Confidential Binding Term Sheet Liberty Media Corporation/IDT Corporation May 15, 2006

Liberty will acquire from IDT all outstanding equity interests of IDT Media not currently owned by Liberty (the “IDT Media Equity Interests”) in exchange for consideration consisting of (a) 17,237,568 shares of Class B common stock of IDT and 7,500 shares of common stock of IDT Telecom, Inc. owned by Liberty (in each case subject to appropriate adjustment for stock dividends, splits, combinations, recapitalizations and any other similar transactions that may occur between the date of this Term Sheet and the consummation of the proposed transaction (the “Closing” and the date on which the Closing occurs, the “Closing Date”)), (b) all of the shares of IDT Media Ventures, Inc. and IDT Investments, Inc. received by Liberty as an equity distribution from IDT Media as subsequently provided in this Term Sheet, (c) $186 million in cash (subject to adjustment as described below under “Adjustment of Additional Cash Consideration”) to be paid by Liberty to IDT (the “Additional Cash Consideration”) and (d) the payment of the Contingent Amount, if any, in the manner described under “Contingent Purchase Price” below. This transaction will be treated as a taxable purchase of the IDT Media Equity Interests by Liberty using cash and the redemption of IDT, IDT Telecom, IDT Media Ventures and IDT Investments shares held by Liberty as of the Closing.  Prior to the Closing, IDT will cause IDT Media and its U.S. subsidiaries to effect the restructuring steps (the “Restructuring”) set forth in the side letter executed by IDT and Liberty on the date hereof. On the Closing Date, cash and cash equivalents in an amount equal to $74,163,000 (as adjusted as described under “Conduct of Business Pending Closing” below, the “Cash Repayment Amount”) will be used to repay intercompany debt of IDTE and its subsidiaries to IDT and the balance of any such intercompany debt will be contributed to the capital of IDTE by IDT.

On the Closing Date, IDT Media will own all of the outstanding equity interests of IDT Entertainment, Inc. or any successor entity resulting from the Restructuring (“IDTE”) and will own no other assets and have no liabilities other than those that would be properly included on the consolidated balance sheet of IDTE and its subsidiaries prepared in accordance with generally accepted accounting principles in the U.S., as consistently applied in accordance with the past practices of IDT Media (“GAAP”). As of the Closing Date, there will not be outstanding any obligations with respect to any restricted shares, options to acquire shares and similar equity-based awards (including “phantom” equity) granted to employees or otherwise or plans to grant any of the foregoing of IDT Media or any of its subsidiaries other than Mainframe Entertainment, Inc. (“Mainframe”). Following the Closing Date, further funding requirements of IDT Media and its subsidiaries will be funded by indebtedness from third parties or from Liberty or its subsidiaries. 

The amount of Additional Cash Consideration will be subject to increase or decrease, as the case may be, to reflect (a) that on the Closing Date, and giving effect to the repayment to IDT of intercompany indebtedness referenced in “Structure of the Transaction; Consideration” above, IDT Media and its subsidiaries will have no long-term liabilities that would be required to be reflected on a balance sheet of IDT Media and its subsidiaries prepared in accordance with GAAP, other than the debt for borrowed money and obligations under capital leases of IDT Media and its subsidiaries (including the current portion of such obligations) in an amount equal to $91,904,000 principal outstanding under: (i) the Credit, Security, Guaranty and Pledge Agreement dated as of April 22, 2005, among Anchor Bay Entertainment, Inc., as Borrower, the guarantors referred to therein, IDTE, the lenders referred to therein and JPMorgan Chase Bank, National Association, as Administrative Agent; (ii) the Credit, Security, Guaranty and Pledge Agreement dated as of December 1, 2005, among IDTE Animation Slate, LLC, as Borrower, the guarantors referred to therein, IDTE, the lenders referred to therein and JPMorgan Chase Bank, National Association, as Administrative Agent; (iii) the Master Lease Agreement dated March 1, 2006, between AT&T Capital Services, as Lessor, and IDTE, as Lessee; (iv) debt of Mainframe pursuant to its existing debenture and bank credit facility as disclosed by IDT to Liberty; and (v) such other credit facilities of IDTE and its subsidiaries approved by Liberty, and (b) that IDT Media and its subsidiaries will have Working Capital (as defined below) on the Closing Date in an amount equal to $55,838,000 (the “Purchase Price Adjustments”).

As additional consideration for the IDT Media Equity Interests, on the Closing Date IDT will be granted the right to receive a one-time payment in cash, Marketable Securities (as defined below) or a combination thereof, at Liberty’s option, in an amount (the “Contingent Amount”) equal to 25% of the excess, if any, of the Net Equity Value (as defined below) of IDT Media as of the Exercise Date (as defined below) over the Base Equity Value (as defined below).

Statements: 

Attached hereto as Exhibit A are copies of (a) the unaudited consolidated balance sheet of IDTE and its subsidiaries as of July 31, 2005, and the related unaudited consolidated statements of income, shareholder equity and cash flows for the twelve months ended July 31, 2005, (b) the audited consolidated balance sheet of the Credit Group (as defined below) as of July 31, 2005, and the related audited consolidated statements of income, retained earnings and cash flows for the twelve months ended July 31, 2005 (including the notes thereto and other financial information contained therein), certified in each case by Ernst & Young, the independent certified public accountants for IDTE and its subsidiaries (the “Credit Group Financial Statements”), (c) the unaudited balance sheet of IDTE and its subsidiaries as of January 31, 2006 and the related unaudited statements of income, retained earnings and cash flows for IDTE and its subsidiaries for the period from August 1, 2005, through January 31, 2006 and (d) the unaudited balance sheet of IDTE and its subsidiaries as of March 31, 2006 (the “Interim Balance Sheet Date”) and the related statements of income and retained earnings for IDTE and its subsidiaries for the period from August 1, 2005 to the Interim Balance Sheet Date ((c) and (d) the “Interim Financial Statements”) in each case prepared by or on behalf of IDT Media (such audited and unaudited financial statements, collectively, the “Financial Statements”). The term “Credit Group” means the following subsidiaries of IDTE: (i) Anchor Bay Entertainment, Inc.; (ii) Manga Entertainment Limited; and (iii) IDT Entertainment Productions, Inc. (and the other entities identified in note 1 to the Credit Group Financial Statements). The Financial Statements (A) conform to the books and records of IDTE and its subsidiaries in all material respects,

IDT has provided, and is continuing to provide, certain information regarding IDT Media, its subsidiaries and their respective businesses that is materially sufficient in order for Liberty to evaluate the appropriateness of the Transaction. No such information provided by IDT contains or will contain any untrue statement of material fact or will omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. In the event of IDT’s breach of this section, Liberty will be entitled to terminate this Term Sheet without any obligation or liability of any of the parties, other than the payment by IDT of Liberty’s reasonable out-of-pocket expenses up to an aggregate of $375,000.

Closing: 

IDT (i) represents and warrants that from and after the Interim Balance Sheet Date it has operated, and caused IDT Media and its subsidiaries to operate, the business of IDT Media and its subsidiaries, and (ii) covenants and agrees that, absent Liberty’s prior written consent to the contrary (which consent, in the case of clauses (i) through (t) or (u) (only insofar as such clause (u) relates to any matter contemplated by clauses (i) through (t)) below, will not be unreasonably withheld or delayed, and in the case of all other clauses, may be granted or withheld in Liberty’s sole discretion) from and after the date hereof to the Closing Date it will operate, and cause IDT Media and its subsidiaries to operate, the business of IDT Media and its subsidiaries (including in each case without limitation the imposition of any liability or obligation of any kind, whether accrued, absolute, contingent, unliquidated or otherwise and whether due or to become due (including any liability for breach of contract, breach of warranty, torts, infringements, claims or lawsuits) or the disposition of any asset), in a manner consistent with the ordinary course of business consistent with past practices and in accordance with, and making the disbursements contemplated by, the interim operating plan of IDT Media attached hereto as Exhibit C (the “Interim Operating Plan”), and it has not and will not, and has caused and will cause IDT Media and its subsidiaries not to, do any of the following (except as otherwise contemplated by the Interim Operating Plan or this Term Sheet):

June 30, 2006 

On or before June 10, 2006, IDT will prepare and deliver to Liberty a draft supplemental interim operating plan for IDT Media for the period from July 1, 2006 to July 31, 2006 prepared in a manner consistent with the Interim Operating Plan and with the five year business plan for IDT Media previously provided by IDT to Liberty. Liberty and IDT will use good faith efforts to agree on the terms of a definitive supplemental interim operating plan for such period (the “Supplemental Interim Operating Plan”) on or before June 20, 2006. If IDT and Liberty agree upon the terms of such Supplemental Interim Operating Plan, and if the Closing does not occur on or before June 30, 2006 but does occur on or before the Outside Date, then (a) the Purchase Price Adjustments will be calculated as if the Closing Date were June 30, 2006 and (b) the parties will make further adjustments to the Additional Cash Consideration to reflect that Liberty will be responsible for any operating cash shortfall (defined as cash expenditures less cash receipts) of IDT Media and its subsidiaries during the period from and including July 1, 2006 to and including the Closing Date, however funded, as a result of the operation of IDT Media and its subsidiaries (a “Supplemental Period Cash Shortfall Amount”) if such operations are conducted in a manner consistent with the Supplemental Interim Operating Plan. If IDT does not deliver a draft supplemental interim operating plan for IDT Media on or before June 10, 2006 or if IDT and Liberty do not agree on the terms of the Supplemental Interim Operating Plan, and if the Closing does not occur on or before June 30, 2006 but does occur on or before the Outside Date, then (x) the Purchase Price Adjustments will be calculated as if the Closing Date were June 30, 2006 and (y) the parties will make further adjustments to the Additional Cash Consideration to reflect that Liberty will be responsible for 75% of any Supplemental Period Cash Shortfall Amount and IDT will be responsible for 25% of any Supplemental Period Cash Shortfall Amount. If the failure to consummate the Transaction prior to June 30, 2006 is the result of the breach of this Term Sheet or the definitive documents by Liberty, Liberty will be responsible for 100% of any Supplemental Period Cash Shortfall Amount. Any such amounts will be treated as further adjustments to the Additional Cash Consideration or as repayment of intercompany debt to IDT.

The obligations of each of the parties to effect the Transaction will be conditioned on:

On or prior to the Closing Date, Starz and IDTE will enter into an agreement having the terms substantially similar to those set forth in Exhibit B and other terms that are customary and reasonable for agreements of this type.

The definitive agreements will be drafted by counsel for Liberty and reasonably acceptable to IDT. The definitive agreements will contain other customary representations and warranties (subject to customary qualifications, limitations and scheduled exceptions (which exceptions will not be materially inconsistent with the materials reviewed by Liberty prior to the date of this Term Sheet), covenants, closing conditions and indemnities. In particular, the definitive documents will contain representations and warranties regarding the following matters:

IDT and its affiliates will provide (or arrange with third parties to provide) such transition services to IDT Media and its subsidiaries as the parties may mutually agree, such services to be furnished on a reasonably allocated actual cost basis (and payable monthly) and may be terminated upon at least 60 days’ prior written notice to IDT.

The definitive agreements will contain the following post-Closing covenants of Liberty, which will apply until the earlier of the Exercise Date or the fifth anniversary of the Closing Date:

From the date of this Term Sheet and until the earlier of (i) the fifth anniversary of the Closing Date and (ii) one year after the Exercise Date, IDT and its subsidiaries will not (a) engage in the business of development, production or distribution of CG animated feature films or live-action motion pictures for theatrical distribution or the distribution of content by VHS or DVD (except (X) by virtue of the ownership by IDT of IDT Media and its subsidiaries from the date of this Term Sheet to the Closing Date and (Y) for distribution of content by VHS or DVD targeted to ethnic markets in locations that are within or similar to the locations comprising the distribution network of IDT and its subsidiaries (other than IDT Media and its subsidiaries) on the date of this Term Sheet and that are not competitive with the existing distribution network of the Anchor Bay Group as defined in the Credit Group Financial Statements) or (b) solicit for employment any employee of IDT Media or its subsidiaries, which restriction shall not include general solicitations not directed at a particular employee or class of employees of IDT Media or its subsidiaries.

If the Closing has not occurred on or before July 31, 2006 or such other date as Liberty and IDT may agree (the “Outside Date”), either party may terminate the Transaction by written notice to the other, provided that neither party may terminate the Transaction pursuant to this sentence if the failure of the Transaction to be consummated on or before the Outside Date resulted from a material breach of this Term Sheet by such party.

Each of Liberty, on the one hand, and IDT, on the other hand, will indemnify the other for any broker’s fee or other type of finder’s fee for which the originating party may be responsible.

Except as set forth herein, each party will pay all of its respective costs and expenses relating to the Transaction. Liberty and IDT will each pay one-half of any filing fees under the HSR Act.

The parties will use reasonable good faith efforts to conclude the negotiation and execution of definitive documents, the receipt of required or desirable third party or governmental consents and the Closing, all as expeditiously as reasonably appropriate.

This Term Sheet, and any documents or information supplied by IDT in connection with the transaction contemplated hereby, is subject to the terms of the nondisclosure agreement entered into between Liberty and IDT dated October 24, 2005.

This Term Sheet, and the other agreements to be entered into by the parties, shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without regard to conflicts of law. The parties agree that should any suit, action or proceeding arising out of this Term Sheet, or any of the other agreements between the parties, be instituted by any party hereto, such suit, action or proceeding shall be instituted only in a court in the State of Delaware, and for such purpose, each of the parties consents to the in personam jurisdiction of any court in the State of Delaware and waives any objection to the venue of any such suit, action or proceeding.

The parties shall consult with each other before issuing any press release or making any public statement with respect to this Term Sheet, or the transactions described herein, and no party shall issue any such press release or make any such public statement without the prior written consent of the other party, unless any such disclosure is otherwise required by law (including applicable regulations of the New York Stock Exchange and the NASDAQ National Market). Promptly after the execution and delivery of this Term Sheet, IDT and Liberty will issue a joint press release in the form attached as Exhibit D.

This Term Sheet is not transferable or assignable by either party; provided that any party may assign its rights and obligations to a wholly-owned subsidiary of such party; provided further, however, that such assignment shall not relieve the assigning party from its obligations hereunder.

TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS TERM SHEET AND THE CONTEMPLATED DEFINITIVE DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS TERM SHEET OR SUCH DEFINITIVE AGREEMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.