Liberty Dips Into Satellite, Postproduction

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Liberty Media Group closed two deals last week that expand
its reach in the television-postproduction and satellite-communications industries.

As expected, the programming arm of AT&T Corp. closed
its $425 million investment in satellite-communications-provider Astrolink LLC. Astrolink,
based in Bethesda, Md., plans to launch its first Ka-band satellite in 2002, followed by
the launch of three additional birds at six-month intervals.

Astrolink said the first two satellites will provide
broadband-data services to customers in North and South America, Europe and the Middle
East. The third and fourth will extend the network worldwide.

As a result of the investment, Liberty becomes Astrolink's
largest shareholder, with 31.6 percent of the company's outstanding shares.

Other investors in the company -- which was formed just
three months ago -- include Lockheed Martin Global Telecommunications (31.2 percent);
Telespazio, a unit of Telecom Italia SpA (18.6 percent); and TRW Inc. (18.6 percent). The
Liberty Media investment increases Astrolink's funding commitments to $1.3 billion.

Liberty, which is chaired by John Malone, has been on a bit
of a broadband-diversification kick. Its recent large noncable deals include its $3
billion acquisition of The Associated Group Inc., mainly to get that company's 40 percent
stake in Teligent Inc., which provides big wireless links to businesses.

Liberty also announced that it has decided to acquire Los
Angeles-based television-postproduction company The Todd-AO Corp. outright. In July
Liberty agreed to buy 57 percent of Todd-AO's equity and 82 percent of its voting shares.
The most recent agreement, which should be closed in the second quarter, supercedes the
earlier agreement.

Two of Todd-AO's largest shareholders -- Robert and
Marshall Naify, who collectively own about 40 percent of the company's stock and more than
70 percent of its voting power -- have already agreed to vote their shares in favor of the
Liberty merger.

As part of the new agreement, Todd-AO shareholders would
control 40 percent of the company's outstanding equity and 6 percent of its voting power.

The agreement provides for a reclassification of the
existing Todd-AO common stock, followed immediately by a merger. In the reclassification,
each share of existing Todd-AO class-A and class-B common stock will be converted into 0.4
shares of Todd-AO new class-A common stock and 0.6 shares of Todd-AO new class-B common
stock. The reclassification shall apply pro rata to all of the existing common stock of
Todd-AO, regardless of class.

In the second stage of the transaction, Todd-AO will be
merged with a newly formed entity, with Todd-AO as the surviving corporation. In that
merger, new class-A shares will remain outstanding as publicly traded common stock of
Todd-AO. Todd-AO class-B shareholders will receive one share of Liberty class A for every
2.4 shares of new Todd-AO class-B shares.

At the conclusion of this transaction, Liberty will own 100
percent of the new class-B shares, representing 60 percent of the outstanding equity and
94 percent of the outstanding voting power of Todd-AO.

Based on Liberty's closing price of $46 per share Dec. 10
and Todd-AO's closing price of $25, the transaction values Todd-AO stock at about $21.50
per share. Liberty shares closed at $46.63, down 50 cents, Dec. 15. Todd-AO shares closed
at $25.69, up 88 cents, that same day.

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