely affect our results of operations and those attributed to any of our groups.    An important component of the success of our subsidiaries and business affiliates is their ability to maintain their existing, as well as build new, relationships with third party distribution channels, suppliers and advertisers, among other parties. Adverse changes in existing relationships or the inability to enter into new arrangements with these parties on favorable terms, if at all, could have a significant adverse effect on our results of operations and those attributed to our groups.

        Adverse events or trends in the industries in which the subsidiaries and business affiliates attributed to our groups operate could harm that group.    In general, the subsidiaries and business affiliates in our groups are sensitive to trends and events that are outside their control. For example, adverse trends or events, such as general economic or market downturns, decreases in consumer spending and natural or other disasters, among other adverse events and trends, could have a significantly negative impact on all of our groups.

        The subsidiaries and business affiliates attributable to each group are subject to risks of adverse government regulation.    Programming services, cable television systems, the Internet, telephony services, direct-to-home satellite services and satellite carriers are subject to varying degrees of regulation in the United States by the Federal Communications Commission and other entities and in foreign countries by similar entities. Such regulation and legislation are subject to the political process and have been in constant flux over the past decade. The application of various sales and use tax provisions under state, local and foreign law to certain of our subsidiaries' and business affiliates' products and services sold via the Internet, television and telephone is subject to interpretation by the applicable taxing authorities, and no assurance can be given that such authorities will not take a contrary position to that taken by those subsidiaries and business affiliates, which could have a material adverse effect on their business. In addition, there have been numerous attempts at the federal, state and local levels to

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impose additional taxes on online commerce transactions. Moreover, substantially every foreign country in which our subsidiaries or business affiliates have, or may in the future make, an investment regulates, in varying degrees, the distribution, content and ownership of programming services and foreign investment in programming companies and wireline and wireless cable communications, satellite and telephony services and the Internet. Further material changes in the law and regulatory requirements must be anticipated, and there can be no assurance that the business and the business of the affiliates attributed to each group will not be adversely affected by future legislation, new regulation or deregulation.

        The success of certain of the groups' subsidiaries and business affiliates whose businesses involve the Internet depends on maintaining the integrity of their systems and infrastructure.    A fundamental requirement for online commerce and communications is the secure transmission of confidential information, such as credit card numbers or other personal information, over public networks. If the security measures of any of our subsidiaries or business affiliates engaged in online commerce were to be compromised, it could have a detrimental effect on their reputation and adversely affect their ability to attract customers.

        Computer viruses transmitted over the Internet have significantly increased in recent years, thereby increasing the possibility of disabling attacks on and damage to websites of our subsidiaries and business affiliates whose businesses are dependent on the Internet. In addition, certain of the subsidiaries and business affiliates attributed to each group rely on third-party computer systems and service providers to facilitate and process a portion of their transactions. Any interruptions, outages or delays in these services, or a deterioration in their performance, could impair the ability of these subsidiaries and business affiliates to process transactions for their customers and the quality of service they can offer to them.

        The success of certain of the subsidiaries and business affiliates attributed to each group is dependent upon audience acceptance of its programs and programming services which is difficult to predict.    Entertainment content production and premium subscription television program services are inherently risky businesses because the revenue derived from the production and distribution of a cable program and the exhibition of theatrical feature films and other programming depend primarily upon their acceptance by the public, which is difficult to predict. The commercial success of a cable program or premium subscription television service depends upon the quality and acceptance of other competing programs and films released into the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditions and other tangible and intangible factors, many of which are difficult to predict. Audience sizes for cable programming and premium subscription television program services are important factors when cable television and direct to home (DTH) satellite providers negotiate affiliation agreements and, in the case of ad-supported programming, when advertising rates are negotiated. Consequently, low public acceptance of cable programs and premium subscription television program services will have an adverse effect on our results of operations.

        Increased programming and content costs may adversely affect profits.    Subsidiaries and business affiliates attributable to our groups produce programming and incur costs for all types of creative talent including actors, writers and producers. These subsidiaries and business affiliates also acquire programming, such as movies and television series, from television production companies and movie studios. An increase in the costs of programming may lead to decreased profitability.

Factors Relating to the Interactive Group's subsidiary QVC

        The risks described below are unique to QVC, which currently constitutes the primary business attributed to the Interactive Group.

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        QVC conducts its merchandising businesses under highly competitive conditions.    Although QVC is the nation's largest home shopping network, it has numerous and varied competitors at the national and local levels, including conventional and specialty department stores, other specialty stores, mass merchants, value retailers, discounters, and Internet and mail-order retailers. Competition is characterized by many factors, including assortment, advertising, price, quality, service, location, reputation and credit availability. If QVC does not compete effectively with regard to these factors, its results of operations could be materially and adversely affected.

        QVC's sales and operating results depend on its ability to predict or respond to consumer preferences.    QVC's sales and operating results depend in part on its ability to predict or respond to changes in consumer preferences and fashion trends in a timely manner. QVC develops new retail concepts and continuously adjusts its product mix in an effort to satisfy customer demands. Any sustained failure to identify and respond to emerging trends in lifestyle and consumer preferences could have a material adverse affect on QVC's business. Consumer spending may be affected by many factors outside of QVC's control, including competition from store-based retailers, mail-order and Internet companies, consumer confidence and preferences, and general economic conditions.

        QVC's success depends in large part on its ability to recruit and retain key employees capable of executing its unique business model.    QVC has a business model that requires it to recruit and retain key employees with the skills necessary for a unique business that demands knowledge of the general retail industry, television production, direct to consumer marketing and fulfillment and the Internet. We can not assure you that if QVC experiences turnover of its key employees, it will be able to recruit and retain acceptable replacements because the market for such employees is very competitive and limited.

        QVC has operations outside of the United States that are subject to numerous operational and financial risks.     QVC has operations in countries other than the United States and are subject to the following risks inherent in international operations:

•

fluctuations in currency exchange rates;



•

longer payment cycles for sales in foreign countries that may increase the uncertainty associated with recoverable accounts;



•

recessionary conditions and economic instability affecting overseas markets;



•

potentially adverse tax consequences;



•

export and import restrictions, tariffs and other trade barriers;



•

increases in taxes and governmental royalties and fees;



•

involuntary renegotiation of contracts with foreign governments;



•

changes in foreign and domestic laws and policies that govern operations of foreign-based companies;



•

difficulties in staffing and managing international operations; and



•

political unrest that may result in disruptions of services that are critical to their international businesses.

Factors Relating to the DirecTV Group and its Potential Attribution to the Entertainment Group

        In December 2006 we entered into an exchange agreement with News Corporation which, if consummated, would result in the exchange of our 16.3% equity interest in News Corporation for a subsidiary of News Corporation which will own, among other things, an approximate 40% interest in the DirecTV Group, which we refer to as DirecTV, that is currently owned by News Corporation. If

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that transaction is consummated, the interest we obtain in DirecTV will be attributed to the Entertainment Group. If we do not complete the transaction with News Corporation we will not implement the reclassification even if the reclassification proposals are approved at the special meeting.

        The risk factors described below relate to: the uncertainties involved in our ability to close under our exchange agreement with News Corporation; the risks involved in our ownership of an interest in DirecTV; and operational risks relating to DirecTV. The operational risk factors have been reproduced from DirecTV's Annual Report on Form 10-K for the year ended December 31, 2006.

        No assurance can be given that we will consummate the transactions contemplated by our exchange agreement with News Corporation.    Prior to the consummation of the transactions contemplated by our exchange agreement with News Corporation, we and News Corporation must satisfy, or cause to be satisfied, certain closing conditions. Currently, the following material conditions remain to be satisfied:

•

we and News must each receive a private letter ruling from the Internal Revenue Service and a tax opinion from our respective counsel regarding certain tax effects of the exchange;



•

the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 must be terminated without material limitations, restrictions or conditions being imposed on our company or DirecTV; and



•

we and News Corporation must receive the consent of the Federal Communications Commission to the transactions contemplated by the exchange agreement without material limitations, restrictions or conditions being imposed on our company or DirecTV.

        We can not assure you when or if these conditions will be satisfied. If any of the closing conditions are not satisfied by December 22, 2007 (which may be extended to March 22, 2008, in certain circumstances), either we or News Corporation may choose to terminate the exchange agreement and even if all of the closing conditions are timely satisfied, we and News Corporation may mutually agree to terminate the exchange agreement.

        Furthermore, in order to cause the closing conditions to be satisfied we may be required to restructure our operations, cause our subsidiaries to restructure their operations, sell or dispose of assets or cause our subsidiaries to sell or dispose of assets. Under the terms of the exchange agreement we are not required to take such actions if such actions would have a material adverse effect on our business or operations or the business or operations of our subsidiaries or if our board determines that such actions would have a material adverse effect on DirecTV. We can not assure you that any action we take to cause the closing conditions to the exchange to be satisfied will not have a negative effect on us or our operations or that any such negative effect will have an equal impact on all of our groups.

        If we consummate the transactions contemplated by our exchange agreement with News Corporation, we will have an approximate 40% interest in DirecTV; however, there are significant impediments to our ability to exercise control over DirecTV.    If we close under our exchange agreement with News Corporation, we will have an approximate 40% interest in DirecTV. DirecTV has agreed to use its reasonable efforts to secure the designation of three designees selected by us to fill the three vacancies on the board of directors of DirecTV (which currently has 11 members) that would result from the resignation of three of the directors designated by News Corporation. Our approximate 40% interest and board positions will allow us to influence but not control any matters put to a vote of DirecTV's stockholders or board of directors. Certain provisions of DirecTV's charter may make it difficult for us to acquire 50% or more of the outstanding shares of DirecTV. For example, pursuant to the terms of DirecTV's charter, our ability to increase our interest in DirecTV to 50% or greater would require one of the following:

•

approval of a majority of DirecTV's independent directors; or



•

the announcement by a person not affiliated with us of such person's intention to acquire a 25% or greater interest in DirecTV in a transaction approved by DirecTV's board of directors; or

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•

a commencement by us of a tender or exchange offer for all outstanding shares of DirecTV's voting securities; or



•

the acquisition by us of all of DirecTV's voting securities pursuant to a merger or combination transaction with DirecTV.

        In addition, DirecTV's Audit Committee has the sole authority to review, consider and approve any transaction by DirecTV or its subsidiaries that the Audit Committee determines is a related party transaction. As a result of DirecTV's current charter provisions, we can not assure you that we would ever be able to acquire a controlling interest in DirecTV even if we determined that acquiring a controlling interest in DirecTV was in our best interest. Furthermore, certain provisions of DirecTV's charter could dissuade a third person from purchasing our shares of DirecTV.

        DirecTV may not sustain profitability.    DirecTV has sustained significant losses in the past and has significant amounts of debt. If DirecTV does not have sufficient income or other sources of cash, it could affect its ability to service debt and pay other obligations.

        Construction or launch delays on satellites could materially adversely affect DirecTV's revenues and earnings.     A key component of DirecTV's business strategy is its ability to expand its offering of new programming and services, including increased local and high definition programming. In order to accomplish this goal, DirecTV needs to construct and launch new satellites. The construction and launch of satellites are often subject to delays, including satellite and launch vehicle construction delays, periodic unavailability of reliable launch opportunities due to competition for launch slots, weather and also due to general delays that result when a launch provider experiences a launch failure, and delays in obtaining regulatory approvals. A significant delay in the future delivery of any satellite would materially adversely affect the use of the satellite and thus could materially adversely affect DirecTV's anticipated revenues and earnings. If satellite construction schedules are not met, there can be no assurance that a launch opportunity will be available at the time a satellite is ready to be launched. Certain delays in satellite construction could also jeopardize a satellite authorization that is conditioned on timely construction and launch of the satellite.

        The satellite that DirecTV leases to provide the Sky Brazil service in Latin America has a shortened useful life due to a failure of its primary propulsion system. If the operator of this satellite is unable to relocate or successfully launch a replacement satellite prior to its end-of-life, DirecTV may have difficulty finding an alternative satellite capable of providing the Sky Brazil service.

        DirecTV's satellites are subject to significant launch and operational risks.    Satellites are subject to significant operational risks relating to launch and while in orbit. Launch risks include launch failure, incorrect orbital placement or improper commercial operation. Launch failures result in significant delays in the deployment of satellites because of the need both to construct replacement satellites, which can take up to 36 months, and obtain other launch opportunities. The overall historical loss rate in DirecTV's industry for all launches of commercial satellites in fixed orbits in the last five years is estimated to be 5% but may be higher. Any significant delays or failures in successfully launching and deploying DirecTV's satellites could materially adversely affect its ability to generate revenues. While DirecTV has traditionally purchased insurance covering the launch and, in limited cases, operation of its satellites, such policies typically cover the loss of the satellite itself and not the business interruption or other associated direct and indirect costs. DirecTV does not currently expect to purchase in-orbit insurance for its satellites scheduled for launch in 2007 and 2008.

        In-orbit risks include malfunctions, commonly referred to as anomalies, and collisions with meteoroids, other spacecraft or other space debris. Anomalies occur as a result of various factors, such as satellite manufacturing errors, problems with the power systems or control systems of the satellites and general failures resulting from operating satellites in the harsh space environment. DirecTV works closely with its satellite manufacturers to determine and eliminate the potential causes of anomalies in

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new satellites and provide for redundancies of critical components in the satellites as well as having backup satellite capacity. However, there is no assurance that DirecTV will not experience anomalies in the future, nor are there assurances that its backup satellite capacity will be sufficient for its business purposes. Any single anomaly or series of anomalies could materially adversely affect DirecTV's operations and revenues and its relationships with its subscribers, as well as its ability to attract new subscribers for its services. Anomalies may also reduce the expected useful life of a satellite, thereby creating additional expenses due to the need to provide replacement or backup satellites and potentially reducing revenues if service is interrupted. Finally, the occurrence of anomalies may materially adversely affect DirecTV's ability to insure its satellites at commercially reasonable premiums, if at all. While some anomalies are currently covered by existing insurance policies, others are not now covered or may not be covered in the future.

        DirecTV's ability to earn revenue also depends on the usefulness of its satellites. Each satellite has a limited useful life. A number of factors affect the useful life of a satellite, including, among other things:

•

the design;



•

the quality of its construction;



•

the durability of its component parts;



•

the launch vehicle's insertion of the satellite into orbit;



•

any required movement, temporary or permanent, of the satellite;



•

the ability to continue to maintain proper orbit and control over the satellite's functions; and



•

the remaining on-board fuel following orbit insertion.

        Generally, the minimum design life of the satellites in DirecTV's fleet is between 12 and 16 years. The actual useful lives of the satellites may be shorter, in some cases significantly. DirecTV's operating results could be adversely affected if the useful life of any of its satellites were significantly shorter than 12 years from the date of launch.

        In the event of a failure or loss of any of DirecTV's satellites, DirecTV may relocate another satellite and use it as a replacement for the failed or lost satellite. In the event of a complete satellite failure, DirecTV's services provided via that satellite could be unavailable for several days or longer while backup in-orbit satellites are repositioned and services are moved. DirecTV is not insured for any resultant lost revenues. The use of backup satellite capacity for its programming may require it to discontinue some programming services due to potentially reduced capacity on the backup satellite. Any relocation of DirecTV's satellites would require prior FCC approval and, among other things, a demonstration to the FCC that the replacement satellite would not cause additional interference compared to the failed or lost satellite. Such FCC approval may not be obtained. DirecTV believes it has in-orbit satellite capacity to expeditiously recover transmission of most of its U.S. programming in the event one of its in-orbit satellites fails. However, programming continuity cannot be assured in the event of multiple satellite losses. DirecTV Latin America leases its satellites and may not have a readily available replacement in the event of a failure or loss of any of its satellites. Programming continuity in the countries in which DirecTV Latin America operates cannot be assured in the event of a single satellite loss.

        The cost of commercial insurance coverage on DirecTV's satellites or the loss of a satellite that is not insured could materially adversely affect DirecTV's earnings.    DirecTV uses in-orbit and launch insurance to mitigate the potential financial impact of satellite fleet in-orbit and launch failures unless the premium costs are considered uneconomic relative to the risk of satellite failure. When insurance is obtained, it generally covers the unamortized book value of covered satellites. Although the insurance

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generally does not compensate for business interruption or loss of future revenues or subscribers, DirecTV relies on in-orbit spare satellites and excess transponder capacity at key orbital slots to mitigate the impact of satellite failure on its ability to provide service.

        The price, terms and availability of insurance fluctuate significantly. Launch and in-orbit policies on satellites may not continue to be available on commercially reasonable terms or at all. In addition to higher premiums, insurance policies may provide for higher deductibles, shorter coverage periods and satellite health-related policy exclusions.

        Any launch vehicle failure, or loss or destruction of any of DirecTV's satellites for which it does not have commercial insurance coverage could have a material adverse effect on its financial condition and results of operations, its ability to comply with FCC regulatory obligations and its ability to fund the construction or acquisition of replacement satellites in a timely fashion, or at all.

        DirecTV competes with other multichannel video programming distributors (MVPDs), some of whom have greater resources than DirecTV does and levels of competition are increasing.    DirecTV competes in the MVPD industry against cable television, Regional Bell Operating Companies (RBOCs), wireless companies and other land-based and satellite-based system operators with service offerings including video, audio and interactive programming, data and other entertainment services and telephony service. Some of these competitors have greater financial, marketing and other resources than DirecTV does.

        Some cable television operators have large, established customer bases and many cable operators have significant investments in, and access to, programming. According to the National Cable & Telecommunications Association's Mid-Year 2006 Industry Overview, 108 million of the 110 million U.S. television households, or 99%, are passed by cable. Of the 110 million U.S. television households, approximately 94 million subscribe to a MVPD service and approximately 69% of MVPD subscribers receive their programming from a cable operator. Cable television operators have advantages relative to DirecTV, including or as a result of:

•

being the incumbent MVPD operator with an established subscriber base in the territories in which DirecTV competes;



•

bundling their analog video service with expanded digital video services delivered terrestrially or via satellite, or with efficient two-way high-speed Internet access or telephone service on upgraded cable systems;



•

having greater bandwidth capacity to deliver programming or services beyond which DirecTV's satellite capacity currently allows; and



•

having the ability to provide certain local and other programming, including high definition programming, in a larger number of geographic areas.

        In addition, cable television operators have grown their subscriber bases through mergers and acquisitions. Moreover, mergers, joint ventures and alliances among franchise, wireless or private cable television operators, RBOCs, and others may result in providers capable of offering bundled cable television, data and telecommunications services in competition with DirecTV's services.

        DirecTV does not currently offer local channel coverage to markets covering approximately six percent of U.S. television households, which places it at a competitive disadvantage in those markets. DirecTV also has been unable to secure certain international programming, due to exclusive arrangements of programming providers with certain competitors, which has constrained its ability to compete for subscribers who wish to obtain such programming.

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        In the United States various RBOCs have deployed fiber optic lines directly to customers' homes or neighborhoods to deliver video services, which compete with the DirecTV service. It is uncertain whether DirecTV will be able to increase its satellite capacity, offer a significant level of new services in existing markets in which it competes or expand to additional markets as may be necessary to compete effectively. Some of these RBOCs also sell the DirecTV service as a bundle with their voice and data services. The existence of a new broadly-deployed network with the capability of providing video, voice and data services could present a significant competitive challenge. Should their deployment of fiber optic lines for video grow substantially, DirecTV may be unable to develop other distribution methods to make up for lost sales through the RBOCs.

        In late December 2006 AT&T Corp. (AT&T) acquired BellSouth, one of the RBOCs that sells the DirecTV service. AT&T has a similar arrangement with EchoStar. It is possible that, as a result of this transaction, DirecTV's arrangements with BellSouth might be adversely affected.

        As a result of these and other factors, DirecTV may not be able to continue to expand its subscriber base or compete effectively against cable television or other MVPD operators in the future.

        Emerging digital media competition could materially adversely affect DirecTV.    DirecTV's business is focused on television, and it faces emerging competition from other providers of digital media, some of which have greater financial, marketing and other resources than DirecTV does. Significant changes in consumer behavior with regard to the means by which they obtain video entertainment and information in response to this emerging digital media competition could materially adversely affect DirecTV's revenues and earnings or otherwise disrupt DirecTV's business.

        DirecTV depends on the Communications Act for access to cable-affiliated programming and changes impacting that access could materially adversely affect DirecTV.    DirecTV purchases a substantial percentage of its programming from programmers that are affiliated with cable system operators. Currently, under certain provisions of the Communications Act governing access to programming, cable-affiliated programmers generally must sell and deliver their programming services to all multi-channel video programming distributors on non-discriminatory terms and conditions. The Communications Act and the FCC rules also prohibit certain types of exclusive programming contracts involving programming from cable-affiliated programmers.

        Any change in the Communications Act or the FCC's rules that would permit programmers that are affiliated with cable system operators to refuse to provide such programming or to impose discriminatory terms or conditions could materially adversely affect DirecTV's ability to acquire programming on a cost-effective basis, or at all. The Communications Act prohibitions on certain cable industry exclusive contracting practices with cable-affiliated programmers are scheduled to expire in October 2007 and may not be renewed or extended.

        In addition, certain cable providers have denied DirecTV and other MVPDs access to a limited number of channels created by programmers with which the cable providers are affiliated. The cable providers have asserted that they are not required to provide such programming due to the manner in which that programming is distributed, which they argue is not covered by the program access provisions of the Communications Act. Challenges to this interpretation of the Communications Act have not been successful, and DirecTV may continue to be precluded from obtaining such programming, which in turn could materially adversely affect DirecTV's ability to compete in regions serviced by those cable providers. Although the FCC recently addressed some of these issues in a limited fashion by placing access conditions on certain regional sports networks affiliated with Time Warner Cable, Inc. and Comcast Corporation, it is not clear that such provisions will be sufficient to assure DirecTV's continued access to this programming on fair and nondiscriminatory terms.

        Carriage requirements may negatively affect DirecTV's ability to deliver local broadcast stations, as well as other aspects of its business.    The FCC's interpretation, implementation and enforcement of

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provisions of the Satellite Home Viewer Improvement Act (SHVIA) and the Satellite Home Viewer Extension and Reauthorization Act of 2004, as well as judicial decisions interpreting and enforcing these laws, could hamper DirecTV's ability to retransmit distant network and superstation signals, reduce the number of its existing or future subscribers that can qualify for receipt of these signals, impose costs on DirecTV in connection with the process of complying with the rules, or subject DirecTV to fines, monetary damages or injunctions. In implementing SHVIA, the FCC has required satellite carriers to delete certain programming, including sports programming, from the signals of certain distant stations. Compliance with those FCC requirements may require costly upgrades to DirecTV's broadcast system. Further, a recent FCC order interpreting the requirement that satellite carriers retransmit local digital signals with "equivalent bandwidth" of significantly viewed digital signals may constrain DirecTV's ability to deliver such significantly viewed digital signals.

        DirecTV has limited capacity, and the projected number of markets in which it can deliver local broadcast programming will continue to be constrained because of the must carry requirement and may be reduced depending on the FCC's interpretation of its rules in pending and future rulemaking and complaint proceedings, as well as judicial decisions interpreting must carry requirements. DirecTV may not be able to comply with these must carry rules, or compliance may mean that it is not able to use capacity that could otherwise be used for new or additional local or national programming services.

        DirecTV depends on others to produce programming and programming costs are increasing.    DirecTV depends on third parties to provide it with programming services, including third parties who are DirecTV's affiliates and third parties controlled by competitors. DirecTV's ability to compete successfully will depend on its ability to continue to obtain desirable programming and deliver it to its subscribers at competitive prices. DirecTV's programming agreements generally have remaining terms ranging from less than one to up to ten years and contain various renewal and cancellation provisions. DirecTV may not be able to renew these agreements on favorable terms, or at all, or these agreements may be cancelled prior to expiration of their original terms. If DirecTV is unable to renew any of these agreements or the other parties cancel the agreements, DirecTV may not be able to obtain substitute programming, or if it is able to obtain such substitute programming, it may not be comparable in quality or cost to its existing programming.

        In addition, many of DirecTV's programming agreements contain annual price increases. When offering new programming, or upon expiration of existing contracts, programming suppliers have historically increased the rates they charge DirecTV for programming, increasing DirecTV's costs. DirecTV expects this practice to continue. Increases in programming costs could cause DirecTV to increase the rates that it charges its subscribers, which could in turn cause subscribers to terminate their subscriptions or potential new subscribers to refrain from subscribing to DirecTV's service. Furthermore, DirecTV may be unable to pass programming cost increases on to its subscribers, which could have a material adverse effect on its earnings or cash flow.

        The FCC recently adopted rules requiring DirecTV to negotiate in good faith with broadcast stations seeking carriage outside of the mandatory carriage regime described above. The rules for "retransmission consent" negotiations, which are similar to those that have applied to broadcast stations for years, require DirecTV to comply with certain indicia of good faith negotiation, as well as to demonstrate good faith under a "totality of the circumstances" test. Failure to comply with these rules could subject DirecTV to administrative sanctions and other penalties.

        DirecTV's subscriber acquisition costs could materially increase.    DirecTV incurs costs relating to subscribers acquired by it and subscribers acquired through third-parties. These costs are known as subscriber acquisition costs. For instance, DirecTV provides installation incentives to its retailers to enable them to offer standard professional installation as part of the subscriber's purchase or lease of a DirecTV System. In addition, DirecTV pays commissions to retailers for their efforts in offering a DirecTV System at a lower cost to consumers. DirecTV's subscriber acquisition costs may materially

38

increase to the extent it continues or expands current sales promotion activities or introduces other more aggressive promotions, or due to increased competition. Any material increase in subscriber acquisition costs from current levels would negatively impact DirecTV's earnings and could materially adversely affect its financial performance.

        Increased subscriber churn or subscriber upgrade and retention costs could materially adversely affect DirecTV's financial performance.    Turnover of subscribers in the form of subscriber service cancellations, or churn, has a significant financial impact on the results of operations of any subscription television provider, including DirecTV, as does the cost of upgrading and retaining subscribers. Any increase in DirecTV's upgrade and retention costs for its existing subscribers may adversely affect its financial performance or cause it to increase its subscription rates, which could increase churn. Churn may also increase due to factors beyond DirecTV's control, including involuntary churn by subscribers who are unable to pay their monthly subscription fees, a slowing economy, significant signal theft, consumer fraud, a maturing subscriber base and competitive offers. Any of the risks described herein under "Risk Factors—Factors Relating to the DirecTV Group and its Potential Attribution to the Entertainment Group" that could potentially have a material adverse impact on DirecTV's cost or service quality or that could result in higher prices for DirecTV's subscribers could also, in turn, cause an increase in churn and consequently have a material adverse effect on DirecTV's earnings.

        DirecTV's ability to keep pace with technological developments is uncertain.    In the MVPD industry, changes occur rapidly as new technologies are developed, which could cause DirecTV's services and products that deliver its services to become obsolete. DirecTV may not be able to keep pace with technological developments. If the new technologies on which DirecTV intends to focus its investments fail to achieve acceptance in the marketplace or DirecTV's technology does not work and requires significant cost to replace or fix, DirecTV could suffer a material adverse effect on its future competitive position, which could cause a reduction in its revenues and earnings. For example, DirecTV's competitors could be the first to obtain proprietary technologies that are perceived by the market as being superior. Further, after incurring substantial costs, one or more of the technologies under development by DirecTV or any of its strategic partners could become obsolete prior to its introduction.

        In addition, technological innovation depends, to a significant extent, on the work of technically skilled employees. Competition for the services of these employees is vigorous. DirecTV cannot assure that it will be able to continue to attract and retain these employees.

        To access technologies and provide products that are necessary for DirecTV to remain competitive, particularly in the area of broadband services, DirecTV may make future acquisitions and investments and may enter into strategic partnerships with other companies. Such investments may require a commitment of significant capital and human and other resources. The value of such acquisitions, investments and partnerships and the technology accessed may be highly speculative. Arrangements with third parties can lead to contractual and other disputes and dependence on the development and delivery of necessary technology on third parties that DirecTV may not be able to control or influence. These relationships may commit DirecTV to technologies that are rendered obsolete by other developments or preclude the pursuit of other technologies which may prove to be superior.

        New technologies could also create new competitors for DirecTV. Entities such as RBOCs are implementing and supporting digital video compression over existing telephone lines and building out fiber optic lines to enhance their capabilities to deliver programming services. While these entities are not currently providing MVPD services on a significant basis, many have the capabilities for such services and some have begun rolling out video services. DirecTV may not be able to compete successfully with new entrants in the market for video services.

        Satellite programming signals have been stolen and may be stolen in the future, which could result in lost revenues and would cause DirecTV to incur incremental operating costs that do not result in subscriber

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acquisition. The delivery of subscription programming requires the use of conditional access technology to limit access to programming to only those who subscribe and are authorized to view it. The conditional access system uses, among other things, encryption technology to protect the transmitted signal from unauthorized access. It is illegal to create, sell or otherwise distribute software or devices to circumvent that conditional access technology. However, theft of cable and satellite programming has been widely reported, and the access or "smart" cards used in DirecTV's conditional access system have been compromised in the past and could be compromised in the future.

        DirecTV has undertaken various initiatives with respect to its conditional access system to further enhance the security of the DirecTV signal. To help combat signal theft, DirecTV provides its subscribers with more advanced access cards that it believes significantly enhance the security of its signal. However, DirecTV cannot guarantee that the new card will prevent the theft of its satellite programming signals. Furthermore, there can be no assurance that DirecTV will succeed in developing the technology it needs to effectively restrict or eliminate signal theft. If DirecTV cannot promptly correct a compromise of its conditional access technology, its revenue and its ability to contract for video and audio services provided by programmers could be materially adversely affected. In addition, DirecTV's operating costs could increase if it attempts to implement additional measures to combat signal theft.

        DirecTV's business relies on intellectual property, some of which is owned by third parties, and DirecTV may inadvertently infringe patents and proprietary rights of others. Many entities, including some of DirecTV's competitors, have or may in the future obtain patents and other intellectual property rights that cover or affect products or services related to those that DirecTV currently offers or may offer in the future. In general, if a court determines that one or more of DirecTV's services or the products used to transmit or receive its services infringes on intellectual property owned by others, DirecTV and the applicable manufacturers or vendors may be required to cease developing or marketing those services and products, to obtain licenses from the owners of the intellectual property or to redesign those services and products in such a way as to avoid infringing the intellectual property rights. If a third party holds intellectual property rights, it may not allow DirecTV or the applicable manufacturers to use its intellectual property at any price, which could materially adversely affect DirecTV's competitive position.

        DirecTV may not be aware of all intellectual property rights that its services or the products used to transmit or receive its services may potentially infringe. In addition, patent applications in the United States are confidential until the Patent and Trademark Office issues a patent. Therefore, DirecTV cannot evaluate the extent to which its services or the products used to transmit or receive its services may infringe claims contained in pending patent applications. Further, without lengthy litigation, it is often not possible to determine definitively whether a claim of infringement is valid.

        DirecTV cannot estimate the extent to which it may be required in the future to obtain intellectual property licenses or the availability and cost of any such licenses. Those costs, and their impact on DirecTV's earnings, could be material. Damages in patent infringement cases may also include treble damages in certain circumstances. To the extent that DirecTV is required to pay royalties to third parties to whom it is not currently making payments, these increased costs of doing business could materially adversely affect its operating results. DirecTV is currently being sued in patent infringement actions related to use of technologies in its direct-to-home business. There can be no assurance that the courts will conclude that DirecTV's services or the products used to transmit or receive its services do not infringe on the rights of third parties, that DirecTV or the manufacturers would be able to obtain licenses from these persons on commercially reasonable terms or, if DirecTV were unable to obtain such licenses, that DirecTV or the manufacturers would be able to redesign DirecTV's services or the products used to transmit or receive DirecTV's services to avoid infringement. The final disposition of these claims is not expected to have a material adverse effect on DirecTV's consolidated financial position, but could possibly be material to its consolidated results of operations of any one period.

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Further, no assurance can be given that any adverse outcome would not be material to DirecTV's consolidated financial position.

        The ability to maintain FCC licenses and other regulatory approvals is critical to DirecTV's business. If DirecTV does not obtain all requisite U.S. regulatory approvals for the construction, launch and operation of any of its existing or future satellites for the use of frequencies at the orbital locations planned for these satellites or for the provision of service, or the licenses obtained impose operational restrictions on DirecTV, DirecTV's ability to generate revenue and profits could be materially adversely affected. In addition, under certain circumstances, existing licenses are subject to revocation or modification and upon expiration, renewal may not be granted. If existing licenses are not renewed, or are revoked or materially modified, DirecTV's ability to generate revenue could be materially adversely affected.

        In certain cases, satellite system operators are obligated by governmental regulation and procedures of the International Telecommunications Union to coordinate the operation of their systems with other users of the radio spectrum in order to avoid causing interference to those other users. Coordination may require a satellite system operator to reduce power, avoid operating on certain frequencies, relocate its satellite to another orbital location and/or otherwise modify planned or existing operations. For example, the FCC has conditionally granted Spectrum Five authority to provide direct broadcast satellite service using frequencies assigned to it by the Government of the Netherlands from an orbital slot located halfway between slots at which DirecTV currently operates. Other operators have filed similar requests. DirecTV believes this closer proximity, if permitted, significantly increases the risk of interference which could adversely affect the quality of service provided to its subscribers. DirecTV may not be able to successfully coordinate its satellites to the extent it is required to do so, and any modifications DirecTV makes in the course of coordination, or any inability to successfully coordinate, may materially adversely affect its ability to generate revenue. In addition, the FCC is currently conducting a rulemaking proceeding to consider, among other things, the adoption of operating parameters under which such "tweener" systems would be automatically deemed coordinated.

        Other regulatory risks include, among others:

•

the relocation of satellites to different orbital locations if the FCC determines that relocation is in the public interest;



•

the denial by the FCC of an application to replace an existing satellite with a new satellite or to operate a satellite beyond the term of its current authorization;



•

the loss of authorizations to operate satellites on certain frequencies at certain locations if DirecTV does not construct, launch and operate satellites into those locations by certain dates; and



•

the authorization by the United States or foreign governments of the use of frequencies by third party satellite or terrestrial facilities that have the potential to interfere with communication to or from DirecTV's satellites, which could interfere with DirecTV's contractual obligations or services to subscribers or other business operations.

        All of DirecTV's FCC satellite authorizations are subject to conditions imposed by the FCC in addition to the FCC's general authority to modify, cancel or revoke those authorizations. Use of FCC licenses and conditional authorizations are often subject to conditions, including technical requirements and implementation deadlines. Failure to comply with such requirements, or comply in a timely manner, could lead to the loss of authorizations and could have a material adverse effect on DirecTV's ability to generate revenue. For example, loss of an authorization could potentially reduce the amount of programming and other services available to DirecTV's subscribers. The materiality of such a loss of authorization would vary based upon, among other things, the orbital location at which the frequencies may be used.

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        In addition, many of DirecTV's authorizations and pending applications will be subject to petitions and oppositions filed by several companies, and there can be no assurance that DirecTV's authorizations will not be cancelled, revoked or modified or that DirecTV's applications will not be denied. Moreover, the FCC recently adopted new rules for licensing satellites that may limit DirecTV's ability to file applications and secure licenses in the future.

        Congress has continued to shape the scope of the FCC's regulatory authority and enact legislation that impacts DirecTV's business. In addition, FCC proceedings to implement legislation and enact additional regulations are ongoing. The outcomes of these legislative or regulatory proceedings or their effect on DirecTV's business cannot be predicted.

        DirecTV Latin America's business is subject to various additional risks associated with doing business internationally, which include political instability, economic instability, and foreign currency exchange rate volatility.

        All of DirecTV Latin America's operating companies are located outside the continental United States. DirecTV Latin America operates and has subscribers located throughout Latin America and the Caribbean Basin, which makes it vulnerable to risks of conducting business in foreign markets, including:

•

difficulties and costs associated with complying with a wide variety of complex laws, treaties and regulations;



•

unexpected changes in regulatory environments;



•

longer payment cycles;



•

earnings that may be subject to tax withholding requirements or the imposition of tariffs, exchange controls or other restrictions;



•

political and economic instability;



•

import and export restrictions and other trade barriers;



•

difficulties in maintaining overseas subsidiaries and international operations; and



•

difficulties in obtaining approval for significant transactions.

        In the past, the countries that constitute some of DirecTV Latin America's largest markets, including Brazil, Argentina, Colombia and Venezuela have experienced economic crises, caused by external and internal factors, and characterized by exchange rate instability, high inflation, high domestic interest rates, economic contraction, a reduction of international capital flows, a reduction of liquidity in the banking sector and high unemployment. These economic conditions have often been related to political instability, including political violence. If these economic conditions recur, they could substantially reduce the purchasing power of the population in DirecTV's markets and materially adversely affect its business.

        Because DirecTV Latin America offers premium pay television programming, its business is particularly vulnerable to economic downturns. DirecTV Latin America has experienced, and may in the future experience, decreases or instability in consumer demand for its programming, as well as subscriber credit problems. DirecTV Latin America's inability to adjust its business and operations to adequately address these issues could materially adversely affect its revenues and ability to achieve profitability.

        DirecTV may not be able to obtain or retain certain foreign regulatory approvals. There can be no assurance that any current regulatory approvals held by DirecTV are, or will remain, sufficient in the view of foreign regulatory authorities, or that any additional necessary approvals will be granted on a timely basis or at all, in all jurisdictions in which DirecTV operates, or that applicable restrictions in those jurisdictions will not be unduly burdensome. The failure to obtain the authorizations necessary to operate satellites or provide satellite service internationally could have a material adverse effect on DirecTV's ability to generate revenue and its overall competitive position.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        Certain statements in this document or in the documents incorporated by reference herein 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 and estimated amounts payable under that arrangement, revenue growth and subscriber trends at QVC and Starz Entertainment, anticipated programming and marketing costs at Starz Entertainment, our projected sources and uses of cash for the remainder of 2007, the estimated value of our derivatives related to certain of our AFS investments, the anticipated non-material impact of certain contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of our business and our expectation that we will close our exchange transaction with News Corporation before the end of this year. In particular, statements under "Summary," "Risk Factors," "The Reclassification Proposals—Background and Reasons for the Reclassification Proposals," "—The Interactive Group, the Entertainment Group and the Capital Group," "—Material U.S. Federal Income Tax Consequences," "Annex A: Description of Business" and "Annex B: Financial Information" 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 such statements necessarily involve risks and uncertainties and there can be no assurance that the statement of 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:

•

consumer 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 and joint venturers;



•

general economic and business conditions and industry trends;



•

consumer spending levels, including the availability and amount of individual consumer debt;



•

the regulatory and competitive environment of the industries in which we, and the entities in which we have interests, operate;



•

continued consolidation of the broadband distribution and movie studio industries;

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•

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;



•

threatened terrorists 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 document (or, as to documents incorporated by reference, the date of such documents), and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein or therein, to reflect any change in its 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 the factors described in "Risk Factors" and other cautionary statements contained or incorporated in this document. Such risk factors and statements describe circumstances which could cause actual results to differ materially from those contained in any forward-looking statement.

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THE SPECIAL MEETING

Time, Place and Date

        The special meeting of our stockholders is to be held at [    ] a.m., local time, on [            ,] 2007, at [                        ], telephone [(    )     -            ].

Purpose

        At the special meeting, you will be asked to consider and vote on each of the reclassification proposals, which are a group of related proposals to amend and restate our certificate of incorporation. The reclassification proposals are described in greater detail under "The Reclassification Proposals—General." Each of the reclassification proposals is dependent on the others, and none of them will be implemented unless they are all approved at the special meeting.

Quorum

        In order to carry on the business of the special meeting, a quorum must be present. This means that at least a majority of the aggregate voting power represented by the outstanding shares of our Liberty Interactive common stock and our Old Liberty Capital common stock must be represented at the special meeting either in person or by proxy. For purposes of determining a quorum, your shares will be included as represented at the meeting even if you indicate on your proxy that you abstain from voting. If a broker, who is a record holder of shares, indicates on a form of proxy that the broker does not have discretionary authority to vote those shares on the reclassification proposals, or if those shares are voted in circumstances in which proxy authority is defective or has been withheld, those shares (broker non-votes) nevertheless will be treated as present for purposes of determining the presence of a quorum. See "—Voting Procedures for Shares Held in Street Name—Effect of Broker Non-Votes" below.

Who May Vote

        Holders of Series A Old Liberty Capital common stock (LCAPA), Series B Old Liberty Capital Common Stock (LCAPB), Series A Liberty Interactive common stock (LINTA) and Series B Liberty Interactive common stock (LINTB), as recorded in our stock register as of 5:00 p.m., New York City time, on [            , 2007] (which is the record date for the special meeting), may vote at the special meeting or at any adjournment or postponement thereof.

Votes Required

        Approval of each of the reclassification proposals requires the affirmative vote of each of:

•

the holders of at least a majority in aggregate voting power of the shares of LCAPA, LCAPB, LINTA and LINTB, voting together as a single class, which we refer to as the combined vote;



•

the holders of at least a majority in aggregate voting power of the shares of LCAPA and LCAPB, voting together as a separate class, which we refer to as the separate LCAP vote; and



•

the holders of at least a majority in aggregate voting power of the shares of LINTA and LINTB, voting together as a separate class, which we refer to as the separate LINT vote.

in each case outstanding on the record date for the special meeting.

Votes You Have

        At the special meeting:

•

holders of LCAPA will have one vote per share;

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•

holders of LINTA will have one vote per share;



•

holders of LCAPB will have ten votes per share; and



•

holders of LINTB will have ten votes per share;

in each case, for each share that our records show they owned as of 5:00 p.m., New York City time, on [                        ], 2007, which is the record date for the special meeting. For purposes of the combined vote on each of the reclassification proposals, holders of our Old Liberty Capital common stock and Liberty Interactive common stocks will vote together as a single class. For purposes of the separate LCAP vote, holders of LCAPA and LCAPB will vote together as a separate class and for purposes of the separate LINT vote, holders of LINTA and LINTB will vote together as a separate class.

Recommendation of Our Board of Directors

        Our board of directors has approved all of the reclassification proposals and recommends that you vote "FOR" each of them.

Shares Outstanding

        As of [                        ] , 2007, the record date for the special meeting, an aggregate of [                        ] shares of LINTA, [                        ] shares of LINTB, [                        ]shares of LCAPA and [                        ] shares of LCAPB were issued and outstanding and entitled to vote at the special meeting. No other shares of our capital stock are currently outstanding.

Number of Holders

        There were, as of the record date for the special meeting, approximately [            ] and [            ] beneficial holders of LCAPA and LCAPB, respectively, and approximately [            ] and [            ] beneficial holders of LINTA and LINTB, respectively (which amounts do not include the number of stockholders whose shares are held of record by banks, brokers or other nominees, but include each such institution as one holder).

Voting Procedures for Record Holders

        Holders of record of our common stock as of the record date for the special meeting may vote in person at the special meeting. Alternatively, they may give a proxy by completing, signing, dating and returning the proxy card that is being included with the mailing of this proxy statement/prospectus, or by voting by telephone or over the Internet. Votes cast by holders of shares of our Old Liberty Capital common stock will be counted towards both the combined vote and the separate LCAP vote and votes cast by holders of shares of our Liberty Interactive common stock will be counted towards both the combined vote and the separate LINT vote Unless subsequently revoked, shares of our common stock represented by a proxy submitted as described below and received at or before the special meeting will be voted in accordance with the instructions on the proxy.

        YOUR VOTE IS IMPORTANT.    It is recommended that you vote by proxy even if you plan to attend the special meeting. You may change your vote at the special meeting. To submit a written proxy by mail, you should complete, sign, date and mail the proxy in accordance with its instructions.

        If any other matters are properly presented before the special meeting, the persons you choose as proxies will have discretion to vote or to act on these matters according to their best judgment, unless you indicate otherwise on your proxy.

        If a proxy is signed and returned by a record holder without indicating any voting instructions, the shares of our common stock represented by the proxy will be voted "FOR" the approval of each of the

46

reclassification proposals for purposes of the combined vote and the separate LCAP vote and/or the separate LINT vote, as applicable.

        If you submit a proxy card on which you indicate that you abstain from voting, it will have the same effect as a vote "AGAINST" the reclassification proposals for purposes of each of the combined vote, the separate LCAP vote and the separate LINT vote.

Voting Procedures for Shares Held in Street Name

        General.    If you hold your shares in the name of a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or other nominee when voting your shares of our common stock or when granting or revoking a proxy.

        Effect of Broker Non-Votes.    "Broker non-votes" will have the same effect as a vote against the reclassification proposals for purposes of each of the combined vote, the separate LCAP vote and the separate LINT vote.

Revoking a Proxy

        Before your proxy is voted, you may change your vote by telephone or over the Internet (if you originally voted by telephone or over the Internet), by voting in person at the special meeting or by delivering a signed proxy revocation or a new signed proxy with a later date to Liberty Media Corporation, c/o Computershare Trust Company, N.A., P.O. Box [8078], Edison New Jersey 08818. Any signed proxy revocation or new signed proxy must be received before the start of the special meeting.

        Your attendance at the special meeting will not, by itself, revoke your proxy.

        If your shares are held in an account by a broker, bank or other nominee, you should contact your nominee to change your vote.

Solicitation of Proxies

        The accompanying proxy for the special meeting is being solicited on behalf of our board of directors. In addition to this mailing, our employees may solicit proxies personally or by telephone. We pay the cost of soliciting these proxies. We also reimburse brokers and other nominees for their expenses in sending these materials to you and getting your voting instructions.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

        The following table sets forth information, to the extent known by us or ascertainable from public filings, concerning shares of our common stock beneficially owned by each person or entity (excluding any of our directors and executive officers) known by us to own more than five percent of the outstanding shares of any series of our common stock.

        The security ownership information is given as of June 30, 2007, and, in the case of percentage ownership information, is based upon (1) 123,110,645 LCAPA shares, (2) 5,988,020 LCAPB shares, (3) 603,298,421 LINTA shares and (4) 29,944,850 LINTB shares, in each case, outstanding on that date.

(1)

The number of shares of LCAPA is based upon the Schedule 13G filed on February 10, 2006 by Capital Research and Management Company with respect to the Series A common stock of our predecessor issuer Liberty Media LLC (formerly named Liberty Media Corporation (Old Liberty)). Such figures included in the Schedule 13G have been adjusted to reflect the issuance of our common stock in connection with our 2006 restructuring. Capital Research, an investment adviser, is deemed to be the beneficial owner of 7,174,145 shares of LCAPA, as a result of acting as investment adviser to various investment companies, but disclaims beneficial ownership pursuant to Rule 13d-4. The Schedule 13G states that Capital Research has sole voting power over 2,241,395 shares of LCAPA.

(2)

The number of shares of LINTA is based upon the Schedule 13G filed on February 10, 2006 by Capital Research and Management Company with respect to the Series A common stock of Old Liberty. Such figures included in the Schedule 13G have been adjusted to reflect the issuance of our common stock in connection with our 2006 restructuring. Capital Research, an investment adviser, is deemed to be the beneficial owner of 35,870,725 shares of LINTA, as a result of acting as investment adviser to various investment companies, but disclaims beneficial ownership pursuant to Rule 13d-4. The Schedule 13G states that Capital Research has sole voting power over 11,206,975 shares of LINTA.

(3)

The number of shares of LCAPA is based upon the Amendment No. 1 to Schedule 13G, filed on June 6, 2007 by Southeastern Asset Management, Inc., an investment adviser, and O. Mason Hawkins, Chairman of the Board and CEO of Southeastern, with respect to shares of LCAPA. All of the 13,263,280 shares of LCAPA covered by the Schedule 13G are owned by Southeastern's investment advisory clients and none are owned directly or indirectly by Southeastern. Mr. Hawkins could be deemed to be a controlling person of Southeastern but disclaims the existence of such control. Mr. Hawkins does not own directly or indirectly any securities covered by the Schedule 13G. Southeastern and Mr. Hawkins disclaim beneficial ownership of the shares covered by the Schedule 13G pursuant to Rule 13d-4. The Schedule 13G states that Southeastern

48

has sole voting power over 7,969,804 shares of LCAPA, shared voting power over 4,217,676 shares of LCAPA and no voting power over 1,075,800 shares of LCAPA.

(4)

The number of shares of LINTA is based upon the Amendment No. 1 to Schedule 13G filed on February 12, 2007 by Southeastern Asset Management, Inc., an investment adviser, and O. Mason Hawkins, Chairman of the Board and CEO of Southeastern, with respect to shares of LINTA. All of the 69,476,779 shares of LINTA common stock covered by the Schedule 13G/A are owned by Southeastern's investment advisory clients and none are owned directly or indirectly by Southeastern. Mr. Hawkins could be deemed to be a controlling person of Southeastern but disclaims the existence of such control. Mr. Hawkins does not own directly or indirectly any securities covered by the Schedule 13G/A. Southeastern and Mr. Hawkins disclaim beneficial ownership of the shares covered by the Schedule 13G/A pursuant to Rule 13d-4. The Schedule 13G/A states that Southeastern has sole voting power over 40,677,163 shares of LINTA, shared voting power over 22,584,666 shares of LINTA and no voting power over 6,214,950 shares of LINTA.

Security Ownership of Management

        The following table sets forth information with respect to the ownership by each of our directors and each of our executive officers and by all of our directors and executive officers as a group of shares of LCAPA, LCAPB, LINTA and LINTB. The security ownership information is given as of June 30, 2007, and, in the case of percentage ownership information, is based upon (1) 123,110,645 LCAPA shares, (2) 5,988,020 LCAPB shares, (3) 603,298,421 LINTA shares and (4) 29,944,850 LINTB shares, in each case, outstanding on that date.

        Shares of restricted stock that have been granted pursuant to our equity incentive plans are included in the outstanding share numbers provided throughout this proxy statement/prospectus. Shares of common stock issuable upon exercise or conversion of options, warrants and convertible securities that were exercisable or convertible on or within 60 days after June 30, 2007, are deemed to be outstanding and to be beneficially owned by the person holding the options, warrants or convertible securities for the purpose of computing the percentage ownership of the person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. For purposes of the following presentation, beneficial ownership of shares of LCAPB and LINTB, though convertible on a one-for-one basis into shares of LCAPA and LINTA, respectively, is reported as beneficial ownership of LCAPB and LINTB only, and not as beneficial ownership of LCAPA or LINTA. So far as is known to us, the persons indicated below have sole voting power with respect to the shares indicated as owned by them, except as otherwise stated in the notes to the table.

        The number of shares indicated as owned by the following persons includes interests in shares held by our defined contribution 401(k) plan (the Liberty 401(k) Savings Plan) as of June 30, 2007. The shares held by the trustee of the Liberty 401(k) Savings Plan for the benefit of these persons are voted as directed by such persons.

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50

*

Less than one percent

(1)

Includes 376,260 LINTA shares, 852,358 LINTB shares, 75,252 LCAPA shares and 170,471 LCAPB shares, held by Mr. Malone's wife, Mrs. Leslie Malone, as to which shares Mr. Malone has disclaimed beneficial ownership.

(2)

Includes 273 LINTA shares and 43 LCAPA shares and held by the Liberty 401(k) Savings Plan.

(3)

Includes 825 LINTA shares and 165 LCAPA shares held by a trust with respect to which Mr. Malone is the sole trustee and, with his wife, retains a unitrust interest in the trust.

(4)

Includes 24,232 restricted LINTA shares and 10,560 restricted LCAPA shares, none of which were vested on June 30, 2007.

(5)

Includes beneficial ownership of 54,604 LINTA shares, 3,171,321 LINTB shares, 11,942 LCAPA shares and 634,264 LCAPB shares, which may be acquired upon exercise of stock options exercisable within 60 days after June 30, 2007. Mr. Malone has the right to convert the options to purchase 2,871,351 LINTB shares and 574,270 LCAPB shares into options to purchase LINTA shares and LCAPA shares, respectively.

(6)

In February 1998, in connection with the settlement of certain legal proceedings relative to the Estate of Bob Magness, the late founder and former Chairman of the Board of the former parent company, TCI, of our predecessor company, TCI entered into a call agreement with Mr. Malone and Mr. Malone's wife. In connection with AT&T's acquisition of TCI, TCI assigned to our predecessor its rights under this call agreement. We succeeded to these rights in connection with our 2006 restructuring. As a result, we have the right, under certain circumstances, to acquire LINTB shares and LCAPB shares owned by the Malones. The call agreement also prohibits the Malones from disposing of their LINTB shares and LCAPB shares, except for certain exempt transfers (such as transfers to related parties or to the other group or public sales of up to an aggregate of 5% of their shares of LINTB or LCAPB after conversion to shares of LINTA or LCAPA, respectively) and except for a transfer made in compliance with our call rights.

(7)

Includes 9,319 LINTA shares and 1,839 LCAPA shares held by the Liberty 401(k) Savings Plan.

(8)

Includes beneficial ownership of 500,000 LINTA shares, 4,169,963 LINTB shares, 100,000 LCAPA shares and 833,993 LCAPB shares, which may be acquired upon exercise of, or which relate to, stock options and stock appreciation rights exercisable within 60 days after June 30, 2007.

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Mr. Bennett has the right to convert the options to purchase LINTB shares and LCAPB shares into options to purchase LINTA shares and LCAPA shares, respectively.

(9)

Includes 299,567 LINTA shares, 100 LINTB shares, 62,329 LCAPA shares and 20 LCAPB shares, owned by Hilltop Investments, Inc. which is jointly owned by Mr. Bennett and his wife, Mrs. Deborah Bennett.

(10)

Includes beneficial ownership of 15,750 LINTA shares and 3,150 LCAPA shares, which may be acquired upon exercise of, or which relate to, stock options and stock appreciation rights exercisable within 60 days after June 30, 2007.

(11)

Includes beneficial ownership of 17,938 LINTA shares and 3,588 LCAPA shares, which may be acquired upon exercise of, or which relate to, stock options and stock appreciation rights exercisable within 60 days after June 30, 2007.

(12)

Includes beneficial ownership of 659,226 LINTA shares and 132,228 LCAPA shares, which may be acquired upon exercise of stock options exercisable within 60 days after June 30, 2007.

(13)

Includes 945 LINTA shares and 561 LCAPA shares held by the Liberty 401(k) Savings Plan.

(14)

Includes 4,331 LINTA shares and 853 LCAPA shares held by the Liberty 401(k) Savings Plan.

(15)

Includes 3,584 restricted LINTA shares and 1,561 restricted LCAPA shares, none of which were vested on June 30, 2007.

(16)

Includes beneficial ownership of 504,425 LINTA shares and 99,786 LCAPA shares, which may be acquired upon exercise of, or which relate to, stock options and stock appreciation rights exercisable within 60 days after June 30, 2007.

(17)

Includes 2,546 LINTA shares and 498 LCAPA shares held by the Liberty 401(k) Savings Plan.

(18)

Includes 4,139 restricted LINTA shares and 1,794 restricted LCAPA shares, none of which were vested on June 30, 2007.

(19)

Includes beneficial ownership of 274,409 LINTA shares and 55,086 LCAPA shares, which may be acquired upon exercise of, or which relate to, stock options and stock appreciation rights exercisable within 60 days after June 30, 2007.

(20)

Includes 2,630 LINTA shares and 518 LCAPA shares held by the Liberty 401(k) Savings Plan.

(21)

Includes 12,966 restricted LINTA shares and 3,739 restricted LCAPA shares, none of which were vested on June 30, 2007.

(22)

Includes beneficial ownership of 228,008 LINTA shares and 45,086 LCAPA shares, which may be acquired upon exercise of, or which relate to, stock options and stock appreciation rights exercisable within 60 days after June 30, 2007.

(23)

Includes 2,811 LINTA shares and 552 LCAPA shares held by the Liberty 401(k) Savings Plan.

(24)

Includes 15,884 restricted LINTA shares and 5,006 restricted LCAPA shares, none of which were vested on June 30, 2007.

(25)

Includes 767 LINTA shares and 153 LCAPA shares held by Mr. Tanabe's wife, Arlene Bobrow, as to which shares Mr. Tanabe has disclaimed beneficial ownership.

(26)

Includes beneficial ownership of 638,215 LINTA shares and 128,029 LCAPA shares, which may be acquired upon exercise of, or which relate to, stock options and stock appreciation rights exercisable within 60 days after June 30, 2007.

(27)

Includes 22,855 LINTA shares and 4,864 LCAPA shares held by the Liberty 401(k) Savings Plan.

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(28)

Includes 377,027 LINTA shares, 852,358 LINTB shares, 75,405 LCAPA shares and 170,471 LCAPB shares, held by relatives of certain directors and executive officers, as to which shares beneficial ownership by such directors and executive officers has been disclaimed.

(29)

Includes 85,037 restricted LINTA shares and 33,220 restricted LCAPA shares, none of which were vested on June 30, 2007.

(30)

Includes beneficial ownership of 2,939,825 LINTA shares, 7,341,284 LINTB shares, 588,345 LCAPA shares and 1,468,257 LCAPB shares, which may be acquired upon exercise of, or which relate to, stock options and stock appreciation rights exercisable within 60 days after June 30, 2007. The options to purchase 7,041,314 of the LINTB shares and 1,408,263 of the LCAPB shares may be converted into options to purchase LINTA shares and LCAPA shares, respectively.

Ownership of Subsidiary Securities

        Except as described below, none of our executive officers or directors beneficially owns any equity securities of any of our subsidiaries.

        As of June 30, 2007, Mr. Gould beneficially owned 78,910 shares of common stock of TruePosition Inc., representing less than a 1% ownership interest in TruePosition. These shares include 74,421 shares of common stock (as to which shares Mr. Gould disclaims beneficial ownership) owned by Allen & Company LLC, of which Mr. Gould is a Managing Director and Executive Vice President.

Change of Control

        We know of no arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of our company.

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THE RECLASSIFICATION PROPOSALS

General

        At the special meeting holders of Old Liberty Capital common stock and Liberty Interactive common stock will be asked to vote on a group of related proposals: the new tracking stock proposal, the recapitalization proposal, the optional conversion proposal, and the group disposition proposal. We refer to all four proposals together as the "reclassification proposals." Before our board of directors implements the reclassification, the following must occur:

•

All four of the reclassification proposals shall have been approved by the affirmative vote of the holders of a majority in aggregate voting power of each of (i) our Old Liberty Capital and Liberty Interactive common stocks, voting together as a single class, (ii) our Old Liberty Capital common stock, voting as a separate class and (iii) our Liberty Interactive common stock, voting as a separate class, in each case, outstanding as of the record date for the special meeting;



•

Our previously announced exchange transaction with News Corporation, pursuant to which we would acquire a subsidiary of News Corporation which will own an approximate 40% equity interest in DirecTV, three regional sports networks and $588 million in cash, shall have closed; and



•

We shall have received a favorable opinion from our tax counsel as to certain tax implications of the reclassification as described under "—Material United States Federal Income Tax Consequences—Tax Implications of the Reclassification" below.

        Each of the four proposals is described below. While each proposal is related and therefore conditioned on approval of the other three proposals, we have "unbundled" them so that you may communicate your view to the board of directors as to each proposal being voted on.

        The new tracking stock proposal.    Under this proposal, you are being asked to approve an amendment and restatement of our certificate of incorporation, included as Annex C hereto, which would reclassify our Old Liberty Capital common stock into two new tracking stocks, one to retain the designation Liberty Capital common stock and the other to be designated Liberty Entertainment common stock. The amended charter would provide for the reattribution of the businesses, assets and liabilities currently attributed to the Old Capital Group between a new, smaller Capital Group and a new Entertainment Group, as described under "—The Entertainment Group, the Capital Group and the Interactive Group" below. In addition, the amended charter would provide for limited, related changes to be made to the terms of the Liberty Interactive common stock. Each of the Liberty Capital common stock and the Liberty Entertainment common stock would be divided into three series with different voting rights. See Article IV, Sections A.1. and A.2.(a) of Annex C.

        The reclassification would not change the businesses, assets or liabilities attributed to our Interactive Group. The terms of our Liberty Interactive common stock also would not change, except that under our amended charter: (i) shares of Liberty Interactive common stock may be converted at our option into shares of Liberty Capital common stock or Liberty Entertainment common stock, and shares of Liberty Capital common stock or Liberty Entertainment common stock may be converted at our option into shares of Liberty Interactive common stock, (ii) we may not redeem outstanding shares of Liberty Interactive common stock for shares of common stock of a subsidiary holding assets and liabilities of the Interactive Group without a class vote of the holders of our Liberty Interactive common stock, (iii) it is no longer a condition to effecting any such redemption that our board of directors determine that the redemption qualifies for nonrecognition of gain or loss (in whole or in part) under Section 355 of the Internal Revenue Code to the holders of Liberty Interactive common stock, and (iv) if we were to effect a redemption described in clause (ii) with stock of a subsidiary that also holds assets and liabilities of the Capital Group and/or the Entertainment Group, shares of Liberty Capital common stock and/or Liberty Entertainment common stock, as applicable, would also be redeemed in exchange for shares of that subsidiary, and the entire redemption would be subject to the class vote described in clause (ii) as well as the separate class vote of the holders of Liberty Capital

54

common stock and/or Liberty Entertainment common stock, as applicable. See "—Description of Liberty Interactive Common Stock Under Our Amended Charter and Comparison to Liberty Interactive Common Stock Under Our Current Charter."

        After the reclassification, an investment in our Liberty Capital common stock or Liberty Entertainment common stock would, and an investment in Liberty Interactive common stock will continue to, represent an ownership interest in our company as a whole and not in the businesses or assets attributed to the Capital Group, the Entertainment Group or the Interactive Group, respectively.

        The recapitalization proposal.    Under this proposal, you are being asked to approve an amendment and restatement of our certificate of incorporation which would cause: (i) each share of LCAPA outstanding at the time our amended charter is filed with the Secretary of State of Delaware to be changed into one share of Series A Liberty Capital common stock and four shares of Series A Liberty Entertainment common stock; and (ii) each share of LCAPB outstanding at the time our amended charter is filed to be changed into one share of Series B Liberty Capital common stock and four shares of Series B Liberty Entertainment common stock.

        The Optional Conversion Proposal.    Under this proposal, you are being asked to approve an amendment and restatement of our certificate of incorporation, in connection with the reclassification of the Old Liberty Capital common stock into two new tracking stocks, which would create the right in favor of our board of directors to convert, in their sole discretion, common stock intended to track the performance of the Capital Group, the Entertainment Group or the Interactive Group into common stock intended to track the performance of any other such group. See paragraphs (b)(ii)-(vii) of Article IV, Section A.2. of Annex C.

        The Group Disposition Proposal.    Under this proposal, you are being asked to approve an amendment and restatement of our certificate of incorporation, in connection with the reclassification of the Old Liberty Capital common stock into two new tracking stocks, which would create the right in favor of our board of directors to sell all or substantially all of the assets of the Capital Group or the Entertainment Group without a vote of the holders of the stockholders of that group, if the net proceeds of the sale are distributed to holders of that stock by means of a dividend or redemption, that stock is converted into stock of another group or a combination of the foregoing is effected. See paragraphs (e)(ii) and (f)(ii) of Article IV, Section A.2. of Annex C.

        Approval of the Group Disposition Proposal would not affect the current right in favor of our board of directors to sell all or substantially all of the assets of the Interactive Group without a vote of the holders of the stockholders of that group, if the net proceeds of the sale are distributed to holders of that stock by means of a dividend or redemption, that stock is converted into Old Liberty Capital common stock or a combination of the foregoing is effected. However, under the terms of the amended charter, in the event of any such disposition, the Liberty Interactive common stock would instead be convertible into Liberty Capital common stock or Liberty Entertainment common stock. See Article IV, Section A.2.(g)(ii) of Annex C.

Treatment of Stock Options and Other Awards

        Options to purchase shares of Old Liberty Capital common stock, stock appreciation rights with respect to shares of Old Liberty Capital common stock and restricted shares of Old Liberty Capital common stock have been granted to various directors, officers, employees and consultants of our company and certain of our subsidiaries pursuant to the Liberty Media Corporation 2007 Incentive Plan and various other stock incentive plans administered by the incentive plan committee of our board of directors. In the reclassification, we intend to treat options, SARs and restricted stock as set forth below.

55

        Option Awards.    Upon filing our amended charter with the Secretary of State of the State of Delaware, each outstanding option to purchase shares of Old Liberty Capital common stock (which we refer to as an outstanding Old Liberty Capital option) will be divided into two options as follows:

•

an option (which we refer to as a Liberty Capital option) to purchase the same number of shares of the corresponding series of Liberty Capital common stock for which such outstanding Old Liberty Capital option was exercisable immediately prior to the reclassification; and



•

an option (which we refer to as a Liberty Entertainment option) to purchase four times the number of shares of the corresponding series of Liberty Entertainment common stock for which such outstanding Old Liberty Capital option was exercisable immediately prior to the reclassification.

        The aggregate exercise price of each outstanding Old Liberty Capital option will be allocated between the Liberty Capital option and the Liberty Entertainment option based upon the exchange ratios applied in the reclassification and the respective volume weighted average prices of the applicable series of Liberty Capital common stock and Liberty Entertainment common stock over the first 20 trading days following the filing of our amended charter with the Secretary of State of the State of Delaware. This allocation is intended to reflect the relative fair market values of each group's stock immediately following the reclassification.

        By way of example, an outstanding Old Liberty Capital option to acquire 1,000 shares of Series A Old Liberty Capital common stock at an exercise price of $100 would be divided, as a result of the reclassification, into:

•

a Liberty Capital option to acquire 1,000 shares of Series A Liberty Capital common stock at an exercise price of $20; and



•

a Liberty Entertainment option to acquire 4,000 shares of Series A Liberty Entertainment common stock at an exercise price of $20.

        The foregoing exercise price allocation assumes that the volume weighted average price of the Series A Liberty Capital common stock over the first 20 trading days was $25 and the volume weighted average price of the Series A Liberty Entertainment common stock over such 20-trading day period was $25.

        Except as described above, all other terms of the Liberty Capital option and the Liberty Entertainment option (including, for example, the vesting terms thereof) will, in all material respects, be the same as those of the corresponding outstanding Old Liberty Capital option.

        SAR Awards.    Upon filing our amended charter with the Secretary of State of the State of Delaware, each outstanding stock appreciation right related to Old Liberty Capital common stock (which we refer to as an outstanding Old Liberty Capital SAR) will be divided into two stock appreciation rights as follows:

•

a stock appreciation right (which we refer to as a Liberty Capital SAR) related to the same number of shares of the corresponding series of Liberty Capital common stock as to which such outstanding Old Liberty Capital SAR related immediately prior to the reclassification;



•

a stock appreciation right (which we refer to as a Liberty Entertainment SAR) related to four times the number of shares of the corresponding series of Liberty Entertainment common stock as to which such outstanding Old Liberty Capital SAR related immediately prior to the reclassification.

        The aggregate base price of each outstanding Old Liberty Capital SAR will be allocated between the Liberty Capital SAR and the Liberty Entertainment SAR based upon the exchange ratios applied in the reclassification and the respective volume weighted average prices of the applicable series of Liberty Capital common stock and Liberty Entertainment common stock over the first 20 trading days following the filing of our amended charter with the Secretary of State of the State of Delaware. This

56

allocation is intended to reflect the relative fair market values of each group's stock immediately following the reclassification.

        By way of example, an outstanding Old Liberty Capital SAR relating to 1,000 shares of Series A Old Liberty Capital common stock with a base price of $100 would be divided, as a result of the reclassification, into:

•

a Liberty Capital SAR relating to 1,000 shares of Series A Liberty Capital common stock with a base price of $20; and



•

a Liberty Entertainment SAR relating to 4,000 shares of Series A Liberty Entertainment common stock with a base price of $20.

        The foregoing base price allocation assumes that the volume weighted average price of the Series A Liberty Capital common stock over the first 20 trading days was $25 and the volume weighted average price of the Series A Liberty Entertainment common stock over such 20-trading day period was $25.

        Except as described above, all other terms of the Liberty Capital SAR and the Liberty Entertainment SAR (including, for example, the vesting terms thereof) will, in all material respects, be the same as those of the corresponding outstanding Old Liberty Capital SAR.

        Restricted Stock Awards.    Upon filing our amended charter with the Secretary of State of the State of Delaware, each restricted share of Old Liberty Capital common stock will be reclassified as (i) one restricted share of the corresponding series of Liberty Capital common stock, and (ii) four restricted shares of the corresponding series of Liberty Entertainment common stock. Except as described above, the terms of the Liberty Capital restricted shares and the Liberty Entertainment restricted shares (including, for example, the vesting terms thereof) will, in all material respects, be the same as those of the corresponding Old Liberty Capital restricted shares.

The Entertainment Group, the Capital Group and the Interactive Group

        Our amended charter will authorize and designate three tracking stocks: the Liberty Entertainment common stock, intended to reflect the separate economic performance of the Entertainment Group; the Liberty Capital common stock, intended to reflect the separate economic performance of the Capital Group; and the Liberty Interactive common stock, intended to reflect the separate economic performance of the Interactive Group.

        Last year we implemented our current tracking stock structure following its approval by stockholders at our annual meeting. We adopted that structure in large part to clarify our capital structure, thereby assisting the capital markets in better understanding and valuing our businesses. We also sought to create acquisition currencies that we believed would prove more attractive to owners of companies we viewed as potential acquisition candidates for the separate lines of businesses we attribute to the Old Capital Group and the Interactive Group. In seeking to reclassify the Old Liberty Capital common stock into two new tracking stocks, we wish to further refine and clarify the businesses and assets we currently attribute to the Old Capital Group, and create an acquisition currency in the Liberty Entertainment common stock that we believe will be more attractive to owners of programming, communications and video distribution businesses that we may wish to acquire with equity securities.

        The Entertainment Group would initially consist of our subsidiaries Starz Entertainment, LLC and FUN Technologies, Inc., our equity interests in GSN, LLC and WildBlue Communications, Inc., and approximately $500 million of cash and cash equivalents. In addition, we would attribute to this new group the approximate 40% interest in DirecTV, three regional sports television networks and an additional approximately $588 million in cash that we will receive if and when our previously announced exchange transaction with News Corporation is completed. We would also attribute to this new group $551 million principal amount (as of June 30, 2007) of our publicly-traded debt 3.25% Senior Exchangeable Debentures due 2031.

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        While we expect the exchange transaction with News Corporation to be completed before the end of this year, if by the date specified in our agreement with News Corporation we ultimately are unable to obtain all required governmental approvals and favorable tax rulings and opinions, we or News Corporation may terminate that transaction. Were that to happen, we would not implement the reclassification.

        The Entertainment Group would focus primarily on programming, communications businesses and the direct-to-home satellite distribution business. Our strategy for this new group would be to grow the businesses we attribute to it organically as well as by increasing our holdings in certain of its equity affiliates and making acquisitions of operating companies with complimentary assets.

        The Capital Group would initially consist of all of our businesses and assets that are currently attributed to the Old Capital Group and that would not be attributed to the Entertainment Group. Those businesses and assets include our subsidiaries Starz Media, LLC, Atlanta National League Baseball, Inc. (which holds the Atlanta Braves major league baseball franchise), Leisure Arts, Inc., True Position, Inc., and WFRV and WJMN Television Station Inc. and minority investments in Time Warner Inc. and Sprint Nextel Corporation. In addition, the Capital Group would continue to have attributed to it the following debt obligations:

        The Capital Group would be primarily focused on media, telecom and technology businesses involving cable, satellite, the Internet and other distribution media as they evolve. As is the case currently for the Old Capital Group, our strategy for the Capital Group would be to seek to further simplify its assets through the monetization of certain of its minority investments. We would then seek to redeploy the proceeds of these monetizations by making acquisitions for the Capital Group's existing businesses, acquiring operating businesses or engaging in financial transactions and investments that management believes have attractive risk and return characteristics.

        The assets, businesses and liabilities attributed to the Interactive Group would not change as a result of the reclassification. That group would continue to focus on our video and on-line commerce businesses, and be anchored by our wholly owned subsidiary QVC. Our strategy for the Interactive Group will continue to be to foster QVC's organic growth in its existing markets while exploring opportunities for expansion in additional international markets. We will also continue to seek to acquire other commerce businesses. Other businesses attributed to the Interactive Group include our subsidiaries Provide Commerce, Inc., BuySeasons, Inc. and Backcountry.com, Inc. and our minority interests in Expedia, Inc. and IAC/InteractiveCorp. We have attributed approximately $3.11 million principal amount (as of June 30, 2007) of our publicly-traded debt to the Interactive Group, which continues to consists of:

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        A more complete description of the businesses and assets attributed to the Interactive Group, and to be attributed to the Entertainment Group and the Capital Group, can be found in Annex A of this proxy statement/prospectus.

        We expect that each group will include in the future other businesses, assets and liabilities that are complementary or related to the businesses attributed to that group as our board of directors may determine. In addition, we may acquire and attribute to any group other businesses, assets and liabilities which are consistent with the focus or strategy of that group or which have financial or other attributes that fit well within a group. In cases where a business may fit into more than one group, our board will have discretion to determine to which group that business should be attributed. We expect that in making such a decision, the board will consider not only whether the business is principally related to those in a particular group but also which group has the financing capability and managerial expertise to best capitalize on the opportunities presented by the acquisition. Our board may change the focus or strategy of any group, in its sole discretion, at any time. We expect that the board will do so if it is determined that such a change would be in the best interests of our company and all of our stockholders.

Background and Reasons for the Reclassification Proposals

        Our stockholders approved a series of related proposals at our 2006 annual meeting which resulted in a restructuring of our company, which we refer to as the 2006 restructuring. As part of the 2006 restructuring, we formed a new public holding company and our predecessor became our wholly-owned subsidiary in a merger transaction. Pursuant to that merger, our stockholders exchanged their shares of our predecessor company's common stock for two new tracking stocks, the Old Liberty Capital common stock and the Liberty Interactive common stock.

        We implemented the 2006 restructuring and our "tracking stock" structure to provide us with greater operational and financial flexibility in executing our business strategies. Our board determined at that time, and continues to believe, that our tracking stock structure permits us to bring greater clarity to our assets and our businesses strategies, thereby allowing the stock of each group to move more in line with the fundamentals of the more focused businesses attributed to that group. Creating a tracking stock structure also allowed us to create two new acquisition currencies which we believe are more attractive to sellers of companies because they have a greater opportunity to participate in any gains enjoyed by the acquired company and similar or complimentary businesses attributed to the same group.

        Subsequent to the 2006 restructuring, our board of directors has continued to review options that may be available to our company to realize additional value from the businesses and assets attributed to the Old Capital Group and the Interactive Group. In anticipation of our acquisition of an approximate 40% interest in DirecTV in our previously announced exchange transaction with News Corporation, our board of directors has decided to further refine the groups of businesses and assets that are currently attributed to our Old Capital Group by reclassifying our Old Liberty Capital common stock into two new tracking stocks. One of these stocks, to be designated the Liberty Entertainment common stock, would be intended to track and reflect the economic performance of our new interest in DirecTV, as well as our programming and communications businesses, including our subsidiaries Starz Entertainment, LLC and FUN Technologies, Inc., and the regional sports networks we expect to acquire in our exchange transaction with News Corporation. We would also attribute to this group our equity interests in GSN, LLC and WildBlue Communications, Inc. Because the primary anchor of the Entertainment Group would be our interest in DirecTV, we will not implement the reclassification unless and until we close our exchange transaction with News Corporation.

        The other new tracking stock would be intended to track and reflect the economic performance of the remaining businesses and assets that are currently attributed to the Old Capital Group.

        Our board of directors also considered a spin off of certain of the businesses to be attributed to the Entertainment Group, but determined that a tracking stock structure, unlike a spin off, is expected

59

to preserve certain favorable financial, tax and other benefits that we will continue to realize as a single consolidated entity.

        Upon management's recommendation and after consultation with our financial and legal advisors, our board of directors determined that the reclassification would be in the best interests of our company and our stockholders.

Positive Aspects of the Reclassification Proposals

        In arriving at its determination and recommendation, our board of directors, with the assistance of its financial and legal advisors, considered, among other things, the following:

•

Greater financial flexibility.  The creation of the Liberty Entertainment common stock will provide us with greater flexibility in raising funds in the capital markets for our direct-to-home satellite distribution, programming, and communications businesses as investors will be able to acquire securities that are more focused on those businesses than is the case now with the Old Liberty Capital common stock. The reclassification of the Old Liberty Capital common stock into two tracking stocks intended to reflect the economic performance of more focused groups of businesses and assets will also allow us to take greater advantage of times when one or more of the Entertainment Group, the Capital Group or the Interactive Group are valued more favorably than the others, thereby permitting us to raise capital on better terms for that group or groups than would otherwise be the case.



•

Attractive Acquisition Currency.  The creation of the Liberty Entertainment common stock will provide us with an attractive currency for increasing our interests in the businesses we attribute to the Entertainment Group and in making acquisitions of complementary businesses, as the sellers will have a greater opportunity to participate in any gains enjoyed by the acquired company and similar or complementary businesses after the acquisition.



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Increased stockholder choice.  The reclassification of the Old Liberty Capital common stock into two new tracking stocks will allow our stockholders and future investors greater choice, depending on their particular investment objectives, to own one or more of three separate securities intended to track and reflect the economic performance of the businesses and assets attributed to the Entertainment Group, the Capital Group and/or the Interactive Group.



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Advantages of doing business under common ownership.  In contrast to a spin off, the reclassification proposals will allow us to retain the advantages of doing business as a single company and allow the businesses attributed to each group to capitalize on relationships with the businesses attributed to the other groups. As part of a single company, the businesses within each group will continue to take advantage of the strategic, financial and other benefits of shared managerial expertise, synergies relating to technology and purchasing arrangements, consolidated tax benefits, lower borrowing costs in some instances and cost savings in corporate overhead and other expenses.



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Management incentives.  The further refinement of our businesses into the Entertainment Group, the Capital Group and the Interactive Group will enable us to more effectively tailor employee benefit plans and retention programs to provide incentives to the employees of the businesses attributed to each of those groups. In particular, it will allow us to issue stock-based compensation and other incentive awards to employees of the businesses within each group that are tied more directly to the performance of those businesses.



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Preserves capital structure flexibility.  The terms of our amended charter preserve the ability of our board of directors to unwind the tracking stock capitalization. The reclassification proposals also retain future restructuring flexibility by preserving our ability to undertake future asset segmentation and capital restructurings.

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Implementation of the reclassification will not be taxable.  We expect that the implementation of the reclassification will not be taxable for U.S. federal income tax purposes to us or to our stockholders.



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Anticipated greater market recognition and more accurate valuation.  The reclassification of the Old Liberty Capital common stock into the Liberty Entertainment common stock and the Liberty Capital common stock will permit the market to review separate information about the more focused groups of businesses and assets, and associated liabilities, attributed to the Entertainment Group and the Capital Group, in addition to the Interactive Group. This should provide greater transparency to investors and analysts when analyzing the separate businesses, assets and liabilities attributed to each group.

Potential Negative Aspects of the Reclassification Proposals

        Our board of directors also evaluated the potential negative aspects of the reclassification proposals, including the following:

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Uncertainty of market valuation.  There can be no assurance as to the degree to which the market price of the Liberty Entertainment common stock and the Liberty Capital common stock will reflect the separate economic performance of the businesses, assets and liabilities attributed to the Entertainment Group and the Capital Group, respectively, or whether the combined market prices of the Liberty Entertainment common stock and the Liberty Capital common stock will exceed the market price of the Old Liberty Capital common stock. In addition, we cannot predict the impact of the reclassification proposals on the market price of our existing Liberty Interactive common stock or whether the implementation of the reclassification will increase our aggregate market capitalization.



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Expansion of the board of directors' responsibilities.  Our amended charter can be expected to expand our board of directors' responsibilities due to the need for our board to review any matter involving the allocation of a business or corporate opportunity to the Entertainment Group and the Capital Group in addition to the Interactive Group, a potential conflict of interest between or among the holders of Liberty Interactive common stock, Liberty Entertainment common stock and/or Liberty Capital common stock, or the movement of assets and creation of inter-group interests among the three groups.



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Creation of potential diverging or conflicting interests.  Our amended charter may create additional, potentially diverging or conflicting interests among the holders of our tracking stocks due to the increase in the number of our tracking stocks, and complex issues may arise in resolving such conflicts that effectively require our board of directors to benefit one group more than the other groups.



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Uncertainty of market reaction to tracking stock decisions.  The market values of the Liberty Entertainment common stock, the Liberty Capital common stock or the Liberty Interactive common stock could be affected by the market reaction to decisions by our board of directors and management that investors perceive as affecting differently one series of common stock compared to the others. These decisions could include decisions regarding business transactions among the groups or the allocation of assets, expenses, debt or other financial liabilities among the groups.



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Potential adverse tax consequences.  The tax treatment of the reclassification is subject to some uncertainty, and the board considered the possibility that the IRS could successfully assert that the receipt of Liberty Entertainment common stock or Liberty Capital common stock or both in the reclassification is taxable to the holders of our Old Liberty Capital common stock and/or to us. The board considered the fact that if the IRS were successful in such a claim, material adverse tax consequences could result to holders of our Old Liberty Capital common stock and us.

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        Our board of directors determined that the positive aspects of the reclassification proposals outweighed the negative aspects and concluded that the restructuring proposals are in the best interests of our company and our stockholders. In light of the number and variety of factors that our board of directors considered, our board of directors believes it is not practicable to assign relative weights to the factors discussed above, and accordingly, our board of directors did not do so.

Recommendation of the Board of Directors

        YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED EACH OF THE RECLASSIFICATION PROPOSALS AND BELIEVES THAT THEIR ADOPTION IS IN THE BEST INTERESTS OF OUR COMPANY AND STOCKHOLDERS. ACCORDINGLY, YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF EACH OF THE RECLASSIFICATION PROPOSALS.

Management and Allocation Policies

        We have established management and allocation policies for purposes of attributing all of our businesses and operations to either the Old Capital Group or the Interactive Group, and allocating between those two groups other items (such as debt, corporate overhead, taxes, corporate opportunities and other charges and obligations) in a manner we deem reasonable after taking into account all material factors. If the reclassification proposals are approved and implemented, we will modify our management and allocation policies as described below.

        As a general principle, we expect that all material matters in which holders of Liberty Entertainment common stock, Liberty Capital common stock and Liberty Interactive common stock may have divergent interests will continue to be generally resolved in a manner that is in the best interests of our company and all of our stockholders after giving fair consideration to the interests of the holders of each tracking stock, as well as such other or different factors considered relevant by our board of directors (or any committee of the board authorized for this purpose, including the executive committee of the board).

Policies Subject to Change Without Stockholder Approval

        We have set forth below the management and allocation policies as we expect them to be effective upon completion of the reclassification. We are not requesting stockholder approval of these policies.

        Our board of directors may, without stockholder approval, modify, change, rescind or create exceptions to these policies, or adopt additional policies. Such actions could have different effects upon holders of Liberty Entertainment common stock, Liberty Capital common stock and Liberty Interactive common stock. Our board of directors will make any such decision in accordance with its good faith business judgment that such decision is in the best interests of our company and the best interests of all of our stockholders as a whole.

        Any such modifications, changes, rescissions, exceptions or additional policies will be binding and conclusive unless otherwise determined by the board.

Attribution of Assets

        The businesses, assets and liabilities that are currently attributed to the Old Capital Group will be attributed to either the Entertainment Group or the Capital Group. The businesses and assets initially to be attributed to the Entertainment Group will include our subsidiaries Starz Entertainment, LLC and FUN Technologies, Inc., our equity interests in GSN, LLC, and WildBlue Communications, Inc., the approximate 40% interest in The DirecTV Group, Inc., three regional sports television networks and approximately $588 million in cash that we would receive upon consummation of our exchange

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transaction with News Corporation, and approximately $500 million of additional cash and cash equivalents. We will also attribute to the Entertainment Group approximately $551 million principal amount (as of June 30, 2007) of our publicly-traded debt. The Entertainment Group will be primarily focused on the direct-to-home satellite distribution, programming and communications businesses.

        The Capital Group will initially have attributed to it the remaining businesses and assets that are currently attributed to the Old Capital Group. Those businesses and assets include our subsidiaries Starz Media, LLC, Atlanta National League Baseball Club, Inc. (owner of the Atlanta Braves baseball franchise), Leisure Arts, Inc., TruePosition, Inc., WFRV and WJMN Television Station Inc., and minority equity investments in Time Warner Inc. and Sprint Nextel Corporation we attribute to that group. In addition, the Capital Group will have attributed to it $3.93 billion principal amount (as of June 30, 2007) of our existing publicly-traded debt and $750 million principal amount (as of June 30, 2007) of our bank debt. The Capital Group will be primarily focused on media, telecom and technology and will continue to simplify its assets through the monetization of certain of its minority investments.

        The businesses, assets and liabilities attributed to the Interactive Group will not change if the reclassification is implemented. Those businesses and assets include our subsidiaries QVC, Inc., Provide Commerce, BuySeasons, Inc., and Backcountry.com, Inc. and our interests in Expedia and IAC. We attribute to the Interactive Group $3.11 billion principal amount (as of June 30, 2007) of our existing publicly-traded debt. The Interactive Group is primarily focused on video and on-line commerce.

        The board currently contemplates that businesses, assets and liabilities acquired after the reclassification will be attributed to one of the three groups principally based upon how strongly they complement or relate to the focus or strategy of that group.

Fiduciary and Management Responsibilities

        Because the Entertainment Group, the Capital Group and the Interactive Group will continue to be a part of a single company, our directors and officers will have the same fiduciary duties to holders of Liberty Entertainment common stock, Liberty Capital common stock and Liberty Interactive common stock that our board of directors currently has to the holders of Old Liberty Capital common stock and Liberty Interactive common stock. Under Delaware law, absent an abuse of discretion, a director or officer will be deemed to have satisfied his or her fiduciary duties to us and our stockholders if that person is disinterested and acts in accordance with his or her good faith business judgment in our interests and the interests of all of our stockholders as a whole. Our board of directors and chief executive officer, in establishing and applying policies with regard to intra-company matters such as business transactions between or among our three groups and allocation of assets, liabilities, debt, corporate overhead, taxes, interest, corporate opportunities and other matters, will consider various factors and information which could benefit or cause relative detriment to the stockholders of the respective groups and will seek to make determinations which are in our best interests and the best interests of our stockholders as a whole. If and when there are conflicting interests between or among the Entertainment Group, the Capital Group and/or the Interactive Group our directors will use good faith business judgment to resolve such conflicts.

Dividend Policy

        We have not paid cash dividends on Old Liberty Capital common stock or Liberty Interactive common stock and do not anticipate paying cash dividends on Liberty Entertainment common stock, Liberty Capital common stock or Liberty Interactive common stock for the foreseeable future following the reclassification. The payment of dividends in respect of Liberty Entertainment common stock, Liberty Capital common stock and Liberty Interactive common stock is addressed in Article IV, Section A.2.(c) of Annex C.

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Financing Activities

        General.    We will continue to manage most of our financial activities on a centralized basis. These activities include the investment of surplus cash, the issuance and repayment of short-term and long-term debt and the issuance and repurchase of any preferred stock.

        If we transfer cash or other property attributed to one group to either of the other groups, we will account for such transfer as a short term loan unless our board of directors determines that a given transfer (or type of transfer) should be accounted for as a long-term loan, an inter-group interest, as a reduction of an inter-group interest or as a transfer in exchange for cash or other assets. See "—Inter-Group Loans" and "—Inter-Group Interests" below.

        Our board of directors will make these determinations, either in specific instances or by setting applicable policies generally, in the exercise of its informed business judgment. Factors our board of directors may consider in making this determination include:

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the financing needs and objectives of the receiving group;



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the investment objectives of the transferring group;



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the current and projected capital structure of each group;



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the relative levels of internally generated funds of each group; and



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the availability, cost and time associated with alternative financing sources, prevailing interest rates and general economic conditions.

        Our board of directors will make all transfers of material assets from one group to another on a fair value basis for the foregoing purposes, as determined by the board. For accounting purposes, all such assets will be deemed transferred at their carryover basis. To the extent that this amount is different than the fair value of the inter-group loan or inter-group interest created in the transaction, this difference will be recorded as an adjustment to the group equity. No gain or loss will be recognized in the statement of operations information for the groups due to the related party nature of such transactions.

        Inter-Group Loans.    If one group makes a loan to another group, our board of directors will determine the terms of the loan, including the rate at which it will bear interest. Our board of directors will determine the terms of any inter-group loans, either in specific instances or by setting applicable policies generally, in the exercise of its informed business judgment. Factors our board of directors may consider in making this determination include:

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our needs;



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the use of proceeds and creditworthiness of the recipient group;



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the capital expenditure plans of and the investment opportunities available to each group; and



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the availability, cost and time associated with alternative financing sources.

        If an inter-group loan is made, we intend to account for the loan based on its stated terms, and the resulting activity, such as interest amounts, will be recorded in the separate group financial results to be included in our consolidated financial statements but will be eliminated in preparing our consolidated financial statement balances.

        Inter-Group Interests.    An inter-group interest is a quasi-equity interest that one group is deemed to hold in another group. Inter-group interests are not represented by outstanding shares of common stock, rather they have an attributed value which is generally stated in terms of a number of shares of stock attributable to one group issuable with respect to an inter-group interest in another group.

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        An inter-group interest in a group will be created when cash or property is transferred from one group to another group and the board of directors determines that the transfer will not be treated as an inter-group loan or as a transfer in exchange for cash or other assets. Inter-group interests may also be created in the discretion of the board of directors for certain other transactions, such as when funds of one group are used to effect an acquisition made on behalf of another group. Additionally, inter-group interests once created are subject to adjustment for subsequent events. For instance, if the Interactive Group holds an inter-group interest in the Entertainment Group at the time of a transfer of cash or property by the Entertainment Group to the Interactive Group, the board of directors may choose to reduce the Interactive Group's inter-group interest in the Entertainment Group rather than create an inter-group interest in the Interactive Group in favor of the Entertainment Group. Certain extraordinary actions that may be taken under our amended charter may also cause an increase or decrease in one group's inter-group interest in another group. For more information regarding inter-group interests, see the definitions of "Number of Shares Issuable With Respect to the Capital Group Inter-Group Interest," "Number of Shares Issuable With Respect to the Entertainment Group Inter-Group Interest," and "Number of Shares Issuable With Respect to the Interactive Group Inter-Group Interest" in Article IV, Section A.2.(j) of Annex C.

        If an inter-group interest is created, we intend to account for this interest in a manner similar to the equity method of accounting whereby the group holding the inter-group interest would record its proportionate share of such other group's net income or loss. Appropriate eliminating entries would be made in preparing our consolidated financial statement balances.

        Equity Issuance and Repurchases and Dividends.    We will reflect all financial effects of issuances and repurchases of shares relating to any group in its own attributed financial information. We will reflect financial effects of dividends or other distributions on, and purchases of, shares relating to any group in its own attributed financial information.

Inter-Group Contracts

        The terms of all current and future material transactions, relationships and other matters between or among the groups, including those as to which the groups may have potentially divergent interests, will be determined in a manner considered by our board of directors to be in our best interests and the best interests of our stockholders as a whole.

Review of Corporate Opportunities

        In cases where a material corporate opportunity may appropriately be viewed as one that could be pursued by more than one group, our board of directors may, independently or at the request of management, review the allocation of that corporate opportunity to one of, or between or among, such groups. In accordance with Delaware law, our board of directors will make its determination with regard to the allocation of any such opportunity and the benefit of such opportunity in accordance with their good faith business judgment of our best interests and the best interests of our stockholders as a whole. Among the factors that our board of directors may consider in making this allocation is:

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whether a particular corporate opportunity is principally related or complementary to the business focus or strategy of the Entertainment Group, the Capital Group or the Interactive Group;



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whether one group, because of operational expertise, will be better positioned to undertake the corporate opportunity than the other two groups;



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existing contractual agreements and restrictions; and



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the financial resources and capital structure of each group.

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Financial Statements; Allocation Matters

        We will present consolidated financial statements in accordance with generally accepted accounting principles in the U.S., consistently applied. We will also provide consolidating financial statement information that will show the attribution of our assets, liabilities, revenue, expenses and cash flows to each of the Entertainment Group, the Capital Group and the Interactive Group.

        Consolidating financial statement information will also include attributed portions of our debt, interest, corporate overhead and costs of administrative shared services and taxes. We will make these allocations for the purpose of preparing such information; however, holders of Liberty Entertainment common stock, Liberty Capital common stock and Liberty Interactive common stock will continue to be subject to all of the risks associated with an investment in our company and all of our businesses, assets and liabilities.

        In addition to allocating debt and interest as described above, we have adopted certain expense allocation policies, each of which will be reflected in the attributed financial information of the Entertainment Group, the Capital Group and the Interactive Group. In general, corporate overhead will be allocated to each group based upon the use of services by that group where practicable. Corporate overhead includes costs of personnel and employee benefits, legal, accounting and auditing, insurance, investor relations and stockholder services and services related to our board of directors. We will allocate in a similar manner a portion of costs of administrative shared services, such as information technology services. Where determinations based on use alone are not practical, we will use other methods and criteria that we believe are equitable and that provide a reasonable estimate of the cost attributable to each group.

Taxes

        General Policies.    From and after the closing date of the reclassification, taxes and tax benefits will, except as provided below, be shared among the Entertainment Group, the Capital Group and the Interactive Group in accordance with the following tax sharing policies regardless of whether or not the applicable taxes or tax benefits relate to—

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a taxable period (or portion thereof) ending prior to the closing date of the merger transaction which occurred as part of the 2006 restructuring (a Pre-Merger Date Period),



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a taxable period (or portion thereof) beginning on or after the closing date of the merger transaction which occurred as part of the 2006 restructuring and ending prior to the closing date of the reclassification (an Interim Period) or



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a taxable period (or portion thereof) beginning on or after the closing date of the reclassification (a Post-Reclassification Date Period).

        These tax sharing policies may differ from the manner in which taxes and tax benefits of each group are reflected in the financial statements. For financial statement purposes, taxes and tax benefits allocable to each group generally have been and will be accounted for in a manner similar to a stand-alone company basis in accordance with generally accepted accounting principles. Any differences between the tax sharing policies described below and the taxes and tax benefits of each group reported in the financial statements will be reflected in the attributed net assets of the groups for financial statement purposes.

        In general, for purposes of these tax sharing policies, any tax item (including any tax item arising from a disposition) attributable to an asset, liability or other interest tracked by the Liberty Interactive common stock will be allocated to the Interactive Group, any tax item (including any tax item arising from a disposition) attributable to an asset, liability or other interest tracked by the Liberty Capital common stock will be allocated to the Capital Group, and any tax item (including any tax item arising

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from a disposition) attributable to an asset, liability or other interest tracked by the Liberty Entertainment common stock will be allocated to the Entertainment Group. Tax items arising from employee or director compensation or employee benefits will be allocated to the group responsible for the underlying obligation (either through the allocation of the related expenses or through the issuance of stock of that group).

        Nothing in these tax sharing policies is intended to change the amount of taxes and tax benefits that would otherwise have been allocated to the Interactive Group for periods prior to the Post-Reclassification Date Period in the absence of the reclassification.

        Consolidated Income Taxes for Post-Reclassification Date Periods.    To the extent that federal, state, local or foreign income taxes are determined on a basis that includes the operations, assets, liabilities or other tax items of more than one group, income taxes and income tax benefits will be shared among the groups based principally on the taxable income (or loss), tax credits and other tax items directly related to the activities of such group for Post-Reclassification Date Periods. Such allocations will reflect each group's contribution, whether positive or negative, to our consolidated taxable income (or loss), income tax liabilities and tax credit position. Consistent with the general policies described above, income tax benefits that cannot be used by a group generating such benefits, but can be used to reduce the taxable income of the other groups, will be credited to the group that generated such benefits. A corresponding amount will be charged to the group or groups utilizing such benefits, determined on a pro rata basis with respect to taxable income or, where appropriate, other relevant items (e.g., allocation of foreign tax credits will be determined with respect to foreign source income). As a result, under this tax sharing policy, the amount of income taxes allocated to a group or the amount credited to a group for income tax benefits may not necessarily be the same as that which would have been payable or received by the group had that group filed separate income tax returns.

        Consolidated Income Taxes for Interim Periods.    To the extent that federal, state, local or foreign income taxes are determined on a basis that includes the operations, assets, liabilities or other tax items of the Interactive Group and the Old Capital Group, income taxes and income tax benefits will, consistent with the policies described under "—Taxes—Consolidated Income Taxes for Post-Reclassification Date Periods," be allocated to the Interactive Group and nominally to the Old Capital Group based principally on the taxable income (or loss), tax credits and other tax items directly related to the activities of such group for Interim Periods. To the extent that income taxes and income tax benefits nominally allocated to the Old Capital Group are determined on a basis that includes the operations, assets, liabilities or other tax items of both the Capital Group and the Entertainment Group in any Interim Period—

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income taxes and income tax benefits (including benefits received by carrying forward a tax item to a Post-Reclassification Date Period) that are attributable to Starz Entertainment, LLC, FUN Technologies, Inc., GSN, LLC, or any of their respective subsidiaries, our equity interest in WildBlue Communications, Inc., the equity interest in The DirecTV Group, Inc. or the three regional sports networks we will receive if our exchange transaction with News Corporation is completed (other than any income taxes or benefits arising from such exchange transaction) or our publicly traded debt that will be attributed to the Entertainment Group will be the responsibility of, or for the benefit of, the Entertainment Group; and



•

except as described below, all other income taxes and income tax benefits (including benefits received by carrying forward a tax item to a Post-Reclassification Date Period) arising from the tax items of the Old Capital Group that are attributable to any Interim Period will be the responsibility of, or for the benefit of, the Capital Group.

        However, any income tax benefit arising from tax credits or losses generated by the Entertainment Group that are carried back from a Post-Reclassification Date Period to any Interim Period will be for the benefit of the Entertainment Group, and any tax obligations or tax benefits of any entity acquired

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for the Entertainment Group, which relate to any Interim Period, will be allocated to the Entertainment Group.

        Consolidated Income Taxes for Pre-Merger Date Periods.    To the extent that federal, state, local or foreign income taxes are determined on a basis that includes the operations, assets, liabilities or other tax items of both the Old Capital Group and the Interactive Group in any Pre-Merger Date Period—

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income taxes and income tax benefits (including benefits received by carrying forward a tax item to an Interim Period or a Post-Reclassification Date Period) that are attributable to QVC, Inc., Provide Commerce, Inc., BuySeasons, Inc., or interests in Backcountry.com, Inc. or any of their respective subsidiaries will be the responsibility of, or for the benefit of, the Interactive Group;



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income taxes and income tax benefits (including benefits received by carrying forward a tax item to an Interim Period or a Post-Reclassification Date Period) that are attributable to Starz Entertainment, LLC, FUN Technologies, Inc., GSN, LLC, or any of their respective subsidiaries, our equity interest in WildBlue Communications, Inc., the equity interest in The DirecTV Group, Inc. or the three regional sports networks we will receive if our exchange transaction with News Corporation is completed, or our publicly traded debt that will be attributed to the Entertainment Group will be the responsibility of, or for the benefit of, the Entertainment Group; and



•

except as described below, all other income taxes and income tax benefits (including benefits received by carrying forward a tax item to an Interim Period or a Post-Reclassification Date Period) arising from the tax items of each group or our company's (or its predecessor's) affiliated group that are attributable to any Pre-Merger Date Period will be the responsibility of, or for the benefit of, the Capital Group.

        However, any income tax benefit arising from tax credits or losses generated by the Interactive Group or the Entertainment Group that are carried back from any Interim Period or Post-Reclassification Date Period to any Pre-Merger Date Period will be for the benefit of the Interactive Group or the Entertainment Group, respectively, and any tax obligations or tax benefits of any entity acquired for the Interactive Group or the Entertainment Group, which relate to any Pre-Merger Date Period, will be allocated to the Interactive Group or the Entertainment Group, respectively.

        Several Liability for Consolidated Taxes.    Notwithstanding these tax sharing policies, under U.S. treasury regulations, each member of a consolidated group is severally liable for the U.S. federal income tax liability of each other member of the consolidated group. Accordingly, each member of our affiliated group for U.S. federal income tax purposes (whether or not such member is attributed to the Capital Group, the Entertainment Group or the Interactive Group) could be liable to the U.S. government for any U.S. federal income tax liability incurred, but not discharged, by any other member of our affiliated group.

        Non-Income Taxes and Non-Consolidated Income Taxes.    In all periods, if any non-income taxes are determined on a basis that includes the operations, assets, liabilities or other tax items of more than one group in any taxable period, then each group will be responsible for non-income taxes, and will be entitled to any non-income tax benefits, based upon their contribution to the consolidated non-income tax liability (or benefit). Non-income tax benefits that cannot be used by a group generating such benefits, but can be used to reduce taxes of the other groups, will be credited to the group that generated such benefits. A corresponding amount will be charged to the group or groups utilizing such benefits, determined on a pro rata basis with respect to the taxes of each such group.

        Any income or non-income taxes or tax benefits that are determined on a basis that includes only the operations, assets, liabilities or other tax items of one group will be for the account of that group.

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        Tax Liability with Respect to Tracking Stock.    As described further in this proxy statement/prospectus under the heading "Risk Factors—Risks Relating to the Ownership of Our Common Stock due to Our Tracking Stock Capitalization—No IRS ruling has been obtained by us with respect to the tax consequences to you or us of the reclassification," no ruling has been obtained from the IRS with respect to the reclassification, and it is possible that the IRS could assert that the Liberty Interactive common stock, the Liberty Capital common stock, and/or the Liberty Entertainment common stock is not stock of our company for tax purposes. Although we think it is unlikely that the IRS would prevail on that view, if the IRS were successful in such a challenge, we and our subsidiaries would recognize a significant taxable gain as a result of the reclassification and/or the 2006 restructuring, and our subsidiaries attributed to the Interactive Group, the Capital Group and the Entertainment Group may not be able to file, where otherwise permitted, consolidated, combined or unitary tax returns as members of the same affiliated group. The Capital Group will be responsible for any taxes or tax items resulting from the treatment of the Liberty Interactive common stock, the Liberty Capital common stock, and/or the Liberty Entertainment common stock as other than stock of our company, or the actual or deemed disposition of a group or any entity attributed to a group caused by the issuance of the Liberty Interactive common stock, the Liberty Capital common stock and/or the Liberty Entertainment common stock; however, in each case, any tax items resulting from deferred intercompany transactions or excess loss accounts that are triggered thereby and are attributable to the Interactive Group or the Entertainment Group will be allocated to the Interactive Group or the Entertainment Group, respectively.

Description of Liberty Interactive Common Stock Under Our Amended Charter and Comparison to Liberty Interactive Common Stock Under Our Current Charter

        The following is a description of the terms of the Liberty Interactive common stock under our current charter and our amended charter, including a comparison of such terms. The discussion of the terms of our amended charter is qualified by reference to the full text of our amended charter, which is included as Annex C to this proxy statement/prospectus.

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