(The following statement was released by the rating agency)

Feb 20 - Fitch Ratings has affirmed all the ratings of Liberty Interactive

LLC (Liberty) and QVC Inc. (QVC), including the companies' 'BB' Issuer Default

Ratings (IDRs). A full rating list is shown below.

Fitch's IDRs for Liberty and QVC reflect the consolidated legal entity/obligor

credit profile, rather than the Liberty Interactive/Venture tracking stock

structure. Based on Fitch's interpretation of the Liberty bond indentures, the

company could not spin out QVC without consent of the bondholders, based on the

current asset mix at Liberty. QVC generates 85% and 96% of Liberty's revenues

and EBITDA, respectively. In addition, Fitch believes QVC makes up a meaningful

portion of Liberty's equity value. Any spin off of QVC would likely trigger the

'substantially all' asset disposition restriction within the Liberty indentures.

The consolidated legal/obligor credit view may change over time if the Liberty

Ventures assets become a more meaningful portion of the consolidated Liberty

asset mix/equity value. At that point, Fitch may adopt a more hybrid rating

analysis, taking into consideration the attribution of assets and liabilities

within each tracking stock. Fitch does not expect this to occur in the near or

intermediate term.

The ratings reflect Fitch's expectation that the company will continue to manage

leverage on a Liberty consolidated basis. Fitch expects Liberty's gross

unadjusted leverage to be managed at 4 times (x) and QVC unadjusted gross

leverage to be managed at 2.5x.

As of Sept. 30, 2012, Fitch calculates QVC's unadjusted gross leverage at 1.9x

and Liberty's unadjusted gross leverage at 3.9x. Pro forma for the redemption

(scheduled for March 8, 2013) of the $414 million in 3.25% exchangeable

debentures due in 2031 (exchangeable for Viacom and CBS shares), Liberty's

unadjusted gross leverage is 3.7x. While Fitch expects EBITDA growth would lead

to reduced leverage, Fitch expects Liberty to manage leverage closer to its

target levels over the long term. Currently, there is financial flexibility for

debt funded acquisition and/or share repurchases.

Fitch rates both QVC's senior secured bank credit facility and the senior

secured notes 'BBB-' (two notches higher than QVC's IDR). The secured issue

ratings reflects what Fitch believes would be QVC's standalone ratings. Fitch

expects that the ratings would remain unchanged in the event that the remaining

security is released.

The ratings incorporate the risk of continued acquisitions at Liberty

Interactive. Fitch recognizes that there is a risk of an acquisition of HSN Inc.

However, depending on how the transaction is structured, and the company's

commitment to returning QVC's or Liberty's leverage to 2.5x and 4x,

respectively, ratings may remain unchanged.

Operating Performance

The ratings reflect the solid operating performance at QVC with total September

2012 year to date revenues and EBITDA up 3.6% and 6.2% respectively. As of this

time frame, QVC Germany was the only region to endure revenue declines, down

11.8% (down 3.6% on a local currency basis). The geographic diversification of

QVC provides the credit cushion to endure cyclical declines in the German

region. The ratings incorporate the cyclicality inherent in QVC's business /

retail industry.

Fitch recognizes QVC's ability to manage product mix and adapt to its customers

shopping preferences. QVC has managed to grow revenues over the last three years

and manage Fitch calculated EBITDA margins in the 20% to 22% range over that

same time frame. Fitch believes that QVC will be able to continue to grow

revenues at least at GDP levels going forward. Fitch models low to mid-single

digit revenue growth at both QVC and at Liberty consolidated.

QVC EBITDA margin fluctuation is driven in part by the product mix and will

likely fluctuate over time as the product mixes changes. However, Fitch

believes, over the next few years, QVC's EBITDA margins will remain in this

historical 20% to 22% range.

Liberty's e-commerce companies continue to have healthy revenue growth with

14.5% growth in the YTD period. However, EBITDA has been significantly

pressured, down 17.6% due to increased promotional activity to move seasonal

inventory and increased spending on advertising and marketing. While margins and

EBITDA levels have been negatively affected, they remain positive and contribute

positive cash flows to the consolidated credit. These businesses are relatively

small in size, accounting for 6% of consolidated Liberty EBITDA. Fitch does not

ascribe a material weight to the e-commerce businesses when assessing the

consolidated credit profile.

Liquidity and Maturities

Fitch believes liquidity at Liberty Interactive will be sufficient to support

operations and QVC's expansion into other markets. Acquisitions and share

buybacks are expected to be a primary use of free cash flow (FCF).

Fitch believes that there is sufficient liquidity and cash generation (from

investment dividends and tax sharing between Liberty Interactive and Liberty

Ventures) to support debt service and disciplined investment at Liberty Venture.

Fitch recognizes that in the event of a liquidity strain at Liberty Ventures,

Liberty Interactive could provide funding to support debt service to Liberty

Ventures (via intercompany loans), or the tracking stock structure could be

collapsed.

Fitch notes that cash can travel throughout all entities relatively easily

(although the tracking stock structure adds a layer of complexity, Liberty LLC

has in the past reattributed assets and liabilities). Fitch believes that

resources at QVC would be used to support Liberty LLC, and vice versa, if ever

needed.

As of Sept. 30, 2012, liquidity for Liberty included $1.8 billion in cash and

$1.1 billion available under the QVC credit facility, which expires in September

2015. Fitch calculates FCF of $979 million for the last 12 months ended Sept.

30, 2012. Based on Fitch's conservative projections, Fitch expects Liberty's FCF

to be in the range of $750 million to $900 million.

In addition, Fitch calculates $5.5 billion in public holdings. Fitch believes

these assets could be liquidated in the event that Liberty needed additional

liquidity.

Liberty's near-term maturities include $1.1 billion of exchangeable debentures

that may be put to the company in 2013 and approximately $279 million in senior

notes maturing in 2013. As noted above, the company intends to redeem its 3.25%

exchangeable debentures in March 2013. Fitch believes Liberty has sufficient

liquidity (including the Time Warner basket of stocks) to handle these

maturities and redemption.

QVC Security

The QVC facility and notes benefit from a security interest in the capital stock

of QVC and are guaranteed by QVC's material and domestic subsidiaries. The

secured collateral may be removed as QVC's leverage has been below 2x for two

consecutive fiscal quarters, as permitted under the company's credit agreement.

The collateral package would be reinstated for both the banks and the senior

notes in the event that last 12 months leverage exceeded 3x for two consecutive

quarters.

Rating Sensitivities

Positive Rating Actions: Fitch believes that the current financial policy is

consistent with the current ratings. If the company were to manage to more

conservative leverage targets, ratings may be upgraded.

Negative Rating Actions: Conversely, changes to financial policy (including more

aggressive leverage targets) and asset mix changes that weakened bondholder

protection, could pressure the ratings. While unexpected, revenue declines in

excess of 10% that materially drove declines in EBITDA and FCF and resulted in

QVC leverage exceeding 2.5x would likely pressure ratings.

Fitch has affirmed the following ratings:

Liberty

--IDR at 'BB';

--Senior unsecured debt at 'BB'.

QVC

--IDR at 'BB';

--Senior secured debt at 'BBB-'.

The Rating Outlook is Stable.

(Caryn Trokie, New York Ratings Unit)

Keywords:

(Caryn.Trokie@thomsonreuters.com; 646-223-6318; Reuters Messaging: rm://caryn.trokie.reuters.com@reuters.net)

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