"LIBERTY MEDIA GROUP"
             (a combination of certain assets, as defined in note 1)


                             Combined Balance Sheets

                                   (unaudited)

                                             September 30,        December 31,
                                                 2000                 1999
                                             -------------       --------------
Assets                                              amounts in millions
------

Current assets:

   Cash and cash equivalents                   $     1,223                1,714

   Cash collateral under securities lending
     agreement (note 7)                                208                   --

   Short-term investments                              461                  378

   Trade and other receivables, net                    330                  134

   Prepaid expenses and committed program rights       501                  406

   Deferred income tax assets                          496                  750

   Other current assets                                 22                    5
                                               -----------          ------------
         Total current assets                        3,241                3,387
                                               -----------          ------------

Investments in affiliates, accounted for under the
  equity method, and related receivables
  (notes 3 and 4)                                   20,679               15,922

Investments in available-for-sale securities and
  others (notes 5, 6 and 7)                         26,063               28,601

Property and equipment, at cost                        828                  162
   Less accumulated depreciation                        91                   19
                                               -----------          ------------
                                                       737                  143
                                               -----------          ------------
Intangible assets:
   Excess cost over acquired net assets (note 6)    11,101                9,973
   Franchise costs                                     190                  273
                                               -----------          ------------
                                                    11,291               10,246
   Less accumulated amortization                       882                  454
                                               -----------          ------------
                                                    10,409                9,792
                                               -----------          ------------
Other assets, at cost, net of accumulated
  amortization                                         719                  839
                                               -----------          ------------
         Total assets                          $    61,848               58,684
                                               ===========          ============

                                   (continued)

<PAGE>

                             Combined Balance Sheets
                                   (unaudited)

                                             September 30,        December 31,
                                                 2000                 1999
                                             -------------       --------------
Liabilities and Combined Equity                     amounts in millions
-------------------------------

Current liabilities:

   Accounts payable and accrued liabilities    $       382                  245

   Accrued stock compensation                        1,706                2,405

   Program rights payable                              179                  166

   Current portion of debt                             237                  554
                                               -----------       --------------
        Total current liabilities                    2,504                3,370
                                               -----------       --------------

Long-term debt (note 7)                              5,632                2,723

Deferred income tax liabilities                     14,120               14,107

Other liabilities                                       74                   23
                                               -----------       --------------
        Total liabilities                           22,330               20,223
                                               -----------       --------------

Minority interests in equity of attributed
  subsidiaries                                         252                    1

Obligation to redeem AT&T Class A Liberty Media
  Group common stock (note 8)                           37                   --

Combined equity (note 8):

   Combined equity                                  36,048               31,876
   Accumulated other comprehensive earnings,
     net of taxes                                    3,060                6,557
                                               -----------       --------------
                                                    39,108               38,433
   Due to related parties                              121                   27
                                               -----------       --------------
     Total combined equity                          39,229               38,460
                                               -----------       --------------

Commitments and contingencies (note 9)

        Total liabilities and combined equity  $    61,848               58,684
                                               ===========       ==============

See accompanying notes to combined financial statements.

<PAGE>

          Combined Statements of Operations and Comprehensive Earnings

                                   (unaudited)

                                           Three months           Three months
                                              ended                  ended
                                           September 30,          September 30,
                                               2000                   1999
                                           -------------          -------------
                                                   amounts in millions

Revenue                                      $     436                    214

Operating costs and expenses:
   Operating, selling, general and
      administrative                               336                    168
   Stock compensation                             (248)                   (23)
   Depreciation and amortization                   201                    164
                                           -------------          -------------
                                                   289                    309
                                           -------------          -------------
     Operating income (loss)                       147                    (95)

Other income (expense):
   Interest expense                               (101)                   (41)
   Adjustment to interest expense for
     contingent portion of exchangeable
     debentures (note 7)                           317                     --
   Dividend and interest income                     53                     66
   Share of losses of affiliates, net
     (note 3)                                     (490)                  (238)
   Impairment of investments (note 4)           (1,350)                    --
   Minority interests in losses of
     attributed subsidiaries                        17                      3
   Gain on dispositions, net (note 3)            4,395                     12
   Unrealized losses on financial
     instruments, net                              (77)                    --
   Other, net                                       (5)                    (4)
                                           -------------          -------------
                                                  2,759                   (202)
                                           -------------          -------------
     Earnings (loss) before income taxes          2,906                   (297)

Income tax (expense) benefit                     (1,150)                    80
                                           -------------          -------------
     Net earnings (loss)                   $      1,756                   (217)
                                           -------------          -------------
Other comprehensive (loss) earnings,
  net of taxes:
   Foreign currency translation adjustments         (75)                   131
   Unrealized holding (losses) gains arising
     during the period, net of
     reclassification adjustments                (1,861)                   308
                                           -------------          -------------
   Other comprehensive (loss) earnings           (1,936)                   439
                                           -------------          -------------
Comprehensive (loss) earnings              $       (180)                   222
                                           =============          =============

See accompanying notes to combined financial statements.
<PAGE>
<TABLE>
<CAPTION>
                              Combined Statements of Operations and Comprehensive Earnings

                                                       (unaudited)

                                                                          New Liberty                            Old Liberty
                                                        -----------------------------------------------     ---------------------
                                                                            (note 1)                               (note 1)
                                                              Nine months             Seven months                Two months
                                                                 ended                    ended                      ended
                                                              September 30,           September 30,               February 28,
                                                                  2000                     1999                       1999
                                                        ----------------------   ----------------------     ---------------------
                                                                                   amounts in millions
<S>                                                        <C>                           <C>                          <C>
Revenue                                                    $     1,053                      506                        282

Operating costs and expenses:
   Operating, selling, general and administrative                  805                      408                        227
   Stock compensation                                             (487)                     432                        183
   Depreciation and amortization                                   604                      394                         47
                                                              ----------------         ----------------     ---------------------
                                                                   922                    1,234                        457
                                                              ----------------         ----------------     ---------------------
        Operating income (loss)                                    131                     (728)                      (175)

Other income (expense):
   Interest expense                                               (276)                     (87)                       (28)
   Adjustment to interest expense for contingent portion
     of exchangeable debentures (note 7)                           153                       --                         --
   Dividend and interest income                                    218                      172                         12
   Share of losses of affiliates, net (note 3)                  (1,284)                    (597)                       (66)
   Impairment of investments (note 4)                           (1,350)                      --                         --
   Minority interests in losses of attributed subsidiaries          45                       15                          4
   Gain on dispositions, net (notes 3, 5 and 6)                  7,450                       10                         14
   Gains on issuance of equity by affiliates and
      subsidiaries (note 3)                                         --                       --                        389
   Unrealized losses on financial instruments, net                 (77)                      --                         --
   Other, net                                                        2                       (8)                        --
                                                              ----------------         ----------------     ---------------------
                                                                 4,881                     (495)                       325
                                                              ----------------         ----------------     ---------------------
        Earnings (loss) before income taxes                      5,012                   (1,223)                       150

Income tax (expense) benefit                                    (2,047)                     405                       (209)
                                                              ----------------         ----------------     ---------------------
        Net earnings (loss)                               $      2,965                     (818)                       (59)
                                                              ----------------         ----------------     ---------------------
Other comprehensive (loss) earnings, net of taxes:
   Foreign currency translation adjustments                       (193)                      88                        (15)
   Unrealized holding (losses) gains arising during the
      period, net of reclassification adjustments               (3,304)                   2,320                        971
                                                              ----------------         ----------------     ---------------------
   Other comprehensive (loss) earnings                          (3,497)                   2,408                        956
                                                              ----------------         ----------------     ---------------------
Comprehensive (loss) earnings                             $       (532)                   1,590                        897
                                                              ================         ================     =====================
See accompanying notes to combined financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                  "LIBERTY MEDIA GROUP"

                                 (a combination of certain assets, as defined in note 1)

                                              Combined Statement of Equity

                                          Nine months ended September 30, 2000

                                                       (unaudited)


                                                                                    Accumulated
                                                                                       other
                                                                                   comprehensive         Due to           Total
                                                                 Combined            earnings,           related        combined
                                                                  equity           net of taxes          parties         equity
                                                              -------------     ------------------   -------------   ----------
                                                                                       amounts in millions
<S>                                                           <C>                         <C>                 <C>           <C>
Balance at January 1, 2000                                    $      31,876                6,557               27           38,460
   Net earnings                                                       2,965                   --               --            2,965
   Issuance of AT&T Class A Liberty Media Group common stock
     for acquisitions (note 6)                                        1,031                   --               --            1,031
   Issuances of common stock by attributed subsidiaries and
     affiliates, net of taxes                                           322                   --               --              322
   Purchase of AT&T Class A Liberty Media Group common stock           (112)                  --               --             (112)
   Premium received in connection with put obligation, net                7                   --               --                7
   Reclassification  of  redemption  amount of AT&T Class A
     Liberty  Media Group common stock subject to put obligation        (37)                  --               --              (37)
   Utilization of net operating losses of Liberty Media Group
     by AT&T                                                             (4)                  --               --               (4)
   Foreign currency translation adjustments                              --                 (193)              --             (193)
   Recognition of previously unrealized gains on
     available-for-sale securities, net                                  --               (1,479)              --           (1,479)
   Unrealized losses on available-for-sale securities                    --               (1,825)              --           (1,825)
   Other transfers from related parties, net                             --                   --               94               94
                                                              -------------     ----------------      -----------    -------------
Balance at September 30, 2000                                 $      36,048                3,060              121           39,229
                                                              =============     ================      ===========    =============

See accompanying notes to combined financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                  "LIBERTY MEDIA GROUP"
                                 (a combination of certain assets, as defined in note 1)

                                            Combined Statements of Cash Flows
                                                       (unaudited)
                                                                           New Liberty                           Old Liberty
                                                        -----------------------------------------------     ---------------------
                                                                            (note 1)                               (note 1)
                                                              Nine months             Seven months                Two months
                                                                 ended                    ended                      ended
                                                             September 30,            September 30,              February 28,
                                                                 2000                     1999                       1999
                                                        ----------------------   ----------------------     ---------------------
                                                                                   amounts in millions
                                                                                       (see note 2)
<S>                                                        <C>                             <C>                          <C>
Cash flows from operating activities:
  Net earnings (loss)                                      $       2,965                     (818)                       (59)
   Adjustments to reconcile net earnings (loss) to net
     cash (used) provided by operating activities:
        Depreciation and amortization                                604                      394                         47
        Stock compensation                                          (487)                     432                        183
        Payments of stock compensation                              (292)                     (42)                      (126)
        Share of losses of affiliates, net                         1,284                      597                         66
        Deferred income tax expense (benefit)                      2,092                     (356)                       205
        Intergroup tax allocation                                    (44)                     (49)                        --
        Cash payment from AT&T pursuant to tax sharing agreement     138                       19                         --
        Minority interests in losses of attributed subsidiaries      (45)                     (15)                        (4)
        Gain on disposition of assets, net                        (7,450)                     (10)                       (14)
        Impairment of investments                                  1,350                       --                         --
        Gains on issuance of equity by affiliates and subsidiaries    --                       --                       (389)
        Noncash interest                                            (143)                      --                         --
        Other noncash charges                                         --                        6                          9
        Changes in operating assets and liabilities, net of
          the effect of acquisitions and dispositions:
             Change in receivables                                   (55)                      (3)                       (19)
             Change in prepaid expenses and committed
               program rights                                       (109)                    (120)                       (10)
             Change in payables and accruals                          39                       70                          4
                                                        -----------------        -----------------          -----------------
                 Net cash (used) provided by operating
                    activities                                      (153)                     105                       (107)
                                                        -----------------        -----------------          -----------------
Cash flows from investing activities:
   Cash paid for acquisitions                                       (669)                      (3)                        --
   Capital expended for property and equipment                      (130)                     (28)                       (21)
   Investments in and loans to affiliates and others              (2,496)                  (1,952)                       (45)
   Purchases of marketable securities                               (832)                  (6,894)                      (132)
   Sales and maturities of marketable securities                   1,720                    3,923                         34
   Cash proceeds from dispositions                                   372                       90                         43
   Cash balances of deconsolidated subsidiaries                       --                       --                        (53)
   Other, net                                                          4                        1                         (9)
                                                        -----------------        -----------------          -----------------
                 Net cash used by investing activities            (2,031)                  (4,863)                      (183)
                                                        -----------------        -----------------          -----------------

                                                       (continued)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                     Combined Statements of Cash Flows, continued

                                                       (unaudited)

                                                                           New Liberty                           Old Liberty
                                                        -----------------------------------------------     ---------------------
                                                                             (note 1)                              (note 1)
                                                              Nine months             Seven months                Two months
                                                                 ended                    ended                      ended
                                                             September 30,            September 30,              February 28,
                                                                 2000                     1999                       1999
                                                        ----------------------   ----------------------     ---------------------
                                                                                   amounts in millions
                                                                                       (see note 2)
<S>                                                         <C>                             <C>                          <C>
Cash flows from financing activities:
   Borrowings of debt                                               3,620                    2,216                        156
   Repayments of debt                                              (1,768)                  (2,166)                      (148)
   Premium received on put contracts, net                               7                       --                         --
   Purchase of AT&T Class A Liberty Media Group common stock         (112)                      --                         --
   Cash transfers (to) from related parties                           (59)                    (156)                       132
   Net proceeds from issuance of stock by subsidiaries                 33                       27                         --
   Repurchase of stock of subsidiaries                                 --                       --                        (45)
   Other, net                                                         (28)                      17                         (1)
                                                             -----------------        -----------------     ---------------------
        Net cash provided (used) by financing activities            1,693                      (62)                        94
                                                             -----------------        -----------------     ---------------------
             Net decrease in cash and cash equivalents               (491)                  (4,820)                      (196)
             Cash and cash equivalents at beginning
               of period                                            1,714                    5,319                        407
                                                             -----------------        -----------------     ---------------------
             Cash and cash equivalents at end of period     $       1,223                      499                        211
                                                             =================        =================     =====================

See accompanying notes to combined financial statements.
</TABLE>
<PAGE>





                              "LIBERTY MEDIA GROUP"
             (a combination of certain assets, as defined in note 1)

                     Notes to Combined Financial Statements

                               September 30, 2000

                                   (unaudited)

(1)      Basis of Presentation

         The accompanying  combined financial statements include the accounts of
         the subsidiaries and assets of AT&T Corp.  ("AT&T") that are attributed
         to Liberty  Media  Group,  as  defined  below.  On March 9, 1999,  AT&T
         acquired  Tele-Communications,  Inc.  ("TCI"),  the former owner of the
         assets attributed to Liberty Media Group, in a merger  transaction (the
         "AT&T  Merger").  The AT&T  Merger  has been  accounted  for  using the
         purchase  method.  Accordingly,  assets and  liabilities  attributed to
         Liberty Media Group have been recorded at their  respective fair market
         values  therefor,  creating a new cost basis.  For financial  reporting
         purposes  the AT&T Merger and related  restructuring  transactions  are
         deemed to have  occurred  on March 1, 1999.  Accordingly,  for  periods
         prior to March 1, 1999 the assets and liabilities attributed to Liberty
         Media Group and the related combined financial statements are sometimes
         referred  to herein as "Old  Liberty",  and for periods  subsequent  to
         February  28,  1999 the assets and  liabilities  attributed  to Liberty
         Media Group and the related combined financial statements are sometimes
         referred to herein as "New  Liberty".  The "Company" and "Liberty Media
         Group" refer to both New Liberty and Old Liberty.  For  convenience  of
         discussion,  assets and properties  acquired,  owned, or disposed of by
         subsidiaries  of AT&T that are  attributed  to Liberty  Media Group are
         referred to herein as being  acquired,  owned or disposed of by Liberty
         Media Group.

         At September 30, 2000, Liberty Media Group consisted principally of the
         following:

         o    AT&T's assets and businesses  which provide  programming  services
              including  production,  acquisition and  distribution  through all
              available formats and media of branded entertainment,  educational
              and informational  programming and software,  including multimedia
              products;

         o    AT&T's  assets and  businesses  engaged in  electronic  retailing,
              direct  marketing,   advertising  sales  relating  to  programming
              services, infomercials and transaction processing;

         o    certain of AT&T's interests in technology and Internet businesses;

         o    certain of AT&T's assets and businesses engaged in international
              cable, telephony and programming businesses; and,

         o AT&T's  holdings in a class of tracking  stock of  Sprint Corporation
           (the "Sprint PCS Group Stock").

         All  significant  intercompany  accounts  and  transactions  have  been
         eliminated.  The combined  financial  statements of Liberty Media Group
         are presented for purposes of additional  analysis of the  consolidated
         financial  statements  of AT&T and should be read in  conjunction  with
         such consolidated financial statements.

                                   (continued)

<PAGE>

         The accompanying  interim combined  financial  statements are unaudited
         but, in the opinion of management,  reflect all adjustments (consisting
         of normal recurring  accruals) necessary for a fair presentation of the
         results for such  periods.  The results of  operations  for any interim
         period are not  necessarily  indicative  of results  for the full year.
         These  combined  financial  statements of Liberty Media Group should be
         read in conjunction  with the combined  financial  statements and notes
         thereto  included  as an exhibit to AT&T's  Report on Form 10-K for the
         year ended December 31, 1999.

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities  at the date of the financial  statements  and the reported
         amounts of revenue and expenses  during the  reporting  period.  Actual
         results could differ from those estimates.

         Certain prior period amounts have been  reclassified for  comparability
         with the 2000 presentation.

(2)      Supplemental Disclosures to Combined Statements of Cash Flows

         Cash paid for  interest  was $262  million  for the nine  months  ended
         September  30,  2000,  $75  million for the seven  month  period  ended
         September  30,  1999 and $32  million  for the two month  period  ended
         February 28, 1999. Cash paid for income taxes for the nine months ended
         September 30, 2000,  the seven months ended  September 30, 1999 and the
         two months ended February 28, 1999 was not significant.
<TABLE>
<CAPTION>
                                                                  New Liberty                     Old Liberty
                                                   -----------------------------------------   -----------------
                                                                    (note 1)                        (note 1)
                                                        Nine months         Seven months           Two months
                                                           ended                ended                 ended
                                                       September 30,        September 30,          February 28,
                                                           2000                 1999                  1999
                                                   --------------------  -------------------   -----------------
                                                                         amounts in millions
         <S>                                       <C>                               <C>                  <C>
         Cash paid for acquisitions (note 6):
                Fair value of assets acquired      $         3,612                    5                   --
                Net liabilities assumed                     (1,120)                  (2)                  --
                Deferred tax liability recorded               (322)                  --                   --
                Minority interests in equity of
                   acquired attributed subsidiaries           (470)                  --                   --
                AT&T Class A Liberty Media Group
                   common stock issued                      (1,031)                  --                   --
                                                   --------------------  -------------------   -----------------
                Cash paid for acquisitions
                                                   $           669                    3                   --
                                                   ====================  ===================   =================

                                                       (continued)
</TABLE>
<PAGE>


         The following  table  reflects the change in cash and cash  equivalents
         resulting from the AT&T Merger and related  restructuring  transactions
         (amounts in millions):

         Cash and cash equivalents prior to the AT&T Merger        $       211
             Cash received in restructuring transactions,
               net of cash balances transferred                          5,284
         Cash paid to TCI Group for certain warrants (note 5)             (176)
                                                                   -----------
         Cash and cash equivalents subsequent to the AT&T Merger   $     5,319

         Liberty  Media Group ceased to include TV Guide,  Inc.  ("TV Guide") in
         its combined  financial results and began to account for TV Guide using
         the equity method of accounting,  effective March 1, 1999 (see note 3).
         The effect of  changing  the method of  accounting  for  Liberty  Media
         Group's ownership interest in TV Guide from the consolidation method to
         the equity method is summarized below (amounts in millions):

         Assets (other than cash and cash equivalents)
           reclassified to investments in affiliates               $      (200)
         Liabilities reclassified to investments in affiliates             190
         Minority interests in equity of attributed subsidiaries
           reclassified to investments in affiliates                        63
                                                                   -----------
         Decrease in cash and cash equivalents                     $        53
                                                                   ===========

(3)      Investments in Affiliates Accounted for under the Equity Method

         Liberty  Media Group has various  investments  accounted  for under the
         equity  method.  The  following  table  includes  Liberty Media Group's
         carrying amount of the more significant investments in affiliates:
<TABLE>
<CAPTION>
                                                                September 30,               December 31,
                                                                    2000                        1999
                                                        --------------------------  -------------------------
                                                                          amounts in millions
         <S>                                                 <C>                                 <C>
         Gemstar-TV Guide International, Inc. ("Gemstar")    $        6,030                          --
         Discovery Communications, Inc. ("Discovery")                 3,222                       3,441
         Telewest Communications plc ( "Telewest ")                   2,869                       1,996
         USA Networks, Inc. ( "USAI ") and related
             investments                                              2,847                       2,699
         QVC Inc. ( "QVC ")                                           2,515                       2,515
         UnitedGlobalCom, Inc. ("UnitedGlobalCom")                      402                         505
         Teligent, Inc. ( "Teligent")                                   249                          --
         TV Guide                                                        --                       1,732
         Various foreign equity investments (other than
             Telewest)                                                1,648                       2,190
         Other                                                          897                         844
                                                        -------------------         -------------------
                                                             $       20,679                      15,922
                                                        ===================         ===================

                                                       (continued)
</TABLE>
<PAGE>

         The following  table  reflects  Liberty Media Group's share of (losses)
earnings of affiliates:
<TABLE>
<CAPTION>
                                                                New Liberty                       Old Liberty
                                               ------------------------------------------   -----------------
                                                                 (note 1)                          (note 1)
                                                    Nine months           Seven months            Two months
                                                       ended                  ended                  ended
                                                   September 30,          September 30,          February 28,
                                                       2000                   1999                   1999
                                               ---------------------   -------------------  -----------------
                                                                       amounts in millions
         <S>                                      <C>                            <C>                     <C>
         Gemstar                                  $         (71)                   --                     --
         Discovery                                         (219)                 (154)                    (8)
         Telewest                                          (262)                 (154)                   (38)
         USAI and related investments                       (18)                  (13)                    10
         QVC                                                 --                   (17)                    13
         UnitedGlobalCom                                   (132)                   --                     --
         Teligent                                          (267)                   --                     --
         TV Guide                                           (25)                  (24)                    --
         Other foreign investments                         (219)                 (123)                   (27)
         Other                                              (71)                 (112)                   (16)
                                             ------------------      ----------------     ------------------
                                                  $      (1,284)                 (597)                   (66)
                                             ==================      ================     ==================
</TABLE>

         Summarized  unaudited combined financial  information for affiliates is
as follows:
<TABLE>
<CAPTION>
                                                    Nine months           Seven months            Two months
                                                       ended                  ended                  ended
                                                   September 30,          September 30,          February 28,
                                                       2000                   1999                   1999
                                               ---------------------   -------------------   ------------------
                                                                       amounts in millions
              <S>                               <C>                            <C>                  <C>
              Revenue                           $     11,557                    6,947                2,341
              Operating expenses                     (10,552)                  (5,901)              (1,894)
              Depreciation and amortization           (2,346)                    (929)                (353)
                                               ---------------         ----------------      ---------------
                  Operating income (loss)             (1,341)                     117                   94
              Interest expense                        (1,542)                    (558)                (281)
              Other, net                                 154                     (322)                (127)
                                               ---------------         ----------------      ---------------
                  Net loss                      $     (2,729)                    (763)                (314)
                                               ===============         ================      ===============

                                                       (continued)
</TABLE>
<PAGE>

         On March 1, 1999,  United Video Satellite Group,  Inc. ("UVSG") and The
         News Corporation Limited ("News Corp.") completed a transaction whereby
         UVSG  acquired  News  Corp.'s TV Guide  properties,  creating a broader
         platform  for  offering  television  guide  services to  consumers  and
         advertisers,  and UVSG was renamed TV Guide. News Corp.  received total
         consideration  of $1.9  billion  including  $800  million  in cash,  45
         million shares of TV Guide's Class A common stock and 75 million shares
         of TV Guide's  Class B common  stock valued at an average of $9.325 per
         share.  In  addition,  News Corp.  purchased  approximately  13 million
         additional  shares of TV Guide's  Class A common stock for $129 million
         in order to equalize its ownership with that of Liberty Media Group. As
         a result of these transactions,  and another  transaction  completed on
         the same date,  News Corp,  Liberty  Media Group and TV Guide's  public
         stockholders owned on an economic basis approximately 44%, 44% and 12%,
         respectively,  of TV Guide.  Immediately  following such  transactions,
         News Corp.  and Liberty Media Group each had  approximately  49% of the
         voting power of TV Guide's  outstanding  stock.  In connection with the
         increase in TV Guide's equity, net of dilution of Liberty Media Group's
         ownership  interest in TV Guide,  Liberty Media Group recognized a gain
         of  $372  million  (before  deducting  deferred  income  taxes  of $147
         million).

         On July 12,  2000,  TV Guide and  Gemstar  completed  a merger  whereby
         Gemstar acquired TV Guide. TV Guide shareholders  received .6573 shares
         of Gemstar  common stock in exchange  for each share of TV Guide.  As a
         result of this  transaction,  133  million  shares of TV Guide  held by
         Liberty Media Group were  exchanged for 87.5 million  shares of Gemstar
         common  stock.   Following   the  merger,   Liberty  Media  Group  owns
         approximately  21.4% of Gemstar.  Liberty Media Group recognized a $4.4
         billion gain (before  deducting  deferred income taxes of $1.7 billion)
         on such  transaction  during  the third  quarter  of 2000  based on the
         difference between the carrying value of Liberty Media Group's interest
         in TV Guide and the fair value of the Gemstar securities received.

         Gemstar is a leading  global  technology  and media company  focused on
         consumer entertainment. The common stock of Gemstar is publicly traded.
         At September 30, 2000,  Liberty Media Group held 87.5 million shares of
         Gemstar  common  stock.  Gemstar's  stock  reported a closing  price of
         $87-3/16 per share on September 30, 2000.

         Telewest   currently  operates  and  constructs  cable  television  and
         telephone systems in the UK. Flextech p.l.c.  ("Flextech") develops and
         sells a variety of  television  programming  in the UK. In April  2000,
         Telewest acquired Flextech in a merger  transaction.  As a result, each
         share of Flextech was exchanged for 3.78 new Telewest shares.  Prior to
         the  acquisition,  Liberty Media Group owned an approximate  37% equity
         interest in Flextech and a 22% equity interest in Telewest. As a result
         of the acquisition, Liberty Media Group has an approximate 24.6% equity
         interest in  Telewest.  Liberty  Media Group  recognized a $649 million
         gain (excluding related tax expense of $227 million) on the acquisition
         during the second quarter of 2000 based on the  difference  between the
         carrying  value of Liberty Media  Group's  interest in Flextech and the
         fair value of the Telewest  shares  received.  At  September  30, 2000,
         Liberty  Media  Group  indirectly  owned 724  million of the issued and
         outstanding  Telewest  ordinary  shares.   Telewest's  ordinary  shares
         reported a closing price of $1.95 per share on September 30, 2000.

                                   (continued)

<PAGE>

         USAI owns and operates businesses in network and television production,
         television  broadcasting,  electronic retailing,  ticketing operations,
         and internet  services.  At September  30,  2000,  Liberty  Media Group
         directly  and  indirectly  held 74.4  million  shares of USAI's  common
         stock.  Liberty  Media  Group  also held  shares  directly  in  certain
         subsidiaries of USAI which are exchangeable into 79.0 million shares of
         USAI common stock.  Liberty Media Group's  direct  ownership of USAI is
         currently  restricted  by  Federal  Communications  Commission  ("FCC")
         regulations.  The exchange of the shares in subsidiaries of USAI can be
         accomplished  only if there is a change to existing  regulations  or if
         Liberty Media Group obtains permission from the FCC. If the exchange of
         subsidiary  stock into USAI common stock was completed at September 30,
         2000,   Liberty  Media  Group  would  own  153.4   million   shares  or
         approximately  21% (on a  fully-diluted  basis) of USAI  common  stock.
         USAI's common stock  reported a closing price of $21-15/16 per share on
         September 30, 2000.

         UnitedGlobalCom is a global broadband communications provider of video,
         voice and data services with operations in over 20 countries throughout
         the  world.  At  September  30,  2000,  Liberty  Media  Group  owned an
         approximate   10.9%  economic   ownership   interest   representing  an
         approximate  36.8% voting  interest in  UnitedGlobalCom.  Liberty Media
         Group owns 10.5 million shares of UnitedGlobalCom Class B common stock,
         which   stock   is   convertible,   on  a   one-for-one   basis,   into
         UnitedGlobalCom Class A common stock.  UnitedGlobalCom's Class A common
         stock  reported a closing  price of $30.00 per share on  September  30,
         2000.

         Teligent is a full-service,  facilities based communications company in
         which Liberty Media Group acquired an approximate  40% equity  interest
         in its January 14, 2000 acquisition of The Associated  Group, Inc. (the
         "Associated  Group") (see note 6). At September 30, 2000, Liberty Media
         Group  held 21.4  million  shares  of  Teligent  Class A common  stock.
         Teligent's  Class A common stock reported a closing price of $13.00 per
         share on September 30, 2000. During the third quarter of 2000,  Liberty
         Media Group  recognized  an  impairment  charge on their  investment in
         Teligent (see note 4).

         The $16 billion  aggregate  excess of Liberty Media  Group's  aggregate
         carrying   amount  in  its   affiliates   over  Liberty  Media  Group's
         proportionate  share of its  affiliates'  net assets is being amortized
         principally over estimated useful lives of 20 years.

(4)      Impairment of Investments

         During the third quarter of 2000,  Liberty Media Group  determined that
         its investments in ICG  Communications,  Inc. and Teligent  experienced
         other than  temporary  declines  in value.  As a result,  the  carrying
         amounts of these  investments  were adjusted to their  respective  fair
         values at  September  30, 2000 based on recent  quoted  market  prices.
         These  adjustments  resulted in an impairment  charge of  approximately
         $1.35 billion,  before  deducting a deferred income tax benefit of $534
         million.

                                   (continued)

<PAGE>

(5)      Investments in Available-for-sale Securities and Others

         Investments in available-for-sale  securities and others are summarized
as follows:
<TABLE>
<CAPTION>
                                                                         September 30,          December 31,
                                                                              2000                   1999
                                                                     ---------------------  --------------------
                                                                                 amounts in millions
         <S>                                                              <C>                          <C>
         Sprint Corporation ("Sprint PCS")                                $       7,580                10,186
         Time Warner, Inc. ("Time Warner")                                        8,842                 8,202
         News Corp.                                                               3,748                 2,403
         Motorola, Inc. ("Motorola")                                              2,146                 3,430
         Other available-for-sale securities                                      2,951                 3,773
         Other investments, at cost, and related receivables                      1,257                   985
                                                                     ------------------     -----------------
                                                                                 26,524                28,979
             Less short-term investments                                            461                   378
                                                                     ------------------     -----------------
                                                                          $      26,063                28,601
                                                                     ==================     =================
</TABLE>
         On January 5,  2000,  Motorola  completed  the  acquisition  of General
         Instrument  Corporation  ("General  Instrument")  through  a merger  of
         General  Instrument  with a wholly owned  subsidiary  of  Motorola.  In
         connection  with the merger  Liberty  Media  Group  received 54 million
         shares and  warrants to purchase 37 million  shares of Motorola  common
         stock in exchange for its holdings in General Instrument. Liberty Media
         Group  recognized a $2.2 billion gain (excluding  related  deferred tax
         expense of $883 million) on such  transaction  during the first quarter
         of 2000 based on the  difference  between the carrying value of Liberty
         Media Group's interest in General  Instrument and the fair value of the
         Motorola securities received.

         The right to  exercise  warrants  to purchase  18.4  million  shares of
         Motorola  common  stock is  subject to AT&T  satisfying  the terms of a
         purchase commitment in 2000. AT&T has agreed to pay Liberty Media Group
         $4.78 for each  warrant  that does not vest as a result of the purchase
         commitment not being met.

         Investments in available-for-sale securities are summarized as follows:
<TABLE>
<CAPTION>
                                                                       September 30,          December 31,
                                                                           2000                   1999
                                                                  ---------------------  --------------------
                                                                              amounts in millions
         <S>                                                          <C>                          <C>
         Equity securities:
             Fair value                                               $     23,958                 24,472
             Gross unrealized holding gains                                  7,144                 11,457
             Gross unrealized holding losses                                (2,013)                  (646)
         Debt securities:
             Fair value                                                      1,109                  1,995
             Gross unrealized holding gains                                     --                     --
             Gross unrealized holding losses                                    (9)                   (22)

                                   (continued)
</TABLE>
<PAGE>

         Management estimates the fair market value of all of its investments in
         available-for-sale  securities and others  aggregated $26.8 billion and
         $29.2   billion  at   September   30,  2000  and   December  31,  1999,
         respectively.  Management  calculates  market values using a variety of
         approaches  including  multiple of cash flow, per  subscriber  value, a
         value of comparable  public or private  businesses  or publicly  quoted
         market  prices.  No  independent  appraisals  were  conducted for those
         assets.

(6)      Acquisitions

         On January 14, 2000,  Liberty Media Group  completed its acquisition of
         Associated  Group pursuant to a merger  agreement  among AT&T,  Liberty
         Media Group and  Associated  Group.  Under the merger  agreement,  each
         share of  Associated  Group's  Class A common  stock and Class B common
         stock  was  converted  into  0.49634  shares of AT&T  common  stock and
         2.41422 shares of AT&T Class A Liberty Media Group common stock.  Prior
         to the merger, Associated Group's primary assets were (1) approximately
         19.7  million  shares of AT&T  common  stock,  (2)  approximately  46.8
         million  shares of AT&T Class A Liberty Media Group common  stock,  (3)
         approximately  10.6 million  shares of AT&T Class B Liberty Media Group
         common stock,  (4)  approximately  21.4 million shares of common stock,
         representing  approximately a 40% interest, of Teligent, and (5) all of
         the outstanding  shares of common stock of  TruePosition,  Inc.,  which
         provides  location services for wireless carriers and users designed to
         determine the location of any wireless transmitter,  including cellular
         and PCS telephones. Immediately following the completion of the merger,
         all of the assets and businesses of Associated  Group were  transferred
         to Liberty Media Group.  All of the shares of AT&T common  stock,  AT&T
         Class A Liberty Media Group common stock and AT&T Class B Liberty Media
         Group common stock  previously held by Associated Group were retired by
         AT&T.

         The acquisition of Associated Group was accounted for as a purchase and
         the $17  million  excess of the fair value of the net  assets  acquired
         over the purchase price is being  amortized over ten years. As a result
         of the issuance of AT&T Class A Liberty Media Group common  stock,  net
         of the shares of AT&T Class A Liberty Media Group common stock acquired
         in this  transaction,  Liberty  Media  Group  recorded  a $778  million
         increase to combined equity.

         On March 16, 2000,  Liberty Media Group  purchased  shares of preferred
         stock in TCI  Satellite  Entertainment,  Inc. in  exchange  for Liberty
         Media Group's  economic  interest in  approximately 5 million shares of
         Sprint  PCS Group  Stock,  valued  at $300  million.  During  the third
         quarter of 2000, TCI Satellite Entertainment,  Inc. changed its name to
         Liberty  Satellite &  Technology,  Inc.  ("LSAT").  Liberty Media Group
         received 150,000 shares of LSAT Series A 12% Cumulative Preferred Stock
         and 150,000  shares of LSAT Series B 8% Cumulative  Convertible  Voting
         Preferred  Stock.  The Series A  preferred  stock does not have  voting
         rights,  while the Series B preferred  stock gives  Liberty Media Group
         approximately  85% of the voting power of LSAT. In connection with this
         transaction,  Liberty Media Group  realized a $211 million gain (before
         related  deferred tax expense of $84 million)  during the first quarter
         of 2000 based on the  difference  between the cost basis and fair value
         of the economic interest in the Sprint PCS Group Stock exchanged.

                                   (continued)

<PAGE>

         On March 28, 2000,  Liberty Media Group announced that it had completed
         its cash  tender  offer  for the  outstanding  common  stock of  Ascent
         Entertainment  Group,  Inc.  ("Ascent") at a price of $15.25 per share.
         Approximately  85% of the outstanding  shares of common stock of Ascent
         were tendered in the offer and Liberty  Media Group paid  approximately
         $385  million.  On June 8, 2000,  Liberty  Media  Group  completed  its
         acquisition  of 100% of Ascent  for an  additional  $67  million.  Such
         transaction was accounted for as a purchase and the $252 million excess
         of the purchase price over the fair value of the net assets acquired is
         being amortized over 20 years.

         On April 10, 2000,  Liberty Media Group acquired all of the outstanding
         common  stock of Four Media  Company  ("Four  Media") in  exchange  for
         approximately $123 million,  6.4 million shares of AT&T Class A Liberty
         Media  Group  common  stock and a  warrant  to  purchase  approximately
         700,000  shares of AT&T Class A Liberty  Media Group common stock at an
         exercise price of $23 per share. The acquisition was accounted for as a
         purchase.  In  connection  with this  acquisition,  Liberty Media Group
         recorded  a $145  million  increase  to  combined  equity  and the $276
         million  excess of the  purchase  price  over the fair value of the net
         assets acquired is being  amortized over 20 years.  Four Media provides
         technical and creative  services to owners,  producers and distributors
         of  television  programming,  feature  films  and  other  entertainment
         products both domestically and internationally.

         On June 9, 2000, Liberty Media Group acquired a controlling interest in
         The Todd-AO  Corporation  ("Todd-AO"),  consisting of approximately 6.5
         million shares of Class B Common Stock of Todd-AO,  representing 60% of
         the  equity  and  approximately  94% of the  voting  power  of  Todd-AO
         outstanding   immediately  prior  to  the  closing,   in  exchange  for
         approximately  5.4 million  shares of AT&T Class A Liberty  Media Group
         common stock.  The  acquisition  was  accounted  for as a purchase.  In
         connection with this  acquisition,  Liberty Media Group recorded a $108
         million  increase to combined  equity and the $96 million excess of the
         purchase price over the fair value of the net assets  acquired is being
         amortized over 20 years.  Todd-AO  provides sound,  video and ancillary
         post  production  and  distribution  services to the motion picture and
         television industries in the United States and Europe.

         Immediately  following the closing of such  transaction,  Liberty Media
         Group  contributed  to Todd-AO 100% of the capital stock of Four Media,
         in exchange for approximately 16.6 million shares of the Class B Common
         Stock of Todd-AO increasing Liberty Media Group's ownership interest in
         Todd-AO to approximately 84% of the equity and approximately 98% of the
         voting power of Todd-AO outstanding immediately following the closing.

         Following  Liberty  Media  Group's  acquisition  of  Todd-AO,  and  the
         contribution by Liberty Media Group to Todd-AO of Liberty Media Group's
         ownership in Four Media,  Todd-AO changed its name to Liberty  Livewire
         Corporation ("Liberty Livewire").

                                   (continued)

<PAGE>

         On July 19,  2000,  Liberty  Media  Group  purchased  all of the assets
         relating to the post production, content and sound editorial businesses
         of  Soundelux   Entertainment  Group  ("Soundelux")  for  $90  million.
         Immediately  following such  transaction,  the assets of Soundelux were
         contributed  to Liberty  Livewire in  exchange  for  approximately  8.2
         million  additional  shares of Liberty  Livewire  Class B Common Stock.
         Following this contribution, Liberty Media Group's ownership in Liberty
         Livewire increased to approximately 88% of the equity and approximately
         99% of the voting  power of Liberty  Livewire  outstanding  immediately
         following the contribution.

(7)      Long-Term Debt

         Debt is summarized as follows:
<TABLE>
<CAPTION>
                                                                       September 30,           December 31,
                                                                           2000                    1999
                                                                  ---------------------   --------------------
                                                                              amounts in millions
         <S>                                                           <C>                           <C>
         Parent company debt:
             Senior notes (a)                                          $        741                    741
             Senior debentures (a)                                            1,486                    494
             Senior exchangeable debentures (b)                               1,679                  1,022
             Securities lending agreement (c)                                   595                     --
             Bank credit facilities                                             177                    390
                                                                  -----------------       ----------------
                                                                              4,678                  2,647
         Debt of subsidiaries:
             Bank credit facilities                                             924                    573
             Senior notes                                                       174                     --
             Other debt, at varying rates                                        93                     57
                                                                  -----------------       ----------------
                                                                              1,191                    630
                                                                  -----------------       ----------------
             Total debt                                                       5,869                  3,277
         Less current maturities                                                237                    554
                                                                  -----------------       ----------------
             Total long-term debt                                      $      5,632                  2,723
                                                                  =================       ================
</TABLE>

         (a)      On July  7,  1999,  Liberty  Media  Group  received  net  cash
                  proceeds of  approximately  $741 million and $494 million from
                  the  issuance  of 7-7/8%  Senior  Notes due 2009 (the  "Senior
                  Notes") and 8-1/2%  Senior  Debentures  due 2029 (the  "8-1/2%
                  Senior Debentures"), respectively. The Senior Notes, which are
                  stated net of an unamortized  discount of $9 million,  have an
                  aggregate  principal  amount of $750  million  and the  8-1/2%
                  Senior  Debentures,  which are  stated  net of an  unamortized
                  discount of $6 million,  have an aggregate principal amount of
                  $500  million.  Interest  on the  Senior  Notes and the 8-1/2%
                  Senior Debentures is payable on January 15 and July 15 of each
                  year.

                  On February 2, 2000,  Liberty  Media Group  received  net cash
                  proceeds of  approximately  $983  million from the issuance of
                  8-1/4%  Senior   Debentures   due  2030  (the  "8-1/4%  Senior
                  Debentures").  The 8-1/4% Senior Debentures,  which are stated
                  net  of  an  unamortized  discount  of  $8  million,  have  an
                  aggregate  principal  amount of $1  billion.  Interest  on the
                  8-1/4% Senior Debentures is payable on February 1 and August 1
                  of each year.

                                   (continued)

<PAGE>

         (b)      On November  16, 1999, Liberty  Media Group received  net cash
                  proceeds  of $854  million  from  the  issuance  of 4%  Senior
                  Exchangeable  Debentures due 2030 (the "4% Senior Exchangeable
                  Debentures").  The 4% Senior  Exchangeable  Debentures have an
                  aggregate principal amount of $869 million. Each debenture has
                  a $1,000  face  amount  and is  exchangeable  at the  holder's
                  option  for the value of  22.9486  shares of Sprint  PCS Group
                  Stock. This exchange value will be paid only in cash until the
                  later  of  December  31,  2001 and the  date  the  direct  and
                  indirect  ownership  level of Sprint PCS Group  Stock owned by
                  Liberty  Media  Group falls below a  designated  level,  after
                  which, at Liberty Media Group's election,  Liberty Media Group
                  may pay the exchange value in cash,  Sprint PCS Group Stock or
                  a combination thereof.  Interest on the 4% Senior Exchangeable
                  Debentures is payable on May 15 and November 15 of each year.

                  On February 10, 2000,  Liberty  Media Group  received net cash
                  proceeds of $735  million  from the  issuance of $750  million
                  principal amount of 3-3/4% Senior Exchangeable  Debentures due
                  2030 (the "3-3/4% Senior Exchangeable  Debentures").  On March
                  8, 2000, Liberty Media Group received net cash proceeds of $59
                  million  from  the  issuance  of  an  additional  $60  million
                  principal  amount of 3-3/4%  Senior  Exchangeable  Debentures.
                  Each debenture has a $1,000 face amount and is exchangeable at
                  the holder's  option for the value of 16.7764 shares of Sprint
                  PCS Group Stock. This exchange value will be paid only in cash
                  until the later of  February  15, 2002 and the date the direct
                  and indirect  ownership  level of Sprint PCS Group Stock owned
                  by Liberty Media Group falls below a designated  level,  after
                  which, at Liberty Media Group's election,  Liberty Media Group
                  may pay the exchange value in cash,  Sprint PCS Group Stock or
                  a   combination   thereof.   Interest  on  the  3-3/4%  Senior
                  Exchangeable  Debentures  is payable on February 15 and August
                  15 of each year.

                  The carrying amount of the senior  exchangeable  debentures is
                  adjusted based on the fair value of the underlying  Sprint PCS
                  Group  Stock.  Increases  or  decreases  in the  value  of the
                  underlying  Sprint PCS Group Stock above the principal  amount
                  of  the  senior   exchangeable   debentures  (the  "Contingent
                  Portion") is recorded as an adjustment to interest  expense in
                  the  combined   statements  of  operations  and  comprehensive
                  earnings.  If the  value of the  underlying  Sprint  PCS Group
                  Stock  decreases  below the  principal  amount  of the  senior
                  exchangeable  debentures  there is no effect on the  principal
                  amount of such debentures.

                                   (continued)

<PAGE>

         (c)      On January 7, 2000, a trust, which holds Liberty Media Group's
                  investment  in  Sprint,  entered  into  agreements  to loan 18
                  million shares of Sprint PCS Group Stock to a third party,  as
                  Agent.  The  obligation  to return  those shares is secured by
                  cash  collateral  equal  to 100% of the  market  value of that
                  stock,  which was $595 million at September  30, 2000.  During
                  the period of the loan, which is terminable by either party at
                  any time, the cash collateral is to be marked-to-market daily.
                  The trust, for the benefit of Liberty Media Group, has the use
                  of 80% of the cash collateral plus any interest earned thereon
                  during the term of the loan,  and is  required to pay a rebate
                  fee equal to the  Federal  funds rate less 30 basis  points to
                  the  borrower  of  the  loaned  shares.  The  unutilized  cash
                  collateral of $208 million at September 30, 2000 included $105
                  million of restricted  cash.  At September  30, 2000,  Liberty
                  Media Group had utilized  $387 million of the cash  collateral
                  under the securities lending agreement.

         At  September  30, 2000,  Liberty  Media Group had  approximately  $414
         million in unused lines of credit under its bank credit facilities. The
         bank credit facilities  generally contain  restrictive  covenants which
         require the  borrowers and certain of their  subsidiaries,  among other
         things, to maintain certain financial ratios,  and include  limitations
         on  indebtedness,  liens,  encumbrances,   acquisitions,  dispositions,
         guarantees  and dividends.  Liberty Media Group was in compliance  with
         its debt covenants at September 30, 2000.  Additionally,  Liberty Media
         Group  pays fees  ranging  from .15% to .375% per annum on the  average
         unborrowed portions of the total amounts available for borrowings under
         bank credit facilities.

         Based on quoted market prices,  the fair value of Liberty Media Group's
         debt at September 30, 2000 is as follows (amounts in millions):

                 Senior notes of parent company                      $      738
                 Senior debentures of parent company                      1,415
                 Senior exchangeable debentures of parent company         1,448
                 Senior notes of attributed subsidiary                      188

         Liberty Media Group believes that the carrying  amount of the remainder
         of its debt approximated its fair value at September 30, 2000.

(8)      Combined Equity

         AT&T Class A Liberty Media Group Common Stock

         In conjunction with a stock repurchase program or similar  transaction,
         Liberty Media Group elected to sell put options on AT&T Class A Liberty
         Media Group common stock.  Proceeds from sales of such put options with
         respect to AT&T Class A Liberty  Media Group common stock are reflected
         as an increase to combined  equity,  and an amount equal to the maximum
         redemption  amount  under  unexpired  put options  with respect to such
         common  stock is  reflected  as an  "Obligation  to redeem AT&T Class A
         Liberty Media Group common stock" in the accompanying  combined balance
         sheets.

                                   (continued)

<PAGE>

         During the nine months ended  September  30, 2000,  pursuant to a stock
         repurchase  program,  5 million  shares of AT&T  Class A Liberty  Media
         Group common stock were purchased at an aggregate cost of $112 million.
         Such  amount is  reflected  as a  decrease  to  combined  equity in the
         accompanying combined financial statements.

         Stock Issuances of Subsidiaries and Equity Affiliates

         During  the  nine  months  ended   September  30,  2000,   consolidated
         subsidiaries  and equity  affiliates  attributed to Liberty Media Group
         issued shares of common stock in connection  with certain  acquisitions
         and the exercise of certain employee stock options.  In connection with
         the  increase in the  issuers'  equity,  net of the dilution of Liberty
         Media  Group's  ownership  interest,  that  resulted  from  such  stock
         issuances, Liberty Media Group recorded increases to combined equity as
         follows (amounts in millions):

                  Stock issuances by consolidated subsidiaries        $    240
                  Stock issuances by equity affiliates (net of
                    deferred  tax expense of  $42 million)                  82
                                                                      $    322

         Transactions with Officers and Directors

         Prior to the AT&T Merger, a limited liability company owned by Dr. John
         C.  Malone  (Chairman  of  the  Board  of  Liberty  Media  Corporation)
         acquired,  from certain attributed subsidiaries of Liberty Media Group,
         for $17 million,  working cattle ranches located in Wyoming. No gain or
         loss was recognized on such acquisition. The purchase price was paid by
         such limited  liability  company in the form of a 12-month  note in the
         amount of $17 million having an interest rate of 7%. Such note was paid
         in March 2000.

         In connection with the AT&T Merger, Liberty Media Group paid two of its
         directors and one other individual, all three of whom were directors of
         TCI, an aggregate of $12 million for  services  rendered in  connection
         with the AT&T Merger.  Such amount is included in  operating,  selling,
         general and  administrative  expenses for the two months ended February
         28, 1999 in the  accompanying  combined  statements of  operations  and
         comprehensive earnings.

         In September 2000,  certain officers of Liberty Media Group purchased a
         6% common stock interest in an attributed  subsidiary for $1.3 million.
         Such  subsidiary  owns an  indirect  interest  in an entity  that holds
         certain  of  Liberty  Media  Group's   investments   in  satellite  and
         technology related assets. Liberty Media Group and the officers entered
         into a  shareholders  agreement in which the officers  could require an
         attributed  subsidiary of Liberty  Media Group to purchase,  after five
         years,  all or part of their common stock interest in exchange for AT&T
         Class A Liberty Media Group common stock at the then fair market value.
         In addition, Liberty Media Group has the right to repurchase the common
         stock interests held by the officers at fair market value at any time.

<PAGE>

         Transactions with AT&T

         Certain  subsidiaries  attributed to Liberty Media Group produce and/or
         distribute   programming  and  other  services  to  cable  distribution
         operators  (including AT&T) and others.  Charges to AT&T are based upon
         customary  rates  charged to others.  Amounts  included  in revenue for
         services  provided  to AT&T were $184  million,  $125  million  and $43
         million for the nine months ended  September 30, 2000, the seven months
         ending  September 30, 1999 and the two month period ending February 28,
         1999, respectively.

         AT&T allocates certain corporate  general and  administrative  costs to
         Liberty  Media Group  pursuant to an intergroup  agreement.  Management
         believes such allocation methods are reasonable. In addition, there are
         arrangements between subsidiaries attributed to Liberty Media Group and
         AT&T and its other  subsidiaries  for satellite  transponder  services,
         marketing support,  programming,  and hosting services.  These expenses
         aggregated  $26  million,  $21 million  and $3 million  during the nine
         months ended  September 30, 2000, the seven months ended  September 30,
         1999 and the two months ended February 28, 1999, respectively,  and are
         included in operating,  selling, general and administrative expenses in
         the accompanying  combined  statements of operations and  comprehensive
         earnings.

         Due to Related Parties

         The  amounts  included  in  "Due  to  related   parties"   represent  a
         non-interest  bearing  intercompany  account which includes  income tax
         allocations  that are to be  settled  at some  future  date.  All other
         amounts included in the  intercompany  account are to be settled within
         thirty days following notification.

(9)      Commitments and Contingencies

         Starz Encore Group LLC ("Starz  Encore  Group"),  a subsidiary  that is
         attributed to the Liberty  Media Group,  provides  premium  programming
         distributed by cable,  direct  satellite,  TVRO and other  distributors
         throughout  the United  States.  Starz Encore Group is obligated to pay
         fees for the  rights to exhibit  certain  films  that are  released  by
         various  producers  through  2013 (the "Film  Licensing  Obligations").
         Based on  customer  levels at  September  30,  2000,  these  agreements
         require minimum payments  aggregating  approximately $1.3 billion.  The
         aggregate amount of the Film Licensing  Obligations under these license
         agreements is not currently  estimable because such amount is dependent
         upon the number of qualifying  films released  theatrically  by certain
         motion picture  studios as well as the domestic  theatrical  exhibition
         receipts  upon the  release  of such  qualifying  films.  Nevertheless,
         required aggregate payments under the Film Licensing  Obligations could
         prove to be significant.

         Certain subsidiaries  attributed to Liberty Media Group have guaranteed
         various loans,  notes payable,  letters of credit and other obligations
         (the "Guaranteed  Obligations") of certain affiliates. At September 30,
         2000, the Guaranteed Obligations aggregated approximately $583 million.
         Currently,  Liberty  Media  Group is not certain of the  likelihood  of
         being required to perform under such guarantees.

                                   (continued)

<PAGE>

         Pursuant  to a final  judgment  (the  "Final  Judgment")  agreed  to by
         Liberty Media  Corporation,  AT&T and the United  States  Department of
         Justice  (the  "DOJ")  on  December  31,  1998,   Liberty  Media  Group
         transferred all of its  beneficially  owned securities (the "Sprint PCS
         Securities")  of Sprint PCS to a trustee (the  "Trustee")  prior to the
         AT&T Merger. The Final Judgment, which was entered by the United States
         District  Court  for the  District  of  Columbia  on August  23,  1999,
         requires  the  Trustee,  on or before  May 23,  2002,  to  dispose of a
         portion of the Sprint PCS Securities  sufficient to cause Liberty Media
         Group to beneficially own no more than 10% of the outstanding  Series 1
         PCS Stock of Sprint PCS on a fully  diluted  basis on such date.  On or
         before May 23,  2004,  the  Trustee  must divest the  remainder  of the
         Sprint PCS Securities beneficially owned by Liberty Media Group.

         The Final  Judgment  requires  that the  Trustee  vote the  Sprint  PCS
         Securities  beneficially  owned  by  Liberty  Media  Group  in the same
         proportion as other holders of Sprint's PCS Group Stock so long as such
         securities are held by the trust. The Final Judgment also prohibits the
         acquisition by Liberty Media Group of additional Sprint PCS Securities,
         with certain exceptions, without the prior written consent of the DOJ.

         Subsidiaries  attributed to Liberty Media Group lease business offices,
         have entered into pole rental and transponder  lease agreements and use
         certain equipment under lease arrangements.

         Subsidiaries   attributed  to  Liberty  Media  Group  have   contingent
         liabilities  related to legal  proceedings and other matters arising in
         the ordinary  course of business.  Although it is  reasonably  possible
         that  these  subsidiaries  may incur  losses  upon  conclusion  of such
         matters,  an estimate  of any loss or range of loss cannot be made.  In
         the opinion of management,  it is expected that amounts,  if any, which
         may be required to satisfy such  contingencies  will not be material in
         relation to the accompanying combined financial statements.