Liberty Eyeing DT, VUE

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Liberty Media Corp. is making moves to re-enter the German cable market as
part of a consortium of bidders for Deutsche Telekom AG's cable assets.

It's also talking with French media and environmental conglomerate Vivendi
Universal about a possible combination of certain entertainment assets.

Liberty bid on the German cable systems -- with about 3 million subscribers
-- last year, only to be rebuffed by regulators in that country. Now it has
re-entered the fray with private equity firms The Blackstone Group and Apollo
Partners.

According to sources, Liberty is one of at least five other bidders for the
German assets.

Liberty's participation in the bidding is in line with company president Dob
Bennett's comments during the company's second-quarter conference call Aug. 15,
when he said that if Liberty were to bid on the German assets again 'it would be
as part of a consortium and at a lower price.'

Liberty's rejected offer for the German cable properties was about $5.1
billion. Janco Partners Inc. analyst Matt Harrigan estimated that bidding prices
for the German assets have dropped by at least $2 billion.

Sources also confirmed published reports that Liberty was in early
discussions with Vivendi about combining its Starz Encore Group LLC and
Discovery Communications Inc. assets with Vivendi Universal Entertainment, the
U.S. media arm of the French conglomerate.

But sources stressed that no deal is imminent and, given Liberty's track
record of backing out of deals at the last minute, it is possible that
negotiations with Vivendi could fall apart, as well.

Sources said that for now, the deal on the table would combine the assets and
spin them off in a separate, publicly traded company. Vivendi -- strapped for
cash to help pay off its $19 billion in debt -- would own 51 percent of the new
enterprise.

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