Former E! Exec Lee Masters to Lead New Liberty Media Unit

Lee Masters has been named president and chief executive of a new cable and interactive television company being formed by Liberty Media Corp., the programming arm of cable giant Tele-Communications Inc.

Masters resigned two weeks ago as head of Los Angeles-based E! Entertainment Television, after having built the cable channel over nine years into a profitable service valued at about $800 million.

The new venture, called Liberty Interactive, aims to develop new channels that would have interactive components enabling viewers to shop or get more information from advertisers or about some aspect of the program they are watching by pressing their remote controls.

Liberty Media will jump-start the venture by contributing its controlling interest in TCI Music, which includes the Box, a music channel; Sonic net, a popular Internet site; and DMX, a package of audio channels.

Analysts say the Box’s video jukebox strategy never took hold. The Box tries to cater to local musical tastes by playing the requests punched in at home by its subscribers. The stock of TCI Music is trading near its yearly low, closing Monday on Nasdaq at $3.75 a share.

Masters said his compensation will be based on the performance of Liberty Interactive.

Liberty, which is an investor in E!, also sought out Masters for his music background. Masters started his career as a radio deejay and was part of the management team that put together MTV. Liberty is pairing Masters with Bruce Ravenel, a TCI technology executive who was instrumental in creating the @Home online service.

In starting the new company, Liberty is trying to exploit the capabilities of advanced digital set-top boxes, which will hit the market next year and allow consumers to send e-mail, surf the Internet, even make phone calls over cable lines.

The boxes are expected to bring a third revenue stream to the cable industry in the form of transactional fees from selling merchandise.

“The idea is to use the power of television in aggregating audiences to transact some sort of commerce,” said Robert Bennett, president and chief executive of Liberty.

Masters will assume his post Jan. 1, and Ravenel will begin right away. TCI and Liberty are in the process of being purchased by AT&T; in a $44-billion deal that will give Liberty more than $5 billion in cash.

Interactive television has stalled despite heavy investments in the early 1990s by such companies as Microsoft, TCI and Time Warner.