Investments in Available-for-Sale Securities and Other Cost Investments
All marketable equity and debt securities held by the Company are classified as available-for-sale ("AFS") and are carried at fair value generally based on quoted market prices. GAAP permits entities to choose to measure many financial instruments, such as AFS securities, and certain other items at fair value and to recognize the changes in fair value of such instruments in the entity's statement of operations (the "fair value option"). The Company has entered into economic hedges for certain of its non-strategic AFS securities (although such instruments are not accounted for as fair value hedges by the Company). Changes in the fair value of these economic hedges are reflected in the Company's statement of operations as unrealized gains (losses). In order to better match the changes in fair value of the subject AFS securities and the changes in fair value of the corresponding economic hedges in the Company's financial statements, the Company has elected the fair value option for those of its AFS securities which it considers to be non-strategic ("Non-strategic Securities"). Accordingly, changes in the fair value of Non-strategic Securities, as determined by quoted market prices, are reported in realized and unrealized gains (losses) on financial instruments in the accompanying condensed consolidated statements of operations. The total value of the Non-strategic Securities aggregated $2,156 million as of September 30, 2011.
Investments in AFS securities, including Non-strategic Securities, and other cost investments are summarized as follows:
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September 30, 2011 |
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December 31,
2010
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amounts in millions |
Capital Group |
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Time Warner Inc.(1)(2) |
$ |
373 |
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|
1,101 |
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Time Warner Cable Inc.(1)(2) |
196 |
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|
567 |
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Sprint Nextel Corporation ("Sprint")(1) |
140 |
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|
301 |
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Motorola Solutions(1)(3) |
311 |
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|
471 |
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Motorola Mobility(1)(3) |
245 |
|
|
— |
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Viacom, Inc. |
294 |
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|
301 |
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Live Nation(4) |
24 |
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|
389 |
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Century Link, Inc.(1) |
122 |
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|
248 |
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Barnes & Noble, Inc. (5) |
206 |
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|
— |
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Priceline(1) |
234 |
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|
208 |
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Other AFS equity securities(1)(2) |
35 |
|
|
100 |
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SIRIUS XM debt securities |
377 |
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|
384 |
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Other AFS debt securities |
216 |
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|
404 |
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Other cost investments and related receivables |
8 |
|
|
9 |
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Total attributed to the Capital Group |
2,781 |
|
|
4,483 |
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Starz Group |
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Other |
1 |
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|
67 |
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Total attributed to the Starz Group |
1 |
|
|
67 |
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Consolidated Liberty |
$ |
2,782 |
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|
4,550 |
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___________________________
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(1) |
Includes shares pledged as collateral for share borrowing arrangements. See note 8. |
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(2) |
As discussed in note 2, certain of these securities were reattributed from its Capital Group to its Interactive Group in the first quarter of 2011. |
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(3) |
Effective January 4, 2011 Motorola, Inc. separated Motorola Mobility Holdings, Inc. in a 1 for 8 stock distribution. Motorola, Inc. simultaneously completed a 1 for 7 reverse stock split and was renamed Motorola Solutions, Inc. |
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(4) |
In June 2011, Liberty acquired an additional 5.5 million shares of Live Nation for $58 million. The additional ownership requires the Company to account for the investment as an equity method affiliate. For additional discussion see note 7. Liberty continues to hold debt securities in Live Nation which are included in available-for-sale securities.
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(5) |
In August 2011, Liberty acquired 204,000 shares of preferred stock of Barnes & Noble, Inc. which is convertible into an approximate 17% common equity interest for $204 million. The preferred stock accrues dividends at a rate of 7.75% per annum. Liberty has elected to account for its investment in Barnes & Noble at fair value. Accordingly, changes in fair value of Barnes & Noble, Inc. preferred stock are reported in realized and unrealized gains (losses) on financial instruments in the accompanying condensed consolidated statements of operations.
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Unrealized Holding Gains and Losses
Unrealized holding gains and losses related to investments in AFS securities are summarized below.
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September 30, 2011 |
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December 31, 2010 |
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Equity
securities
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Debt
securities
|
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Equity
securities
|
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Debt
securities
|
|
amounts in millions |
Gross unrealized holding gains |
$ |
1 |
|
|
52 |
|
|
32 |
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|
66 |
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Gross unrealized holding losses(1) |
$ |
— |
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|
1 |
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— |
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— |
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___________________________
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(1) |
Liberty does not currently have any gross unrealized losses that have been in such position for greater than a year. |
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