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

 <TABLE>
                             Combined Balance Sheets
                                   (unaudited)
<CAPTION>
                                                                               March 31,          December 31,
                                                                                 2000                 1999
                                                                         ----------------       -----------------
                                                                                      amounts in millions
<S>                                                                           <C>                          <C>
Assets
------

Current assets:

   Cash and cash equivalents                                                  $     2,177                   1,714

   Cash collateral under securities lending agreement (note 6)
                                                                                    1,013                      --

   Short-term investments                                                             525                     378

   Trade and other receivables, net                                                   175                     134

   Prepaid expenses and committed program rights                                      495                     406

   Deferred income tax assets                                                         731                     750

   Other current assets                                                                11                       5
                                                                         ----------------       -----------------

         Total current assets                                                       5,127                   3,387
                                                                         ----------------       -----------------

Investments in affiliates, accounted for under the equity method, and
   related receivables (note 3)                                                    17,040                  15,922

Investments in available-for-sale securities and others (notes 4, 5
   and 6)                                                                          34,564                  28,601

Property and equipment, at cost                                                       465                     162
   Less accumulated depreciation                                                       24                      19
                                                                         ----------------       -----------------
                                                                                      441                     143
                                                                         ----------------       -----------------

Intangible assets:
   Excess cost over acquired net assets                                            10,169                   9,973
   Franchise costs                                                                    269                     273
                                                                         ----------------       -----------------
                                                                                   10,438                  10,246
   Less accumulated amortization                                                      592                     454
                                                                         ----------------       -----------------
                                                                                    9,846                   9,792
                                                                         ----------------       -----------------
Other assets, at cost, net of accumulated amortization
                                                                                    1,196                     839
                                                                         ----------------       -----------------

         Total assets                                                         $    68,214                  58,684
                                                                         ================       =================
</TABLE>


                                   (continued)
<PAGE>

<TABLE>
                       Combined Balance Sheets, continued
                                   (unaudited)
<CAPTION>
                                                                               March 31,          December 31,
                                                                                 2000                    1999
                                                                         --------------------   -------------
                                                                                      amounts in millions
<S>                                                                           <C>                         <C>
Liabilities and Combined Equity
-------------------------------

Current liabilities:

   Accounts payable and accrued liabilities                                   $       329                    245

   Accrued stock compensation                                                       2,179                  2,405

   Program rights payable                                                             174                    166

   Current portion of debt                                                          1,573                    554
                                                                         ----------------       ----------------

        Total current liabilities                                                   4,255                  3,370
                                                                         ----------------       ----------------

Long-term debt (note 6)                                                             5,237                  2,723

Deferred income tax liabilities                                                    16,331                 14,107

Other liabilities                                                                     136                     23
                                                                         ----------------       ----------------

        Total liabilities                                                          25,959                 20,223
                                                                         ----------------       ----------------

Minority interests in equity of attributed subsidiaries
                                                                                      286                      1

Combined equity (note 7):
   Combined equity                                                                 33,675                 31,876
   Accumulated other comprehensive earnings, net of taxes
                                                                                    8,307                  6,557
                                                                         ----------------       ----------------
                                                                                   41,982                 38,433
   Due (from) to related parties                                                      (13)                    27
                                                                         ----------------       ----------------
     Total combined equity                                                         41,969                 38,460
                                                                         ----------------       ----------------

Commitments and contingencies (note 8)

        Total liabilities and combined equity                               $      68,214                 58,684
                                                                            =============       ================

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

<TABLE>
          Combined Statements of Operations and Comprehensive Earnings
                                   (unaudited)
<CAPTION>
                                                                         New Liberty                           Old Liberty
                                                      -----------------------------------------------     ---------------------
                                                                          (note 1)                               (note 1)
                                                           Three months               One month                 Two months
                                                               ended                    ended                      ended
                                                          March 31, 2000            March 31, 1999           February 28, 1999
                                                      ----------------------   ----------------------     ------------------------
                                                                                            amounts in millions
<S>                                                       <C>                               <C>                        <C>
Revenue                                                   $       235                        71                         282

Operating costs and expenses:
   Operating, selling, general and administrative
                                                                  174                        56                         227
   Stock compensation                                             (23)                      (41)                        183
   Depreciation and amortization                                  167                        53                          47
                                                              --------------         ----------------             ----------------
                                                                  318                        68                         457
                                                              --------------         ----------------             ----------------

        Operating income (loss)                                   (83)                        3                        (175)

Other income (expense):
   Interest expense                                              (439)                      (13)                        (28)
   Dividend and interest income                                    80                        24                          12
   Share of losses of affiliates, net (note 3)                   (382)                      (80)                        (66)
   Minority interests in (earnings) losses of attributed
      subsidiaries                                                 (8)                       --                           4
   Gains on dispositions, net (notes 4 and 5)
                                                                2,444                        --                          14
   Gains on issuance of equity by affiliates and
      subsidiaries (note 3)                                        --                        --                         389
   Other, net                                                       5                        --                          --
                                                              --------------         ----------------             ----------------
                                                                1,700                       (69)                        325
                                                              --------------         ----------------             ----------------
        Earnings (loss) before income taxes                     1,617                       (66)                        150

Income tax benefit (expense)                                     (675)                        8                        (209)
                                                              --------------         ----------------             ----------------

        Net earnings (loss)                               $       942                       (58)                        (59)
                                                              ==============         ================             ================

Other comprehensive earnings, net of taxes:
   Foreign currency translation adjustments
                                                                  (31)                       12                         (15)
   Unrealized holding gains arising during the period, net
      of reclassification adjustments
                                                                1,781                       894                         971
                                                              --------------         ----------------             ----------------

   Other comprehensive earnings                                 1,750                       906                         956
                                                              --------------         ----------------             ----------------

Comprehensive earnings                                    $     2,692                       848                         897
                                                              ==============         ================             ================

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



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

                          Combined Statement of Equity

                        Three months ended March 31, 2000
                                   (unaudited)
<CAPTION>
                                                                                      Accumulated
                                                                                         other             Due to
                                                                                     comprehensive          (from)        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                                                           942                   --               --           942
   Foreign currency translation adjustments                                --                  (31)              --           (31)
   Recognition of previously unrealized gains on
     available-for-sale securities, net                                    --               (1,478)              --        (1,478)
   Unrealized gains on available-for-sale securities
                                                                           --                3,259               --         3,259
   Issuance of AT&T Liberty Media Group tracking stock for
     acquisition (note 5)                                                 778                   --               --           778
   Issuances of common stock by attributed subsidiary and
     affiliate, net of taxes                                               79                   --               --            79
   Other transfers to  related parties, net                                --                   --              (40)          (40)
                                                                 -------------     ----------------     ------------   -----------

Balance at March 31, 2000                                        $     33,675                8,307              (13)       41,969
                                                                 =============     ================     ============   ===========

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

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

                        Combined Statements of Cash Flows
                                   (unaudited)
<CAPTION>
                                                                                 New Liberty                       Old Liberty
                                                              ----------------------------------------------- ---------------------
                                                                                  (note 1)                           (note 1)
                                                                   Three months               One month             Two months
                                                                       ended                      ended                ended
                                                                  March 31, 2000           March 31, 1999        February 28, 1999
                                                              ----------------------   ---------------------- ---------------------
                                                                                         amounts in millions
                                                                                             (see note 2)
<S>                                                               <C>                             <C>                          <C>
Cash flows from operating activities:
   Net earnings (loss)                                            $         942                      (58)                       (59)
   Adjustments to reconcile net earnings (loss) to net cash
     used by operating activities:
        Depreciation and amortization                                       167                       53                         47
        Stock compensation                                                  (23)                     (41)                       183
        Payments of stock compensation                                     (183)                      (1)                      (126)
        Share of losses of affiliates, net                                  382                       80                         66
        Deferred income tax expense                                         721                        3                        205
        Intergroup tax allocation                                           (46)                     (12)                        --
        Cash payment from AT&T pursuant to tax sharing
          agreement                                                          33                       --                         --
        Minority interests in earnings (losses) of
          attributed subsidiaries                                             8                       --                         (4)
        Gains on disposition of assets, net                              (2,444)                      --                        (14)
        Noncash interest                                                    364                       --                         --
        Gains on issuance of equity by affiliates and
          subsidiaries                                                       --                       --                       (389)
        Other noncash charges                                                --                       --                          9
        Changes in operating assets and liabilities, net of
          the effect of acquisitions and dispositions:
             Change in receivables                                           15                        2                        (19)
             Change in prepaid expenses and committed
               program rights                                               (88)                      (5)                       (10)
             Change in payables and accruals                                  7                      (32)                         4
                                                              -----------------        -----------------      ---------------------

                 Net cash used by operating activities
                                                                           (145)                     (11)                      (107)
                                                              -----------------        -----------------      ---------------------

Cash flows from investing activities:
   Cash paid for acquisitions                                              (342)                      --                         --
   Capital expended for property and equipment
                                                                            (12)                      (4)                       (21)
   Investments in and loans to affiliates and others
                                                                           (808)                     (88)                       (45)
   Purchases of marketable securities                                      (337)                  (3,217)                      (132)
   Sales and maturities of marketable securities
                                                                            511                       --                         34
   Cash proceeds from dispositions                                            8                        3                         43
   Cash balances of deconsolidated subsidiaries
                                                                             --                       --                        (53)
   Other, net                                                                15                        4                         (9)
                                                              -----------------        -----------------      ---------------------

                 Net cash used by investing activities
                                                                           (965)                  (3,302)                      (183)
                                                              -----------------        -----------------      ---------------------

                                   (continued)
</TABLE>
<PAGE>
<TABLE>
                  Combined Statements of Cash Flows, continued
                                   (unaudited)
<CAPTION>
                                                                                 New Liberty                       Old Liberty
                                                              ----------------------------------------------- ---------------------
                                                                                  (note 1)                           (note 1)
                                                                   Three months               One month             Two months
                                                                       ended                    ended                  ended
                                                                  March 31, 2000           March 31, 1999        February 28, 1999
                                                              ----------------------   ---------------------- ---------------------
                                                                                         amounts in millions
                                                                                            (see note 2)
<S>                                                               <C>                             <C>                        <C>
Cash flows from financing activities:
   Borrowings of debt                                                     2,410                      495                      156
   Repayments of debt                                                      (772)                    (448)                    (148)
   Cash transfers (to) from related parties                                 (41)                     (80)                     132
   Repurchase of stock of subsidiaries                                       --                       --                      (45)
   Other, net                                                               (24)                      --                       (1)
                                                              -----------------        -----------------      -------------------

                 Net cash provided (used) by financing
                    activities                                            1,573                      (33)                      94
                                                              -----------------        -----------------      -------------------

                    Net increase (decrease) in cash and
                        cash equivalents
                                                                            463                   (3,346)                    (196)

                    Cash and cash equivalents at beginning
                        of period                                         1,714                    5,319                      407
                                                              -----------------        -----------------      -------------------

                    Cash and cash equivalents at end of
                        period                                    $       2,177                    1,973                      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

                                 March 31, 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,   Liberty  Media  Group's  assets  and
         liabilities  have been recorded at their  respective fair market values
         therefore,  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.

         At March 31, 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 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.

         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 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.

                                   (continued)
<PAGE>

         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 $70 million for the three months ended March
         31, 2000, $16 million for the one month period ended March 31, 1999 and
         $32 million for the two month period ended February 28, 1999. Cash paid
         for income taxes for the three  months  ended March 31,  2000,  the one
         month ended March 31, 1999 and the two months  ended  February 28, 1999
         was not material.
<TABLE>
<CAPTION>
                                                                    New Liberty                      Old Liberty
                                                    -----------------------------------------  -----------------
                                                                     (note 1)                         (note 1)
                                                        Three months           One month             Two months
                                                            ended                ended                  ended
                                                          March 31,            March 31,            February 28,
                                                            2000                 1999                   1999
                                                    --------------------  -------------------  -------------
                                                                              amounts in millions
         <S>                                        <C>                               <C>                      <C>
         Cash paid for acquisitions (note 5):
                Fair value of assets acquired
                                                    $         2,510                   --                       --
                Net liabilities assumed                        (743)                  --                       --
                Deferred tax liability recorded
                                                               (362)                  --                       --
                Minority interests in equity of
                   acquired attributed
                   subsidiaries                                (285)                  --                       --
                AT&T Liberty Media Group tracking
                   stock issued
                                                               (778)                  --                       --
                                                    ----------------     ----------------        -----------------
                Cash paid for acquisitions
                                                    $           342                   --                       --
                                                    ================     ================        =================
</TABLE>
<TABLE>
<CAPTION>
         The following  table  reflects the change in cash and cash  equivalents
         resulting from the AT&T Merger and related  restructuring  transactions
         (amounts in millions):
         <S>                                                                                           <C>
         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                                                     (176)
                                                                                                       ----------

         Cash and cash equivalents subsequent to the AT&T Merger                                       $    5,319
                                                                                                       ==========
</TABLE>
                                   (continued)
<PAGE>
<TABLE>
<CAPTION>
         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):
         <S>                                                                                     <C>
         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
                                                                                                 ==============
</TABLE>


(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>
                                                               March 31, 2000             December 31, 1999
                                                        --------------------------  -----------------------
                                                                           amounts in millions
         <S>                                                 <C>                                 <C>
         USA Networks, Inc. ("USAI") and related
             investments                                     $        2,682                       2,699
         Telewest Communications plc ("Telewest")
                                                                      1,884                       1,996
         Discovery Communications, Inc. ("Discovery")
                                                                      3,378                       3,441
         TV Guide                                                     1,719                       1,732
         QVC Inc. ("QVC")                                             2,514                       2,515
         Teligent, Inc. ("Teligent")                                  1,317                          --
         Flextech p.l.c. ("Flextech")                                   707                         727
         UnitedGlobalCom, Inc. ("UnitedGlobalCom")
                                                                        453                         505
         Various foreign equity investments (other than
             Telewest and Flextech)
                                                                      1,440                       1,463
         Other                                                          946                         844
                                                             --------------            ----------------
                                                             $       17,040                      15,922
                                                             ==============            ================
</TABLE>
                                   (continued)
<PAGE>


         The following  table  reflects  Liberty Media Group's share of earnings
(losses) of affiliates:
<TABLE>
<CAPTION>
                                                                New Liberty                     Old Liberty
                                               ------------------------------------------   -----------------
                                                                 (note 1)                        (note 1)
                                                   Three months             One month           Two months
                                                       ended                  ended               ended
                                                     March 31,              March 31,          February 28,
                                                       2000                   1999                 1999
                                               ---------------------   -------------------  -----------------
                                                                       amounts in millions
         <S>                                      <C>                             <C>                    <C>
         USAI and related investments
                                                  $          (7)                    3                     10
         Telewest                                           (87)                  (25)                   (38)
         Discovery                                          (63)                  (16)                    (8)
         TV Guide                                           (13)                   (4)                    --
         QVC                                                 (1)                   (1)                    13
         Teligent                                           (71)                   --                     --
         Flextech                                           (10)                   (5)                    (5)
         UnitedGlobalCom                                    (50)                   --                     --
         Other foreign investments                          (47)                  (15)                   (22)
         Other                                              (33)                  (17)                   (16)
                                                  -------------         -------------        ---------------
                                                  $        (382)                  (80)                   (66)
                                                  =============         =============        ===============
</TABLE>
         Summarized  unaudited combined financial  information for affiliates is
as follows:
<TABLE>
<CAPTION>
                                                                New Liberty                    Old Liberty
                                               ------------------------------------------   ----------------
                                                                 (note 1)                        (note 1)
                                                   Three months             One month           Two months
                                                       ended                  ended               ended
                                                     March 31,              March 31,          February 28,
                                                       2000                   1999                 1999
                                               ---------------------   -------------------  ----------------
                                                                       amounts in millions
              <S>                               <C>                              <C>                <C>

              Revenue                           $      3,610                      993                2,341
              Operating expenses                      (3,333)                    (849)              (1,894)
              Depreciation and amortization
                                                        (641)                    (124)                (353)
                                             ---------------         -----------------    ----------------
                  Operating income (loss)
                                                        (364)                      20                   94
              Interest expense                          (465)                     (37)                (281)
              Other, net                                  (4)                     (89)                (127)
                                             ---------------         ----------------     -----------------
                  Net loss                      $       (833)                    (106)                (314)
                                                ============         ================     ================
</TABLE>
                                   (continued)
<PAGE>
         USAI owns and operates businesses in network and television production,
         television  broadcasting,  electronic retailing,  ticketing operations,
         and internet services.  At March 31, 2000, Liberty Media Group directly
         and indirectly held 66.5 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 these  shares  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 March  31,  2000,  Liberty  Media  Group  would own 145.5
         million shares or approximately 21% (on a fully-diluted  basis) of USAI
         common stock.  USAI's common stock had a closing market value of $22.56
         per share on March 31, 2000.

         Telewest   currently  operates  and  constructs  cable  television  and
         telephone  systems in the UK. At March 31,  2000,  Liberty  Media Group
         indirectly  owned 506  million of the issued and  outstanding  Telewest
         ordinary  shares.  The  reported  closing  price  on the  London  Stock
         Exchange of Telewest  ordinary  shares was $7.66 per share at March 31,
         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  Associated  Group,  Inc. (the
         "Associated  Group")  (see note 5). At March 31,  2000,  Liberty  Media
         Group held 21 million  shares of  Teligent  Class A common  stock.  The
         closing price for Teligent Class A common stock was $66.81 per share on
         March 31, 2000.

         On March 1, 1999, UVSG and 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,  22.5
         million  shares of UVSG's Class A common stock and 37.5 million  shares
         of UVSG's  Class B common  stock  valued at an  average  of $18.65  per
         share.  In addition,  News Corp.  purchased  approximately  6.5 million
         additional  shares of UVSG  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 own on an economic basis  approximately  44%, 44% and 12%,
         respectively, of TV Guide. Following such transactions,  News Corp. and
         Liberty Media Group each have  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).

                                   (continued)
<PAGE>
         The Class A common stock of TV Guide is publicly  traded.  At March 31,
         2000,  Liberty  Media Group held 58 million  shares of TV Guide Class A
         common  stock and 75 million  shares of TV Guide Class B common  stock.
         The TV Guide Class B common stock is convertible,  one-for-one, into TV
         Guide  Class A common  stock.  The  closing  price for TV Guide Class A
         common stock was $48.06 per share on March 31, 2000.

         Flextech develops and sells a variety of television  programming in the
         UK. At March 31, 2000,  Liberty Media Group indirectly owned 58 million
         Flextech  ordinary  shares.  The reported  closing  price on the London
         Stock Exchange of the Flextech  ordinary shares was $28.34 per share at
         March 31, 2000.

         UnitedGlobalCom is the largest global broadband communications provider
         of video,  voice and data services with operations in over 20 countries
         throughout the world.  At March 31, 2000,  Liberty Media Group owned an
         approximate 10% economic ownership interest representing an approximate
         36%  voting  interest  in   UnitedGlobalCom.   The  closing  price  for
         UnitedGlobalCom  Class A common stock was $75.06 per share on March 31,
         2000. The  UnitedGlobalCom  Class B common stock is  convertible,  on a
         one-for-one basis, into UnitedGlobalCom Class A common stock.

         The $14 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
         over an estimated useful life of 20 years.

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

         Investments in available-for-sale  securities and others are summarized
as follows:
<TABLE>
<CAPTION>
                                                                              March 31,         December 31,
                                                                                2000                 1999
                                                                        ----------------    -----------------
                                                                                    amounts in millions
         <S>                                                              <C>                          <C>
         Sprint Corporation ("Sprint")                                    $       12,513               10,186
         Time Warner, Inc. ("Time Warner")                                        10,975                8,202
         News Corp.                                                                2,801                2,403
         Motorola, Inc. ("Motorola")                                               3,308                3,430
         Other available-for-sale securities                                       4,427                3,773
         Other investments, at cost, and related receivables
                                                                                   1,065                  985
                                                                        ----------------    -----------------
                                                                                  35,089               28,979
             Less short-term investments                                             525                  378
                                                                        ----------------    -----------------
                                                                          $       34,564               28,601
                                                                          ==============    =================
</TABLE>
                                   (continued)
<PAGE>
         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 the
         merger,  each outstanding share of General  Instrument common stock was
         converted  into the right to receive  0.575  shares of Motorola  common
         stock.  In connection  with the merger  Liberty Media Group received 18
         million  shares and warrants to purchase 12 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
         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.

         Liberty  Media  Group's  right to exercise  warrants  to  purchase  6.1
         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  $14.35 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>
                                                                               March 31,         December 31,
                                                                                 2000               1999
                                                                         ------------------   -----------------
                                                                                  amounts in millions
         <S>                                                              <C>                          <C>
         Equity securities:
             Fair value                                                   $       30,663               24,472
             Gross unrealized holding gains                                       15,440               11,457
             Gross unrealized holding losses                                      (1,684)                (646)
         Debt securities:
             Fair value                                                            1,820                1,995
             Gross unrealized holding gains                                            1                   --
             Gross unrealized holding losses                                         (21)                 (22)
</TABLE>

         Management  of  Liberty   Media  Group   estimates  the  market  value,
         calculated  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,  of all of Liberty Media
         Group's  investments  in   available-for-sale   securities  and  others
         aggregated  $33.3  billion  and $29.2  billion  at March  31,  2000 and
         December  31,  1999,  respectively.   No  independent  appraisals  were
         conducted for those assets.

                                   (continued)
<PAGE>
(5)      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
         1.20711  shares of AT&T Class A Liberty  Media  Group  tracking  stock.
         Prior  to the  merger,  Associated  Group's  primary  assets  were  (1)
         approximately   19.7  million   shares  of  AT&T  common   stock,   (2)
         approximately  23.4 million  shares of AT&T Class A Liberty Media Group
         tracking stock,  (3)  approximately  5.3 million shares of AT&T Class B
         Liberty Media Group  tracking  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
         transmitters,   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  tracking  stock and AT&T Class B Liberty  Media  Group  tracking
         stock previously held by Associated Group were retired by AT&T.

         The acquisition of Associated Group was accounted for as a purchase and
         the $20  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 Liberty Media Group tracking stock,  net of the
         shares of AT&T  Liberty  Media Group  tracking  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.  ("TSAT") in exchange for
         Liberty  Media Group's  economic  interest in  approximately  5 million
         shares of Sprint PCS Group Stock, valued at $300 million. Liberty Media
         Group received 150,000 shares of TSAT Series A 12% Cumulative Preferred
         Stock and  150,000  shares of TSAT 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 TSAT. In connection with
         this  transaction,  Liberty  Media Group  realized a $211  million gain
         (before related tax expense of $84 million) during the first quarter of
         2000 based on the  difference  between the cost basis and fair value of
         the Sprint PCS Group Stock exchanged.

         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.  Such transaction was accounted for as a purchase and the
         $216 million  excess of the  purchase  price over the fair value of the
         net assets acquired is being amortized over 20 years.

                                   (continued)
<PAGE>
(6)      Long-Term Debt

         Debt is summarized as follows:
<TABLE>
<CAPTION>
                                                                              March 31,         December 31,
                                                                                2000                 1999
                                                                        ----------------    ----------------
                                                                                    amounts in millions
         <S>                                                               <C>                         <C>
         Parent company debt:
             Bank credit facilities                                        $        288                  390
             Senior notes                                                           741                  741
             Senior debentures (a)                                                1,486                  494
             Senior exchangeable debentures (b)                                   2,196                1,022
             Securities lending agreement (c)                                     1,116                   --
                                                                        ---------------     ----------------
                                                                                  5,827                2,647
         Debt of subsidiaries:
             Bank credit facilities                                                 770                  573
             Senior notes                                                           165                   --
             Other debt, at varying rates                                            48                   57
                                                                        ---------------     ----------------
                                                                                    983                  630
                                                                        ---------------     ----------------
             Total debt                                                           6,810                3,277
         Less current maturities                                                  1,573                  554
                                                                        ---------------     ----------------
             Total long-term debt                                          $      5,237                2,723
                                                                        ===============     ================
<FN>
         (a)      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 senior debentures have
                  an aggregate  principal amount of $1 billion.  Interest on the
                  senior  debentures  is payable  on  February 1 and August 1 of
                  each year.

         (b)      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. 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  due 2030.  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 amount 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  amount in cash,
                  Sprint PCS Group Stock or a combination  thereof.  Interest on
                  these  exchangeable  debentures  is payable on February 15 and
                  August  15  of  each  year.   The   carrying   amount  of  the
                  exchangeable debentures in excess of the principal amount (the
                  "Contingent  Portion)  is  based  on  the  fair  value  of the
                  underlying Sprint PCS Group Stock. The increase or decrease in
                  the Contingent  Portion is recorded as an increase or decrease
                  to interest  expense in the combined  statement of  operations
                  and comprehensive earnings.

                                   (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.  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 cash  collateral  of $1,013  million at March 31,
                  2000 included  $223 million of  restricted  cash. At March 31,
                  2000,  Liberty  Media Group had  utilized  $103 million of the
                  cash collateral under the securities lending agreement.
</FN>
</TABLE>

         At March 31, 2000,  Liberty Media Group had approximately  $161 million
         in unused  lines of credit under its bank credit  facilities.  The bank
         credit facilities of Liberty Media Group generally contain  restrictive
         covenants which require, among other things, the maintenance of 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 March
         31, 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.
<TABLE>
<CAPTION>
         Based on quoted market prices,  the fair value of Liberty Media Group's
         debt at March 31, 2000 is as follows (amounts in millions):
                 <S>                                                            <C>
                 Senior notes of parent company                                 $      742
                 Senior debentures of parent company                                 1,483
                 Senior exchangeable debentures of parent company
                                                                                     2,295
                 Senior notes of attributed subsidiary                                 178
</TABLE>
         Liberty Media Group believes that the carrying  amount of the remainder
         of its debt approximated its fair value at March 31, 2000.

(7)      Combined Equity

         Stock Issuances of Subsidiary

         During  the first  quarter of 2000,  Liberty  Digital,  Inc.  ("Liberty
         Digital")  issued  approximately  1.5 million shares of common stock in
         connection  with a certain  acquisition  and the  exercise  of  certain
         employee  stock  options.  In  connection  with the increase in Liberty
         Digital's equity, net of the dilution of Liberty Media Group's interest
         in Liberty Digital,  that resulted from such stock  issuances,  Liberty
         Media Group recorded a $75 million increase to combined equity.

                                   (continued)
<PAGE>
         Transactions with Officers and Directors

         Prior to the AT&T Merger, a limited liability company owned by Dr. John
         C. Malone (Liberty Media Corporation's Chairman) 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 repaid 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.

         Transactions with AT&T

         Certain AT&T corporate general and administrative  costs are charged to
         Liberty Media Group based on the cost of services provided.  Management
         believes this allocation method is reasonable.  During the three months
         ended  March 31,  2000,  the one month ended March 31, 1999 and the two
         months ended  February  28, 1999  Liberty  Media Group was charged less
         than $1 million, less than $1 million and $2 million,  respectively, in
         corporate  general and  administrative  costs by AT&T.  These costs are
         included in operating expenses in the accompanying  combined statements
         of operations and comprehensive earnings.

         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 $52 million, $18 million and $43 million
         for the three  months ended March 31,  2000,  one month  period  ending
         March 31,  1999 and the two month  period  ending  February  28,  1999,
         respectively.

         Subsidiaries  of  Liberty  Media  Group  lease  satellite   transponder
         facilities from a subsidiary of AT&T. Charges for such arrangements and
         other related  operating  expenses for the three months ended March 31,
         2000, and the one month ended March 31, 1999  aggregated $5 million and
         $2 million, respectively, and are included in operating expenses in the
         accompanying   combined  statements  of  operations  and  comprehensive
         earnings.

         Liberty Media Group makes marketing  support payments to AT&T.  Charges
         by AT&T for such arrangements were less than $1 million for each of the
         three months  ended March 31, 2000,  the one month ended March 31, 1999
         and the two months ended February 28, 1999.

                                   (continued)
<PAGE>
         The Puerto Rico Subsidiary  purchases  programming  services from AT&T.
         The  charges,  which  approximate  AT&T's  cost  and are  based  on the
         aggregate  number of subscribers  served by the Puerto Rico Subsidiary,
         aggregated $2 million,  less than $1 million and $1 million  during the
         three months  ended March 31, 2000,  the one month ended March 31, 1999
         and the two months  ended  February  28,  1999,  respectively,  and are
         included in operating expenses in the accompanying  combined statements
         of operations and comprehensive earnings.

         Due (from) to Related Parties

         The amounts  included in "Due  (from) 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.

(8)      Commitments and Contingencies

         Starz Encore 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
         2017 (the "Film  Licensing  Obligations").  Based on customer levels at
         March 31, 2000, these agreements  require minimum payments  aggregating
         approximately $1.2 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.

         Flextech has undertaken to finance the working capital  requirements of
         a joint  venture  (the  "Principal  Joint  Venture")  formed  with  BBC
         Worldwide, and is obligated to provide the Principal Joint Venture with
         a primary credit facility of (pound)88  million and, subject to certain
         restrictions,  a standby credit  facility of (pound)30  million.  As of
         March 31, 2000,  the  Principal  Joint  Venture had borrowed  (pound)59
         million under the primary credit facility.  If Flextech defaults in its
         funding  obligation  to the  Principal  Joint Venture and fails to cure
         within  42 days  after  receipt  of  notice  from  BBC  Worldwide,  BBC
         Worldwide is entitled,  within the  following 90 days,  to require that
         Liberty Media Group assume all of Flextech's funding obligations to the
         Principal Joint Venture.

         Liberty  Media  Group has  guaranteed  various  loans,  notes  payable,
         letters of credit and other obligations (the "Guaranteed  Obligations")
         of certain  affiliates.  At March 31, 2000, the Guaranteed  Obligations
         aggregated approximately $679 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
         Securities") of Sprint 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,  would
         require the Trustee, on or before May 23, 2002, to dispose of a portion
         of the Sprint  Securities  sufficient  to cause  Liberty Media Group to
         beneficially own no more than 10% of the outstanding Series 1 PCS Stock
         of Sprint on a fully  diluted  basis on such date. On or before May 23,
         2004,  the Trustee must divest the  remainder of the Sprint  Securities
         beneficially owned by Liberty Media Group.

         The Final Judgment requires that the Trustee vote the Sprint Securities
         beneficially  owned by Liberty  Media Group in the same  proportion  as
         other holders of Sprint's PCS 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  Securities,  with  certain
         exceptions, without the prior written consent of the DOJ.

         Liberty  Media Group  leases  business  offices,  has entered into pole
         rental and  transponder  lease  agreements  and uses certain  equipment
         under lease arrangements.

         Liberty  Media  Group  has  contingent  liabilities  related  to  legal
         proceedings  and  other  matters  arising  in the  ordinary  course  of
         business.  Although it is reasonably  possible  Liberty Media Group 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.