Q4 2019 Earnings Call
[music].
Ladies and gentlemen, thank you for standing by welcome to the Liberty Media Corporation 2019, Q4 earnings call. During the presentation. All participants will be in listen only mode. Afterwards, we will conduct a question answer session at the time. If you have a question. Please press star one on your telephone as a reminder, this conference.
Being recorded February 26.
I would now like to turn the conference over to Courtney Chen Chief portfolio Officer in senior Vice President of Investor Relations. Please go ahead.
Thank you before it begins I would remind everyone that this call include certain forward looking statements I mean, the private Securities Litigation Reform Act.
Actual events or results could differ materially gives you a number of risks and uncertainties.
Those mentioned in our most recent form 10-K filed with the FCC. These forward looking statements speak only as of the data on this call and Liberty media and Liberty Tripadvisor expressly disclaim any obligation or undertaking.
Any updates or revisions to any forward looking statements contained herein.
Any change in Liberty media or Liberty Tripadvisor is expectations with regard to or any change in events conditions or circumstances on which any such statements are based on today's call [laughter] certain non-GAAP financial measures, including adjusted OIBDA and adjusted EBITDA, the required definitions and reconciliations for Liberty media and Sirius XM.
Just wanted to 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 over to Liberty, President and CEO, Greg mistakes.
Good morning, welcome all of you on the call.
Today speaking besides myself will have over the one chairman and CEO Chase Carey.
Liberty, Chief Accounting Officer, and principal financial Officer, Brian went away.
During Q1, I will also be available to answer questions related to Liberty trip advisor.
Beginning with Liberty Sirius XM.
We continued our purchase of all the stock.
And bought an additional $55 million from the period of November 1st of January 31st including buying both our success LS X.M.K. shares.
I would note. This the first time, we bought the shares. In addition, the case and we just look out in the marketplace or what is a more attractive value in determining our repurchases.
If you look through to the underlying Sirius XM shares are looking to price was $5. An 11 cents over this period price, we probably pretty attractive for devry likes to restock.
As I've said before and we'll continue to say, we continue to take advantage of the discount tickets and TV.
And as of January 31st our ownership answer is such an almost 71.6%.
That's really looking at the underlying curious extra myself and a strong finish to the year.
We record high financial performance at both jurisdiction and Pandora.
This was the 10th consecutive year of 1 billion plus helping that adds.
Research and returned about $2.4 billion a capital during the year.
And they continue to focus on innovation.
First the Threesixty outlets Nexgen platform, which will be distributed across six Oems in 13 of their underlying brands. We anticipate 2 million vehicles will be an operation by the end 2020.
And innovation on the content from when they come in quadrupled the number of podcasts available on the platform last year was solid growth in monthly listening.
You had very creative programming agreements with Drake Marvel bronze uninterrupted and too.
We are pleased with the integration of Pandora to remind you that deal close just over a year ago, especially the combination of our development team and our AD Tech resources.
75% Sirius XM development resources resources are now being spent in ways that benefit both of the brand for services.
And Pandora is a positive contribution to EBITDA today.
Turning to Formula One group.
We had strong financial results and you'll hear more about that from chase in a moment and leverage is already done with 5.1 time.
As we discussed at our Investor meeting in November we began repurchasing Liberty Sirius XM stock at flawed to hedge ourselves against some of the underlying exposure we have with our convert.
And in a period of November 1st of January 31st we bought back $52 million.
We very much before you start of the Formula one season March 15th in Melbourne.
Well I've nations not yet reporting so I'm going to defer commentary on that.
And looking at the Braves very solid revenue growth.
Third consecutive year of attendance at truest apart our newest name opt for the ballpark.
We opened a new brace academy adjacent to our spring training.
Apart just south of service Southern Florida, and we held the first game last Saturday first precision or spring training game, where it came Felix had a strong outing.
We have filled out our 40 man roster.
Extended contracts with Alex and thought was surprised snitker and.
Since I was just that and we're excited bar on field prospects and 2020.
I'd also note we've seen a very good advance on sales of tickets.
Turning over to Liberty trip Advisor Trust had a difficult year.
But we believe it's focused on the right areas continues to drive revenue growth outside of the hotel auction into faster growing areas of experiences in restaurants.
Maybe just as our cost structure to support strong adjusted EBITDA and free cash flow growth in 2020, and they returned 540 million of capital to shareholders in 2019.
With that I'll turn it over to Brian for more on our financial results. Thanks, Greg and good morning, everyone.
At year end Liberty Sirius XM group had attributed cash restricted cash and liquid investments of 387 million.
Including 120 million of cash unrestricted cash held it.
Your next them.
The Sirius XM common stock held at Liberty Sirius XM as of yesterday's close was 22 billion and we have approximately 1.4 billion debt against these holdings.
Well Liberty Sirius XM group attributed principal amount of debt was 9.3 billion, which includes 7.9 billion of debt battelle directly Sirius XM level.
Formula One group had attributed cash and liquid investments of 185 million, which excludes four on $402 million of cash held up one.
Formula One group had attributed public market securities with a market value of approximately 4.9 billion as of yesterday's close which include there's interest in the Braves group, there's interest and Liberty Sirius XM group and of course are stuck in my mission.
Total Formula One group attributed principal amount of debt was 5.1 billion, which includes 2.9 billion of debt held it.
One, leaving 2.2 billion.
At the corporate level.
Formula wants total net debt covenant OIBDA ratio as defined in up ones credit facilities was 5.1 times as of yearend.
Fair to a maximum allowable leverage of 8.25.
The set a target total net leverage ratio for Formula one of five to 5.5 times Bank Covenant light, though.
Please note that these leverage ratios are for the Formula one business not the Formula One group.
As the branch group, we attributed cash liquid investments unrestricted cash of 212 million attributed principal amount of the 559 million.
I'll turn it over to chase to talk about a point.
Thank you Brian.
I was in 19 once a year of growth for both fans and the business a formula one from a fan perspective attendance at our races again exceeded 4 million up 1.75%, even with this Saturday cancellation of the shop in East Grand Prix do that due to the tie soon.
The average attendance per race was over 200 in 2000.
Grand Prix exceeded crowds.
Had crowds of over 200000 over the weekend with five tracks hosting over 100000 spectators on race day.
The scale of these events is truly unmatched in sports and we continue to be impressed with our promoters in the world class If I'd say orchestrate.
We're even more engaged at home with a total global cumulative audience at 1.9 to 2 billion the highest since 2012 in an increase of 9% over 2018.
The third consecutive year of growth.
19 of the 21, grom freeze and higher cumulative audiences that 2018.
Across Formula one social media platforms, we saw followers increased significantly at almost 33%.
Page views in our core digital platforms, surpassing 1 billion.
We continue to expand or digital initiatives recently launching F. One TV on road <unk> in North America, everything up one TV to the large screen format for the first time.
We also encourage you to listen to our podcast beyond the grid, which now is 43 episodes and reached up to 15 million listens and 2019.
For a business perspective, 2019, so lets begin to reap the benefits of our foundation built in 2017 in 2018.
2019 revenue grew over 10% and EBITDA grew over 25%.
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Up to over 20%.
For me. The one also attributed continued to be a cash machine with 2019 net operating cash flow exceeding.
The solid growth in cat as strong cash conversion.
We finished 2019 with a leverage ratio of about 5.1 times near the low end of our recently originated range.
We expect this momentum to continue into 2020 to 2020 season marks the seventh year anniversary the Formula One World Championships and we recently debuted a special logo for this milestone to celebrate this change throughout the year.
All car Liberty's for this year have been revealed someone dramatic fashion and we saw the potential of these new cars when are testing in Barcelona.
We look forward to first race in Melbourne and March 15th.
As announced earlier after ongoing discussions with authorities and our promoter in China, we decided to postpone the Chinese grom pre which was scheduled to be held on April 19th.
Her own a virus.
We will continue to monitor the situation and we're working to reschedule the like race later in the season.
No you have questions about how potential cancellation the race could impact our financials.
The events. The race is not held we will not receive approach and revenue, but given the early notice I guess postpone it we're working hard to mitigate the effects, but yet the in back to adjusted EBITDA to be relatively minimal.
In addition patient if your next question in General Broadcasting sponsorship deals are not dependent on race Kelly.
We're excited to welcome to new races to the 2020 calendar.
Vietnam Grand Prix will take place on April 5th in Illinois and to anticipate another question.
We do plan to proceed with the race.
I talk to her Vietnam taught Vietnamese partners yesterday, and Atlanta, stopping annoying April 5th on my way.
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March 16 somebody way back the London from Australia, and all systems are though.
Equally excited about our second race and getting the Netherlands ground free apps and for a makes third.
As we previously it hasn't even absent mentioned previously dynamic new locations like the spring wonderful fresh energy to Formula One and we look forward to welcoming new fans in Vietnam willing gauging the Orange Army in Holland.
In sponsorship, we announced one eight bet as the official F. One sponsor in Asia.
This is part of our previously announced deal with eat into regional Sports group that we'll see that bookmaker effect feature exclusively throughout the Asian broadcast market through 2024.
We expect announced an exciting new additions to our sponsor lineup in the coming weeks before our season launch in Australia.
The driver lineup for the 2020 season has the promise of some great racing Informatics story lines.
Lewis Hamilton will be chasing a seven world championship, which would equal the record set by Michael Schumacher.
He's teammates fell three bought this followed up in a strong 2019 showing.
Quite exciting competition.
The battle that Ferrari between Battle in Leclerc would continue to provide drama at the new team has adopted a let the race policy.
You can forget to raise sending coalition in Brazil.
Red Bull powered by Honda is hoping to challenge, both Mercedes and Ferrari, even more this season with Max per snap and one of the rising stars a formula one is eating away.
Unclear it looks to build on their progress from last year with the exciting do have like a Morris and Carlos signs behind the wheel.
At Renault Esteban O'connor will make has returned to the grid like a likely or something to prove.
And the only drive or did you for the year, we welcome Nicolas like TV to the Williams team.
Uniquely exciting mix et cetera in World Championship drivers going to head to head with one of the most talented groups of young drivers. The sport is seen in a generation.
So to kinda drama and storytelling, that's compelling part of the Netflix series to drive to survive, we anxiously await ceasing to which would they do on February 28.
Fantastic Clamoring for season, too and it does not disappoint, especially with the addition of Ferrari and Mercedes.
The series has been instrumental in bringing new fans and building our base and Underpenetrated markets, especially in North America, and we're pleased with our relationship with Netflix.
In other areas of new fan outreach 2019 F. One new balance he sports Pro series B Carter, just largest audience ever a 5.8 million.
This represents an uplift of 76% year over year.
In a clear demonstration of how we're reaching a new younger and more digitally minded audience, 79%. If you wish to winning and were below the age of 34.
This was followed by our inaugural or have one E Sports China Championship held in Chile.
Qualification spanned across six major cities into over 6 million viewers for the finals.
Is your will host three fan festivals Johannesburg in March London in May New York in October.
This will be and further celebration of our Seventyth anniversary.
I suppose formula one to new audiences.
We're excited to happy W series joined the 20 Twond calendar at our Austin in Mexico City races, further efforts of promoting diversity and inclusion at motor sports.
Off the track we were thrilled to share ambitious sustainability plan to have a net zero carbon footprint by 2030.
Throughout our history Formula was going at the forefront of technological innovation.
Many of our innovations had been adopted by road cars and other industries.
Our current F. One hybrid power unit, it's the most efficient engine in the world delivering more power using less fuel than any other car.
Engine presents an opportunity to be net zero carbon.
Through advanced sustainable fuels and energy recovery systems.
Over 1 billion over the 1.1 billion vehicles in the world are powered by an internal combustion engines.
So the impact here can be tremendous.
Retrofit occasion of ROE transport the personal solution, that's still true requires generation of the energy to power the car manufacturer the battery and then disposal of it.
My 2025 Lawson sure all of our events are sustainable this will be through the use of sustainable materials.
In addition to single use plastics and always being reuse just recycled or come posted while offering our fans greater options to reach the race.
Corporate level, we will move to ultra efficient logistics and travel and 100% Renewably powered offices facilities in factories.
These plants are the result of over a year of work between the F.I. sustainability experts teams and promoters and we aim to set. The example for sustainability in the world of sports.
Well the 2020 season hasn't begun we're already working looking toward 2021 and beyond that and we're thrilled with the progress in the last few weeks of Miami to become closer to finalize thing that potential tent pole event on future calendars.
We're excited to partner with the Miami Dolphins to bring a world class event to the region and our second race to the U.S.
Falling on the ratification of new regulations for the 2021 season.
We're making progress and a new Concord agreement, which will include undo governance in price fund structure.
These discussions are at advanced stages with teams will strengthen the business model and from a growth in the sport.
Financially.
We also expect 2020 to be another year of strong across the board growth for Formula one with each of our three primary revenue categories race promotion media and sponsorship contributing to the growth.
We also we're also expecting growth in other important segments of our business like hospitality and are excited to see business segments like licensing a digital advertising, but hardly existed a couple of years ago become exciting new growth areas.
We further expect thorough t. platform to continue to be a four source of growth as we stabilize the platform the second half of last year.
And we now begin to launch new features like our recently expanded coverage of winter testing.
And the cost side, while we continue to add new initiatives to engage nextcyte fans.
Our organization it clearly a more mature one today that will enable us to limit cost increases.
Growth in some areas like hospitality afraid of cost increases that are tied to revenue growth.
Well the emerging areas like deal to de platform.
Are still in an investment phase, but the foundation for our business and sport is largely in place.
Due to the contractual nature of our business.
Many of the key drivers over 2021 2020 results are largely in place in fact much of our current efforts are focused on initiatives.
In fact, 2021 and beyond in areas like median race promotion.
We're excited about the engagement of arrange a third parties in these areas as many react to the renewed energy and excitement around the sport.
Activity further reinforces our conviction formula one is uniquely positioned for that diet for dynamic growth in the next few years.
Well I feel like the thanks, Sean branches for the contribution he made the formula one over the past three years. He was instrumental in transforming the commercial side of the business.
Making formula one a fan centric sport with growing popularity and set us up for continued success.
He's got a strong leader of the organization and personally a great partner.
Now I'll turn call back over to Greg.
Thanks, Jason.
Let me Echo chases comments about we will Miss shot my friend and thanks for all your good work.
Thanks also to chase and Brian as I said for their comments here on all these great year for Liberty media.
We set the name for our Investor meeting in New York.
Leasehold Thursday November 19th.
We do appreciate your continued interest in Liberty media look for speaking with you on next quarter's call a thought before and with that operator I'd like to open the line for questions.
Thank you if you ask the question. Please take note pressing star one on your telephone keypad.
Speakerphone. Please make sure you I mean function is turned off well, you're saying not to reach our equipment.
Dan Press Star one to ask a question. So just a moment hello, everyone an opportunity say now for questions. Thank you.
Well take our first question from Benjamin Swinburne Morgan Stanley. Please go ahead.
Thanks, Good good morning Chase could you I know I'm. The virus situation is quite fluid and then sort of hard to depend on exactly what is going to end up that.
What are the things that factor into the decision to to move forward would races, or not and you know, what's what's sort of level of confidence around some of the races. In Asia that you few highlighted you guys are going to continue to you're planning on having sitting here today, just trying to get a sense for you know sort of what the range of outcomes are as we think about at least.
The early part of the season and then I was wondering here one of the things we've all been hoping for thank you as well on the new conquered agreement is greater team parity long term and I'm wondering if you could tell us today, given where you are in the process of negotiating these feel agreements. If you think you're going to achieve that and if the sports is seeking.
Later parity as we move into the 2021 and beyond.
Sure.
I just first on the Corona virus minutes. It you know you said upfront which is probably.
The obvious states. It's it's fluid so its difficult up you know really a basketball where the where this plays out obviously a country like easily wasn't really on the radar screen a few days ago and now it is.
I think we you know by largest process. What we're doing is we're actively engaged with all you know all the events upcoming I guess, particularly the more current one step you know kept perspective from in countries as and I had a conversation yesterday.
Yeah, I know a partner.
And they're update with I think they said they were around 15 cases and actually all of them you know kind of bad debt recovery. So so things that they had they've recovered.
Yeah, we are continuing to talk to others about it we're obviously and we are in London.
Through our own channels connecting with experts who had been sites to this you know I think mostly what we need to do is continuing to get recognized it would be on top of the issue they're trying to get the right advice to try to plan if somebody gets logistics because of the trail travel planning as merging in Bahrain just.
Added a number of cities that.
Travel restrictions are coming from them cities. So you know I think part of what we can plan is to make sure we have flexibility and.
Options in place to which were either logistical issues getting to win from races.
Other than China.
Yeah, I guess back in with a particular focus on the races. The beginning of the year, they're all going at home. So I'm certainly you know we're heading to what we're heading in Melbourne.
Turning to Bahrain heading to a I'm heading to handling although the state the obvious yeah, we got to see what evolves and becoming the coming days.
And we are working actively.
To see if there are ways to mitigate the China postponement.
So I don't.
At this point and so long and short of it is you know we are connecting with sort of in country experts our own experts I'm trying to stay on top of logistical issues on getting to win from long distance places and up you know feel we've got as good handle on it as you can and the conquered agreement.
I guess the journal packets again don't Wanna get too far into things you know I mean, I think prefers general practice to be comedy when things are done I guess, what I would say that wasn't agreed we feel we're achieving the goals we set out the mix what healthier and I think a fair distribution funds. You know is one of the cornerstones, we've identified as being important for healthier sport. So I think.
You know all the things we're doing that will launch in 2021 beyond again, I think there a significant step they're not up you know you know, it's not sort of declare victory in the home everything's done, but I think we are making significant steps to achieve the goals.
We set out for the business to make it a healthier a better sport in a better business for everybody I'm at that deals with the dressing cost revenue distribution on the others. So I think you know we we do believe you know I'm on a path to it.
Certainly directionally achieving the goals, we set out at the beginning the process.
Thank you so much.
Sure.
Hi, Mike.
Right.
David Karnovsky from JP Morgan. Please go ahead.
Hi, Thank you just could change so you know in France that looks like you lowered the price of the F. One TV product a introduced the monthly option as well just wondering if you can elaborate on the strategy there and how this may have played into your recent broadcast renewal and then for Brian would it be possible to get.
Operating free cash flow number for Formula 120, <unk>. Thanks.
Yeah, I guess, what I'd say on F. One TV is.
As we launch definitely TV, they're different issues in different countries based on what agreements existed in place and clearly we need to work with our traditional television partners.
I think it's right wing, so we had.
Yeah, we had different if she says it replaces you pays in sample it still no not available due to a degree might you have.
You places luxury in U.S. is more widely available in France, Yeah, we added <unk> distributor on a on a basis that which consisted with agreements we reach for their local partners.
I think what we've done in France is try and move it there. If you look through it yeah. You know there probably is a market probably theres not a single market price because obviously varies due on the rate of issues in country, but there's generally a range of price that we've targeted for this.
And Ah you know when it France brings in France is like priced at that above the high end of what we would have we think it'd be appropriate price at this point in time for F. One TV and I think this brings it more into what we think is sort of though where we'd like them market price for this to be but I think that pricing is all part of had.
Are we navigate through the distribution that existing television partnerships.
Yeah in other words on the a free cash flow for Formula One as you can see in the release for 82 of 'em adjusted OIBDA for Formula one for the year really good cash conversion this year with some positive working capital movements.
So just over 500 million of operating free cash.
Okay. Thank you.
Our next question comes from Bryan Kraft from Deutsche Bank. Please go ahead.
Hi, good morning, a once if you could quantify for us the impact to the Japanese cramp pre cancellation and which revenue lines. It impacted so we can take that into account in forecasting 2020, and then separately you wanted to ask you reserve or perhaps related was there a particular driver for the flat year over year trend.
In advertising and sponsorship in the fourth quarter relative to the much stronger a full year growth was that Japan.
Is there any read through from that into the growth outlook for 2020 in advertising sponsorship. Thank you.
So the first question just sit on shipping what was the question in Japan, So not sure I followed it.
But the in Japan, the Grand Prix <unk> typhoon impact on the Grand Prix out, but was there a financially it affected fall out there wasn't a there's not a financial and there was not a financial impact of Formula one.
The.
There was a financial probably a financial attached to the local promoter get it ticket sales, but are there wasn't a material.
Financial impact.
Was there was an attendance impacts as we said.
Yeah, if you're looking at attendance figures, so clearly that the impact that we're on track for actually quite a nice growth type. It's in Japan, and you can try and show Saturday that didnt. It didnt manifest as I didnt occur.
But the financial impact was with limited.
The Tyson.
Right.
Yeah.
And the the other.
Yes, I mean pack you asked about.
Yeah, the other than the other thanks for that and the other question was I think in your release you called out a decline in advertising and sponsorship revenue Oh This one year over year.
Yeah, I don't Seth I don't know that actually up here and there was anything particularly material I mean, we can have local pop local sponsors and local Parker said, so there was nothing sort of.
On a large deals sort of global partner level. So I would you know actually just I'm, assuming so I don't actually know specifically like they would be more.
Variance within that.
Probably the local partnership level or a one off partnership levels that that can occur you raised to race or when you get.
It's why sometimes the comparisons on quarters, where races for I don't know what race shell could have fallen on either side of say a quarter and you know as it with promotion fees or response, just if you could have large promotion deals when you get down to quarters. They can swing just on race scheduling and things like that.
Great. Thank you trust.
Our next question comes from end users that from Evercore. Please go ahead.
Thanks, Scott one protect you know obviously, you're talking about potentially of U.S. raised 2021, North Korea or talk about maybe Saudi Arabia rate can help us understand how fast can you scaled that leases up from 22 this year I'm getting at two Baker Hughes.
Are you going to be like one when it makes it a time a this is sort of understand suits are these promotions and then probably for Greg, but you know as you started buying from Formula one started buying committed easier stock this quarter to be so can you help us understand how do you think about how much there because it's got to buy.
Well, so you know how much could potentially by pumping one given.
Now lets you know lewanna, you're talking Levered things. Thank you.
Yeah, I think in general Yeah. She said I think we feel we can increase yeah, you never get a limited basis increased number races. It if we try to take our goal would be to do it at a disciplined basis disciplined way.
You know clearly the teams we recognized there.
[laughter] logistical and organizational issues for the teams to accommodate that yeah. We you know they directionally. They know what we're going but I think we want to in fairness to them in them and to make it a management process try and do it in a disciplined way so I wouldn't see us all of sudden adding to races in one year, So I take it.
It will be more stepping up to level in it and again, we only step up if we have races that we really think or <unk>.
There are bringing something yeah, yeah, bringing another dimension sport sort of a beneficial to us what both for fans and business.
But I do expect us to be I think our goal would be to do it in a disciplined way.
So BJ I think what we at Investor Day, we talked about the fact, we used 3 billion of free cash flow monetizable assets and leverage capability over the four year period, a 2020 to 2023 and you know I think that gives us.
Ample opportunity to buyback LSAG. So the amount we will actually buyback is somewhat related to run at a loss X. I may trade.
And how much or potential liability and but.
I can't even if you look at the total it's likely to be less than a third of that over the period. So we'll see where that comes out.
We have ample free cash flow to do that which we need on LS x. I might add anything else related to.
Flexibility de leveraging share repurchase other forms of return capital.
Got it.
Thank you. Thank you.
Our next question comes from John Tinker from Gabelli. Please go ahead.
Hi, I'm back from or Genteel paid baseball think good [laughter] [noise].
I understand that said the the teams can now [laughter] streaming rights would be MLB of giving them given them back.
Do you, where you stand on those rights, particularly vis-a-vis your TV deal.
Secondly, Tyson crops going through some changes.
Does that have any impact on the timing of Ah Ah new elevator building by that I think summer of 2021.
So John Thanks, I'm on the first point I don't think they're testing.
Financial issues will impact the timing or no construction cycle at all were very good shape on that.
And this is the.
Jewel in the <unk> crown in terms of its business. So.
We feel very secure about whatever happens with this incredible we're in good shape with them financially et cetera.
Onstream rates is complicated because the contracts are a with the Rs and provider saves are not utilizing a certain way. They go back to a they go to them. So I I would say, we don't have any current plans.
Or current large revenue streams are going to explore where we go with that and we'll see you know what happens to that or send provider and what their capabilities over the next couple of years.
Thanks.
Thank you.
Well take our next question from Brian got back from Bank of America Merrill Lynch. Please go ahead.
Well, Thanks, I had a couple of questions on F. One.
First on your comments about your direct to consumer growth plan.
In 2020.
Just curious I think you characterize this year as it was another you're like it investment phase and I'm just curious.
When we talk about investment or you are we talking more about programming around the a bench themselves or the acquisition of non life programming or is this more a function of a rising subscriber acquisition costs and then my my second question is a chase I think he talked about it.
2020, your expectation for all three of your revenue categories to be up in 2020, and I guess is the calendar stands today you should have a higher event count which is an obvious driver of growth, but outside of that how should we think about the same store growth potential across raise promotion broadcasting and sponsorship is this a year that's gonna be dictated.
More by rate escalators in existing contracts or are there significant contractual renewal opportunities or and or greater sponsorship sell through opportunities.
Thanks.
So I guess only OTI key.
Investment.
I mean.
We're not investing significantly I guess, probably more I'd say, it's early stage growth. So it's probably a bit of yep.
Yeah, a bit of all of those things I'm a bit in content, but you know you know Marshall into context, if our.
Our overall business abated marketing as you push it out particularly into it we still are for at least age in some markets, rather see relaunch and the price points in France did you notice that we only really take lots of platform second half of last year. So so it's not the investment size, it's probably by.
Saying almost maybe about officially been early stage growth, but given its scale at this point.
Yeah. We are yeah were more focused on on the growth of that subscriber base and the growth for that business then on it as it being a significant profit contributor in the short term I think as we've said all along I think there certain areas that yes.
The opportunity inherent in it whether it's in the U.S. and China or if you take claims are clearly you know sort of.
Payoffs down the road not you know not 12 months. So you know it's not an investment in terms of.
Large resources for us, but it is probably you know investing and growing quite early stage, but early stage business that we typically increasingly important as we go forward over the years I think in terms of revenue. Yeah. It is you know we do expect revenue from each area. Yeah. There you know there's some places.
For media, it's not up in our bigger your and media it or is it sort of 2021, we did have some renewals so but the renewals work.
Smaller so its.
As a combination of.
Some you know some new deals.
And then just some you know your to your increases.
I think in that.
And the sponsorship side.
Again, we do expect does it because I said you know we're.
Looking forward to adding some sponsors in the short term. So we think theres opportunity continue to but we certainly have the room and the capacity and we expect you ought to take some steps that getting sponsorships to where we think it ultimately there should be.
So you know again, it's probably a bit fiction so I.
That's incremental incremental growth and some.
Some new deals and.
When the promoter side the opportunity is probably.
Yeah, Yeah, we've got two races, we've talked about them. So clearly there are two races as well as what would be the incremental growth I'm. So we have.
I'm in Vietnam in.
Amsterdam coming in you know, replacing Germany, so that clearly is positive for us.
And then we've got the ordinary course that exist beyond that so there's a mixed bag of incremental growth in new varies by each of those big segments. The other areas like hospitality and licensing it's amazing so talking about it probably again more ongoing growth or not event driven kind of getting the three good categories that are so is a bit of mix.
Thanks, actually if I kind of just a quick follow up on your efforts in Miami.
I think you got a favorable vote from the Miami Dade County Commission I think last week.
But now there is because I think there's some sort of legal challenge to that and I was just wondering how should we think about next sets from here in Miami and before you know that comes out of that can really really be solidified on a calendar.
Yeah, I can't I mean were positive steps. The last couple of weeks Yeah. We're actively engaged with them I think we've got some meetings over the next week or two to continue to nail things down and Ah, Yes, we feel good about where we are without rates, obviously for 2021 and it first and foremost.
We want if you're at a great race at rates that were live up to what that potential of what that races, which is a real tent pole race.
Well, that's not just in the U.S., but around the world race to capture the world matching issuance that we want to make sure we do the race [noise].
And I'm going to work, we're still focusing on trying to get things in place for 2021, obviously time continues.
Yeah time get shorter, but yeah, we are actively working on it and engage with it.
And Oh, you know like it making good headway we feel.
Yeah. These are complicated so there's.
Nothing new who've been there through this before so the steps and processes. You know we go through to ultimately to finalize the race you always have agreed to complications to him.
But I think we feel good about the path, we're on and we feel good about the opportunity to make the race in Miami, you know a reality and short term.
Thanks, a lot.
Yep.
Well take our next question comes Zack Silver from B. Riley FBR, Inc. Please go ahead.
Okay, great. Thanks, you're Gonna question. The first one for Chase I got one just they'd be provided us an update on the sponsorship pipeline back in November I, just wondering if you'd give us an update that you know whether that has changed gotten more healthy or perhaps no dissipated Rick Boucher <unk>.
No I guess I don't get too dramatically different story again I simply.
I think we are excited about to be.
The level of interest the breadth of interest the engagement in the sport. Yeah. Certainly you know we are actively pursuing.
Many conversations I guess is as we've said sponsorships is probably over the last three years, we'd been involved it's been and area.
That is probably had a few more headwinds than we thought I think whether it was telling the state of the degree to which the wasn't the pipeline. There. So building the story building providing an understanding.
Building the capabilities to create more tailored offerings, but I think you really need to be competitive and that that world. Today. So I think we've made good headway at a and I think we are excited about you know it's a great. We're certainly.
I think the last three months two months here since the season ended in this period, we probably wouldn't more active than ever and the breadth.
And ER and breadth number a variety of conversations you know where it and we look forward to up until the closing feeling short term.
Got it. Thank you and then one for grabbed the follow up on the Braves, obviously, maybe after the Braves just given that the length of time between you know your last deal and the real and 23 now than ever.
They were mostly as a good chunk of revenues are coming from the broadcast meals is in healthy growth in the value of the sports rights, but given some of the headwind that's it.
Yeah, and the picky ecosystem and you know distributor some distributor drops.
You know maybe that makes the right uneconomical for some of the traditional Ryerson players. So more curious to get your sort of high level thoughts on how you think that evolved a you know over the next couple of years.
I think it's a good question.
If you were.
You know the.
Team on the West coast that had a relatively small territory and.
Gotten a massive our ascent contract.
You think about you know what would happen at the end of that.
A renewal.
No one question, whether you're going to see incremental value or decline.
We have a good contract not an amazing one it was a very low one then when we bought it from time Warner it's been renegotiated with the longest.
And he just at the time, it's still among the longest.
I've never been written and because of that but it's relatively low even at the adjusted value against the size of our territory, which is 12 million broadband households, the largest territory of any baseball team.
This popularity the Braves I feel pretty good.
You're right to point out those headwinds as you may recall, we spend a lot of time looking PR offensive no. The risks of the RSM business very well then you can see the cartilage.
That is Sinclair at the moment.
So all balance, but when you look at the factors that are favorite the Braves you look at our territory you look at our contract I'm not you know.
Not worried compared to where a lot of teams are.
That makes sense thanks right.
Thank you.
Next question comes from Jason Bazinet from Citi. Please go ahead.
Got a question for me.
Other than Opportunistically working on that like kinase discount with the liquidity that you alluded to.
What did the other brought options that you concur at your disposal like if you're going to come up with an exhaustive.
List of options, what <unk>, what would be either three or four options that you have.
I'm not really sure I could come up with an infinite number of options and what to do but most them or not financially attractive because the tried to discount I think the right thing to do is to go out of your way to capture the discount there are several ways. We can do that we have sufficient liquidity between one and me.
These between one on the hedging side and L.S. exams capabilities on inside both with the dividend and financial power. We've raised to take advantage of that so we think this is the optimal way there are ways, which we could accelerate that.
And you know, perhaps raise more capital find some holder to split the difference where the do things like that but we believe attacking it systematically with our available resources, which are sufficient is the right way.
Do you see M&A is one way to sort of closing.
I'm not sure what you mean by M&A.
I don't want to use the stock because.
That is issuing stock at a discount seems like a fool's errand to me and I'm not sure what M&A do I want someone else to buy into it because they're getting the benefit of that discount I'm not really sure how that played to our shareholders benefits, which is my goal.
Well I would say use your liquidity to buy something that's cash generative to give you more firepower to shrink the discount.
Well why not just go directly and use my gosh devised the discount itself.
Well I pay a premium because people don't.
Well because the market will look through the quantum of liquidity that you have which is very different than having in mass that generates cash for your and your out.
I I disagree because I'd have to utilize my cash flow to do that and I assume you know the combination of what capital we have and where we think we might get with Sirius XM as a more attractive option.
Understood. Thank you.
Our next question comes from Matthew Harrigan kind of benchmark. Please go ahead.
Oh, thank you.
Hi, I'm, a very hard and our balance sheet, but if you go back to seek out maybe 2009, you there were number.
Pretty loud you created a lot of opportunities.
Okay. So if we do get a bad economic downturn off the kroner bars and love that debt within the global economy right now because you're going to have some really good deal prospects across the board if you did.
Years ago, or do you think that.
Other people are more responsible so it can be as the <unk> was there are 2008 2009 I notice if usually by question I apologize, but when do they asked because you don't always interesting brought them the macro I'm doing burn.
I think you'd look and say can agree we had strong franchises, which I believe we do.
We will suffer less in that kind of a downturn than many other kind of businesses.
Which are maybe equally strong but are not you know viewed as strong don't have other pieces in place like a management team or something so you know that could create opportunity. It also means you know that we may have to have nerve at a time when having nerve isn't readily apparent war.
You may be feasible.
What's the Buffett line about you know be bold, where others are beautiful.
And that's not always easy so look I hope I I, certainly I'm waiting for a recession.
I wouldn't notably as we've noted before it's hard to buy things unless you either have synergies today.
Or a particular story both of which are hard in a market where things are rising put aside corona and.
You know so that may create opportunities.
But you speculate beyond that Matthew is hard to you know.
Will we be where we find the things in this bases we like.
Well will they be willing to sell off in time, which a real problem is even if it's trading at a discount people don't want to move it takes a while for the sellers to a want it you know to come to that realization. They look at the high watermark before it takes a while the break.
So you know we that could create opportunity, but it's no assurance.
Thank you.
Thank you they got where that was our last question for this call a thank you again.
Through all the joint and all that participated and hope to speak to again next quarter, if not before and thank you for your interest in Liberty media.
Yeah.
[noise] Christmas time. Thank you for your participation you may now disconnect.
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