Q3 2019 Earnings Call

Ladies and gentlemen, thank you for spending by.

Welcome to the Liberty Media Corporation, 2019 stores quotes or earnings call.

During the presentation, all participants will be in listen only mode. [noise]. Afterwards, we will conduct a question answer session.

That's stein.

If you have a question. Please press star one on your telephone as a reminder, this conference is being recorded November 11th.

Warrants over to coordinate Sean juice portfolio Officer, and senior Vice President of Investor Relations. Please go ahead.

Thank you good morning forward again, we'd like to remind everyone that this call and certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent Form 10-K , and 10-Q filed with the FCC. These forward looking statements.

The only after the date of this call and Liberty media and Liberty trip advisor expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained herein to reflect any change in liberty media at Liberty trip advisors expectations with regard there too [noise] or any change in events conditions or circumstances on which any such statement and they.

On today's call, who will discuss certain non-GAAP financial measures, including adjusted OIBDA and adjusted EBITDA the required definitions and reconciliations for Liberty media and Sirius XM discussions went into can be found at the end of the earnings press release issued today, which is available on our website now I'd like to turn the call a really great, let's say Liberty President and CEO . Thank you.

Corn and good morning.

Today's became a call, we'll also have or the ones chairman and CEO Chase Carey.

And Liberty Media's principal financial Officer, Brian .

During Q1 name, we will also be able available to answer questions related to Liberty trip advisor.

Beginning with Liberty Sirius XM, we continued our repurchases of Liberty Sirius XM stock buying an additional $60 million Pureed August 1st October 31st if you look at that we effectively bought the underlying Sirius XM shares I don't look through price of $4.47 per share.

We will continue to take advantage of the discount to anybody as long as you the marketplace continue to give it to us.

Our ownership today stands and Sirius XM at 71.5% actually it was as of October 29.

Looking at Sirius XM myself fantastic results, yet again robust subscriber growth solid expansion of adjusted EBITDA and free cash flow.

Pandora acquisition has increased our scale to approximately 100 million users.

Continued focus on distribution a contract we have a new deal with Google, making Sirius XM available on Google Assistant and Google maps devices, we have a collaboration with marble decreed scripted and unscripted podcast.

Your today through October Sirius XM has returned over $2 billion of capital to shareholders.

Formula One group.

Made tremendous progress.

During the period regarding the regulations for 2021 and beyond.

Also experience exciting racing on the track Lewis Hamilton, One has six World Championship in Austin and Mercedes.

There are six constructors championship.

Fun to watch for already come back to when three in a row, the thrill of Red Bull and the return of Mclaren would close battles among the best of the rest.

Well I've nation.

Continued strong execution, the highest alewife quarter ever expect to deliver double digit growth for the year.

Man for live events continues to grow.

Within 92 million tickets sold through mid October .

Turning the Braves.

I, just wonder if second straight and L. East Division title.

With a host of individual awards, including Donaldson being ml nationally.

Come back player the year, Brian Snicker wasn't nationally manager in the year finalist surrogate was a national rookie of the year finalist and this weekend three players were named Silver Slug of award winners Freeman Communion. All these most trophies of any club. This season in the first time any club has had multiple winters under 23 years old and once.

Yes.

Turning to the more mundane, but importantly, we have it's a number of exciting new tenants moving into the battery, including an indoor top golf type experienced any dueling piano bar.

Vaccine H. continue to progress on timing on budget and we look forward to our new Braves Academy at North Port opening in early January .

Over at Liberty trip advisor.

Trip had a difficult quarter with trends worsening in the hotel click based auction.

We still see opportunity in experience.

But that's categories, probably it is growing quickly, but slower perhaps than we'd originally forecast.

Trip advisor does plan to return capital to shareholders and they announced a dividend of $3.50 per share, which will translate into a $108 million proceeds.

To Liberty trip.

Also announced that they would increase their share repurchase authorization by $100 million to $250 million.

In light of these these are done really in light of the fact that despite the challenges to to some of the click based auction items.

The business does generate and we'll continue to generate strong free cash flow. There also plan to evaluate their cost structure and prudently reduce and reallocate expenses among the groups.

With that I'll turn over to Brian for more on our financial results. Thank you, Greg and good morning, everyone at quarter end Liberty Sirius XM group had attributed cash restricted cash and liquid investments of 54 million, excluding 90 million of cash restricted cash held directly at Sirius XM.

Value of the Sirius XM common stock held by Liberty Sirius XM at November Eightth was 22 billion and we have 950 million in debt against these holdings.

Total Liberty Sirius XM group attributed principal amount of debt was 9 billion, which includes 8 billion of debt that's directly at Sirius XM level.

[noise] Formula One group had attributed cash and liquid investments of 65 million, which excludes 354 million of cash at that one.

Formula One group had attributed public market securities with a market value of approximately 5 billion as of last Friday, a that includes the intergroup interest in the Braves group and our stake in live nation.

Total Formula One group attributed principal amount of debt was 5 billion, which includes 2.9 billion of debt at up one, leaving 2.1 billion of data at the corporate level.

That's ones total net debt the covenant OIBDA ratio as defined in up ones credit facilities for Covenant calculations was 5.3 times at quarter end.

As compared to a maximum allowable leverage of 8.25 times.

We have set a target total net leverage ratio for formula one of five to six times Bank Covenant OIBDA.

Please note these leverage ratios are for the Formula one business nonperforming loans.

Raise group had attributed cash liquid investments restricted cash 210 million at quarter end and attributed principal amount of debt of 549.

That'll turn it over to chase to talk about Formula one.

Thank you, Brian we've made tremendous progress on defining the future direction, a formula one and we're pleased to announce the unanimous ratification by the F.I. a world Motor Sport Council, So new regulations, beginning in the 2021 season.

These rules are the result of a detailed to your process then included input from the teams and other stakeholders.

We firmly believe achieve the goals, we set out to deliver.

2021 on Formula one will have cars that are better able to a battle on the track.

A more balanced competition on the truck a fully enforceable cost cap of $175 million per season.

In a better and more sustainable business model for participants.

There's a wealth of information online if he'd like to see all the details.

But let me talk a bit more in depth about closer racing.

Kurt Formula one cars can lose up to half their downforce when following in the wake of another car.

As part of the New regulations, we project the 2021 cars or Louis just 15% of their downforce when Theyre one car length behind arrival and just 5% at three Carling's <unk>.

There's a huge difference that will enable the battles our fans want to see.

These regulations around him an important major step. However, this is an ongoing process. The regulations were married to a new governance and price fund structure, which will enable this sport to grow and improve while further strengthening the business model.

These agreements are in advance stages with the teams.

In addition, we plan to address our initiatives around the environmental impact of our sport. We already have the most efficient engine in the world. It will be launching plans to reduce it eventually eliminate the environmental environmental impact of our sport and business.

We believe we can play a leadership role in this critical and issue in the automobile industry.

Now back to season.

Lewis Hamilton clashes six Formula One World Championship been achievement that puts him just one title behind the all time record holder Michael Schumacher.

It was also tremendous season for Mercedes which secured their six F. One constructors championship.

Louis just teammate Val three bodice scored is fourth first place finish of the season in Austin.

And we look forward to seeing be seeing these team mate rivalry continue and 2020 .

Ferrari posted an impressive showing after the summer break unsecured three wins in a row, including a Charles Leclerc win at home and Monza.

Not to be outdone, Sebastian Vettel posted a win in Singapore, and several podium finishes, but suffered a dramatic suspension failure in Austin.

Rounding out the top three teams we've seen some fantastic racing from Red Bulls, Max for staff, and and Alex Albarran, who hasn't finished below six since being elevated to the team from Toro. So.

The excitement on the track has been drawing crowds and viewers through 19 races, including Austin average weekend attendance is 204000 per event up 2% year on year.

We set a new record in Italy, and Mexico drew a crowd of over 345000.

We had three races that attracted attendance over 300000, Mexico Silverstone in Melbourne.

For TV viewership were up 7% through 15 races in Singapore and.

And we look forward to our last two races in Brazil in Abu Dhabi.

During the quarter, we announced important race renewals.

Formula One we'll continue to race in Mexico City and will change the net race named to the Mexico City Grand Prix to emphasize the support given by the government of the city.

This event recently won the award for Best Live Sporting event at the 2019 leaders Sports Awards selected from among 450 events in five categories worldwide.

We also announced the extension of the Italian grom premium onto them.

This race has been on the calendar since 1950.

The year. The World Championship was established is that in and is an important part of our history.

And we announced that the Spanish ground pre will return in 2024, its thirtyth consecutive season.

These rule renewals along with previous announcements of Silverstone in Melbourne, and the new race in Vietnam and the return to the that it'll is set us up for a record 22 race season in 2020 .

We continue to pay homage to there were rich history formula one, while adding exciting new destinations.

On the broadcast front, we extended our partnership with the ESPN until 2022.

Since returning TSB out in 2018 Formula one has seen viewership in the U.S. increased 19%.

The Democrats grad demographic of viewers, aged 18 to 34 has grown 81% over that same period.

This new deal, we'll see all Formula one races continued air alive and commercial free on either SPM, SDN too or a b C.

As an additional element DSP and support this will serve as the exclusive Spanish language home for all Formula one races.

This renewal rounds out carriage for the 2020 season.

Regarding sponsorship reached we reached a new deal by deal with Dubai Expo 2020, which will debut in Abu Dhabi. This year the feature to eight races across 2019 and 2020.

If you watch the U.S. ground pre you might have seen signage from caterpillar.

We're in the final stages of signing our Master services agreement with them for a long term sponsorship arrangement and are excited to partner with them.

We were also pleased to announce Vin fast as the title sponsor of the Vietnam aren't Vietnam Grand Prix.

We announced largest car manufacturer is signed a multiyear deal for the Grand Prix, which will debut in 2020 on the streets of annoying.

We held our third fan festival in Hollywood Boulevard in Los Angeles prior to the U.S. Grom pre.

This event included our first ever Dona contests between Daniel Ricardo Salisbury, Batus, Max were step in and Alex album.

The event was featured on Jimmy Kimmel alive, and Guillermo even stopped by data donor.

We hosted our final fan festival this past weekend in Brazil, with Heineken and the Santa family to celebrate Ayrton Senna and is 25 year legacy.

The event featured modern F. One cars from Mercedes and Marino and legends Emerson Fittipaldi flipping mass at driving sent Us historic cars.

We'd like to bring your attention to our new corporate web web site can be found at Corp. Dot formula one dot com.

We felt we need a site that was more user friendly to cater to sponsors investors media and perspective employees. Please take a look at the site when looking for corporate information and sign up for news alerts.

In summary, we're pleased with our results year to date are on track to hit our 2019 targets and look forward to continued strong growth results in 2020.

After years of effort, we achieved a milestone in the approval of the regulations for 2021 and beyond and we look forward to working on the commercial agreements with the teams now I'll turn the call back over to Greg.

Thanks, Jason Brian on all the great quarter Liberty Media as a reminder, we will be holding our annual Investor meeting on November 21st in New York.

Linked to register is our home page of our website, we look forward to seeing many of you there.

And.

With that operator, we'll open it up for questions.

Thank you.

We'll take our first question from a VJ giant from Evercore. Please go ahead your line is.

Thank you. This is John Belton for VJ two on F. One so first on these commercial agreements you're discussing with the teams anything you can share on on timing when you're hoping to get these finalized any regulatory deadlines that that may or may not just with these agreements.

And then the second question on broadcasting. So appreciate some of the details on the FPN deal, but anything you can share about some of the competitive dynamics around that deal.

And then kind of how you're thinking about some of your core western European renewals in light of positive viewership trends. So far this year. Thank you.

So I guess on the first part timing.

Yes.

We'd like to obviously get it done as soon as possible in ferrous of the teams while the I think the the core business principles they've had for a while the actual underlying agreements which are substantive.

They've only got last few weeks, we've had meetings with both they've been sort of financial and legal teams to take them through it.

So they now have had a chance to digest it and certainly we plan to engage with them in coming weeks again, I'm not going but if I'm not going to put up a deadline to I think we're having good discussions and we'd like to get things done in finalized as soon as possible.

I guess one the broadcast when you say competitive do you mean competitive interest or I guess I'm not sure what you mean.

So.

Were there other bidders and I guess scanner, yeah actually we have mortgage or somebody did this was.

It wasn't that long in the last deal. It was only a couple of years. So it was really just two years ago.

We have better interest than we did two years ago.

The step forward for us.

We still have a lot upside in the U.S. Theres no question.

The U.S. I think we said before is a long term proposition we like the momentum there and we saw increased interest we saw from parties and increased interest expressed in offers.

But.

So we feel good about it but clearly we think the U.S. as a market that still has a lot of upside for us.

Great.

And then anything the western European renewals.

Were probably just turning to.

Look I again, I think our begin to where I think we'll we feel good about the momentum.

Of the sport, we feel good about the interest and the sport whether again its attendance its viewership or just.

General fan research in terms of perception, which is very positive about the direction of the sport.

Where where in the early stages, our agreements that the significant European agreement, you're talking about our in place for 2020, so they're really renewals for 2021.

We're probably in the earlier stage early stages of moving forward with those given there's still more than a year away.

Yes, but I think we feel feel positive about.

No matter, what we have going and really the reaction engagement and I'm from from.

Parties about sport.

Great. Thank you Jay.

Well take our next question from Bryan Kraft at some point coupon Ensco has your line is open.

Hi, good morning, Thank you.

I had two one for chase one for Greg.

Greg kind of an open ended question for you podcasts have become a bigger focus for virtually everyone in the audio entertainment space.

Wondering how you think this segment of the industry evolves from an industry structure perspective, and do you think there any real economic winners in podcasting over the long term and then chase wondering if you can give us any color on the growth outlook in sponsorship and advertising for next year relative to this year, just directionally and can you.

You give us any sense for the growth this year in broadcasting relative to the advertising and sponsorship revenue.

You know within that primary revenue bucket or those growing a relatively similar rates are there or is the is based materially different between the two thank you.

James do you want to go first and handle the more direct question I'll Ramble on the open ended one.

[laughter].

Okay like I think the sponsorship area, we said before.

You know probably from a couple of years ago.

So it was probably up.

A little slower to develop than we initially anticipated I think the advertising market in general.

Probably hold it a little tougher than than it was a few years ago.

Yeah, but actually I think we feel good about the momentum and the interest and it's really taken I think we recognize we had to do more work telling the story about.

What we're doing the sport, where we're going with the sport.

We had to create capabilities for sponsors.

Yeah to create the type of offerings, they want whether its virtual or regional or or or other events like EA sports and digital and other vehicles, we can use to create those offerings.

We just.

Referred to the two deals with caterpillar in Dubai Expo the interest right now we feel very good about we always got a turn into dollars. We are quite busy I'd say the sponsorship group is realistically flat out and I expect them to be flat out the next few months.

Before we get to that 2020 season and.

Significant deals.

We again I don't want to get ahead of ourselves we've got a tournament the dollars but.

Certainly the the interest and engagement in the sponsorship area as been.

Increasing significantly as we have sort of gone through the last.

The last year and certainly in the recent quarters and you know there probably never been busier.

To be Frank about it.

I think on the broadcast side. If you look next I mean, the renewals this year well or.

For some we're probably not larger contracts so.

Yes, Directionally, we feel good about where we're going but.

The big the bigger markets are probably in 2021, so it's a positive, but but they're not the up.

They weren't to they weren't the larger markets that were being being renewed and tooling for 2020.

Great So Brian .

Thank you that is a a great question and one that you'll hear.

A lot more about from us and for me at our Investor Day, because I think podcasts are Great example of how audio content continues to expand.

We believe there's a lot of room left expand your audio day. Unlike your video day, which is pretty much being capped out because everyone's got their device and the timing, which you can use that device for video is limited.

Has become Baxter.

The audio day between air pods, and Elecsys and other kinds of distribution devices is only expanding.

And is well under tap both in monetization and in time.

When you think about how to differentiate that audio day, you moved from a world of music, which is somewhat of a commodity its table Stakes everybody's got a habit to a world where things like podcasts are an example of exclusive something that serious has done so well that with things like Howard stern or.

Versions like CNBC, any SP and having exclusives at least for a window on audio podcast or place where you can really go to exclusives and you think about the economics of that whatever a podcast maker charges and it.

They might be pretty good being podcast company right now and tried to sell yourself because it's obviously hot it's still far less cost per hour than what you get in video so.

The reality is all these new forms of pot content.

You'll content like podcasts and our judgment are really attractive economically and really attractive for consumers and therefore distributors. So you'll hear probably more than you care to at our Investor day, because it really is one of our key focuses.

Great Thanks to both.

Well take our next question.

Good morning, <unk> from JP Morgan. Please go ahead your line is.

Hi, Thank you just what the case during the last Concord negotiation in 2012, 13, I think formula one made some upfront payment teams in connection with future participation. So as you look to finalize commercial agreements with the team is now do you see payments like this is part of the process. There was that really you need to the prior period.

I don't think we're going to.

At this point comment on the specific components.

Of the of the deal while we're still engaged with the teams.

I think we put something on the.

But we've got a proposal to the my structure they've had this structure somebody again the business as the business element to this they've largely had for a while we think it's a proposal that's fair to us unfair to the teams but oh.

Yeah, we think it enables us to continue to achieve the growth we expect them the business but.

But I don't think where we're going to get into company or what's what's what's in it and what's not in it didnt get was once we finalized it will provide wholl provide appropriate color to yeah, what the agreement what the agreement is.

Okay, and then you mentioned the agree with Caterpillar before is there anything incremental incremental you could say this is this a central global or regional deal and then just given our track that advertising. It off then should we assume this starts in the fourth quarter.

Yeah, I mean, obviously, just say showed up in Austin It will start.

I will start where they show up itself. You know you had said, yes more than a it's it's not a global deal in terms of all 21 races, but it's a significant deal and you know anything important partnership and one that certainly is a.

It is one that we look to build on with them. So it is oh.

It's a it's a deal we're excited about they've.

They've been quite enthusiastic about it and we think there'll be a b a good partner so I'm so certainly its.

It's more that up it's more than just a regional deal. It is a significant multi race deal.

Great. Thank you.

Well go next question, John Tinker with Gabelli and company. Please go ahead your line.

Hi, Thank you.

Just a quick question on sports gambling, it looks like new Jersey's already got a booked in Vegas, how do you see that playing out in terms of how it might help the Braves.

You know when we just passed it here in Colorado as well. So you can see I think state by state you're going to continue to see this chip away.

It will take time.

And there are clearly some states, which are unlikely ever or at least for a long time to pass it.

But major stage, we'll do it as a revenue source.

Here, it's going to be used for water.

But.

You'll see it state by state and I do think Thats an opportunity. The leagues had been tried to do you know things around verify data, it's not quite as clear way, how you do that and baseball as you do in something frankly like Formula one where there's a but much more proprietary data and that you may recall, we have a deal to monetize some of that in formula one, but I do think it's both.

Someone of Robert revenue opportunity, but perhaps even more of a fan engagement opportunity, which will just strengthened.

Baseball and to disagree that more and more of it becomes an opportunity to.

In game bet on parts of a game.

You'll just see continued fan engagement much the way that fantasy built out and particularly in football.

[noise] affects not slow multi you got out of trade channel outdoor very well I know you still have a couple other small investment I think you may have little Viacom left with some 18 T. and now.

In and for Middle one how do you think about them.

So I think we would look at them, mostly as a source of capital at the right time.

Turns out the right time for Viacom was probably earlier than we executed on it but so be it we were probably more bullish that the merger would be positive then it has been on the 18 T in particular.

It's worth noting we actually don't really have 18, t. there a in any real sense it say.

Hedged by we aren't the hedge the exchangeables that we've issued.

We have a couple of odds and ends that are in there that our capital sources, a partnership or two that is likely liquidating bright Brian you want to add any those of note or or substance no. I mean, none of them are specifically material and they're not they're not liquid.

So theres not call out in particular, but but in general. They are you ask about our philosophy on them, John where you know.

There are a source of capital at the right time, when we think it's the right moment and something we can probably get out of either tax efficiently or are we have a used for the capital that says we want to pay the taxes and go do it now.

Thank you.

Thank you.

I live in though takeout next question from Jason Bazinet from Citi. Please go ahead your line is.

Thanks, I heard you guys sort of reiterate the five to six times leverage target and you guys have made nice progress, bringing that down why or why is that the right leverage for this business I know, it's not cyclical, but it's still strikes me as a.

As a pretty high amount of leverage to have on the business or is that just sort of the interim target when you get to.

Five you may lower it beyond that.

I'll I'll comment Chase, if you want to add anything surely you can.

Our view is that this is an unbelievably secure sustainable financing business 90, plus percent on contract even in the case of a downturn because of the nature of how we share risk with the teams limited downside and our judgment few businesses support leverage as well as this.

Business and any in a period of extremely low interest rates and our continued ability to refinances on more and more attractive terms.

We like five to six times.

Thank you I guess all at all yet it's Mike if I sorry, one more thing Chase I'd note also.

Two more things are below the EBITDA line make that only more compelling the low cap capex needs and the very attractive tax structure that we have make both of it probably be the case that five to six times well on the surface may sound large is actually not particularly large if you look at the free cash flow yield.

Sorry. Please go ahead.

Yeah, and I was going out on those and you're going to the only other thing then I'd add.

Yes, I think also from up or from a cost perspective realistically at this point, we probably put the operate we don't really face any increased costs as we've got the weve built the organization to support grow the business. The last couple of years. So at this point.

We feel good about the cost side of it and took degree there.

They're incremental cost about and some variable revenues like freight where we have both freight revenue in freight costs. There directly tied to revenues. So you know so I think from up from a margin cost perspective, yeah, we equally feel very good about the business.

That's very helpful. Thank you.

We will take on next question from Bryan Goldberg from Bank of America Merrill Lynch. Please go ahead.

Thanks, I've got a couple on a formula one first.

On a your efforts in Miami looks like local politics took another twist down there last week with.

May oral detail against the local opposition and I was wondering if there was any kind of timeline you could help us think about within which you'd expect to get clarity on whether or not this integration of the Miami Crown pre can go forward from a regulatory standpoint, and I guess, if negotiations become meaningfully protracted it.

Point wouldn't Miami appearance on the 2021 calendar.

Become a bit problematic and then I've got a follow up.

Okay.

[laughter] I guess I'm trying to handicap politics is probably really something ill advised.

I think you your head yet your comment on the veto that's leakage is accurate yes, there's some steps to go they're very short term.

The reality is for 2021, we really do we need to resolve this in the short term say vault next few months.

For it to be a 2021 race. So we have time yeah. The reality is most of the work most of the premature Don certainly the business. The business agreements are done so it really is.

Political issues around it and their active.

But I'm, probably not trying to hit trying to handicap local politics is probably beyond my pay grade.

And.

Will you know, we'll see what could be a great rice, where they would be great from Miami, if they would be great for us and great for all our partners. We have other options in the U.S. get up that we think well be exciting, but yeah. We're hopeful about hopeful about Miami, but we'll see where it you know where it takes us in the next step.

In the coming weeks.

Great. Thank you for that I get my follow up question is on the sponsorship side of the business really I guess from the global sponsorship side I just wonder if you could update us what at what are the key on sold.

Verticals right now as you see them or said another way.

Which categories or is your sponsorship sales force team spending the most time on as you look to shore everything up for a 2020 season.

<unk>, well I mean, but realistically as they said we've got you know.

I got an update yesterday, it's a three page update of engagement with wells with potential partners. So is that we really at this point are flat out in turns engagement a number them being large engagement and then there.

There are certainly an array of categories I guess, you know areas like finance technology telecommunications.

The oil industry sort of there you know there are an array of places.

That are probably obvious in some you know that I wouldn't have had Dubai Expo in them yet on the list a few months ago, or probably caterpillars and I'll be as a place the would've been as obvious. So there's some that are probably.

More obvious and historically tied to us and some that are that are less so but I think we do we really do we feel it has taken time, but I think we're getting I think we're getting to where we think we shot we were getting to the place. We thought the we could in terms of sponsorships the trolley been a little slower going but I think we've you know we feel good about.

Yeah, the the engagement the momentum in the interest yeah behind the sport and Oh.

And the story, we have to tell.

Thank you very much.

Even though they got next question from drew Borst from Goldman Sachs. Please go ahead your line.

Okay.

Great. Thank you I wanted to ask a question about formula one.

You know chase when you look at the the race calendar for next year. You do you think you renewed five races and added two new ones investors have come to expect that the the race promotion revenue is.

It's a fixed right multiyear contracts with FIS fixed escalators I guess I'm wondering if anything has changed after all these renewals in terms of the trajectory or that is it less fixed is it more variable or is there's nothing really changed there. Thank you.

I think we probably today feel.

<unk>.

More positive about the upside in that category certain elements of it.

Individual races are probably more mature.

But we do think there's upside there.

Yeah, I think that.

Probably in many ways is just the fact that I think the demand.

Has continued to.

Be a real positive I mean really across the world, but number of places that are interested again, our we have a pretty full calendar and long term contracts. So there are limits to how much you can do but I think we.

We do think there are opportunities <unk>, yeah, we have.

Yes, 22 as a full it was pretty full calendar, but we do think there's room still to add a couple I think.

We want long term partnerships, but just as we change this year.

We will add races, and we will selectively probably end up dropping races. There a couple places on a couple issues we've touched on in the past about races, we inherited.

That yes, <unk> agreements, we inherited that clearly were not reflecting what we think the value should be.

So.

I think there is is there is.

Upside to that that probably more than we would've.

For you if we were sort of.

Two years ago more than we would have.

Sort of expected there and.

We think it's a place we can continue to grow and I think.

There are also sort us and I guess, what I call related areas that equally up growth I guess, particularly something like hospitality, which is an important element. The high end customer is increasingly important at these events.

And it's about paddock clubs the hospitality.

Area. There are few races, where we really maximize that I think there a lot of events, where we've got upside to the hospitality side of it as well as just up.

The basic promoter agreements.

And it and ability to to add dimensions like title sponsors were still not yet we're still not fully not fall more in a sponsor area, but as you add races.

We still have opportunities to take advantage of things like title sponsorships, we talked about.

The Vietnam opportunity. So there I think the whole arena related to the promoter relationships and the related elements of the promoter relationships as an area that.

I think has more opportunity a more upside heard. It then you know again, we probably would have thought it would or would have said a couple of years ago.

And if I might.

Well appreciating the the upside scenarios. It is there any type of of downside.

Risk like I don't know again, I know you don't want to get into specifics about contract which is generally.

For example, or they are the hinged to serve the attendance at the raise for any of those things and if attendance didn't come through or is that not really.

How the deals work.

Yeah, I mean, our agreements today don't bet don't generally have that type of variable obviously the pad at club component of it is attendant space. So there is certainly revenue that is.

I attended space, but yeah, but the.

The base part of it.

As you know generally is not yet it's not.

Attendance based so look on any renewal I.

I guess you see wherever it all comes in.

And what alternatives exist so.

I'm, certainly not going to say there aren't there aren't risks today.

We feel pretty well positioned given the breadth of interest from the array of places.

That Ah that we have but you know we still got to get renewals executed. We obviously went through up a number of renewals.

In the last 12 months, yeah. So we feel good about the ability to navigate that space.

And look forward to take advantage or whether it's adding a race to the calendar or making some substitution that are upside or fixing some of the issues.

We've got but.

The other than Paddick club, which is like independent I wouldn't say attendance at a race in general.

Is that that's not generally a part of our agreements.

Okay. Thank you very much.

And then they'll take a last question for todays call.

Next feel there.

<unk> Riley.

Please go ahead your line is HM.

Okay, great. Thanks for taking the question I think when you guys first announced video to acquire offline. There was some talk around issuing shares to the teams that yes, obviously never happened, but because there's still the a possibility down the road and also curious to hear thoughts around financial mechanisms you have to promote higher economic alignment with the teams beyond.

The prize pool.

Today, when I will now be yeah, we're not we're not discussing equity with the teams. This point obviously, we are discussing a long term relationship I guess more generally look one of our real.

Efforts has been to try to create more of a shared vision about where where we can go where the sport and the growth opportunities in it I think the teams.

Our actually quite positive about.

The changes and energy, we brought to the sport, yeah, and they see the bigger crowds they sees the growth in.

The growth in events, the breadth of it a things that I events, whether it's a fan faster a fan zone.

The energy there is palpable they see them, we share with them the research about where we're going so.

And we certainly share with them probably more than would have been shared in the past. They like what are they are partners you know they they the price fund.

That they Sharon is obviously that they receive.

Makes him a partner.

In the business so they share on the upside in the growth of it and yeah, we're engaging with them on a much more regular basis I mean, my meet with them. Every every race, we have a good sort of a casual meeting on a Saturday morning, Jetstep make sure. We're in we're sort of sharing what we're doing sharing that things were trying to do and addressing any issues that exists. So.

You know a lot of how do you make how do you create a better alignment is just a is dealing with a day to day and dealing with them.

In a more transparent and up at a more collaborative why you know there obviously going to be it always going to be tough issues, we got to work through and that's.

That's true in any business.

But I think we are trying to bring a fresh mindset.

And a fresh perspective.

They all want the business to grow and I think they yeah, largely thinking we're not perfect, but I think they believe we're doing a lot of the things.

We should be doing that are really adding breadth and depth and growth to the sport. So it's a there's no magic bullet to how do you how do you create alignment other than.

Treat them like partners in them.

And.

And then and engaged with them in an honest and transparent way.

Got it that's helpful. One more if I could that.

Hi, everyone Mark.

Sure with with leverage at the at the offline.

The opco and sort of at the low end of the target can you talk about your view on buybacks at the F. One tracker and whether this is something that you think that happened in the near term or not.

Well I think your you're right the restricted payments test that we have and the target leverage that we've.

Discussed is going to start, allowing us to generate free cash flow from the F. One operating business up to the Holdco and we're looking at alternatives for that what we might do that capital.

Including share repurchase and I think I'm going to punch a little bit on that talk more about that next week when we get to the Investor day, because we I think we have a little more time, we will spend there on that.

Makes sense. Thank you Beth.

Thank you thanks to all the units get we look forward to seeing.

Many of you on next week.

It is veterans day, thanks to the many veterans.

Alignment of served our country and with that operator, we'll say good afternoon are good morning.

Thanks, a lot guys.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect.

Yes.

HM.

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[noise], ladies and gentlemen, thank you for spending.

Right.

Welcome to Delever.

Relation 2019.

Thanks.

The presentation.

Well listen only mode.

We will conduct a question answer session.

That's fine.

The question.

Sorry.

This conference is being late November 11.

All right.

John .

Yeah.

Senior Vice President Investor Relations. Please go ahead.

Thank you good morning, before we begin we'd like to remind everyone. In this call and certain forward looking statements and in the meaning of the private Securities Litigation Reform Act 90, 95, actual events or results could differ materially due to a number of risks and uncertainties, including notes mentioned in our most recent Form 10-K and 10-Q filed.

These forward looking statements speak only as of todays call and Liberty media Liberty Tripadvisor expressly disclaim any obligation or undertaking.

Any updates or revisions to any forward looking statements contained herein.

Any change in Liberty media, Nobody tripadvisors expectations with regard guarantees or any change in events conditions or circumstances, which any such statements me.

I'll now discuss certain non-GAAP financial measures, including India, China and adjusted.

The required definitions and reconciliations for Liberty media area.

It can be found in earnings press release.

Now I'd like to turn the call array Greg.

Good morning, President and CEO . Thank.

Thank you corn and good morning.

Today's begin the call. We'll also have formula one chairman and CEO Chase Carey.

And Liberty Media's principal financial Officer, Brian .

During Q1 name, we will also be able available to answer questions related to Liberty Tripadvisor.

Beginning with Liberty Sirius XM, we continued our repurchases of Liberty Sirius XM stock buying an additional $60 million.

Period August 1st October 30, Onest, if you look at that we effectively bought the underlying Sirius XM shares at a look through price of $4.47 per share. We will continue to take advantage of the discount to anybody as long as you the marketplace continue to give it to us.

Our ownership today stands and Sirius XM at 71.5% actually it was as of October 29.

Looking at Sirius XM myself fantastic results, yet again robot subscriber growth solid expansion of adjusted EBITDA and free cash flow.

Pandora acquisition has increased our scale to approximately 100 million users.

Continued focus on distribution and content, we have a new deal with Google, making Sirius XM available on Google Assistant and Google maps devices.

Collaboration with Marvel decreed scripted and unscripted podcast.

Year to date through October Sirius XM has returned over $2 billion of capital to shareholders.

Over the one group.

Made tremendous progress.

During the period regarding the regulations for 2021 and beyond.

Also experience exciting racing on the track Lewis Hamilton, One six World Championship in Austin and Mercedes.

There are six constructors championship.

Fun to watch Ferrari come back to when three in a row thriller Red Bull and the return of Mclaren would close battles among the best for the rest.

Live nation.

Continued strong execution the highest.

Quarter ever expected delivered double digit growth for the year.

Man for live events continues to grow.

92 million tickets sold through mid October .

Turning to break.

I guess when their second straight and LG Division title.

Host of individual awards, including Donaldson being ml nationally.

Come back player in the year, Brian Tunick or was it nationally manager near finalist surrogate with a national rookie of your finalized and this weekend three players were named Summer Slug Award winners agreement Communion all these.

Most trophies of any club the season in the first time any club has had multiple winters under 23 years holding one season.

Turning to the more mundane, but important mimics a number of exciting new tenants moving into the battery, including indoor top golf type experience any dueling piano bar.

Block seeing H. continue to progress on timing on budget and we look forward to our new Braves Academy at North Port opening in early January .

Over at Liberty Tripadvisor.

I've had a difficult quarter.

Trends worsening in the hotel click based auction.

We still see opportunity in experience.

But thats categories, probably it is growing quickly much slower perhaps than we originally forecast.

Trip advisor does plan to return capital to shareholders.

They announced a dividend at $3.50 per share, which will translate into a $108 million proceeds.

To Liberty trip.

We also announced that they would increase their share repurchase authorization by $100 million to $250 million.

In light of these these are not really in light of the fact that despite the challenges to to some of the click based auction items.

The business does generate and we'll continue to generate strong free cash flow. There also plan to evaluate their cost structure and prudently reduce and reallocate expenses among groups.

With that I'll turn over to Brian from more on our financial results. Thank you, Greg and good morning, everyone.

At quarter end Liberty Sirius XM group had attributed cash restricted cash and liquid investments at 54 million, excluding 90 million of cash restricted cash held directly at Sirius XM.

Valiant Sirius XM common stock held by Liberty Sirius XM at November Eightth was 22 billion and we have 950 million and I guess the holdings.

Total Liberty Sirius XM group attributed principal amount of debt was 9 billion, which includes 8 billion of debt that's directly at Sirius XM level.

Formula One group had attributed cash and liquid investments 65 million, which excludes 354 million of cash at one.

Formula One group had attributed public market securities, where the market value of approximately 5 billion as of last Friday.

That includes the intergroup interest in the branch group and our stake in live nation.

Total Formula One group attributed principal amount of debt was 5 billion, which includes 2.9 billion of debt at up one, leaving 2.1 billion of that corporate level.

Aethlons total net debt covenant OIBDA ratio as defined in that one's credit facilities for covenant calculations was 5.3 times at quarter end.

As compared to a maximum allowable leverage of 8.25 times.

Set a target total net leverage ratio for Formula one of five to six times Bank Covenant OIBDA.

Please note these leverage ratios are for the Formula one business not.

Right group had attributed cash liquid investments unrestricted cash 210 million at quarter end and attributed principal amount of data 549.

That'll turn it over to chase to talk about Formula one.

Thank you, Brian we've made tremendous progress on defining the future direction, a formula one and we're pleased to announce the unanimous ratification by the F.I. a world Motor Sport Council of New regulations, beginning in 2021 season.

These rules are the result of a detailed to your process then included input from the teams and other stakeholders.

We firmly believe achieve the goals, we set out to deliver.

2021 on Formula one will have cars that are better able to what battle on the track.

A more balanced competition on the track a fully enforceable cost cap of $175 million per season.

In a better and more sustainable business model for participants.

There's a wealth of information online if you'd like to see all the details, but let me talk a bit more in depth about closer racing.

Current formula one cars can lose up to half their downforce when following in the wake up another car.

As part of the New regulations, we project. The 2021 cars will Lewis just 15% of their downforce when they're one car length behind arrival and just 5% at three carling's.

As a huge difference that will enable the battles our fans want to see.

These regulations are an important major step. However, this is an ongoing process. The regulations were married to a new governance and price fund structure, which will enable the sport to grow and improve while further strengthening the business model.

Agreements are in advance stages with the teams.

In addition, we plan to address our initiatives around the environmental impact of our sport. We already have the most efficient mentioned in the world it'll be launching plans to reduce and eventually eliminate the environmental environmental impact of our sport and business.

We believe we can play a leadership role is critical and issue in the automobile industry.

Now back to season.

Lewis Hamilton claims she is six Formula one World Championship been achievement that puts him just one title behind the all time record holder Michael Schumacher.

It was also tremendous season for Mercedes which secured their six F. One constructors championship.

Lowest as teammate Val three bodice scored is fourth first place finish of the season in Austin.

And we look forward to seeing be seeing these team mate rivalry continue and 2020 .

Rory posted an impressive showing after the summer break and secure three wins in a row, including the Charles let clerk win at home and Monza.

Not to be outdone, Sebastian Vettel posted a win in Singapore, and several podium finishes, but suffered a dramatic suspension failure in Austin.

Rounding out the top three teams we've seen some fantastic racing from Red Bull Smacks for staff and and Alex Alabama, who hasn't finished below six since being elevated to the team from two are also.

The excitement on the track has been drawing crowds and viewers through 19 races, including often average weakened attendance is 204000 per event up 2% year on year.

We set a new record in Italy, and Mexico drew a crowd of over 345000.

We had three races that attracted attendance over 300000, Mexico Silverstone in Melbourne.

For TV viewership were up 7% through 15 races in Singapore.

We look forward to our last two races in Brazil in Abu Dhabi.

During the quarter, we announced important race renewals.

Formula One we'll continue to race in Mexico City and will change the net race named to the Mexico City Grand Prix to emphasize the support given by the government of the city.

This event recently won the award for Best Live Sporting event at the 2019 leaders Sports Awards selected from among 450 events in five categories worldwide.

We also announced the extension of the Italian Grand Prix a mountain.

It's rice has been on the calendar since 1950.

The year the World Championship was established is it and it is an important part of our history.

And we announced that the Spanish Grom Prady will then return in 2024, its thirtyth consecutive season.

These rule renewals along with previous announcements of Silverstone in Melbourne, and the new race in Vietnam and the return to the that it'll is set us up for a record 22 race season in 2020 .

We continue to pay homage to their rich history, a formula one while adding exciting new destinations.

On the broadcast front, we extended our partnership with the ESPN until 2022.

Since returning to you have spent in 2018 formula one has seen viewership in the U.S. increased 19%.

The Democrat Grad demographic of yours, aged 18 to 34 has grown 81% over that same period.

This new deal, we'll see all Formula One racing continued air alive and commercial free on either U.S.P. and yes beyond two or a b C.

As an additional element, yes beyond the port this will serve as the exclusive Spanish language home for all Formula one races.

This renewal rounds out carriage for the 2020 season.

Regarding sponsorship reached we reached a new d. deal with Dubai Expo 2020, which will debut in Abu Dhabi. This year the feature to eight races across 2019 and 2020.

If you watch the U.S. Gram per you might have seen signage from caterpillar.

We're in the final stages of signing our Master services agreement with them for a long term sponsorship arrangement and are excited to partner with them.

We were also pleased to announce Vin fast as the title sponsor of the Vietnam Vietnam Grand Prix.

Vietnam's largest car manufacturer is signed a multiyear deal for the Grand Prix, which will debut in 2020 on the streets event oil.

We held our third fan festival in Hollywood Boulevard in Los Angeles prior to the U.S. Grom pre.

This event included our first ever don't not contests between Daniel Ricardo Zealotry, Batus, Max were step in and Alex Salmond.

The event was featured on Jimmy Kimmel alive, and Guillermo even stopped by data donor.

We hosted our final fan festival this past weekend in Brazil, with Heineken and the Santa family to celebrate Ayrton Senna and is 25 year legacy.

The event featured modern F. One cars from Mercedes and Marino and likens Emerson Fittipaldi, and flipping mass at driving Senate's historic cars.

We'd like to bring your attention to our new corporate website web site can be found at Corp. Dot formula one dot com.

We felt we need to site that was more user friendly to cater to sponsors investors media and perspective employees. Please take a look at the site when looking for corporate information and sign up for news alerts.

In summary, we're pleased with our results year to date are on track to hit our 2019 targets and look forward to continued strong growth results in 2020.

After years of effort, we achieved a milestone in the approval of the regulations for 2021 and beyond and we look forward to working on the commercial agreements with the teams now I'll turn the call back over to Greg.

Thanks, Jason Brian on all the great quarter at Liberty Media.

As a reminder, we will be holding our annual Investor meeting on November 21st in New York.

Linked to register.

Home page of our website, we look forward to seeing many of you there and.

With that operator, we'll open up for questions.

Thank you.

First question.

Vijay Jayant from Evercore. Please go ahead your line is.

Thank you. This is John Belton for VJ two on F. One so first on these commercial agreements you're discussing with the teams anything you can share on timing when you're hoping to get these finalized any regulatory deadlines that that may or may not just with these agreements.

And then the second question on broadcasting. So appreciate some of the details on the FPN deal, but anything you can share about some of the competitive dynamics around.

Around that deal.

And then kind of how you're thinking about some of your core western European renewals in light of the positive viewership trends. So far this year. Thank you.

So I guess on the first part timing.

Yeah, we'd like obviously get it done as soon as possible in ferrous at the teams wild up I think the the core business principles and they've had for a while the actual underlying agreements what your substantive.

They've only gotten the last few weeks, we've had meetings with both the sort of financial and legal teams to take them through it.

So they now have had a chance to digest it and certainly we plan to engage with them in coming weeks again, I'm not going what if I'm not going to put up a deadline to what are the grabbing good discussions and we'd like to get things done finalized as soon as possible.

I guess one the broadcast when you say competitive do you mean competitive interest or I guess I'm not sure what you mean.

So.

Were there other bidders out I guess scanner, yeah, and actually we have mortgage or somebody did this was.

It wasn't that long in the last deal. It was only a couple of years. So it was really just two years ago, we had better interest and we did two years ago.

To step forward for us.

And we still have a lot upside in the U.S. Theres no question.

The U.S. I think we said before.

It's a long term proposition we like the momentum there we saw increased interest we saw from parties and increased interest expressed in offers.

But up.

So we feel good about it but clearly we think the U.S. as a market that still has a lot of upside for us.

Great.

And then anything the western European renewals.

Will probably just turning to.

Look I again, I think our view of where I think we feel good about the momentum.

Of the sport, we feel good about the interest in this sport whether again its attendants its viewership or just.

General fan research in terms of perception, which is very positive about the direction of the sport.

Where where in the early stages, our agreements that the significant European agreement, you're talking about our in place for 2020. So.

That really renewals for 2021.

We're probably in the earlier state early stages of moving forward with those given there's still more than a year away.

Yeah, but I think we feel positive about.

No matter, what we have going and really the interaction engagement im from <unk>.

Parties about sport.

Great. Thank you Jay.

Well take our next question Bryan Kraft from Deutsche Bank. Please go ahead your line.

Hi, good morning, Thank you.

I had two one for chase one for Craig.

Greg kind of an open ended question for you podcasts have become a bigger focus for virtually everyone in the audio entertainment space.

Just wondering how you think this segment of the industry evolves from an industry structure perspective, and do you think there any real economic winners and podcasting over the long term and then chase wondering if you can give us any color on the growth outlook and sponsorship and advertising for next year relative to this year just directionally and.

Can you give us any sense for the growth this year in broadcasting relative to the advertising and sponsorship revenue.

Within that primary revenue bucket or those growing at relatively similar rates are that or is the space materially different between the two thank you.

James do you want to go first and handle the more direct question I'll Ramble on the open ended one.

[laughter] <unk>.

Okay.

Like I think the sponsorship area, we said before.

Probably from a couple of years ago, I'd say was probably up.

A little slower to develop than initially anticipated I think the advertising market in general.

Probably old.

A little tougher than than it was a few years ago.

Yes, but actually I think we feel good about the momentum and the interest.

And it's probably taken I think we recognize we had to do more work telling the story about.

What we're doing with a sport, where we're going with the sport.

We had to create capabilities for sponsors.

Create the type of offerings, they want whether its virtual or reach at all or or other events like EA sports and digital and other vehicles, we can use to create those offerings.

We just.

Just referred to the two deals with Caterpillar and Dubai Expo.

Interest right now we feel very good about we always got to turn it into dollars. We are quite busy I'd say the sponsorship group is realistically flat out and I expect them to be flat out the next few months.

Before we get to that 2020 season.

And the significant deals.

Again, I don't want to get ahead of ourselves, we got a tournament the dollars but.

Certainly the the interested engagement in the sponsorship area has been increasing significantly as we've sort of gone through the last.

The last year and certainly in the recent quarters and they probably never been busier.

To be Frank about it.

I think on the broadcast side. If you look next I mean, the renewals this year well.

Where some we're probably not larger contracts so.

Directionally feel good about where we're going but.

The big the bigger markets are probably in 2021, so it's a positive, but but they're not the up.

They weren't to.

They weren't the larger markets that were being road being renewed until it for 2020.

Great So Brian .

Thank you that is a a great question and one that you'll hear a lot more about from us and for me at our Investor Day, because I think podcasts are Great example of how audio content continues to expand we believe there's a lot of room left to expand your audio day. Unlike your bid.

Okay, which is pretty much being capped out because everyone's got their device.

The time and once you can use that device for video is limited.

Has become Max.

The audio day between air pods, and Elecsys and other kinds of distribution devices is only expanding and is well under tap both in monetization and in time.

When you think about how to differentiate that audio day, you moved from a world of music, which is somewhat of a commodity its table Stakes everybody's got a habit to a world where things like podcasts are an example of exclusive something that serious has done so well that with things like Howard stern or.

Versions like CNBC, any ESP yen, having exclusives at least for a window on audio podcast or place where you can really go to exclusives and you think about the economics of that whatever a podcast maker charges and.

They might be pretty good being podcast company right now and try to sell yourself because it's obviously hot it's still far less cost per hour than what you get in video so.

The reality is all these new forms of pot content.

Audio content like podcasts, and our judgment are really attractive economically and really attractive for consumers and therefore distributors. So you'll hear probably more than you care to at our Investor day, because it really is one of our key focuses.

Great Thanks to both.

Well take questions David.

JP Morgan. Please go ahead your line is.

Hi, Thank you just want the case during the last Concord negotiation in 2012, 13, I think formula one need some upfront payment teams in connection with the future participation. So as you look to finalize the commercial agreements with the team is now do you see payments like this is part of the process. There was that really you need to the prior period.

I don't think we're going to.

At this point comment on the specific components.

The of the deal while we're still engaged with the teams.

I think we put something on the.

But we've got a proposal to the my structure they've had this structure symbolic and the business as the business element to this they've largely had for a while we think it's a proposal that's fair to us unfair to the teams but oh.

Yeah, we think it enables us to continue to achieve the growth, we expect them to business, but.

But I don't think where we're going to get into company or what's what's what's in it and what's not in it didnt get was once we finalized it will provide what provide appropriate color kind of to yeah. What the agreement what the agreement is.

Okay, and then you mentioned the agree with Caterpillar before is there anything incremental incremental you can send US is this a central global or regional deal and then just given that tracks that advertising at Austin should we assume that starts in the fourth quarter.

Yeah, I mean, obviously, just say showed up in Austin. It will start now it will start where they show up.

It's a you know yet that.

More than up it's it's not a global deal in terms of all 21 races, but it's a significant deal.

And.

It is an important partnership and one that certainly is a.

It is one that we look to build on with them. So it is.

It's a it's a deal are excited about they've.

They've been quite enthusiastic about it and we think there'll be a good partner so certainly its.

It's more that it's more than just a regional deal you don't get is a significant multi rate steel.

I'd like it.

Well take questions John King.

Gabelli and company. Please go ahead your line.

Hi, Thank you.

Just a quick question on sports gambling it looks like New Jersey is already got a better books in Vegas, how do you see that playing out in terms of how it might help the Braves.

You know when we just passed it here in Colorado as well.

So you can see I think state by state you're going to continue to see this chip away.

It will take time.

And there are clearly some states, which are unlikely ever or at least for a long time to pass it but major stage, we'll do it into revenue source.

Here is going to be used for water.

But.

You'll see it state by state and I do think that's an opportunity. The leaks had been tried to do things around verify data, it's not quite as clear way. How you do that in baseball as you doing something frankly like formula one where there's a but much more proprietary data and as you may recall, we have a deal to monetize some of that in formula one, but I do think it's both.

Someone <unk> revenue opportunity, but perhaps even more of a fan engagement opportunity, which will just strengthened.

Baseball and to the degree that more and more of it becomes an opportunity to.

In game bet on parts of a game.

You'll just see continued fan engagement much the way that fantasy built that particularly in football.

[noise] affects us one will be you got out of trade channel outdoor very well I know you still have a couple of other small investment I think you may have little Viacom lessen some eightseventy and now.

In insulin middle what how do you think about them.

So I think we would look at them, mostly as a source of capital at the right time.

Turned out the right time for Viacom was probably earlier than we executed on it but so be it.

We were probably more bullish that the merger would be positive than it has been on the 18 T in particular.

It's worth, noting we actually don't really have 18 t. there.

In any real sense and say.

Hedged by and we aren't hedge the exchangeables that we've issued.

We have a couple of odds and ends that are in there that our capital sources, a partnership or two that is likely liquidating, Brian Brian you want to add any those of note or or substance no. I mean, none of them are specifically material and they're not they're not liquid.

So theres not call out in particular, but but in general they are you asking about our philosophy on them John where.

There are a source of capital at the right time, when we think it's the right moment and something we can probably get out of either tax efficiently or we have a used for the capital that says we want to pay the taxes and go do it now.

Thank you.

Thank you.

Well take our next question so Jason.

Please go ahead your line is.

Thanks, I heard you guys sort of reiterate the five to six times leverage target and you guys have made nice progress, bringing that down why or why is that the right leverage for this business I know, it's not cyclical, but it's still strikes me as a.

Because it pretty high amount of leveraged have on the business or is that just sort of the interim target when you get to.

Five you may lower it beyond that.

I'll I'll comment Chase, if you want to add anything certainly you can.

Our view is that this is an unbelievably secure sustainable financing goodness 90 plus percent on contract.

Even in the case of a downturn because of the nature of how we share risk with the teams limited downside.

In our judgment few businesses support leverage as well as this business and any in a period of extremely low interest rates and our continued ability to refinances on more and more attractive terms.

We like five to six times.

Thanks, that's all I don't yet.

If I sorry, one more thing Chase I'd note also.

Two more things that are below the EBITDA line megawatt only more compelling the low cap capex needs and the very attractive tax structure that we have make both of it probably be the case that five to six times.

Well on the surface may sound large is actually not particularly large if you look the free cash flow yield.

Sorry, just yet.

Yeah, and I was going out on those and they're going to the only other thing then I'd add.

Yes, I think also from up or from a cost perspective realistically at this point, we probably put the operate we don't really face any increased costs as we've got the it weve built the organization to support grow the business last couple of years. So at this point.

We feel good about the cost side of it and took three there.

They're incremental cost about in some variable revenues like freight where we have both freight revenue in freight costs, they're directly tied to revenues. So you know so I think from up from a margin cost perspective, we really feel very good about the business.

That's very helpful. Thank you.

We will take on next question Bryan Goldberg from Bank of America Merrill Lynch. Please go ahead.

Thanks, I got a couple on Formula one first.

On a your efforts in Miami looks like local politics took another twist down there last week with.

Hey, I may oral Vito against the local opposition and I was wondering if there was any kind of timeline you could help us think about within which you'd expect to get clarity on whether or not this integration.

The Miami Crown pre can go forward from a regulatory standpoint, and I guess, if negotiations become meaningfully protracted at what point where to Miami appearance on the 2021 calendar.

Become a bit problematic and then I've got to a follow up.

Okay.

[laughter] I guess trying to handicap politics is probably.

Really something ill advised.

I think you your head your comment on the veto that's leakage is accurate.

There's some steps to go.

They're very short term the reality is for 2021, we really do need to resolve this in the short term sei wealth next few months.

For it to be a 2021 race. So we have time.

Yeah, the reality as most of the work most of the premature Don certainly the business. The business agreements are done so it really is the political issues around it.

And there are active.

But.

Im not trying to hit trying to handicap local politics is probably beyond my pay grade.

And.

We'll we'll see what could be a great rice, we they would be great from Miami, if they would be great for us and great for all our partners. We have other options in the U.S., we think we'll be exciting, but and we're hopeful about hopeful about Miami, but we'll see where it.

Where it takes us in the next to.

In the coming weeks.

Great. Thank you for that I get my follow up question is on the sponsorship side of the business really I guess from the global sponsorship side I.

I just wonder if you could update us what it what are the key on sold.

Verticals right now as you see them or said another way.

Which categories. There is your sponsorship sales force team spent in the most time on as you look to shore everything up for.

The 2020 season.

Well I mean, but realistically as I said, we've got you know.

I got an update yesterday, it's a three page update of engagement.

With potential partners. So is that we really at this point or flat out.

In terms of engagement, a number them being large engagement.

Then there.

There is certainly an array of categories I guess areas like finance technology telecommunications.

Oil industry sort of there there are an array of places.

That are probably obvious and some that I wouldn't have had Dubai X, but one of them yet on the list a few months ago.

Or probably caterpillar is an obvious a place that would have been as obvious so.

There are some that are probably more.

More obvious and historically tied to us and some that are that are less so but I.

I think we do we really do we feel it has taken time, but I think we're getting I think we're getting to where we think we shot we were getting to the place. We thought the we could in terms of sponsorships the trolley been a little slower going but I think we've we feel good about the the engagement the momentum in the interest.

Hi, the sport and Oh.

And the story, we have to tell.

Thank you very much.

Even though they kind of next question from drew Borst from Goldman Sachs. Please go ahead your line.

Okay.

Great. Thank you on wanted to ask a question about formula one.

Chase when you look at the the race calendar for next year, you do I think you a renewed five races and added two new ones investors have come to expect that the the race promotion revenue is is fixed right multiyear contracts with FIS fixed escalators I guess I'm wondering if anything has changed after all these renewals.

In terms of the trajectory of that is it less fixed as it is it more variable or is there is nothing really changed there. Thank you.

I think we probably today feel.

More positive about the upside in that category certain elements of it.

In individual races are probably more mature.

But we do think there's upside there.

I think that.

Probably in many ways is just the fact that I think the demand.

His continued tip.

Be a real positive I mean really across the world, but number of places that are interested again, our we have a pretty full calendar and long term contracts other limits to how much you can do but I think weve.

We do think there are opportunities.

We have.

22, as a full it was pretty full calendar, but we do think there's room still to add a couple I think.

We want long term partnerships, but just as we change this year.

We will add races, and we will selectively probably end up dropping races. They're a couple places on couple issues, we've touched on in the past about races, we inherited.

That yes, <unk> agreements, we inherited that clearly were not reflecting what we think the value should be.

So.

Yeah, I think there is.

There is upside to that that yeah, probably more than we would've.

We were sort of.

Two years ago more than we would've.

Sort of expected there and.

We think it's a place we can continue to grow and I think.

There are also sort us and I guess, what I call related areas that equally up growth I guess, particularly something like hospitality, which is.

An important element the high end customer is increasingly important at these events.

And is that pad at club the hospitality.

Area. There are few races, where we really maximize that I think there a lot of events, where we've got upside to the hospitality side of it as well as just up.

The basic promoter agreements.

And up and ability to to add dimensions like title sponsors were still not we're still not fully not fall more to sponsor area, but as you add races.

We still have opportunities to take advantage of things like title sponsorships, we talked about.

The Vietnam opportunity so there.

I think the whole arena related to the promoter relationships and the related elements of the promoter relationships as an area that.

That I think has more opportunity a more upside at then you know again, we probably would have thought it would it would have said a couple of years ago.

And if I might.

Well appreciating the the upside scenarios. It is there any type of of downside.

Risk like I don't know again, I know you don't want to get into specifics about contract, but just generally.

For example, or they are the hinged to serve the attendance at the raise for any of those things and if attendance didn't come through or is that not really.

How that how the deals work.

Yeah, I mean, our agreements today don't bet don't generally have that type of variable obviously, the paddock club component of it is attendance space. So there is certainly revenue that is.

Tendon space, but yeah, but the the base part of it.

As.

Generally has not yet it's not.

Tendons based so look on any renewal.

I guess you see wherever it all comes in.

And.

What alternatives exist, so I'm certainly not going to say there aren't you know there aren't risks today.

We feel pretty well positioned given the breadth of interest from the array of places.

That that we have but we still got to get renewals executed. We obviously went through a number of renewals.

In the last 12 months, yeah. So we feel good about the ability to navigate that space.

And look forward to take advantage of whether it's adding a race to the calendar or making some substitution is there upside or fixing some of the issues.

We've got but.

But the other than Paddock club, which as I get offended I wouldn't say attendance at a race in general.

So that's not generally a part of our agreements.

Okay. Thank you very much.

Okay.

Todays call from Zacks feel that from B. Riley.

Please go ahead your line is.

Okay, great. Thanks for taking the question I think when you guys first announced video to acquire offline. There was some talk around issuing shares to the team.

Obviously never happened, but because it's still the a possibility down the road and also curious to hear thoughts around financial mechanisms you have to promote higher economic alignment with the team beyond the prize pool.

Today, when I will now be yeah, we're not we're not discussing equity with the teams. This point, obviously, we are discussing a long term relationship.

I guess more generally look one of our real.

Efforts has been to try to create more of a shared vision about where where we can go where the sport and the growth opportunities in it I think the teams.

Our actually quite positive about.

The changes and energy, we brought to the sport and they see the bigger crowds they sees the growth in.

The growth in events, the breadth of it a things that I events, whether it's a fan faster a fan zone.

The energy there is palpable they see the we share with them the research about where we're going so.

And we certainly share with them probably more than would have been shared in the past they make the our partners you know they they the price fund.

That day, Sharon as obviously that they receive.

Makes him the partner.

The business so they share on the upside in the growth of it.

And yeah, we're engaging with them on a much more regular basis and in my meet with them. Every every race, we have a good sort of a casual meeting on a Saturday morning, Jetstep make sure. We're we're sort of sharing what we're doing sharing the things we're trying to do and addressing any issues that exist. So you know a lot of how do you make how do you create a better alignment is just to it.

Dealing with a day to day.

And dealing with them.

In a more transparent.

And at a more collaborative why.

There are obviously going to be it always gonna be tough issues, we got to work through.

And that's.

That's true in any business.

But I think we are trying to bring a fresh mindset.

And a fresh perspective.

They all want the business to grow and I think they.

Largely we're not perfect, but I think they believe we're doing a lot of the things we should be doing.

That are really adding breadth and depth and growth to the sport.

So it's a there's no magic bullet to how do you how do you create alignment other than.

Treat them like partners in them.

And.

And then and engaged with them in an honest and transparent way.

Got it that's helpful. One more if I could that.

Hi, everyone Mark.

Sure.

Leverage at the at the F. One.

The opco and sort of at the low end of the target can you talk about your view on buybacks at the F. One tracker and whether this is something that you think that happened in the near term or not.

Well I think your you're right.

Restricted payments test that we have and the target leverage that weve.

Discussed is going to start, allowing us to generate free cash flow from the F. One operating business up to the Holdco and.

We're looking at alternatives for that what we might do that capital.

Including share repurchase and I think I'm going to punch, a little bit on that and talk more about that next week when we get to the Investor day, because we I think we have a little more time, we will spend there on that.

Makes sense. Thank you Beth.

Thank you thanks to all the units get we look forward to seeing.

Many of you on next week.

It is veterans day, thanks to the many veterans for on the line and the served our country and with that operator, we'll say good afternoon are good morning.

Thanks, a lot guys.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect.