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(1)������Basis of Presentation

The accompanying consolidated financial statements of �鶹app (formerly named �鶹app Spinco,��Inc.; see discussion below pertaining to the Starz Spin-Off (defined below)) ("�鶹app" or the "Company" unless the context otherwise requires) represent a consolidation of certain media and entertainment related assets and businesses. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

�鶹app, through its ownership of interests in subsidiaries and other companies, is primarily engaged in the media and entertainment industries primarily in North America. Our significant subsidiaries include Sirius XM Holdings Inc. (“SIRIUS XM”) and Braves Holdings, LLC (“Braves Holdings”). Our significant investment accounted for under the equity method of accounting is Live Nation Entertainment, Inc. ("Live Nation").

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In September 2011, �鶹app Interactive Corporation ("�鶹app Interactive" and formerly named �鶹app) completed the split-off of its former wholly-owned subsidiary (then known as �鶹app) from its �鶹app Interactive tracking stock group (the "Split-Off").

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In January 2013, the entity then known as �鶹app (now named Starz) spun-off (the “Starz Spin-Off”) its then-former wholly-owned subsidiary, now known as �鶹app, which, at the time of the Starz Spin-Off, held all of the businesses, assets and liabilities of Starz not associated with Starz, LLC (with the exception of the Starz, LLC office building). The transaction was effected as a pro-rata dividend of shares of �鶹app to the stockholders of Starz. Due to the relative significance of �鶹app to Starz (the legal spinnor) and senior management's continued involvement with �鶹app following the Starz Spin-Off, �鶹app is being treated as the "accounting successor" to Starz for financial reporting purposes, notwithstanding the legal form of the Starz Spin-Off previously described. Therefore, the historical financial statements of the company formerly known as �鶹app continue to be the historical financial statements of �鶹app, and Starz, LLC has been treated as discontinued operations upon completion of the Starz Spin-Off in the first quarter of 2013. Therefore, for purposes of these consolidated financial statements, �鶹app is treated as the spinnor for purposes of discussion and as a practical matter for describing all the historical information contained herein.

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Also in January 2013, �鶹app obtained a controlling interest and began consolidating SIRIUS XM, as further discussed in note 3.

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During 2014, �鶹app’s board approved the issuance of shares of its Series C common stock to holders of its Series A and Series B common stock, effected by means of a dividend. On July 23, 2014, holders of Series A and Series B common stock as of 5:00 p.m., New York City, time on July 7, 2014, the record date for the dividend, received a dividend of two shares of Series C common stock for each share of Series A or Series B common stock held by them as of the record date. The impact of the Series C common issuance has been reflected retroactively in these consolidated financial statements due to the treatment of the dividend as a stock split for accounting purposes. Additionally, in connection with the Series C common stock issuance and the Broadband Spin-Off (defined below), outstanding Series A common stock warrants have been adjusted, as well as the number of shares covered by outstanding cash convertible note hedges and purchased call options (the “Bond Hedge Transaction”). See note 9 for further discussion regarding the warrants and Bond Hedge Transaction. There were 21,085,900 warrants with a strike price of $64.46 outstanding at December 31, 2015. The number of shares covered by the Bond Hedge Transactions was adjusted to 21,085,900 shares of �鶹app Series A common stock and the strike price was adjusted to $47.43 per share, which corresponds to the adjusted conversion price of our 1.375% Cash Convertible Senior Notes due 2023.

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On November 4, 2014, �鶹app completed the spin-off to its stockholders common stock of a newly formed company called �鶹app Broadband Corporation ("�鶹app Broadband") (the “Broadband Spin-Off”). Shares of �鶹app Broadband were distributed to the shareholders of �鶹app as of a record date of 5:00 p.m., New York City time, on October 29, 2014. �鶹app Broadband is comprised of, among other things, (i) �鶹app’s former interest in Charter Communications, Inc. (“Charter”), (ii) �鶹app’s former subsidiary TruePosition, Inc. (“TruePosition”), (iii) �鶹app’s former minority equity investment in Time Warner Cable, Inc. ("Time Warner Cable"), (iv) certain deferred tax liabilities, as well as liabilities related to Time Warner Cable call options and (v) initial indebtedness, pursuant to margin loans entered into prior to the completion of the Broadband Spin-Off.����Prior to the transaction, �鶹app Broadband borrowed funds under margin loans and made a final distribution to �鶹app of approximately $300 million in cash. The Broadband Spin-Off was intended to be tax-free to stockholders of �鶹app.����In the Broadband Spin-Off, record holders of Series A, Series B and Series C common stock received one share of the corresponding series of �鶹app Broadband common stock for every four shares of common stock held by them as of the record date for the Broadband Spin-Off, with cash paid in lieu of fractional shares.

As of the date of the completion of the Broadband Spin-Off, the Company’s former investments in and results of Charter and Time Warner Cable are no longer included in the results of �鶹app. Based on the relative significance of TruePosition to �鶹app, the Company concluded that discontinued operations presentation of TruePosition is not necessary. However, the table below includes the historical financial information of TruePosition, which is included in the consolidated statements of operations for the years ended December 31, 2014 and 2013, to illustrate the historical impact of the Broadband Spin-Off on Liberty’s financial statements.

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As a result of the Broadband Spin-Off and repurchases of Series A common stock, the Company’s additional paid-in capital balance was in a deficit position as of December 31, 2015. In order to maintain a zero balance in the additional paid-in capital account, we reclassified the amount of the deficit ($499 million) to retained earnings as of December 31, 2015.

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During August 2014, �鶹app Interactive completed the distribution of �鶹app TripAdvisor Holdings, Inc. (“�鶹app TripAdvisor”) (the “TripAdvisor Spin-Off”). Following the Split-Off, Starz Spin-Off, TripAdvisor Spin-Off and Broadband Spin-Off, �鶹app, �鶹app Interactive, Starz, �鶹app TripAdvisor and �鶹app Broadband operate as separate publicly traded companies, none of which has any stock ownership, beneficial or otherwise, in the other. In connection with the Split-Off, Starz Spin-Off, TripAdvisor Spin-Off and Broadband Spin-Off, �鶹app entered into certain agreements with �鶹app Interactive, Starz, �鶹app TripAdvisor and �鶹app Broadband, respectively, in order to govern ongoing relationships between the companies and to provide for an orderly transition. These agreements include����Reorganization Agreements, Services Agreements, Facilities Sharing Agreements, a Lease Agreement (in the case of the Starz Spin-Off only) and with respect to Starz and �鶹app Broadband, Tax Sharing Agreements. The Reorganization, Services and Facilities Sharing Agreements entered into with �鶹app Interactive were assigned from Starz to �鶹app in connection with the Starz Spin-Off.

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The Reorganization Agreements provide for, among other things, provisions governing the relationships between �鶹app and each of �鶹app Interactive, Starz, �鶹app TripAdvisor and �鶹app Broadband following the Split-Off, Starz Spin-Off, TripAdvisor Spin-Off and Broadband Spin-Off, respectively, including certain cross-indemnities. Pursuant to the Services Agreements, �鶹app provides �鶹app Interactive, Starz, �鶹app TripAdvisor and �鶹app Broadband with general and administrative services including legal, tax, accounting, treasury and investor relations support. �鶹app Interactive, Starz, �鶹app TripAdvisor and �鶹app Broadband reimburse �鶹app for direct, out-of-pocket expenses incurred by �鶹app in providing these services and for �鶹app Interactive's and Starz's allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent providing services to each respective company. �鶹app TripAdvisor and �鶹app Broadband reimburse �鶹app for shared services and personnel based on a flat fee. Under the Facilities Sharing Agreements, �鶹app shares office space and related amenities with �鶹app Interactive, Starz, �鶹app TripAdvisor and �鶹app Broadband at �鶹app's corporate headquarters.����Under these various agreements, approximately $17 million, $15 million and $16 million of these allocated expenses were reimbursed to �鶹app during the years ended December��31, 2015, 2014 and 2013, respectively. Under the Lease Agreement, Starz leases its corporate headquarters from �鶹app. The Lease Agreement with Starz for their corporate headquarters requires a payment of approximately $3 million annually, subject to certain increases based on the Consumer Price Index. The Lease Agreement expires on December 31, 2023 and contains an extension option.

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The Tax Sharing Agreements provide for the allocation and indemnification of tax liabilities and benefits between �鶹app and each of Starz and �鶹app Broadband as well as other agreements related to tax matters. Among other things, pursuant to the Tax Sharing Agreements, �鶹app has generally agreed to indemnify Starz and �鶹app Broadband for taxes and losses resulting from the failure of the Starz Spin-Off and the Broadband Spin-Off, respectively, to qualify for tax-free treatment. However, Starz will be responsible for any such taxes and losses related to the Starz Spin-Off which (i)��result primarily from the breach of certain restrictive covenants made by Starz, or (ii)��result from Section��355(e) of the Code applying to the Starz Spin-Off as a result of the Starz Spin-Off being part of a plan (or series of related transactions) pursuant to which one or more persons acquire a 50-percent or greater interest (measured by vote or value) in the stock of Starz, and �鶹app Broadband will be responsible for any such taxes and losses related to the Broadband Spin-Off which (i)��result primarily from the breach of certain restrictive covenants made by �鶹app Broadband, or (ii)��result from Section��355(e) of the Code applying to the Broadband Spin-Off as a result of the Broadband Spin-Off being part of a plan (or series of related transactions) pursuant to which one or more persons acquire a 50-percent or greater interest (measured by vote or value) in the stock of �鶹app Broadband. In February 2014, the IRS and Starz entered into a closing agreement which provided that the Starz Spin-Off qualified for tax-free treatment to Starz and �鶹app. �� ��In September 2015, �鶹app entered into a closing agreement with the IRS which provided that the Broadband Spin-Off qualified for tax-free treatment.

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As further discussed in note 11, during November 2015, �鶹app’s board of directors authorized management to pursue a reclassification of the Company’s common stock into three new tracking stock groups, one to be designated as the �鶹app Braves tracking stock, one to be designated as the �鶹app Media tracking stock and one to be designated as the �鶹app SiriusXM tracking stock, and to cause to be distributed subscription rights related to the �鶹app Braves tracking stock following the creation of the new tracking stocks.