PPV Deal Craters Over Team Sale

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Ascent Entertainment Group Inc.'s inability to
finalize a deal to sell its sports teams to a Denver billionaire has brought an end to a
separate $514 million acquisition of On Command Corp. — its hotel-based pay-per-view
cable service — by Liberty Media.

Liberty cut a deal in October to buy On Command for stock.
But that transaction was predicated on Ascent finalizing an earlier deal with Denver
banker Donald Sturm, who had agreed to pay $461 million for its two sports teams —
the National Hockey League's Colorado Avalanche and the National Basketball
Association's Denver Nuggets — as well as the arena they play in.

In a prepared statement, Ascent said it had given Sturm a
Dec. 1 deadline to reach an agreement with the city. In that same statement, Ascent said
the Liberty deal was terminated.

"If The Sturm Group and the city of Denver are unable
to reach an agreement and Ascent terminates its agreement with The Sturm Group, Ascent
will consider all of its alternatives, including commencing litigation against The Sturm
Group and Donald Sturm, personally, as a result of their actions in connection with the
proposed transactions," Ascent said.

The deal appeared headed toward a Nov. 10 closing deadline,
but that date was missed after Sturm hedged on a commitment to keep the teams in Denver
for at least 25 years.

That stipulation stems from a tax break the city agreed to
give Ascent when it began building the arena — called the Pepsi Center — in
1997. The facility opened in October.

Because Sturm is an individual and not a corporation, the
city wanted some guarantee that the 67-year-old businessman's heirs would agree to
keep the teams in Denver in the event of his death. So far, Sturm has refused.

There is still an outside chance that the On Command deal
could be revived, should Sturm and the city reach agreement on the arena. But given the
drawn-out history of negotiations between the two parties, at this point a compromise
appears unlikely.

With the On Command purchase on hold, Liberty could be on
the prowl for other hospitality-based pay-per-view providers.

The most likely candidate is the only other major player in
the hospitality pay-per-view space — publicly traded LodgeNet Entertainment Corp.

LodgeNet's stock was unaffected by the Liberty deal,
and was trading at $17.50 a share in after noon trading Nov. 30, down 13 cents each.

"Liberty clearly tipped its hand that it was
interested in this space," said Janco Partners analyst Ted Henderson. "There are
two major players in the space — On Command and LodgeNet."

Henderson would not speculate if Liberty would set its
sights on LodgeNet.

Sturm won the bidding for the teams in April, after a $400
million bid by Bill and Nancy Laurie was rejected by Ascent shareholders as being low.
Bill Laurie is a well-known horse breeder whose 200-acre Crown Center Farms in Columbia,
Mo., produces national and world champions. His wife is the daughter of Wal-Mart Stores
Inc. co-founder James Walton and the niece of retail icon Sam Walton.

The only other bidder for the teams turned out to be a
self-described Saudi princess named Thara Saud, whose bid fell $450 million of
Sturm's.

Even if the Ascent deal falls through, Liberty shareholders
should be happy with the company's actions, said Henderson.

"If you are a Liberty shareholder, this is what you
want to see," he said. "This indicates that Liberty doesn't sit around
waiting for things to happen."

Officials at Liberty Media could not be reached for
comment.

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