GSN-FUN Deal Overview

March, 2009

GSN/FUN TransactionsPresentation for the GEC

March 25, 2009

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Executive Summary

• SPE is recommending a sale of 15% of GSN (30% of our 50% interest) and an acquisition of a 35% interest in FUN Technologies (currently 100% owned by Liberty) after which SPE and Liberty will contribute their interests in FUN to GSN, leaving SPE 35% of the combined entity. The purchase and sale transaction is expected to close in March 2009

• SPE believes now is the best time to structure and execute the transaction

– GSN’s current 50/50 governance structure makes it less likely for either owner to leverage their broader business interests to GSN’s advantage. As a result, DirecTV is paying below market fees to GSN despite Liberty ownership

– GSN faces risks normally associated with smaller, independent cable networks in an increasingly competitive market

– Liberty’s desire to consolidate GSN into its new spin-off entity, Liberty Entertainment, presents SPE leverage to address the DirecTV issue and monetize a portion of our investment in GSN at an attractive valuation

• The transactions will result in immediate value to SPE and position GSN for near-term growth

– The combination would provide SPE $27MM in cash and a gain of roughly $70-$80MM for the sale of 15% of GSN

– GSN would realize synergies through a merger with FUN (in its internet businesses and in senior management)

– Governance would remain unchanged despite SPE retaining only 35% of the combined business

• The deal would provide mechanisms to either improve fees from DirecTV or provide a path to exit for SPE

– A fair market put/call will be in place and will be exchanged for a buy/sell (with Liberty and SPE guarantees) in the event that Liberty Entertainment is spun-off and GSN enters into a new carriage agreement with DirecTV

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Overview of GSN and FUN

• Cable network with a primary programming focus on game show content

• Currently a 50/50 JV between SPE and Liberty Media Corp

• Distributed to 66 million homes

• Revenues driven by a mix of affiliate fees and television/online advertising

• Demographics: 66% Female, core audience aged 25-54

• Consistent growth in profitability in recent years with operating income reaching $42.3MM in CY 2008 (CY 2009 estimated at $36.6MM)

• Programming strategy includes licensed SPT library product and new shows developed based on classic SPT game show formats

• Enables 30 million registered users to compete in cash competitions of popular skill games online

• Provides co-branded game portals and services to large games and lifestyle Web sites, including AOL Games, EA.com/Pogo, Games.com, and GSN

• Specializes in developing and licensing advertiser-supported casual games

• Attracts approximately 4.6 million unique visitors/month

Potential Merger Benefits

• Cross-promotion of GSN/FUN properties

• Worldwinner’s hosting capabilities will continue to improve GSN.com cost efficiency

• FUN’s game development expertise will enable GSN to quickly roll-out interactive versions of GSN properties

FUN TechnologiesGSN

• When SPE invests in FUN Technologies, it will include the FUN Games business, primarily consisting of WorldWinner and Teagames (described below)

• Currently, FUN Technologies also operates FUN Sports, a provider of sports information online

• The FUN Sports business will be left with Liberty and will not be part of FUN Technologies when SPE invests

WorldWinner

Teagames

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SPE Believes Now is the Best time to Monetize a Portion of our GSN Investment and Increase the Potential of an Eventual Exit

Rationale for Decreasing Ownership

Benefits of Deal Timing

• 50 / 50 ownership limits the level of benefits GSN receives from either strategic partner, forcing GSN to operate as an independent in some respects

– GSN has not yet been able to reach agreement with DirecTV for carriage on market terms despite Liberty’s ownership of DirecTV

– Lack of consolidation of earnings reduces upside from investments by either owner

• 100% ownership by either owner is the likely outcome; Liberty is expected to pay the higher price for the business as they will drive greater synergies:

– Cross promotion with other Liberty channels

– Carriage negotiations / channel positioning on DirecTV

– Overhead synergies

• Liberty has a strong need to merge FUN with GSN

– Liberty acquired FUN at an average valuation of $298MM (Acquired 53% at a $367MM valuation in March 2006; Acquired the remainder at roughly $220MM valuation in December 2007)

– Without the synergies that GSN will provide, Liberty is unlikely to generate an acceptable return on this acquisition

• Further, Liberty seeks a path to consolidate GSN earnings in order to bolster earnings in its planned spin-off stock

Independent cable networks do not enjoy the benefits of scale and leverage of networks owned by larger media conglomerates

Liberty’s immediate goals provide us increased leverage

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• Liberty’s 65% stake in GSN/FUN (along with its interests in DirecTV, Liberty Sports Holdings, and PicksPal) will be transferred to Liberty Entertainment Inc. (LEI)

–Starz Entertainment and Wildblue will not be included in the spin-off

• LEI will be owned by the public stockholders who previously owned the Liberty Entertainment tracking stock

Liberty Media Anticipates Including Their GSN/FUN Stake in a Planned Spin-Off Targeted For May 2009

• Liberty’s 65% stake in the combined GSN/FUN entity will remain in the Liberty Entertainment tracking stock along with the other Liberty Entertainment assetsAt Close of the Transactions

(Prior to Spin-off)

• Liberty Media Corporation is comprised of three tracking stocks: Liberty Entertainment, Liberty Interactive, and Liberty Capital

• The Liberty Entertainment tracking stock includes Liberty’s interest in GSN (50%), FUN (100%), and Liberty’s interest in several other businesses:

– DirecTV (54%), Liberty Sports Holdings (100%), Starz Entertainment (100%), Wildblue Communications (37%), and PicksPal (73%)

Today

After Spin-Off (target of May 2009)

Liberty expects that conversion of the current tracking stock to a defined public entity will improve the stock's valuation and position it for a subsequent merger with DirecTV or another party

Liberty expects that conversion of the current tracking stock to a defined public entity will improve the stock's valuation and position it for a subsequent merger with DirecTV or another party

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The Sale of 15% of GSN will Allow SPE to Generate Additional Returns on our Investment

Cash Invested and Returned P&L Impact

(Values in $MM)

Total Cash Invested by SPE in GSN ($197) Sony's Share of Cumulative Earnings ($68)

Sale of 50% to Liberty in 2001 $225 Gain on Sale of 50% to Liberty in 2001 $194

Total Dividends Received by SPE(Includes $42.5MM received 3/15/2009) $83

Sale of 15% to Liberty in 2009 $27 Sale of 15% to Liberty in 2009 $75($90MM net of $63MM investment in FUN) (Estimated, may be $70-$80MM)

Net Cash Generated to Date $138 Cumulative SPE EBIT Contribution to Date $201

Approximate Cash-on-Cash IRR at Close of Transactions 14%

Estimated Current Value of 35% of GSN / FUN* $273 Estimated Gain on Sale of 35% of GSN / FUN* $200

Estimated Lifetime Net Cash if Sold Today $411 Estimated Lifetime SPE EBIT if Sold Today $401

Approximate Lifetime IRR if Sold Today 21%

* Assumes $780MM current total valuation

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Transaction Summary

• SPE will be paid $90MM for 15% of GSN and will pay $63MM for 35% of FUN, with a positive net cash impact of $27MM

• SPE and Liberty will contribute their interests in FUN to GSN, leaving SPE 35% of the combined entity

• SPE will recognize a gain of approximately $75MM

- Final gain calculation will be based on accounting valuations, which are currently being completed and may be below $600MM and $180MM for GSN and FUN, respectively

• Pre-close dividend was $85MM ($42.5MM to SPE)

• As part of the transaction, the parties will agree to bear responsibility under the current 50/50 ownership ratio for any potential pre-close MFN liabilities, which could equal up to $20-$25MM ($10-$12.5MM for SPE)

• At 35% ownership of the combined entity, SPE will retain the same governance rights as held at current 50% ownership level

$600MM $180MMAssumed Transaction Price

% Sold / Bought 15% 35%

Cash to (from) SPE $90MM ($63MM)

$27MMNet Cash to SPE

Interim SPE Stake 35% 35%

SPE Stake in GSN/FUN 35%

GSN FUN

Determination of Net Cash to SPE and Resulting Ownership

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Put/Call and Buy/Sell Mechanisms

• At close, a put/call mechanism will be in place

– During the trigger window, SPE will have the right to put its remaining 35% stake of GSN to Liberty and Liberty will have the right to call SPE’s remaining 35% stake of GSN

• Either party may exercise the put/call during a trigger window

• Trigger window is December 1-15 of each year, commencing in 2011

– Purchase price is based on an independent appraisal of fair market value

– The put/call is guaranteed by a Liberty entity that owns 54% of DirecTV

• In the event Liberty Entertainment is spun-off from Liberty Media and GSN enters into a new carriage agreement with DirecTV, the put/call will be exchanged for a buy/sell

– New carriage agreement must start in February 2007 and run for at least 3 years with fees of at least $0.085 per subscriber

– Buy/sell would have same trigger window and fair market valuation mechanism as the put/call

– Buy/sell would be guaranteed by SPE and a Liberty entity that owns 54% of DirecTV

– Either party may initiate the buy/sell during the trigger window

• Initiating party notifies the other party

• Receiving party must elect (by the later of 120 days or 5 days after the purchase price is determined) to either purchase all of the initiating member’s ownership interest in GSN or sell all of the receiving party’s interest in GSN to initiating party

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Gain on the Sale of 15% of GSN Will be Based on Accounting Valuations

• For GSN, a $600MM transaction is likely a meaningful premium to market

– CY07 Salem valuation supported $600MM if owned by Liberty. Liberty was not a buyer at this price

– Value to SPE at that time was considerably less due to strategic considerations

– A valuation overhang exists due to unresolved carriage dispute with DirecTV

– Although GSN’s business performance has improved, the market has cooled in the last 2 years

• For FUN, a $180MM transaction is at the low end of historical transactions, but also likely a premium to market

– Liberty acquired FUN at a $298MM average valuation, with the last component of the purchase at $220MM ($180MM for sub-set of assets SPE is buying into)

– Negative market trends in valuation may not be fully offset by synergies to be captured through combination with GSN

• By structuring the transaction as a simultaneous purchase and sale, SPE and Liberty are able to capture the benefits of the business combination, with a sharing of valuation risks by both parties

– $27MM net cash received by SPE is locked and will not vary if accounting valuations are below negotiated levels of $600MM and $180MM

– Final accounting valuations will determine our FY09 gain, but can be below $600MM and $180MM (e.g., $550MM and $160MM) and still generate a gain of roughly $70-$80MM

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Legal Issues With Regard To Skill-based Games

• FUN operates an online casual games business including tournament games for a fee

– FUN is subject to gaming regulations

– Games must be "skill-based" and not illegal gambling/games of chance

– "Skill-based" determination is done on a game-by-game basis, is factually intensive and can vary based upon the jurisdiction

Background

• If FUN's activities are illegal gambling, FUN could be criminally prosecuted for a misdemeanor or felony (depending on the jurisdiction), including fines and imprisonment (of FUN management), but outside counsel advised that imprisonment is highly unlikely

– Fines vary by jurisdiction but could be $10,000 per violation

Risks

• To comply with gaming regulations, FUN does not offer fee-based tournament games in certain prohibited U.S. states, employs filtering technology in an attempt to exclude players from these prohibited states and designs its games, utilizing outside counsel review, with the intent to be skill-based

• Despite all of the preventative measures taken by FUN, gaming counsel has advised us that there is no way to entirely eliminate the risks associated with the skill-based games business, including any negative publicity from charges made (whether substantiated or not)

Mitigation/ Limits On Ability to Mitigate

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M T W T F S S

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MARCH

• SCA initial review

• Technical diligence

• Initial drafts of all long-form documents

• Legal diligence

• In-person briefing for SCA and Tokyo teams

• EY completes preliminary GSN valuation

• SCA final review

• Investment Committee Meeting

3/25 • GEC Meeting and approval

3/27 • Close

Targeted Deal Timing