Liberty Expedia Holdings (NASDAQ: LEXEA) CABLE, MEDIA AND ENTERTAINMENT

December 13, 2016

Outperform Robert G. Routh, CPA / 212-312-7657 /
rrouth@fbnsecurities.com
Fair Value: $48.97

Initiating Coverage of Liberty Expedia Holdings (LEXE)

Company Statistics
with Outperform and CFVPS of $48.97…..
Price: $42.29
We are initiating coverage of Liberty Expedia Holdings Inc. (LEXE A/ B) with an Outperform rating and current
Symbol: LEXEA fair value per share (CFVPS) of $48.97. The decision to create LEXE formed in November 2015 when the
Board of Liberty Interactive decided to distribute to holders of Liberty Ventures (LVNT A/B) shares of a new
Market: NASDAQ asset backed entity comprised primarily of Liberty’s meaningful interests in Expedia and 100% interest in
Bodybuilding.com.
52 wk. High $45.43
As a result of this decision, on November 4, 2016 LEXE was distributed from LVNT via a tax free redemption
52 wk. Low $39.25
and Split-Off. In said transactions, 0.4 of each outstanding share of LVNT were redeemed in exchange for 0.4
Equity Cap. ($M) $2,497.57 shares of newly created Liberty Expedia Holdings, or LEXE.

Based on our model LEXE is now trading at a discount of 15.8% to its CFVPS when assigning a 10% premium
10-Day Volume 323,087 to the 12.799 million super-voting EXPE B shares it owns and 9.6% when valuing these super-voting Expedia
shares at EXPE’s current market price.

VALUATION METHODOLOGY
We arrive at our current fair value per
share (CFVPS) using a sum of the parts
valuation model.
We then derive the discount investors
can buy EXPE at through LEXE (A/ B).
RISKS
Liberty Expedia Holdings is a holding
company that derives most of its value
from publicly traded EXPE. Anything
that impacts the value of EXPE will
impact the value of LEXE (A / B).
LEXE has a complicated control
structure and tax laws could make a
merger of LEXE with EXPE in the near
term difficult, resulting in a discount to
CFVPS remaining for a while.
If Bodybuilding.com is valued at $226.1 million (7x 2016E OIBDA of $32.3 million), through LEXE investors
can buy EXPE at an implied price of $94.08 per share, $26.17 or 27.8% less than EXPE’s price. If
Bodybuilding.com is valued at $0 through LEXE investors can create EXPE for an implied $103.66 per share,
16% below the current market price of $120.25.
Because of this situation, those interested in EXPE should consider LEXE as a cheaper way to own EXPE
than buying the shares directly.
Although SEC filings more than hint that LEXE was created to eventually be merged tax efficiently with EXPE
(ultimately putting all of EXPE in one place), due to tax laws we doubt anything along these lines can happen
for a while.
However two years after the LEXE distribution merging it with EXPE without triggering a tax should be
relatively easy due to the IRS safe harbor provisions. Although it is possible LEXE could hypothetically be tax
efficiently merged with EXPE a year after its distribution (with certain approvals), we doubt anything will
happen this soon.
Nonetheless it is also possible if another entity (such as Priceline) had interest in eventually controlling EXPE,
said entity could try to buy LEXE at any time as long as there were no conversations regarding such a
transaction with Liberty during the 12 months prior to LEXE’s distribution.

Here we note although something like this is possible, due to Barry Diller having effective control of LEXE for
the next year and a half it is very doubtful even if a third party offer materialized it would result in a transaction.

Although at the moment LEXE is trading at a discount ultimately we think it will be at a premium because it
legally owns all the super-voting EXPE B shares and at least in theory these shares should receive a premium
as they control 54.7% of EXPE’s vote.

We believe this is the case even though Barry Diller (rather than LEXE) really has the right to vote these EXPE
B shares in perpetuity through an irrevocable proxy which he assigned to LEXE for 18 months in exchange for
a proxy to vote Dr. Malone’s super-voting LEXEB shares for the same 18 months.

FOR INSTITUTIONAL CONSIDERATION ONLY.

FOR REQUIRED DISCLOSURES, INCLUDING ANALYST CERTIFICATION, PLEASE REFER TO THE IMPORTANT
DISCLOSURES IN THE LAST PAGE OF THE REPORT.
 Liberty Expedia Holdings Inc. is comprised primarily of material interests in publicly traded Expedia (EXPE) and private Bodybuilding.com.
As far as Expedia, LEXE owns 23.6 million shares including all 12.799 million of the super-voting EXPE B shares. These 23.6 million
shares represent an economic interest in EXPE of 15.7% and a voting interest of 52.3%.

Expedia is a major online travel company comprised of the tools and information travelers need to research, plan and book travel.
Expedia seeks to grow through the ownership of a dynamic portfolio of travel brands, including majority owned subsidiaries that feature a
broad supply portfolio.

This supply portfolio includes over 321,000 properties in approximately 200 countries, 475 airlines, rental cars, cruises and destination
services and activities. Some of the well-known brands owned by Expedia include Expedia.com, Hotels.com, Hotwire.com, Classic
Vacations, trivago, HomeAway and Orbitz Worldwide.

Bodybuilding.com is an internet retailer of sports and fitness products, dietary supplements and a digital media publisher featuring health-
and-fitness content, workout programs, video trainers, recipes, health advice and motivational stories. The online and mobile application
e-retail model combines detailed product information and real-time user reviews for more than 15,000 dietary supplements and
accessories to help consumers achieve their health, fitness and appearance goals.

Due to a long standing Stockholders Agreement, Barry Diller has an irrevocable proxy to vote Liberty’s EXPE shares (both the A and B
shares). Because of this, although Liberty legally owns all the super voting EXPE B shares (representing 57% of the vote at EXPE), Mr.
Diller has had the right to vote these shares through an irrevocable proxy he has assigned to LEXE for 18 months and thus he ultimately
controls EXPE.

Under a separate Governance Agreement, Liberty has the right to nominate 20% of Expedia's board (currently 13 members) even though
Mr. Diller has a proxy to vote the Liberty EXPE B shares as mentioned above. This Governance Agreement also gives Liberty registration
and preemptive rights with respect to their EXPE shares (preemptive up to 20.01%) and imposes certain restrictions on ownership of the
EXPE B shares, all 12.799 million of which are legally owned by Liberty.

Due to these two agreements, prior to the Split-Off of LEXE Liberty Interactive accounted for its EXPE holdings under the equity method,
determining that although they had significant influence over Expedia, due to the proxy Mr. Diller has they did not control it.

LEXE however will consolidate EXPE for financial reporting purposes due to a proxy swap described later that in effect allows LEXE to
control EXPE, at least for a period of time.

As part of the LEXE Split-Off, Mr. Diller irrevocably assigned his proxy to vote Liberty’s EXPE shares to LEXE for up to 18 months,
subject to certain termination events. In exchange for this LEXE’s controlling shareholder, Dr. Malone gave Mr. Diller a proxy to vote his
controlling LEXE B shares for the same 18 month period, or until Diller’s proxy reverts back to him.

Because of this proxy swap, for the 18 months following the distribution of LEXE Mr. Diller will control it and thus control EXPE by being
able to decide how LEXE will vote its EXPE shares.

Therefore, Mr. Diller continues to control EXPE through controlling LEXE via the proxy to vote Malone’s LEXE B shares.

Note the rights under both the Governance and Stockholders Agreements will remain in effect after the term of the proxy swap ends and
the proxies revert back to their original owners, Mr. Diller and Dr. Malone.

Due to acquisition accounting rules, LEXE received a full step up in the basis in its EXPE holdings with the Split-Off.

Thus LEXE should realize a large one-time gain on its EXPE shares when it reports financial results equal to the difference between
Liberty’s historical basis in the EXPE holdings (approximately $922 million) and their fair value at the time of the Split-Off (November 4,
2016).

Said step up in basis and the related gain are for book purposes not tax, and thus the realized gain will not trigger any true taxable event.

Robert G. Routh, CPA (212)-312-7657 rrouth@fbnsecurities.com FBN Securities 2

 Figure 1: Liberty Expedia Holdings-Share Derivation Summary
Original LVNT shares
LVNTA 135.24 95.0%
LVNTB 7.12 5.0%
Total 142.36 100.0%

Implied valuation derivation

LEXE redemption ratio - 40% 40%
Total LVNT shares Redeemed for LEXE pre options 56.95

New LVNT Shares

LVNTA Shares redeemed 54.10 81.15
LVNTB shares Redeemed 2.85 4.27
Total 56.95 85.42

New Liberty Ventures Share Derivation (LVNT)-pre options

Resultant New LVNT Shares after redemption After Redemption Estimated Options Total
LVNTA 81.15 2.13 83.28
LVNTB 4.27 1.04 5.31
Total 85.42 3.17 88.59

Liberty Expedia Holdings Inc. Share Derivation (LEXE)

Number of shares of Liberty Expedia Holdings Inc. per LVNT (A, B) redeemed 1.00

Resultant LEXE Shares Basic Estimated Options Total

LEXEA 54.10 1.42 55.52
LEXEB 2.85 0.69 3.54
Total 56.95 2.11 59.06

Source: Company reports and FBN Securities estimates

Figure 2: Liberty Expedia Holdings- Valuation Summary with EXPE B shares at 10% premium
ASSETS Value Per Share
2016E OIBDA (Millions) Multiple
Bodybuilding.com (2015 revenue of $464.4 million, OIBDA of $33.1 million) $32.30 7.x $226.10 $3.83

Public Holdings Shares (Millions) Price Total Value Per Share

Expedia-EXPE- 15.7% economic, 52.3% Voting 10.8 $120.25 $1,299.54 $22.00
Expedia-EXPE- 15.7% economic, 52.3% Voting -10% premium for Control Shares 12.8 $132.28 $1,693.12 $28.67
Total 23.6 $2,992.66 $50.67

Cash and equivalents $50.41 $0.85

Total Asset Value $3,269.17 $55.36
Debt (Margin Loan of $350 m at split-off plus $26.817 m in other debt / capital leases as of 9/30/16) Current ($376.82) ($6.38)
Equity value / Fair value $2,497.57 $2,892.36 $48.97
Difference $394.79 $6.68

LEXE Equity Price

LEXEA $42.29 55.52 55.52
LEXEB $41.00 3.54 3.54
LEXE Class C (none issued) - -
Total / Weighted average $42.29 59.1 59.1

Fair Value $48.97 $48.97

Discount to NAV 15.8%

Derivation of the implied price of EXPE in LEXE

Total current equity value of LEXE $2,497.57
Less Cash -$50.41
Less bodybuilding.com value from above -$226.10
Implied value of EXPE holdings through LEXE at current equity value $2,221.06

EXPE shares owned by LEXE 23.6

Implied cost of EXPE through LEXE $94.08
EXPE price $120.25

Difference-($) $26.17
Percent difference 27.8%

Source: Company reports and FBN Securities estimates

Robert G. Routh, CPA (212)-312-7657 rrouth@fbnsecurities.com FBN Securities 3

 Figure 3: Liberty Expedia Holdings- Valuation Summary with EXPE B shares at no premium
ASSETS Value Per Share
2016E OIBDA (Millions) Multiple
Bodybuilding.com (2015 revenue of $464.4 million, OIBDA of $33.1 million) $32.30 7.x $226.10 $3.83

Public Holdings Shares (Millions) Price Total Value Per Share

Expedia-EXPE- 15.7% economic, 52.3% Voting 10.8 $120.25 $1,299.54 $22.00
Expedia-EXPE- 15.7% economic, 52.3% Voting -10% premium for Control Shares 12.8 $120.25 $1,539.20 $26.06
Total 23.6 $2,838.74 $48.07

Cash and equivalents $50.41 $0.85

Total Asset Value $3,115.25 $52.75
Debt (Margin Loan of $350 m at split-off plus $26.817 m in other debt / capital leases as of 9/30/16) Current ($376.82) ($6.38)
Equity value / Fair value $2,497.57 $2,738.44 $46.37
Difference $240.87 $4.08

LEXE Equity Price

LEXEA $42.29 55.52 55.52
LEXEB $41.00 3.54 3.54
LEXE Class C (none issued) - -
Total / Weighted average $42.29 59.1 59.1

Fair Value $46.37 $46.37

Discount to NAV 9.6%

Derivation of the implied price of EXPE in LEXE

Total current equity value of LEXE $2,497.57
Less Cash -$50.41
Less bodybuilding.com value from above -$226.10
Implied value of EXPE holdings through LEXE at current equity value $2,221.06

EXPE shares owned by LEXE 23.6

Implied cost of EXPE through LEXE $94.08
EXPE price $120.25

Difference-($) $26.17
Percent difference 27.8%

Source: Company reports and FBN Securities estimates

Figure 4: Liberty Expedia Holdings- Valuation Summary with Bodybuilding.com at $0

ASSETS Value Per Share
2016E OIBDA (Millions) Multiple
Bodybuilding.com (2015 revenue of $464.4 million, OIBDA of $33.1 million) $32.30 .x $0.00 $0.00

Public Holdings Shares (Millions) Price Total Value Per Share

Expedia-EXPE- 15.7% economic, 52.3% Voting 10.8 $120.25 $1,299.54 $22.00
Expedia-EXPE- 15.7% economic, 52.3% Voting -10% premium for Control Shares 12.8 $132.28 $1,693.12 $28.67
Total 23.6 $2,992.66 $50.67

Cash and equivalents $50.41 $0.85

Total Asset Value $3,043.07 $51.53
Debt (Margin Loan of $350 m at split-off plus $26.817 m in other debt / capital leases as of 9/30/16) Current ($376.82) ($6.38)
Equity value / Fair value $2,497.57 $2,666.26 $45.15
Difference $168.69 $2.86

LEXE Equity Price

LEXEA $42.29 55.52 55.52
LEXEB $41.00 3.54 3.54
LEXE Class C (none issued) - -
Total / Weighted average $42.29 59.1 59.1

Fair Value $45.15 $45.15

Discount to NAV 6.8%

Derivation of the implied price of EXPE in LEXE

Total current equity value of LEXE $2,497.57
Less Cash -$50.41
Less bodybuilding.com value from above $0.00
Implied value of EXPE holdings through LEXE at current equity value $2,447.16

EXPE shares owned by LEXE 23.6

Implied cost of EXPE through LEXE $103.66
EXPE price $120.25

Difference-($) $16.59
Percent difference 16.0%

Source: Company reports and FBN Securities estimates

Stock Chart

FBN Securities, Inc. disclosure price charts are updated within the second 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 will not be displayed until the following quarter.

Robert G. Routh, CPA (212)-312-7657 rrouth@fbnsecurities.com FBN Securities 4

 Liberty Expedia Holdings Stock Chart (LEXEA)

Source: Bloomberg
Risks
 The company depends on the skills of senior management for future success. The loss of any such member
could impact its valuation in the markets.
 LEXE derives the bulk of its value from publicly traded EXPE. Any change in the markets value of EXPE will
impact the value of LEXE.
 LEXE has two classes of stock and a complicated structure due to a proxy swap.
 There is always a risk the company pursues a transaction that investors don’t view as in their best interests.
 LEE has a relatively low tax basis in the EXPE shares it owns.

Disclosures

Regulation AC, Analyst Certification

I, Robert Routh, certify that the views expressed in the research report accurately reflect my personal views
about the subject securities or issuers.

No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or
views I have expressed in the research report.

Ownership and material conflicts of interest:

To the best of my knowledge, FBN Securities has no beneficial ownership in any of the recommended securities
and does not hold 1% or more of the subject company’s securities.

At the time of this writing, the analyst owns the stock that is the subject of this report. Such ownership is less
than 1% of outstanding shares.

The analyst reserves the right to purchase the stock in the future subject to the policies and procedures of FBN
Securities personal trading policy.

FBN Securities limits its investment banking role in the capacity only as a selling group member and does not act
in the capacity of underwriter for any public or private deals. FBN may have or in the future be part of a selling
group in the security covered.

FBN has not received compensation from any investment banking activity or from any activity to the best of my
knowledge, from any company mentioned in this report within the twelve months preceding publication.

FBN Securities does not compensate its research personnel for investment banking services.

FBN Securities makes no market in any recommended securities.

Robert G. Routh, CPA (212)-312-7657 rrouth@fbnsecurities.com FBN Securities 5

 Neither the analyst nor any member of the analyst’s household is an officer, director or advisory board member
of any company mentioned in this report.

***DISCLAIMERS***

This publication is provided to you for information purposes and is not intended as an offer or solicitation for the
purchase or sale of any financial instrument. The information contained herein has been obtained from sources
believed reliable but is not necessarily complete and its accuracy cannot be guaranteed. Any opinions or
estimates contained in this report represent the judgment of the analyst at this time, and are subject to change
without notice.

The investments discussed or recommended in this report may not be suitable for all investors. Investors must
make their own investment based on their specific investment objectives and financial position and using such
independent advisers, as they believe necessary. Additional information is available upon request. Past
performance should not be taken as an indication or guarantee of future results. Opinions and estimates may be
changed without notice and FBN Securities disclaims any obligation to advise you of any such change.

FBN offers both Fundamental and Technical Research. At any time the two may offer different views.

FBN permits its analysts to make media appearances and securities mentioned in this report may be discussed
through the media.

Stock Ratings
FBN uses a relative rating system using terms Outperform, Sector Perform, Underperform and Unrated. FBN
does not assign ratings of buy, hold or sell to the stocks covered.

Outperform (O) – The stock’s total return is expected to exceed the average return for the analyst’s sector
coverage universe over the next 6 to 12‐month period.

Sector Perform (SP) ‐ The stock’s total return is expected to be in‐line with the average return for the analyst’s
sector coverage universe over the next 6 to 12‐month period.

Underperform (U) ‐ The stock’s total return is expected to be below the average return for the analyst’s sector
coverage universe over the next 6 to 12‐month period.

Unrated-(UR) - The stock’s total expected return relative to the analyst’s coverage universe over the next 6 to 12
months cannot be determined with any degree of accuracy due to certain reasons.

At the time of this writing, neither the analyst nor his household members own the stock in subject of this.

Institutional Sales: Trading:

Gregory Naso, CFA Michael Naso
120 Broadway, Suite 1034 120 Broadway, Suite 1034
New York, NY 10271 New York, NY 10271
212-618-2193 212-566-2216
gnaso@fbnsecurities.com mnaso@fbnsecurities.com

Ratings Distribution IB Serv./Past 12 Mos.

Category Count % %
Outperform (O) 43 64% 0%
Sector Perform (SP) 22 33% 0%
Underperform (U) 1 1% 0%
Unrated 1 1% 0%
Total 67 100% 0%

Robert G. Routh, CPA (212)-312-7657 rrouth@fbnsecurities.com FBN Securities 6