Liberty Revives Ascent Entertainment Buyout

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The on-again, off-again relationship between Ascent
Entertainment Group Inc. and Liberty Media Group is on again.

Liberty -- which had agreed to purchase Ascent in November
for about $514 million in stock, only to cancel the deal after problems arose in a
separate arrangement to sell Ascent's sports assets -- came back to the bargaining
table last week, agreeing to purchase Ascent for $15.25 per share.

Given Ascent's 30 million outstanding shares, the cash
portion of the deal is worth about $460 million. Liberty has also agreed to assume
Ascent's debt, upping the purchase price to about $755 million.

The deal is expected to close in the second quarter.

Liberty chairman John Malone's deal to buy Ascent last
year was scuttled after plans to sell Ascent's sports assets to Denver billionaire
Donald Sturm fell through. The original deal did not include the sports teams -- the
National Basketball Association's Denver Nuggets and National Hockey League's
Colorado Avalanche.

For AT&T Corp. programming arm Liberty, the key asset
in the deal is On Command Corp., which owns hotel pay-per-view service SpectraVision.
SpectraVision reaches about 1 million hotel rooms across the country, including those in
major chains such as Marriott International Inc. and Four Seasons Hotels and Resorts.

"Given our extensive relationships in video
programming, interactive television and high-speed-data services, the acquisition of On
Command will position us perfectly to offer even better and more comprehensive services
for business and recreational travelers," Liberty executive vice president Gary
Howard said in a statement.

According to the most recent agreement, Liberty will get
the sports teams. But Liberty is actively seeking a buyer for them. Also included in the
deal is the Pepsi Center, the 19,000-seat arena where both teams play.

"These are two very different transactions,"
Ascent spokesman Arthur Aaron said. "Ascent is at a different place now. Certainly,
[the most recent deal] is a lower value than if we were able to consummate the transaction
we had on the table last year."

That earlier deal involved Liberty paying about $17.60 each
for Ascent shares, but it did not include assumed debt.

The sports teams could attract a hefty price. Before the
Sturm deal was scrapped when the city of Denver insisted that he and his heirs commit to
keep the teams there for 25 years, Sturm had agreed to pay $461 million for those assets.

Janco Partners analyst Ted Henderson said it was unlikely
that the teams would attract that price, speculating that they are probably worth about
$400 million.

Liberty will also have to spend some money upgrading
SpectraVision equipment to on-demand service, which allows customers to view movies
whenever they want, as opposed to only during scheduled times. Henderson said this was
also most likely factored into the purchase price.

Aaron said that once the first deal with Liberty was
canceled, negotiations broke off. The current deal was a result of recently restarted
discussions between the two companies.

Henderson said Liberty probably has a buyer for the teams
in mind, but he would not speculate on who that could be. He added that the fact that
Liberty still wanted to do the deal shows that the company is very high on the potential
of the lodging industry for new services.

"This is a fairly strong indication of Liberty's
sense about the demographics in hotel rooms," Henderson said. "Those eyeballs
are being underutilized."

Although the focus so far has been on selling movies in
hotel rooms, Henderson added that Liberty, with its vast content assets, is likely looking
toward a day when hotel guests are able to get a whole host of bundled services.

The hotel audience could also prove attractive as a test
bed for new services. "It's a great demographic proving ground," Henderson
said. "They can help to brand an online service with that demographic as the
residential pipes are beginning to launch."

In an unrelated deal, Liberty agreed to purchase a 19.9
percent stake in Canadian radio and television company Corus Entertainment Inc. for about
$137 million.

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