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Disclosures and Certifications may be found in the Appendix at the end of this report.

1- LI NTA- OCTOBER 18, 2013

Liberty Interactive (LINTA / LINTB)**A Tracking stock of Liberty Interactive

October 18, 2013

Fair Value: $32.05 (pro forma)[Previous: $30.74]

Robert G. Routh, CPA

(917) 796-9884

[email protected]

IM: robert_routh

SECTOR: TMT-Large Cap Media

LIBERTY INTERACTIVE: COMPLEXI TY BECOMES SIMPLE………

We are maintaining coverage of Liberty Interactive (LINT) with a “Buy ” rating and current fair publicmarket value of $32.05 per fully diluted share (priced as of the close 10/17/2013) pro forma for theplanned name change to QVC (A, B) and the distribution of Liberty Digital Commerce (LDCA, LDCB)scheduled to take place in the first half of 2014.

Although this represents significant upside of 21.72% from present levels, we think the announcements at

the Liberty Interactive Investor day on October 10th

, 2013 where it was made clear that LINT will bedistributing on a one for ten basis pro rata to LINT shareholders tax free shares of a new tracker namedLiberty Digital Commerce (ticker LDCA, LDCB) and that the legacy Liberty Interactive tracker LINT will

be renamed the QVC Group.

We think this should certainly create and highlight material equity value for current LINT holders bothshort and long term, especially as LINT has real operating businesses, is liquid and can be valued in many

ways.

In addition this is usually the best time of year to own the equity due to the businesses they operate in(Home Shopping and ecommerce).

It was also announced at the Investor Day that LINT had repurchased $206 million of LINT shares from August 1, 2013 through October 4, 2013 and the company continues to have $503 remaining under itsexisting repurchase authorization.

We think once this is extinguished, another repurchase authorization at LINT is likely so the company cancontinue to create leveraged equity returns for investors.

We also believe the name change to QVC from LINT combined with the business focus on HomeShopping will result in the clientele effect whereby the group of investors interested in QVC will be farlarger than is presently the case as LINT is currently structured.

Rating: BUY

Price Close

(10/17/2013):

$26.33

Ticker Symbol: LINTA, LINTB-soon QVCA, QVCB, LDCA, LDCB52-week Range: $18.68-$26.82

Market Cap. (MM) $14,631.37

mailto:[email protected]:[email protected]:[email protected]

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Robert G. Routh CPA

(917) 795-9884

[email protected]

2- LI NTA - OCTOBER 18, 2013

The new LINT (QVC) will be 100% of QVC (as well as the 38% of HSN owned by Liberty Interactive), cashand the $400 million in convertible exchangeable debt tied to 5.38 million HSNI shares at 1% interest

with an initial conversion of $74.31.

The name change and the simplicity the restructuring should create combined with the international

opportunity at QVC should result in multiple expansion at the QVC Group, which combined withcontinued share repurchases there (which we don’t have figured in our models, representing only moreupside) should bode well for investors.

We also think the creation of the LDC tracker to separate the ecommerce operations tax free from thehome shopping operations will result in the clientele effect there as well as there are many investors that

want exposure to either the home shopping operations of LINT or the ecommerce operations, but not both.

Although in this note we value the ecommerce operations at cost (to the extent that we can), we thinkdepending on how that tracker trades, an opportunity could present itself for investors as we saw whenLVNT and LVNAR was created from LINT.

The pro forma LDC tracker is expected to have a $250 million credit facility in place and should initiallyhave $96 million in cash and debt of $142 million in addition to the ecommerce operations currentlytracked by LINT.

The only exception here is Buy Seasons (now part of Celebrate Interactive Holdings, LLC which is anecommerce operation of LINT) will be moved to LVNT prior to the LDC creation from LINT (anotherLiberty Interactive tracker) for some consideration to LINT, and then distributed from that entity (LVNT)on a one for one basis along with Interactive’s Trip Advisor holdings (22% economic, 57% voting control)into a new asset backed security with the ticker LTRPA, LTRPB in the first half of 2014 (this is a topic foranother note).

Ultimately, we think once LVNT distributes the asset backed LTRP shares to LVNT holders (again on aone for one basis which equates to about 39.3 million shares) , Liberty Interactive management may lookto either buy in the rest of EXPE or sell their interest tax free to EXPE at a premium similar to the 63%

premium paid by Liberty to Diller and the Von Furstenberg foundation (which set a precedent) for theTRIP shares they bought from them along with the irrevocable proxy Diller had to vote Liberty’s TRIP57% voting interest.

We also think LVNT may look to buy in IILG and could do this prior to the creation of LDC. Due to thelow level of leverage at that entity (IILG), it could be purchased by Liberty Interactive Corp., moved intoLDC prior to the LDC distribution which could make LDC easier for investors to value in the publicmarketplace. Just a thought here.

When all is said and done, we think LVNT will eventually be remerged with LINT (QVC), and once againInteractive will have only two trackers rather than three (QVC and LDC).

At some point, LDC could also be split off and become an asset backed security which would eliminate any

tracking stock discount ascribed to any on the Liberty Interactive trackers (we estimate that to be 10%-15%). We see the QVC Group though as the safer of the trackers to own at this time due to how simple it isto understand and value and the fact it has a name all are familiar with.

If LVNT was to sell its EXPE position (or at least the 12.777 million super voting B shares tax free back tothe company-as EXPE still has 16.1 million shares remaining under its existing repurchase authorization)and then LINT (QVC) was to roll in LVNT for LINT (QVC) stock, LINT (QVC) could then use the cashfrom EXPE to repurchase any LINT (QVC) shares issued in the roll in.

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Robert G. Routh CPA

(917) 795-9884

[email protected]


A simultaneous roll-in of LVNT, tender offer for LINT (QVC) here would seem to make a ton of sense, ofcourse, repurchasing more LINT (QVC) now before the planned roll-in makes a bunch more sensed to us.

When all is said and done here, we see the complexity of the announced separation at LINT of the homeshopping business and the ecommerce operations tax free via a tracker at LINT as genius.

We also think the combination of multiple expansion at QVC and the clientele effect combined with moreshare repurchases should result in material equity appreciation for investors as well as provide the LibertyInteractive legal SEC filing entity with tons of flexibility as far as doing more deals going forward withoutand tax bleed.

In summary, we view all these LINT announcements as good for investors, especially those with a longinvesting horizon.

Our full interactive model for LINT “as is” as well as for QVC and LDC pro forma are available uponrequest. Exhibits showing what we see as the result of announcements so far may be found in this note.

Figure 1: Liberty Interactive-(Share Count and Options Summary Derivation)

Shares per 10Q Market Price

Outstanding Shares

LINT Class A -soon to be QVC 491.51 $26.33 -

LINT Class B -soon to be QVC 28.90 $26.00 -

Total Shares Outstanding 520.42

Options Option Shares Option Price Option Cash

LINT Class A -soon to be QVC 35.21 $17.88 $629.59

LINT Class B -soon to be QVC 0.43 $17.92 $7.74

Total Option Shares 35.64 $637.33

Shares For Valuation

LINT Class A -soon to be QVC 526.73 $629.59

LINT Class B -soon to be QVC 29.33 $7.74

Total Shares / Incremental Cash For Valuation 556.06 $637.33

Option Cash $637.33

Source: NACM estimates, Public Filings, Company data.

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Robert G. Routh CPA

(917) 795-9884

[email protected]


Figure 2: Liberty Interactive-Valuation Summary (Now “As Is”)Assets Value Per Share

Non QVC: Private Assets and Operations

Backcountry.com-88% (Cost, Liberty LMDIA / LEI Proxy) $124.20 $2.23

Bodybuilding.com-90% (Cost, Liberty LMDIA / LEI Proxy) $203.04 $3.65

Celebrate Interactive Holdings, Inc. (BuySeasons, Inc.)-100% $35.00 $0.63

Commerce Technologies, Inc. (CommerceHub)-99% $25.00 $0.45

Evite-100% $70.00 $1.26GiftsCo, Inc. Gifts.com-100% $70.00 $1.26

Liberty Interactive Advertising-100% $10.00 $0.18

LMC Right Start, Inc. -100% (Investment Cost) $4.00 $0.07

LOCKERZ, Inc. -36% $15.00 $0.27

MotoSport, Inc.-100% $25.00 $0.45

Provide Commerce, Inc. -100% $125.00 $2.25

SubTotal $706.24 $12.70

Note: E-commerce OIBDA was $96 million in 2012

Public Holdings Shares (Millions Price

HSNI-38% (At Market) 14.9 $53.21 $793.72 $14.27

HSNI (Tied to CED's, assumes full $400 million) 5.4 $53.21 $286.44 $5.15

Total HSNI (HSN shares tied to CED's capped at initial conversion price of $74.31) 20.3 $1,080.16 $19.43

QVC 2013E OIBDA (Billions) Multiple

Con sol idated QV C-10 0% (5 % Growth ov er 20 12A OIBDA of $1.82 8 bi llio n) $1.9 2 9.5x $18,230.50 $327.85 Imbedded QVC Multiple

CNRS, QVC (China venture at book under equity accounting) $58.00 $1.04 LINTA EV $19,755.37

T ot al Q VC $ 18 ,2 88 .5 0 $ 32 8. 89 Non-QVC $3,343.74

QVC Implied $16,411.63

Cash as reported, including ioptions cash, amounts due to LVNT, repurchases, CED's tied to HSN. $1,557.33 $28.01

Total Asset Value $19,755.37 $21,632.24 $387.98 QVC 2013E OIBDA $1,919.00

Attributed Debt (GAAP) plus HSN CED's at $400 milli on $5,124.00 $5,124.00 ($9.21) Imbedded QVC Multiple 8.6x

Total Equity Value $14,631.37 $16,508.24 $29.69

HSNI Multiple 10.2x

Fully Diluted LINTA Shares 526.73 526.73 526.73

Fully Diluted LINTB Shares 29.33 29.33 29.33

Fully Diluted Shares 556.1 556.1 556.1

Price, LINTA (Current) $26.33

Price, LINTB (Current) $26.00

Weighted Average Price - Liberty Interactive $26.31

Weighted Average Fair Value / Liberty interactive Shares $29.69 $29.69

Percent Appreciation 12.83% Source: NACM estimates, Public Filings, Company data.

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Robert G. Routh CPA

(917) 795-9884

[email protected]


Figure 3: Liberty Interactive-( Liberty Digital Commerce Valuation Summary-LDCA, LDCB)

Assets Value Per Share

Backcountry.com-88% (Cost, Liberty LMDIA / LEI Proxy) $124.20 $2.23

Bodybuilding.com-90% (Cost, Liberty LMDIA / LEI Proxy) $203.04 $3.65

Celebrate Interactive Holdings, Inc. (ex BuySeasons, Inc.)-100% $25.00 $0.45

Commerce Technologies, Inc. (CommerceHub)-99% $25.00 $0.45Evite-100% $70.00 $1.26

GiftsCo, Inc. Gifts.com-100% $70.00 $1.26

Liberty Interactive Advertising-100% $10.00 $0.18

LMC Right Start, Inc. -100% (Investment Cost) $4.00 $0.07

LOCKERZ, Inc. -36% $15.00 $0.27

MotoSport, Inc.-100% $25.00 $0.45

Provide Commerce, Inc. -100% $125.00 $2.25

SubTotal (most at cost where possible to get that data) $696.24 $12.52

Estimated Cash (millions) $96.00 $96.00 $1.73

Total Asset Value $792.24 $792.24 $14.25

Attributed Debt (GAAP-from $250 million facility) $142.00 $142.00 $2.55

Total Equity Value $650.24 $650.24 $11.69

Fully Diluted LDCA Shares (1 for 10) 52.67 52.67 52.67

Fully Diluted LDCB Shares (1 for 10) 2.93 2.93 2.93

Fully Diluted Shares 55.6 55.6 55.6

Possible value, LDCA $11.69

Possible value, LDCB $11.69

Weighted Average $11.69

Weighted Average Possible Fair Value $11.69 $11.69


Figure 4: Liberty Interactive- (QVC Home Shopping Valuation Summary-QVCA, QVCB)

Asset Value Detail

Public Holdings Shares (Millions Price Value Per Share Imbedded QVC Multiple

HSNI-38% (At Market) 14.9 $53.21 $793.72 $14.27 QVC EV $19,587.67

HSNI (Tied to CED's, assumes full $400 million) 5.4 $53.21 $286.44 $5.15 Non-QVC $2,647.50

Total HSNI (shares tied to CED's capped at initial conversion price $74.31) 20.3 $1,080.16 $19.43 QVC Implied $16,940.17

QVC QVC 2013E OIBDA $1,919.00

2013E OIBDA (Billions) Multiple

C onso lida ted QVC -100% ( 2013E a t 5% Growth ove r 2012A OIBD A o f $1.828 b il li o $1.92 10.21x $19,587.67 $352.26 Imbedded QVC Multiple 8.83x

CNRS, QVC (China venture at book under equity accounting) $58.00 $1.04

Total QVC $19,645.67 $353.30 HSNI Multiple 10.21x

Cash as reported, including options cash, amounts due LVNT, repurchases, CED's cash tied to HSN, Buyseasons. $1,567.33 $28.19

Total Asset Value $22,293.16 $399.87

Attributed Debt (GAAP) plus HSN CED's at $400 milli on $5,124.00 ($9.21)

Total Equity Value $17,169.16 $30.88

Fully Diluted QVCA Shares 526.73 526.73

Fully Diluted QVCB Shares 29.33 29.33

Fully Dilute d S ha res 556 .1 5 56.1

Weighted Average Fair Value, QVCA, QVCB $30.88 $30.88

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Robert G. Routh CPA

(917) 795-9884

[email protected]



Figure 5: Liberty Interactive- (Potential value creation from QVC Home Shopping / LDC ecommerce Separation)

Potential QVC value $30.88

LDC Potential Value $11.69Times .1 (LDC value per original LINT share) $1.17

Total Potential QVC, LDC Value $32.05

Value, LINT "as is" today $29.69

Diference $2.36

Potential instant return (before multiple eqating) 7.94%


Figure 6: Liberty Interactive Comparison Summary Chart

Company Symbol Shares (mm) Price Equity Value Debt Capitalization Cash AEV EBITDA Multiple (TTM)

HSN HSNI 53.22 $53.21 $2,831.84 $246.88 $3,078.72 $91.98 $2,986.74 $292.61 10.21x

ValueVision VVTV 49.36 $5.00 $246.80 $38.00 $284.80 $32.36 $252.44 $11.20 22.54x

Amazon AMZN 456.88 $310.77 $141,984.60 $3,040.00 $145,024.60 $7,460.00 $137,564.60 $2,920.00 47.11x

Ebay EBAY 1,290.00 $51.38 $66,280.20 $4,530.00 $70,810.20 $10,440.00 $60,370.20 $4,420.00 13.66x

Acorn ATV 27.48 $2.18 $59.91 $8.51 $68.42 $86.12 -$17.70 -$23.49 .75x NMF

Average TTM Multiple - excludes negatives 23.7x

QVC (TTM implied multiple, Imbeded at FV) LINTA - $16,411.63 $16,412 $1,828 8.98x

QVC (2013 implied multiple, Imbeded at FV) LINTA - $16,411.63 $16,412 $1,919 8.55x


Figure 7: Liberty Interactive – (HSNI Convertible Exchangeable Debenture Summary)

CED Issuance 1000

Initial Shares 13.458

CED Initial Conversion Price $74.31

Total issuance (all in) 400,000,000

CED's Issued 400,000

Total Potential HSNI Shares Tied to CED's 5,383,200


Risks

The company depends on the skills of senior management. The loss of any of them could materially impact the company’svaluation.

There is always a risk that the company pursues a transaction that investors don’t view as in their best interests.

Interest rates and access to the capital markets is always something to keep in mind.

The global economy impacts the value of the bulk of the operations at LINT. `

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Robert G. Routh CPA

(917) 795-9884

[email protected]


Stock Chart

NACM disclosure price charts are updated within the first fifteen days of each new calendar quarter per FINRA regulations.

Price charts for companies initiated upon in the current quarter, and rating and target price changes occurring in the current quarter, willnot be displayed until the following quarter.

Additional information available on request.

LINTA Stock Chart

Source: Bloomberg

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Robert G. Routh CPA

(917) 795-9884

[email protected]


Appendix

IMPORTANT DISCLOSURES & CERTIFICATIONS

Analyst CertificationI, Robert Routh, certify that the views expressed in this report accurately reflect my personal opinion and that I have not and will not,directly or indirectly, receive compensation or other payments in connection with my specific recommendations or views contained in thethis report.

Stock RatingNational Alliance Capital Markets (NACM) uses the following rating system:

Buy: The stock appears attractively valued, and we believe the stock’s total return will exceed that of the market over the next 12 months

Hold: The stock appears appropriately valued, and we believe the stocks total return will be in line with the market over the next 12

months

Sell: The stock appears overvalued, and we believe the stocks total return will be below the market over the next 12 months

NACM Current Rating Distribution:

The percentage of companies with in each of the conforming categori es for wh ich National Al li ance has provided investment

banki ng servi ces for the 12 months ended 1018/2013 are as foll ows: 0% of buy rated stocks, 0% of hold/neutral rated stocks,

and 0% of sell rated stocks.

As of October 18, 2013 48% of the companies covered by National A ll iance Secur iti es, LL C Equi ty Research Group are rated

Buy; 47% are rated Hold; 5% are rated Sell .

Other DisclosuresThe information herein has been obtained from sources we believe to be reliable but is not guaranteed and does not purport to be acomplete statement of all material factors. The information contained herein is not a representation by this corporation, nor is anyrecommendation made herein based on any privileged information.

This is for informational purposes and is not a solicitation of orders to purchase or sell securities. Opinions expressed are subject tochange without notice and do not take into account the particular invest objectives, financial situation or needs of individual investors.Employees of NACM or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differfrom the opinions expressed here.

The Research Analyst responsible for preparation of this report and any member of his/her household do not hold a financial interest in thesecurities of the Company that is the subject of this report.

Neither the Research Analyst responsible for preparation of this report nor any member of his/her household serves as an officer, directoror advisory board member of the Company that is the subject of this report.

As of the end of the month immediately preceding the date of this report, neither NACM nor any of its affiliates beneficially owned morethan 1% of the issued and outstanding shares of any class of the securities of the Company which is the subject of this report.

The views expressed in the attached research report accurately reflect the personal views of the Analyst about the subject securities andCompany. No part of the Analyst’s compensation was, is or will be directly or indirectly related to the specific recommendations or views

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Robert G. Routh CPA

(917) 795-9884

[email protected]


contained in the report. The Analyst responsible for preparing this report receives compensation that is based, in part, on NACM’s overallinvestment banking revenues.

Analyst does own shares in the Company which in aggregate is

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Lint 10182013