Q2 2020 Liberty Media Corp Earnings Call
[music].
Ladies and gentlemen, thank you for standing by welcome to the Liberty Media Corporation Twentytwenty quarter to earnings call.
During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question answer session at that time. If you have a question. Please press star one on your telephone keypad.
As a reminder, this conference is being recorded all the intent I don't like to turn the conference over to Corky, John Cheap portfolio Officer, and senior Vice President Investor Relations. Please go ahead.
Yeah.
I would like to remind everyone. This call include certain forward looking statement within the meaning of the private Securities Litigation Reform Act. The bank 95, actual events or results could differ materially there's a number of risks and uncertainties, including those 19, our most recent form 10-K filed with the I think.
These forward looking statements speak only as of the data this call and Liberty media, especially disclaims any obligation on to disseminate any updates or revisions to any forward looking statements contained herein reflect he believes the expectations with regard to ARPU or any change in events conditions or circumstances.
Any such statements.
On today's call they will discuss certain non-GAAP financial measures, including adjusted Wise, our adjusted EBITDA the required definitions and reconciliation for Liberty media and Sirius XM schedules wanting to maybe 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 the Liberty President and CEO, Greg Good thing.
Good morning, Thank you quoted.
Great retailer call. We will also have formed a once chairman and CEO Chase Carey.
And Liberty's, Chief accounting and principal to principal officer.
The next a loss or other Brian one way.
First I hope you all else, helping it safe.
And have been enjoying your summer given these challenging circumstances.
That kind of like to again bank, our management teams and employees that Doug such an impressive job managing through this corporate banking crisis.
So first looking at Liberty Sirius XM.
We completed the previously announced raw rights offerings as fully subscribed.
Generated proceeds of 754 million and we use that money to fully repaid be intergroup loan that Liberty Sirius XM had to the formula one good.
During that period, we pause our share repurchases as we were prohibited from being in market during the rights offering.
We're certainly aware that the discounted remains and we have ample liquidity and Alex XM and expect to take full advantage of the discount opportunity.
Our ownership at Sirius XM now stands as of July 28, 72.9%.
Sure. We also pause it's buybacks in Q2 do the market conditions in the depths of the cobot crisis, but recently extended their authorization by $2 billion.
We remain very focused on getting 80% that theory.
Looking at serious itself like our other subscription business a serious history for with proved resilient during the crisis.
Self pay net ads.
Subscriber adds were 264000 return was down to 1.6%.
During the quarter, we generate over half a billion dollars of free cash flow.
We also announced the deal to acquire stricter, creating a full service platform for podcast creators publishers and advertisers and also announced a smaller deals simple cast with podcast management analytics platform services.
During sex and continues to provide innovative programming and launching new acts, including the BC Boys, Bob Marley Coldplay, Queen how much I enjoy Freddie Mercury and comedian Jim gap again.
With strength and visibility to the business. We offer you 2020 guidance at Sirius XM.
Turning briefly to the Formula one good and more from chase in a moment.
We returned to race in the beginning of July one now completed five races are still targeting a 15 to 18 late season.
And we continue to move the business forward.
We are the new lower cost capital build it back to 2021, we have new broadcasting and sponsorship deals.
The teams and all of our partners have been doing a tremendous job of returning to the truck.
Yesterday, we had an exciting racing Silverstone, where red Bull and Max for stop and had a great strategy that they execute on very well upon to win.
So as exciting racing.
Turning to live nation their top priority in recent months has been strengthening the financial position.
We announced an amendment to their credit agreement with suspends the leverage covenant till the end of 2021 provides increased flexibility.
Are they recently reported results last week still bullish on the future of live events, even at the near term the ticket is turbulent rather.
They've already sold my team million tickets over 4000 concerts and festivals that your schedule for 2021.
Management expects live events can return to scale in the summer 2021.
In a positive note 86 foot to send a fan opted to keep their ticket for reschedule shows even if they're offered reef problems.
Two thirds of their fan keeping tickets for canceled festival. So they can go to next year's show.
Virtual conflict are generating big demand with fans over 67 million fans Youd 18000, virtual concerts globally in the second quarter.
We had over 150 performances for a virtual lollapalooza.
And we launched socially different shows and permitted locations, including New Zealand, France, Denmark, Spain, Germany, Finland, and select cities across the us.
Now turning to the Braves glad to see the Braves, the terms of field and they're off to a strong start with Elevensix records, including 72 at home and they want all three series Truest Park.
In series play they are five in one.
Which is tied to the most such victories in the majors.
It was very sad to see our number one Mike. So roka end of season early with a 20 carries a new do wish from a speedy recovery.
But the Braves still hub for former first round picks and startup and starting rotation that Max freed short lead them.
All right and two key to sell.
Early in the year.
Our tickets opt is out in the season.
Thanks returns.
Okay return with a bang with a walk up Homer last week and as they do.
Hello.
Greg do you want.
Yep.
While we wait for Greg to return I will.
Continue on and then handed over to chase.
Good morning, everyone.
At the end of June we amended the term loan and revolving credit facility a formula one.
The net leverage covenant will not applying to our first testing day for the quarter ending March 31, 2022, providing the business additional flexibility to operate during this uncertain time.
Break holdings is expected to be out of compliance with certain debt covenants at the ended the quarter. We continue to work with the lenders to obtain waivers and covenant modifications.
Discussions are going well and we're optimistic that we will have a favorable resolution by the end of the month.
Liberty Sirius XM group had attributed cash restricted cash and liquid investments of 154 million, excluding 1.8 billion of cash restricted cash held a serious et cetera.
We have 870 million of Undrawn margin on capacity at the parent level.
The value of the Sirius XM common stock and live nation stock held at Liberty Sirius XM as a Fridays close was 22 billion.
Which excludes valuable admission call spread which is held a formula one group died at 210 million at quarter end.
We have 2.1 billion in principle amount of debt against the holdings.
Total Liberty Sirius XM group attributed principal amount of debt is 12.6 billion, which includes 9.4 billion of debt at Liberty Sirius XM.
Well no one group had attributed cash and liquid investments of 1.4 billion, which excludes 324 million of cash a formula one.
Total Formula One group attributed principal amount if that was 3.6 billion, which includes the 2.9 billion a debt held directly by Formula One leading 733 million at the corporate level.
And lastly to the breaks we had attributed cash liquid investments in restricted cash and 329 million and attributed debt of 789.
With that I'll turn it over to test to talk more about formula one.
Okay. Thank you, Brian and I guess I'll keep going.
Wait for Greg return at some point.
We were thrilled to return to racing with the launch of our 2020 season in Austria. The first we are going in July.
It was an exciting race that so a lot of competition in midfield with an action packed last few labs that are Atlanta Norris his first podium finish.
Five races, so far we've seen Lewis Hamilton fighting for a seventh World Championship.
The continued strength in ingenuity of Red Bull stop us a Ferrari and the emergence of Mclaren racing point is serious contenders.
Our data through the first for races, or the season, a pretty solid viewership growth across the race weekend.
Especially in key markets like China, and when there is tremendous growth on our digital platforms measured in video views social media interactions and traffic across the web sites and apps.
The drama in the Paddick built this summer as a number of driver changes were announced for 2021 for already decided not to renew for time World champion Sebastian Vettel and instead sign Carlo size.
Is open ceded Mclaren went to down the Ricardo which will make for a strong and entertaining pairing with landowners.
Right no decided to fill their vacancy with former champion Fernando Alonso invalid, three bodice re signed with Mercedes for 2021.
There's continued speckle speculation around Sebastian Vettel some more to come.
Just prior to the start of the season with Landstar, We launched our we races. One initiative to tackle the major issues that we as a sport and a society are facing.
We used our restart to show that we stand United against racism and are doing more to address and a quality and diversity and formula one while also taking moment to thank people around the world for the fortitude they've shown against the global Cobot 19 pandemic.
We will be establishing a task force to lessen and identify the right initiatives required to increase diversity and inclusion across formula one.
This is typically focused on identifying employment and education opportunities and the required actions to effect change.
We're in the process of creating a foundation.
That primarily finance internships, and apprenticeships with within Formula one for underrepresented groups.
These efforts to build on the embankment ambitious sustainability diversity and inclusion strategy as set out in November 2019.
Which set goals of having a net zero carbon footprint by 2030, and ensuring all of our events are sustainable by 2025.
Getting back to racing has been no easy feat and I'd like to thank the FAA our employees the teams and drivers are promoter partners and local authorities.
Together, we developed an extensive code of conduct and testing protocols that are being closely followed it had been working well.
Our priority is always been to safely transport, everyone and to enable those individuals to operate in a safe and secure manner.
We've been publishing our testing results each week as we believe it's good to provide this transparency.
At Silverstone, we saw firsthand, how our safety procedures are robust and effective sadly Sergio Perez tested positive for the virus.
But our tracing test procedure handled the situation safely and with efficiency with no impact on the race weekend for the wider sport.
It shows how far we comes into Australia, and as a testament to the diligent way that we've we've returned to racing.
We now we have now announced 13 races in the revised calendar and expect to get to between 15 and 18 races in 2020.
The newly added three races, bringing exciting circuits that were not part of the original 2020 calendar quarter mile in Portugal will be a completely new circuit, while we welcome back analog and Nurburgring that of hosted World Championships World Championships in the past.
Unfortunately, due to the fluid nature of the ongoing pandemic it will not be possible for us to race in the Americas. This season, but we look forward to being back in 2021.
We expect to release the final details of the 2020 calendar in the coming weeks.
While we've been extremely focused on 2020 season, we continue to progress the business for the long term.
We reached a long term exclusive rights agreement with Sky Deutschland, beginning in 2021.
I do I will provide fans in Germany with full coverage of every ground parade and include Germany's first 24, seven channel dedicated to Formula one.
We also announced agreements in Austria with service, TV, and RF and in Russia with match TV.
In the process of finalizing finalizing the last couple of TV deals for 2021.
We've also been tended to strengthen and expand our commercial partnerships. We believe our planned raised calendar 15 dating races, we'll be able to satisfy the vast majority of our contracted sponsorship revenue and twentytwenty.
To name a few recent updates liquid Molly the globally renowned vehicle care products experts upgraded to an official sponsor for the next three years.
Adapting to the new reality, we partnered with zoom to deliver the first ever virtual Paddock club experience.
Beginning with the race in Hungary guests are treated to a range of experiences and we're working to expand this offering to our global partners in F. One teams.
Furthering the fan outreach, we announced a new podcast seriousness modified.
Paddick passes hosted by will Buxton and in these exclusive episodes. He will speak the drivers team principles and legend to the sport.
On the video front and following on the strong results for the first two seasons of the Netflix show drive to survive. The film crews are already worked filling the third season.
Also partnered with Youtube to live stream, the Eiffel Grand Prix and Nurburgring, Germany.
This is the first time fans from select European countries will be able to view the entire ground pretty weekend for free and the Formula One you to channel.
Before our returns that track, we took the opportunity to revisit the cost cap of 175 million announced last October.
The new cost cap of 145 million will be introduced in 2021.
I will further reduce to 140 million in 2022, and a 135 million and Twentytwenty tree.
This will advance the objective to improve the competition in action on the track and at same time make the sport healthier and more attractive business for all.
But I returned to racing and the revised cost cap, we have moved to finalize discussions around the conquered agreement.
We've had productive conversations with all constituents and we look forward to completing this agreement in the near future in solidifying the sport for the longer term.
We've also been focused on the corporate operations a formula one during the second quarter, we for furloughed over 50% of our workforce, but we're pleased to bring back the majority of our employees with a return to racing.
We also focused on our balance sheet and announced an amendment to our debt covenants, which provides flexibility until March 31 Twentytwenty too.
These actions along with a digital diligent approach to our spending will enable us to whether this difficult time.
Given all the challenges in 2020 were proud of what we've been able to an accomplished and expect to accomplish.
We've been a regular contact with the majority of our commercial partners to discuss the reduced rates calendar and the expectation that many of our races will not have fans.
Clearly this is going to impact our revenue in multiple areas, but is still dependent on how the remainder of the year unfolds.
We appreciate in value our long term partners and we expect to resolve any contractual issues in a fair and straightforward manner.
We are confident our plans for 2020 and look forward to 2021, when we think we can return to our prior expectations for Formula one.
Now I'll turn the call back to Greg.
Thank you Chase and thank you Brian.
Given the ongoing pandemic.
We have decided that Liberty's investor day, this year will be virtual and will happen over two days.
Because no one as much as we love to should have to get into video call for that long.
On Thursday November 19th we will probably Liberty media and Liberty trip advisor on on Friday November Twentyth.
I will include cure rate this year at Liberty and Liberty broadband.
Well run from 11 to eastern on both days more details will be provided on our website, but please mark your calendars.
As always we appreciate your continued interest in Liberty media and again I Hope you all state safe and healthy.
And with that operator, I'd love to open the floor for questions.
Thank you Sir just a quick reminder, ladies and gentlemen, it is star one of your telephone keypad. If you wish to ask a question on today's call.
We'll now take our first question from then that Swinburn from Morgan Stanley. Please go ahead. Your line is now open.
Thanks, Good morning.
Change can you talk about I know, you're obviously laser focused on 2020.
But I don't ask you a couple of questions about next season.
On the sponsorship front are you able to give us any sense for how you're thinking that it's coming together for next year and if you're willing to to be the specific but I'm trying to figure out of 21.
Could be higher than 2019, or if the sort of global recession and pressure on corporate spending is any change the direction of that revenue line.
And then secondly, I'm wondering if you're thinking about.
A later start to the season next year.
Just because it's obviously, what's going on with the with the virus in sort of continue.
Timelines around vaccination.
I'm just curious if that's an option that you guys are exploring yet or if it's too early.
And then I just had one for Greg Greg you again reemphasize the discount at Liberty theory.
The buyback did you guys buyback any shares between June 16th and and you know whenever you filed the 10-Q at last we'll see we'll let the number looks like on the share count front because it doesn't look like you did and I didn't know if that was because you were boxed out or some other reasons trying to reconcile the comment with the buyback thanks guys.
Okay.
Let me answer the second part first go to sort of sets up the first part yeah.
We are planning.
2021 season that looks pretty much like what we would've expected it to look like.
The beginning of this year and.
And obviously you know we qualify that was if we don't have any better visibility than anybody else. What this virus is going to look like as we go forward I do think when asked to realize.
I think were about five months into the virus and our season in March would be still seven months away. So there's a long time and conversations on.
Vaccines to treatments and testing in the like we'll obviously continue to evolve relative obviously race in 22 countries. So we deal with a much bigger mixed bag of issues throughout this.
We're planning on 2021 that looks like.
Like we would expect it which probably probably will be a 22 race calendar.
Calendar that probably starts and finishes about when our calendar has.
We may make us so there's a little more space in the front end of it you know at a calendar in the second half is a little busier. So we've got a little more flexibility built into it but I think thats, probably up to tweak to it not up I'm not a a real restructuring.
You know clearly as this goes along yeah, we'll know more and there's always the possibility we make some adjustments as we go forward but.
At this point, we're planning, we're planning races or what fans.
We've been in touch with most of our eventually getting nobody nobody has visibility. This will obviously have a lot of sports ahead of us.
You know what will the M. JD NHL do as they get the next season and what are the soccer leagues football leagues in Europe do as their seasons, you don't get going so I think we do have the benefit of a lot of things that will be in front of us as a as template to rally.
Around the World I think as it relates to the sponsorship side yeah.
Big things went pretty quiet just isn't in the early stages I'd say, the first month or two whether the virus period I think if people adjusted to working from home engaging in a different way I mean, obviously virtually in connecting into like we actually feel pretty good about the traction.
In the last few months, yeah, we're actually in a pretty good place in terms of renewals. So.
I mean, I think sponsorship is a place we could.
We clearly believe there's real room to grow I think we were talking for the virus hit the about I'm. The head when we're making we'd acknowledged we probably weren't.
As far along into growth as we expected, but still you know still.
Felt as strong as ever about the growth opportunities for us the interest is good so.
So we continue to expect.
Growth in that and we've got again, our foundations in pretty good place.
Get on to read the renewal we have for having you know where in advanced discussions that are very positive and the interest from new parties.
It is strong so.
So.
As much as everything's fluid.
We feel pretty good about.
Continuing to get to where we think we should be in the sponsorship world and the opportunity we have in front of us but.
Thank you okay and.
And I'm happy to.
Try and answer the other.
We were blacked out promoted Q2 during the rights offering and we had our normal course blackouts prior to our earnings the are the most is disclosed.
Or more details in the press release, so that I know, we just dropped it on but if you look in that I think it's about lines.
Okay. Thanks, Greg.
Our next question will come from Bryan Kraft from Deutsche Bank. Please go ahead. Your line is no.
Hi, good morning <unk>.
That's two questions first on Formula one.
Working capital usage is essentially neutral year to date, you expect that to change it on the second half based on what you know at this point in time.
Related to that season were to be Arctic set expected they cut sure shorter than the 15 18 race plan would you be in a position where you'd have to refund fees collected for this season already on for example, those from the broadcast rights holders just trying to get a sense for what the potential cash needs could be relative to the cash here over the balance.
She currently.
Then my other question is on the strategic front, Greg If you were to increase your equity stake in Iheart something closer to the 50% level that has received antitrust approval for the reasons that you'd be doing it through liberty Sirius versus Sirius XM, even though the pros and cons of.
Of those two options. Thank you.
So if you want to start on the <unk> are there yes.
Yeah sure.
Yeah, I think largely in terms of.
Payments received from parties.
Not in all cases, but im I'd say the majority of our cases.
We're aligning payments in a more with the races.
So yeah.
Payments, which would have been you know scheduled throughout the race season.
We're just starting March obviously, the race season, starting in July it's a different start in a different than that.
You know pace do it.
So not in all cases, but I think in the majority of it you know we've moved that was payments to be more aligned with the races. So.
Lastly, there is no impact, but certainly the impact if we didnt get to our targeted ranges from people who paid us for that you know for those raises what would be limited I'm just because of again how were looking for payments to commit more against the races as they are actually occurring.
Yeah, I think in terms of working capital [noise].
And I say I don't really probably gets that you know that granular on trying to you know because we got to so many moving parts. They're probably you know you some working capital evolved mobs first to second quarter, we did it much in the way of operations. So there you know, we probably limits the amount of.
Working capital that's we're generating one we're not you know we're not operating the business in the third and fourth quarter will obviously be operating the business, which will create working capital clearly doesn't impact on our revenues for our working capital is not what it would be at a normal year, just because as a results or would they be at an earlier, but.
But there will be but I, but I don't actually.
With all those moving parts, if we've got a liquid balance sheet sort of not.
You know, it's not probably one of the things like that I forecast or particularly if we manage our payments and receipts, but focus more on that then.
They're working capital, which would be pre I'll, probably reasonably ordinary course for a reduced level of operations.
Yes, I would like it just add on chases comment before I address I heard I mean, obviously one of the reasons. We did the reattribution was to put bulletproof balance sheet and placing formula one.
And it sets up Holdco and I think we've done that so I I echo chases points, where.
We're very much focused on getting through 2020 and set ourselves in place that no matter what happened in 2020 were prepared to try and get back to normal course, which were reasonably confident.
For 2021.
Turning briefly to Iheart.
You know we.
There are some issues there that are worth thinking about for the long term, which as you know.
Syria, the faster going Nbn Iheart, how much do you want to consolidate that.
How would you want to account for that there are a lot of operating synergy potential there, but candidly given the opportunities we have at Sirius XM.
We like Iheart, but we don't feel any rush.
To do that we've all noted the discount we've all noted some of things that screw wants to do about getting to 80 somebody thinks it's really wants to do about.
Potentially in podcast those haven't been big and I don't expect is gonna be huge going forward, but the point they know our demands on the cash flow of Siri and opportunities on the cash flow see that are interesting and you know I heard is a great management team, we like the business.
But clearly advertising is challenged in this environment, we want to watch and see what happens.
Thanks, that's one follow up on that right the antitrust approval it in that applies.
Other scenario, whether it would be acquired for serious or iheart up to the 50% is that correct.
I think you meant to Liberty Sirius for serious on yes.
Just area where.
We treated as one entity.
For that purpose on it.
Okay. Thank you very much.
Yep.
Ladies and gentlemen, you signed that your question has been answered you mean, you yourself in the queue at any stage by pressing star too.
Our next question will come from David Karnovsky from JP Morgan. Please go ahead. Your line is open.
All right. Thank you just two for chase and raise permission in the past I think you've discussed having a long list of locations I want to holder Graham Creek. So just wondering if you think depend demichele impact a willingness of local governments to subsidize and support races, either to the negative because of pressure the finances or maybe the deposit of even because of the need to attract tourism.
In the future and then just for this season, assuming a limited number of fans are allowed at some races can you discuss others would impact from motor fee would this be prorated based on you know how much it because then you're you're able to Phil. Thanks.
Sure.
So in terms of race promotion certainly in discussions to date, which obviously there for our beyond this year, they're not 2020 month Weve you know, we certainly have races and started as one off some of them I mentioned in the in the early comments like Portugal animal, but on the longer term.
Additional type arrangements you know, we've actually got our calendar.
Pretty well set for we haven't announced 2021, just kind of focused on 2020, but we're pretty close to sort of finalizing 2021, we've got a couple agreements to complete where we started about the business terms agreed and got a paper it now theres been no impact on.
You know that then obviously those are discussion as to when it began well before the virus, Tom and is certainly not.
You know had any negative impact and I think in some ways. It is.
The importance of getting back to the world as we know what and Reenergizing actually seems to be it's always a bigger topics up the positive you're talking about as opposed to the negative in the short term everybody still wrestles with how long the virus in Alaska, Yes, but I think there is a broad based assumption.
Thats a world has to continue to recover and businesses have to everything has to start to operate and in some ways. There's a pent up demand for this and obviously in importance we have.
Places that want to attract people and the like the types of cities were in that obviously, you're very yeah. We're tourism.
And their general business is an important I'm getting exposure to the global.
The World AWS important probably makes our platforms more important but.
The comp the conversation in interest if not we've not seen any negative.
Given our calendar for 2021, you know the conversations we have right now are probably early stage because they're not for next year. We've got next year as I said, it pretty much done and we're just finishing the agreements for it.
So we're not pushing 2022 and beyond but there are still parties that we've talked too, but again, if not in any way do their interest hasn't diminished you know, we're not getting to that we started with agreements we're not really into business terms and we're talking a race, that's two or three years away 'cause it's early stage.
So you're really talking more about the opportunity and once you can do with it things around it so it's not.
The detailed substance.
The agreements we have this year I mean, it's such a unique year I mean, they're all over the place when you have obviously.
We don't we're not going to we don't expect Fannie first race, we think there's potential for up a very small number offense is probably now magellan, but.
And probably increasing not still on racist and on the latter part of the schedule. They're certainly we hope that fans as many as possible.
In some places the government's Wanna get a little closer to the date to determine what's up.
What the situation is our deals are agreements you know very all over in some degree depend our are these long term partners or one off partners.
So there are a lot up there a lot of moving parts some of them to have.
Variables in it but you know, but you know you again itself. It differs in each place which is always the case you know with our with our agreements.
Thank you.
Oh well.
Well now take our next question from James Ratcliffe from Evercore. Please go ahead. Your line is open.
Hi, Thanks for taking the questions one for granted and I want to chase, Okay, great falling I heart.
From last November Analyst day, John that's something the fact that didn't really see value than buying things of the momentum and valuation levels unless there were synergies and clearly don't get a lot of.
Oh, I heart combine Sirius XM.
Talking about right.
If you could potentially capture owning a minority non controlling thinking I hurt.
And then the chase around the broadcasting walls.
I think I'm pretty happy with what you've gotten them in Germany, Austria, Russia.
Yes, maybe as well as you work to finalizing agreements and sounds like Youre, adding how sites Ferrari in front on the long, but coming back should be positive for that I can you provide additional commentary and what you think hearing from the back half partners over the last month and how are you marked for sports rights specifically costs on the most important market.
Hi.
Sure.
I'll go first chase.
[music].
On on Iheart.
I think you point out that you know a a minority stake would make some of the issues around synergies more difficult, but I don't necessarily think impossible in terms of how you share.
Advertising sales, how you share digital build outs, there clearly ways, we could work together probably ways. We can work together, even without an acquisition, but they get easier to degree comedy ownership and the easiest evolves if you're 100% certainly to your point is fair.
You know we.
The one thing I noticed John talked about valuations, obviously valuations have come down, but the business is more challenged as well.
We we weigh all back and ultimately the goal would be to get to full consolidation whether that takes longer or.
It's not something we can do out of the blocks.
But as I said right now were causing that all of it.
Sorry go ahead Jake.
Okay I.
I guess I'd say in terms of the broadcast a landscape and it probably to some degree because [noise].
Our deals are multiyear deals since you know even now we're having their deal. So starting 2021. So we're not because we're not in discussions about deals it for 2020, and Ah and again, our multiyear deals the virus is actually not had up yes I.
I mean, if it's a positive but I don't you, but it's not really had a material impact on sort of.
The interest in the sport event I think it's an event I mean events.
You know continue to sort of.
Have a unique value I think we continue to see that varies by <unk> by country.
And it can generally you probably say that ends up the pay side of the world given its Adam subscription.
You know base.
It is slightly different than than an AD supported service so.
And obviously, it's a pay sports services that navigate through not having sports, but I think as they.
Come back it probably reinforces the importance of those events on the on the sports platforms, but yeah, I would actually say in the in the broadcast World again, probably just the nature of the long term agreements.
It hasn't been up it hasn't had a significant impact on the discussions who would have been having yeah pre pre covert yeah. It I think everybody has some yeah.
So I'm excited about what the short term looks like but again I think it.
Yes, a degree of confidence.
Yeah, Im, particularly with B M.
All the increase discussions about being at home in what you do at home you know obviously.
Watching things in a screen you know it's become more important than ever.
Great. Thank you.
Our next question comes from Brian Russo from Credit Suisse. Please go ahead your line is.
Hi, Thanks for taking the question this one's about Sirius XM.
Greg and ER and one of your past analyst days I think you made a case that TV film business has challenges because certain technology companies have entered the space in her spending more on content because they either have alternative ways to monetize or they're not valued on near term profits.
It seems like a similar case could be made for like spoken word content in the audio space.
I wanted to get your view on Leidos may or may not be kind analogy.
What the implications could be for serious and Uh huh.
Thanks.
I think it's an imperfect analogy there are certainly elements that might be worth considering use you've seen the case, where.
Oh Spotify has gotten enormous.
Benefit from the please proceed moves they may not be perceived moves, but the valuable proceed moves.
See value rather the mood they've made in podcast.
Yes.
I'd note that you know.
There's a certain base level that is music that all players have there's a certain.
I'm out of differentiated content and if you look at the amount of differentiated content that Jerry Moyes serious 40 has.
Pretty much exceeds most would it be in sports.
For me it.
Two things like Formula one or whether it be the fact that you can listen to the NFL and MLB.
You can listen to a.
There's most CNBC you've got comedy I would say, there's already a breadth of differentiated content in.
Sirius XM, which in one of the reasons, we've been able to all charge a premium and continued growth and very low trend enviable drawn against those other services and position ourselves very well.
Our view is I think we Jim Meiers elegantly stated.
And I totally agree is podcasting is gonna be interesting part of the business.
Ultimately it will have some percentage of the listening it will still be fairly low it's going to be important, but we'll be at fairly low percentage.
And we are in the early innings of that which has gone to podcast.
There are certainly some of the people that have been signed two exclusives that all.
Oh.
You will have an audience, but there's so much content, it's high value content that hasn't yet come too.
Come onto podcast that we believe will come up to podcasts and a lot of will be based on.
I, helping those.
People get onto the podcast role, which is why the reasons. We went out did stitcher and did simple cast.
The so we think the values there and podcasting I think the market may have over reacting in a positive fashion.
To the moves that others have made podcasting, but we'll see I don't think this is like a the complete world video, where you're going to have guys with other b. I don't have a playing a big way people with other outside monetization schemes have.
As not entered in force because they can sell some other kind of service or product and monetize to podcast that's not what Spotify is try to do and that's not where the board has been well so far it's been a lot much less differentiated business and we already have a lot of unique content. So we'll see.
Gosh I appreciate that thank you.
We'll take our next question from John Tinker from Gabelli and company. Please go ahead. Your line is open.
Hi, I'm switching gears.
The baseball the.
Could you just discuss given that some of the the you had some rent so what the attendance is being like at.
The the stores and the restaurants in the.
Battery Park and secondly.
Giving you a wonderfully on time and on schedule on the build out.
On the same means you'll be.
Sitting in the large town watching you all star game mixture.
You sold some I think the rental apartments or how do you sort of see the the property as part of your portfolio.
[noise] I'll I'll, Oh, I'll answer the second part and a I'll let Brian.
If you could buy and speak to the first.
About where we're at the battery the.
Look I think we try and make a decision about.
Uses of the capital and how it gets valued and you know depending on where we stand or we might or might not have more kind of valuation, we would get you might or might not try and liquidate some of the battery portfolio.
Given what's going on.
In real estate.
Both office potential and retail potential.
I'm not sure that's is likely in the near term Dokey do get a fully leased up office space, maybe that'll be different and we're obviously not.
In a you know downtown urban corridor, which seems to me. The most challenged go where people have questions about the future. We may actually be a beneficiary of some de Densification, we'll see so I think we'll we'll look and see what kind of lease up we get what kind of valuation, we get and make a decision.
What else would turn alternative uses of capital.
Brian could you address where we are in some of the reps.
Yeah.
So with the battery grade as Georgia started to open up the battery started to open up they started would take out at a limited number of venues they're almost fully open now there is theres a in person dining at quite a few of the venues are falling various safety protocols to make sure other patrons are safe than ever.
Things clean.
The army's booking up fairly well, especially those corner rooms that can see into the park as you might expect and the hayloft just opened recently so.
Every everything's going pretty well at the better.
Thank you.
Thanks, John.
Our next question comes from Jason Bazinet from Citi. Please go ahead.
I just had a question for Mr. Kerry.
In general investors like you as a manager and they like the Formula one asset I mean, like what you're doing libbey asset.
You said since inception that you're very focused on the long term.
He decisions on long term value creation not short term.
And at the beat that emerged in sort of when left.
Summation of all the decisions that you need what sort of manifest themselves in something that's obvious to buy side in terms of the better you could point number materially better.
My question is.
Based on everything that you know and based on that sort of potentially schedule. You saw 2021 do you think 2021 could be the year or as we should add up all of the puts and takes some decisions as it feels more like a 2020 to 2023.
The story thank you.
Look I mean I screen in reality, if you go back and hit on the beginning of this year He said I.
I mean my go all the way back because I felt I feel we were actually.
Yeah, you're never exactly where do you plan, but we were on pretty much. The track we had laid out three years ago, and we talked about 17 or 18 being foundation building I mean, I know, what we tried to declare that wasn't it could take a couple of years STEMI. Yeah. We've been clear what we stepped into in what we had to do and what we had to put in place I know the market. We think he built the foundation a three month free.
Months, but you know 17, and 18 were really building long term Foundation I think we had a real step forward is just first step and 19 and we have been clear we are expecting twentytwenty to be.
Another significant step forward and 2021 to continue to be further step forward. So you know we were very much I think on a trajectory to moving and again it wasn't going to be in 12 months, but moving to the levering the type of growth that got us to a place.
And you never done so it's not like we're not like were done in 2023 or something I think you know well clearly we've got initiatives like new cars in 2022, and other initiatives and we started the countries that enough to grow the sport in that are five to 10 European China in the U.S. are clearly not pay offs that happened.
In two or three years, but yeah. We were you know I think we felt we I mean beginning of this year, we run a good track and we've got a pretty predictable.
Business model.
So ex the virus we were.
Very much moving to deliver the type of growth you know long term growth.
We had talked about obviously virus turned at all its head you know we at this point, we're planning on a 2021 that is probably not quite but yeah, yeah, but pretty close to the 2021, you know we would've planned no planning anything in the virus era.
You know is obviously got complexities because we don't know what are going to be the issue in terms of.
Limitations of fan attendance and you know when things we do believe the world again has to start to function function in the ways. You know we know the world and so we do believe 2021 can be.
Pretty close to back to the you know.
That should you know on them curve around the on the slope, we had planned for the for the business.
Yeah, Yeah, but you know again, none of us have the visibility you know, we'd like you know to the virus silk. So I guess, excluding unexpected continuing encumbrances you know from the pandemic you know, we expecting 2021 and 2022 to be largely back on the call.
If we would have been on from you know sitting at the beginning of this year with 19 being a year growth in 20 being you know a significant further your of growth.
Keep helpful. Thank you.
Well no take our next question from sank silver from B. Riley. Please go ahead. Your line is open.
Okay, great. Thanks, you're going to question two on Formula One. The first is if you could talk about how fun TV pro fit them if I'm in a more recent broadcast renewals and also whether you see that as an opportunity for some of the Paytv partners to be more of a meaningful distribution partner for that did you see service and the second it just on the fly.
Anyway races that began a little later on there obviously more demanding from a logistics perspective, if their R&D snags would you be able to pivot back to some of the circuits closer to home adds or anything.
Actually that preclude you from doing that thanks.
I think it <unk> first in the latter no. There's not so you know if we you know which as you know again, we haven't announced the last handful of races.
And.
Yeah, I mean, we are we're recruiting options on yeah on all fronts I mean, there's probably some limitation on how late somebody gets if something came up yeah. We got canceled a week before the race that maybe more problematic the pivot on that but if we've got if we've got adequate time.
Yeah, then we have certainly building contingencies in all directions. So in the latter in terms of F. One TV pro and again it varies by market actually I'd say right now I mean, you know because to me. The most important thing for ethylene TV pro and beyond getting it you know quality wise and yeah, we did.
I have a glitch the very first race, but it's worked well since then and think we feel were continuing to get there with the product. It has to grow its access to consumers. So in a number places you know we are pursuing it more as a partnership and trying to develop a ways to have it be or something to enhance the exhibit enhance the experience for a truck.
National television partners customer with a product that is geared towards <unk> eight.
Hey.
Through enthusiast and so it's that extra experience and work with our partners to to have that be something that we can broke ground both share and the success of.
And.
And that benefit from.
So that certainly we'd have more and more discussions on that front there are places.
It operates more countries, we certainly continue to operate it.
More as a standalone.
Alternative for the traditional television, but in many ways in the short term yeah, I think the path. It I think probably that's the yeah.
Best short and long term opportunities for US is if we can develop it in the right way in the REIT structure with our partners as an extra dimension and then it gives us optionality as we go forward long term to kind of how does it fix has it fit into a world that obviously, it's continuing to evolve certainly the digital side of our world.
Many ways in a positive way continues to explode the viewership and engagement we've got the products, we're putting out there.
There seems to be no end to the appetite for it and get a win we just looking to continue to find ways to enhance and expand that so that whole.
All those opportunities in that field I think are are becoming an increasing really important part of the sport and it's obvious for at all.
In all aspects of the content world, but it really is becoming in many ways have you can you talk about reach it really is becoming reach engagement you know with fans.
Got it doesn't change.
Our last question today comes from Canada is Encaje left from Barclays. Please go ahead. Your line is open.
Thank you submitted a one quick wouldn't see through.
<unk> distinctive acquisition to get started fleets. It if it would be anchored more used car market and conversion do tend to be doing to that but we'd love to do an acquisition you now have a brand potentially that Kim.
And now seems to be coupled with some extension beyond to market.
It's really open up opportunities outside the U.S. do agree that extend then has to be lots of little in institute potentially and independent brand that can be used management.
Okay.
Thank you for the question I think you know we have been expanding in ways outside the core obviously for awhile.
Look at the Pandora acquisition.
But your point about being a outside the core and outside the U.S. and certainly true.
With the acquisitions, we made.
I'm asking about content will go outside the U.S. how much is a play that's an open question.
General U.S. market given the ARPU is a more attractive market operating.
So we're cautious about proceeding we see the benefits of scale outside the U.S.
But in general those markets on the less attractive markets in the market rent, partly because of the at least our crews as I mentioned and partly because some of the protections around the DMC all.
So.
I think we'll post that cautiously one other things I would now these are the only our OEM auto partners Perversity would love to see us be more global because that would love to see as bundled across all markets. When they build cars. They are global players. So we.
We'll take tell outside the United States, we do have some obviously in Canada.
Mexico already historically combed oil was in some of those markets English speaking markets outside the U.S., but we will be cautious and doing that et cetera.
You could think.
I think thats, our last question for them for the morning.
Thank you very much all for joining thank you for your continued interest in Liberty and we look forward to speaking with you again.
Getting a chance to Oh.
You participate in.
The Investor day, if so remotely.
Thank you very much and be while everybody.
Ladies and gentlemen, this does conclude todays call. Thank you for your participation you may now disconnect.
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Ladies and gentlemen, thank you for standing by welcome to the Liberty Media Corporation Twentytwenty call her to earnings call.
During the presentation, all participants will be they listen only mode. Afterwards, we will conduct a question answer session at that time. If you have a question. Please press star one on your telephone keypad.
As a reminder, this conference is being recorded Oh, there's.
No it to turn the conference over to Corky, John She's portfolio Officer, and senior Vice President Investor Relations. Please go ahead.
Thank you Oh, yes, I do we want this call include certain important be stable with a meeting of the quite Securities Litigation Reform Act 1995, I feel a bulk of adult could differ materially the number of breast and I couldn't be including those mckean I'm. Most recent form 10-K, and thank you filed we'd be happy to these forward looking statements.
Going into the baby this call and Liberty media expressly disclaims any obligation or anything you can tell me any updates or revisions any forward looking statements contained herein reflect even when you need the expectations with regard to argue are you changing conditions or circumstances on <unk> and that's what you see on todays call, we will discuss certain non.
GAAP financial measures, including adjusted wiped out and adjusted EBITDA the required definitions and reconciliation for the beauty I'm curious about wanting to be down would be on the best earnings press release issued to though which is available on our website now I'd like to turn the call over the Liberty President and CEO great insight.
Good morning, Thank you Corp.
We did look call will also help formed a once you're going to feel chase Carey and Liberty streets accounting principles first blocks or.
That's a lost or otherwise.
Well I hope you all helping it safe.
I've been enjoying your summer given these challenging circumstances.
Second I like to again bank on management genes in accordance with such an impressive job managing through its called it might be in crisis.
So first looking at Liberty Sirius XM.
We completed the previously announced walk rights offerings was fully subscribed.
Generated proceeds of 754 million and use that money to fully repaid being a good well that liberty Sirius XM had to the formula one.
During that period, we paused or share repurchases were prohibited from being in market during the rights offering.
Certainly aware that the discounted remains and we have ample liquidity and Alex XM and expect to take full advantage of the discount opportunity.
Our ownership.
Six I'm now stands as of July 28, 72.9%.
Sure. We also apart its bought back in Q2 due to market conditions in the gaps of the called the crisis, but recently extended their authorization by $2 million.
We remain very focused on getting 80% absolutely.
Looking at serious itself like our other subscription business just curious such <unk>.
<unk> proved resilient during the crisis.
Oh pay net ads.
Subscriber adds were 260000 returned to double 1.6%.
During the quarter, we generated over half a billion dollars that free cash flow.
Also announced that the although quite stitcher, creating a full service platform for podcast graders publishers and advertisers and also what else are smaller deal simple cap.
The podcast management analytics platform services.
During sex junket changed like integrated programming, we're watching wax, including the BC Boys, Bob Marley Coldplay, Queen how much I enjoy Freddie Mercury.
Comedian Jim got together.
With strength in visibility into the business, we offer new 2020 guidance at Sirius XM.
Turning briefly in the Formula one im working treats in a moment.
We returned to race in the beginning of July one now completed five races are still targeting a 15 to 18 rates either.
And we'll continue to move the business forward.
Yeah, the new lower cost capital build attractive 2021, because you broadcasting sponsorship deals.
The teams and all of our partners have been doing a tremendous job.
We're trying to the truck.
Hello yesterday, we had an exciting rate silver so.
Where red Bull and Maxwell stop and had a great strategy that they execute on very well talk to it.
So with exciting racing.
Turning to our nation their top priority in recent months has been strength in the financial position.
An amendment to their credit agreement.
Spend where libre, it's called them till the end of 2021 provides increased flexibility.
They recently reported results last week still bullish on the future of live events, even near term ticket is her brother.
They've already sold my 18 million tickets over 4000 calls it's acceptable such a schedule for 2021.
Management expects live events can return to scale in that number 2021.
In a positive note 86, but just kind of saying opted to keep their ticket for we schedule shows even if they're offered Republic.
Third of their fans keeping tickets for cancel acceptable. So they can go to next year's show.
Virtual conflict are generating good demand with fans over 67 million fans you 18000 virtual concerts globally in the second quarter.
We had over 150 performance is for a virtual wallet Lisa.
Wants so we'll get that shows that could maybe locations, including New Zealand, France, Denmark, Spain, Germany sentiment and select cities across the U.S.
Now turning to the Braves glad to see braved the terms of field.
After a strong start with Elevensix record improved seven to two at home and they want all three series to its park.
Series play there five and one which is tied to the most such pictures of the majors.
It was very sad to see our number one luxottica embassies early with a 20 carries and do wish him a speedy recovery.
But the Braves still hub for former course rockets and start and starting rotation woodmac sprayed short list them.
All right and to keep too so.
Early in the year.
Our tickets opt is out in the season, how do you sense return.
Okay return with a bang with a walk up over last week and as they do.
While we wait for Greg to return I will hop out I'll continue on into handed over to Jay.
Good morning, everyone.
At the end of June we amended the term loan and revolving credit facility a formula one.
And that leverage covenant will not applying to our first that's been day for the quarter ending March 31, 2022, providing the business additional flexibility to operate during this uncertain time.
Break holdings is expected to be out of compliance with certain debt covenant that the ended the quarter. We continue to work with the lenders to obtain labors and covenant modifications.
These discussions are going well and we're optimistic that we will have a favorable resolution by the end of the mark.
Liberty Sirius XM group had attributed cash restricted cash and liquid investment of 154 million, excluding 1.8 billion of cash restricted cash held at Sirius XM.
We have 870 million of Undrawn margin on capacity at the parent level.
The value of the Sirius XM common stock and live nation stock held at Liberty Sirius XM as the Fridays close with 22 billion.
Which excludes value as a lot nation call spread which is held at Formula One group died at $210 million at quarter end.
We have 2.1 billion in principle amount of debt against the holdings.
Total Liberty Sirius XM group attributed principal amount of debt is 12.6 billion, which includes 9.4 billion of debt at Liberty Sirius XM.
Well no one group had attributed cash and liquid investments of 1.4 billion, which excludes 324 million of cash a formula one.
Total Formula One group attributed principal amount of debt was 3.6 billion, which includes the 2.9 billion of that held directly by Formula One, leaving 733 million of corporate level.
And lastly to the brags, we had attributed cash liquid investments in restricted cash and 329 million and attributed that 718 million.
With that I will turn it over to Ted talk more about 4 million walking.
Okay. Thank you, Brian I guess I'll keep going.
Wait for Greg return at some point.
We were thrilled to return to racing with the launch of our 2020 season in Austria. The first weekend in July.
It was an exciting rights that saw a lot of competition in the mid field with an action packed last few labs that are Atlanta Norris his first podium finish.
Five races, so far we've seen Lewis Hamilton fighting for a seventh World Championship.
Continued strength and ingenuity of Red Bull start less a ferrari the emergence of Mclaren racing point of serious contenders.
Our data through the first for races, or the seasonal produce solid viewership growth across the race weekend.
Especially in key markets like China, and when there's tremendous growth on our digital platforms measured in video views social media interactions and traffic across the web site the nap.
The drama in the padding built this summer as a number of driver changes were announced for 2021.
For our you decided not to renew for time World champion Sebastian Vettel and instead sign Carlo signs.
Is open C., the Mclaren went to the on the Ricardo which will make for a strong and entertaining pairing with landowners.
Right no decided to fill their vacancy with former champion Fernando Alonso Novell three bodice re signed with Mercedes for 2021.
As continued speckle speculation around Sebastian Vettel so more to come.
Just prior to the started the season with Landstar, we launched our we races, one initiative to tackle the major issues that we as a sport and a society are facing.
We used our restart the show that we stand United against racism and are doing more to address into quality and diversity and formula one.
While also taking moment the thank people around the world for the fortitude they've shown against the global Cobot 19 pandemic.
We will be establishing a task force to lessen and identify the right initiatives required to increase diversity and inclusion across formula one.
Typically focused on identifying employment and education opportunities and the required actions to effect change.
We're in the process of creating a foundation.
Primarily finance internships and apprenticeships with within Formula one for underrepresented groups.
These efforts to build on the embankment ambitious sustainability diversity and inclusion strategy set out in November 2019.
Which set goals of having a net zero carbon footprint by 2030, and ensuring all of our events are sustainable by 2025.
Getting back to racing has been no easy feat I'd like to thank the FAA our employees the teams and drivers are promoter partners at local authorities.
Together, we developed an extensive code of conduct and testing protocols that are being closely followed that have been working well.
Our priority has always been to safely transport, everyone and to enable those individuals to operate in a safe and secure manner.
We've been publishing our testing results each week as we believe it's good to provide this transparency.
That's it Silverstone, we saw firsthand, how our safety procedures are robust and effective sadly Sergio Perez tested positive for the virus.
But our tracing cast procedure handled the situation safely and with efficiency with no impact on the race weekend for the wider sport.
It shows how far we've comes into Australia, and as a testament to the diligent way that we've we've returned to racing.
We now we have now announced 13 races in the revised calendar and expect to get to between 15 and 18 races in 2020.
The newly added three races, bringing exciting circuits that were not part of the original 2020 calendar quarter mile in Portugal will be a completely new circuit, while we welcome back analog and Nurburgring that of hosted World Championships World Championships in the past.
Unfortunately, due to the fluid nature of the ongoing pandemic it will not be possible for us to race in the Americas. This season, but we look forward to being back in 2021.
Expect to release the final details of the 2020 calendar in the coming weeks.
While we've been extremely focused on 2020 season, we continue to progress the business for the long term.
We reached a long term exclusive rights agreement with Sky Deutschland, beginning in 2021.
Sky Deutschland will provide fans in Germany with full coverage of every Grom parade and include Germany's first 24, seven channel dedicated to Formula one.
We also announced agreements in Australia with service TV at RF and in Russia with match TV.
We're in the process of finalizing finalizing the last couple of TV deals for 2021.
We've also begun to strengthen and expand our commercial partnerships.
We believe our planned raised calendar 15 dating races, we'll be able to satisfy the vast majority of our contracted sponsorship revenue in twentytwenty.
The name a few recent updates liquid Molly the global delivery now vehicle care products experts upgraded to an official sponsor for the next three years.
Adapting to the new reality, we partnered with zoom to deliver the first ever virtual Paddick club experience.
Beginning with the race and hungry guests are treated to a range of experiences and we're working to expand this offering to our global partners in F. One teams.
Furthering the fan outreach, we announced a new podcast seriousness modified.
Patrick passes hosted by well Buxton and these exclusive episodes he will speak the drivers Ting principles and legend to the sport.
On the video front and following on the strong results of the first two seasons of the Netflix show drive to survive.
Film crews are already worked filling a third season.
We're also partnered with you to to live stream, the Eiffel Grand Prairie and Nurburgring, Germany.
This is the first time fans from select European countries will be able to view the entire Grand Prix weekend for free and the Formula One you to channel.
Before our returns that track, we took the opportunity to revisit the cost cap of 175 million announced last October.
The new cost cap of 145 million will be introduced in 2021.
Well further reduced to 140 million in 2022, and a 135 million and Twentytwenty three.
This will advance the objective to improve the competition in action on the track and at same time make the sport healthier and more attractive business for all.
With a return to racing in the revised cost cap, we've moved to finalize discussions around the conquered agreement.
We've had productive conversations with all constituents and we look forward to completing this agreement in the near future and solidifying the sport for the longer term.
We've also been focused on the corporate operations a formula one.
During the second quarter, we for furloughed over 50% of our workforce. We're pleased to bring back the majority of our employees with a return to racing.
We also focused on our balance sheet and announced an amendment to our debt covenants, which provides flexibility until March 31 Twentytwenty too.
These actions along with individual diligent approach to our spending will enable us to whether this difficult time.
Given all the challenges in 2020, we're proud of what we've been able to an accomplished and expect to accomplish.
We've been a regular contact with the majority of our commercial partners to discuss the reduced rates calendar and the expectation that many of our races will not have fans.
Clearly this is going to impact our revenue in multiple areas, but it's still depends on how the remainder of the year unfolds.
We appreciate in value our long term partners and we expect to resolve any contractual issues in a fair straightforward manner.
We are confident our plans for 2020 and look forward to 2021, when we think we can return to our prior expectations for Formula one.
Now I'll turn the call back to Greg.
Thank you Jason Thank you Brian.
Given the ongoing pandemic.
We have decided that Liberty's investor day, this year looking virtual and will happen over two days.
Because no one as much as we love to should have to get into video call for that long.
On Thursday November 19th we will probably Liberty media and Liberty trip advisor on on Friday November Twentyth.
I will include cure rate this year at Liberty and Liberty broadband.
Well run from 11 to eastern on both days more details will be provided on our website. Please mark your calendars.
As always we appreciate your continued interest in Liberty media and again I Hope you all state safe and healthy.
With that operator, I'd love to open the floor for questions.
Thank you Sir just a quick reminder, ladies and gentlemen, it is star one of your telephone keypad. If you wish to ask a question on today's call.
We'll now take our first question from Dan Swinburn from Morgan Stanley. Please go ahead. Your line is now open.
Thanks, Good morning.
Shane can you talk about I know, you're obviously laser focused on 2020.
But I don't ask you a couple of questions about next season.
On the sponsorship front are you able to give us any sense for how you're thinking that is coming together for next year and if you're willing to to be this specific but I'm trying to figure out of 21.
The higher than 2019, or if the sort of global recession and pressure on corporate spending is.
He changed the direction to that revenue line.
And then secondly, I'm wondering if you're thinking about.
A later start to the season next year.
Just because it's obviously, what's going on with the with the virus in sort of continue.
Timelines around vaccination.
I'm just curious if that's it.
Options that you guys are exploring yet or if it's too early.
And then I just had one for Greg Greg you again, reemphasize the discount that Liberty theory.
The buyback did you guys buyback any shares between June 16th and and whenever you filed the 10-Q at last we'll see we'll let the number looks like on the share count front because it doesn't look like you did and I didn't know if that was because you are boxed out or some other reasons trying to reconcile the comment with the buyback thanks guys.
Okay.
Let me answer the second part first because it's sort of sets up the first part.
Yes.
We are planning.
2021 season that looks pretty much like what we would've expected at the looked like.
The beginning of this year and.
And obviously, we qualify that way, we don't have any better visibility as anybody else. What this virus is going to look like as we go forward.
I do think want us to realize.
We are about five months into the virus and our season in March would be still seven months away. So there's a long time and conversations on.
Vaccines and treatments and testing and alike.
Obviously continue to evolve.
We also obviously raising 22 countries. So we deal with a much bigger mixed bag of issues throughout this.
We're planning on 2021 that looks.
Like we would expect it which probably probably will be a 22 raise calendar.
On.
A calendar the probably starts and finishes about when our calendar has.
We may make us so there's a little more space in the front end of it the calendar in the second half is little busier. So we've got a little more flexibility built into it but I think thats, probably up to tweak to at Nada.
I'm not a real restructuring.
You know clearly as this goes along.
We'll know more and there's always the possibility we make some adjustments as we go forward but.
At this point, we're planning, we're planning races that what fans.
Yeah, we've been in touch with most of our.
Eventually getting nobody nobody has visibility to this will obviously have a lot of sports ahead of US you know what will the M. JD NHL do as they get the next season and one of the soccer leagues football leagues in Europe do as their seasons get going so I think we do at the benefit of a lot of things that will be in front of us.
As a as template to route.
Around the World I think as it relates to the sponsorship side yeah.
I think things went pretty quiet just in the early stages I'd say, the first month or two whether the virus period I think if people adjusted to working from home engaging in a different way I mean, obviously virtually in connecting into like.
Got you feel pretty good about the traction.
In the last few months, yeah were actually pretty good place in terms of renewals. So.
Sponsorship has a place we could.
We clearly believe there's real room to grow.
I think we were talking for the virus hit about.
The head when we were making we'd acknowledged we probably weren't.
As far along in the growth as we expected but still.
Yep.
As strong as ever about the growth opportunities for us the interest is good so.
So we continue to expect.
Growth in that and we've got our foundations in pretty good place get on the <unk>. The renewal we have for having you know.
We're in advanced discussions that are very positive.
And the interest from new parties.
Strong.
So.
As much as everything's fluid.
We feel pretty good about you.
Continuing to get to where we think we should be in the sponsorship world.
And the opportunity we have in front of us.
Thank you, Okay, and I've been I'm happy to.
Try and answer the other Oh, we were blacked out promoted Q2 during the rights offering and we had our normal course blackouts prior to our earnings.
The ER.
The most is disclosed or more details in the press release, so that I know, we just dropped it on but if you look in that I think it's that's out like.
Okay. Thanks, Greg.
Our next question will come from Boeing path from Deutsche Bank. Please go ahead. Your line is no.
Hi, good morning.
Well, that's two questions first on Formula one.
Working capital usage.
It's actually neutral year to date.
That's a change at all in the second half based on what you know at this point in time related to that season were to be on except expectedly cut short shorter than the 15 18 race plan would you be in a position where you'd have to refund is collected for this season already on for example, those from the broadcast rights holders just trying to get a sense for.
What the potential cash needs could be relative to the cash that you're out on the balance sheet. Currently and then my other question its on the strategic fraud, Greg. If you were to increase your equity stake in high hard and something closer to the 50% level that has received antitrust approval, where the reasons that you'd be doing it through liberal.
The serious versus Sirius XM, they though the pros and cons of.
Of those two auctions. Thank you.
So if you want to start on the.
Yes.
Sure.
I, Yeah, I think largely in terms of.
Yeah.
Payments received from parties.
Not at all cases, but im I'd say the majority of our cases.
We are aligning payments get a more with the races.
So yeah.
Payments, which would have been.
Scheduled throughout the race season.
Starting March obviously the race season, starting in July it's a different start going a different than that.
The pace do it so.
No not at all cases, but I think at the majority of it.
Yeah, we've moved that was payments couldn't be more aligned with the races. So.
Let's say, there's no impact, but certainly the impact if we didnt get to our targeted ranges from people who paid us for that for those races, what would be limited I'm just because of again, how were looking for payments to commit more against the races that they're actually occurring.
Yeah, I think in terms of working capital.
And I'd say I don't really probably get that you know.
That granular on trying to up because we got to so many moving parts.
They're probably you know your some working capital evolve.
First to second quarter, we didn't have much the way of operations. So there.
The limits the amount of.
Working capital that's we're generating one we're not you know we're not operating the business and the third and fourth quarter will obviously be operating the business, which will create working capital clearly doesn't impact on our revenue start working capital is not what would be at a normal year just because that's the results are what they'd be at an earlier, but.
But there will be but I, but I don't actually.
With all those moving parts, if we've got to liquid balance sheet sort of not.
It's not probably one of the things like that.
Forecast or particularly if we manage our payments of receipts, but focused more on that and.
The working capital, which would be probably reasonably ordinary course for reduced level of operations.
Yeah, I'd like to just add on shakes his comment before I address I heard I mean, obviously one of the reasons. We did the reattribution was to put bulletproof balance sheet and placing formula one.
It sets up Holdco and I think we've done that so I I echo chases points, where.
We're very much focused on getting through 2020 and set ourselves in place that no matter what happened in 2020 were prepared and trying to get back to normal course, which were reasonably confident.
For 2021.
Turning briefly to Iheart.
You know we.
There are some issues there, but are worth thinking about the long term, which as you know.
Serious faster gone Nbn Iheart, how much do you want to consolidate that.
[music].
How would you want to account for that there are a lot of operating synergy potential there, but candidly given the opportunities we have at Sirius XM.
We like Iheart, but we don't feel any rush.
To do that we've all noted the discount we've all noted some of things that screwing wants to do about getting to 80 some of that thinks it's really wants to do about.
Potentially and podcasts those haven't been big and I don't expect they're going to be huge going forward, but the point being there are demands on the cash flow of silly and opportunities on the cash flow series that are interesting and yes, I heard is a great management team, we like the business.
But clearly advertising was challenged in this environment, we want to watch and see what happens.
Thanks, that's one follow up on that right the antitrust approval right in that applies.
Other scenario, whether it would be acquired through serious or iheart up to the 70% is that correct.
I think you meant to liberty Sirius or serious on yes.
To stay ARIA where.
We treated as one entity.
For that purpose.
Okay. Thank you very much.
Yep.
Ladies and gentlemen, you signed Victor question has been answered you mean, you yourself from the Q at any stage by pressing star too.
Our next question will come from David Karnovsky from JP Morgan. Please go ahead. Your line is open.
Alright. Thank you are just too for Chaves on rates solution in the past that you've discussed having a long list of locations. The on a whole the Grand Prix. So just wondering if you think depend demichele impact a willingness with local governments to subsidize and support races, either to the negative because of pressure the finances or maybe to the positive even because of the need to attract tourism.
In the future and then just for this season, assuming a limited number of fans are allowed at some races can you discuss others would impact the motor fee would this be prorated based on you know how much of the could then you are able to Phil. Thanks.
[music].
[noise].
Ladies and gentlemen, thank you for standing by welcome to the Liberty Media Corporation Twentytwenty quarter to earnings call.
During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time. If you have the question. Please press star one on your telephone keypad.
As a reminder, this conference is being recorded August tent no like to turn the conference over to court, John Cheap portfolio Officer, and senior Vice President Investor Relations. Please go ahead.
Thank you.
Yes, I would like to remind everyone. This call include certain forward looking statement within the meaning of the private Securities Litigation Reform Act like 95, actual events or results could differ materially there's a number of risks and uncertainties, including those Manhattan I'm sleeping form 10-K filed with the.
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He disseminate the updates or revisions to any forward looking.
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The expectations with regard to ARPU or any change in event.
Circumstances on with that thank you.
They called it will discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA, there are quite definitions and reconciliations in the media.
One example beyond that.
I personally think to though which is available on our website now I'd like to turn the call over the Liberty President.
Okay.
Good morning, Thank you coordinator.
Today's begin the call. We will also have formula once chairman and CEO Chase Carey.
And Liberty's, Chief accounting and principal to principal officer.
The next a loss or out of Brian one way.
First I hope you all else healthiest date.
Been enjoying your summer given these challenging circumstances.
Second I like to again bank, our management teams and employees that's on such an impressive job managing through this call the 19 crisis.
So first looking at Liberty Sirius XM.
We completed the previously announced raw rights offerings was fully subscribed.
Generated proceeds of 754 million and we use that money to fully repaid the group loan that Liberty Sirius XM had to the formula one.
During that period, we pause our share repurchases were prohibited from being in market. During the rights offering. We're certainly aware that the discounted remains and we have ample liquidity and Ellis XM and expect to take full advantage of the discount opportunity.
Our ownership at Sirius XM now stands as of July 28 that 72.9%.
We also pause it's buybacks in Q2 do the market conditions in the depth of the called the crisis, but recently extended their authorization by $2 billion.
We remain very focused on getting 80% add series.
Looking at serious itself like our other subscription businesses serious that's.
Proved resilient during the crisis.
Self pay net ads.
Subscriber adds were 254000 term was down to 1.6%.
During the quarter, we generated over half a billion dollars and free cash flow.
We also announced the deal to acquire stitcher, creating a full service platform for podcast creators publishers and advertisers and also announced a smaller deals simple caps with podcast management analytics platform services.
During sex and continues to provide innovative programming, we're launching new acts, including the BC Boys, Bob Marley Coldplay Queen now much on dry Freddie Mercury.
And comedian Jim gap again.
With strength in visibility to the business, we offer new 2020 guidance at Sirius XM.
Turning briefly to the Formula one good im working chasing a moment.
We returned to race in the beginning of July one now completed five races, there's still targeting a 15 to 18 race season.
And we continue to move the business forward.
We have a new lower cost capital don't get back to 2021, we have new broadcasting on sponsorship deals.
The teams in all of our partners have been doing a tremendous job.
Turning to the truck.
Yesterday, we had an exciting rate and Silverstone.
Where red Bull and actually stop and had a great strategy that they execute on very well upon to it.
So with exciting rates.
Turning to our nation their top priority in recent months has been strength in the financial position.
And now an amendment to their credit agreement would suspends the leverage carbon till the end of 2021 provides increased flexibility.
They recently reported results last week.
Both on the future of live events, even at the near term ticket is turbulent rather.
They've already sold my team million tickets over 4000 concerts and festivals, which are scheduled for 2021.
Management expects live events can return to scale in that number 2021.
In a positive note 86 foot just kind of fan opted to keep their ticket for reschedule shows even if they're offered Republic.
Third of their fan keeping tickets for cancel acceptable. So they can go to next year's show.
Virtual conflict are generating big demand with vans over 67 million fans Youd 18000, virtual concerts globally in the second quarter.
We had over 150 performances for a virtual lollapalooza.
Launched socially different shows and permitted locations, including New Zealand, France, Denmark, Spain, Germany, Finland, and select cities across the U.S.
Now turning to brace glad to see braved the terms of field.
Off to a strong start with Elevensix Records includes 72 at home and they want all three series Truest Park.
Series play they are five and one which is tied for the most such victories in the majors.
It was very sad to see our number one Mike So roka end of season early with the 20 carries and do wish him a speedy recovery.
But the Braves still hub for former first round fits and starts and starting rotation that Max freed short list them.
All right and to keep too so.
Early in the year.
Our tickets opt is out in the season are these since returned.
And the return with a bang with a walk up Homer last week and as they do.
While we wait for Greg the return I will I'll continue on and then handed over to chase.
Good morning, everyone.
At the end of June we amended the term loan and revolving credit facility a formula one.
And that leverage covenant will not inclined to our first testing day for the quarter ending March 31, 2022, providing the business additional flexibility to operate during this uncertain time.
Break holdings is expected to be out of compliance with certain debt covenants at the end of the quarter. We continue to work with the lenders to obtain labors and covenant modifications.
These discussions are going well and we're optimistic that we will have a favorable resolution by the end of the month.
Liberty Sirius XM group had attributed task restricted cash and liquid investments of 154 million, excluding 1.8 billion of cash restricted cash held at Sirius XM.
We have 870 million of Undrawn margin lung capacity at the parent level.
The value of the Sirius XM common stock in live nation stock held at Liberty Sirius XM as a Fridays close with 22 billion.
Which excludes the value of the live nation call spread which is held a corner one group valued at 210 million at quarter end.
We have 2.1 billion in principle amount of debt against the holdings.
Total Liberty Sirius XM group attributed principal amount of debt is 12.6 billion, which includes $9.4 billion debt at Liberty Sirius XM.
Well no one group had attributed cash and liquid investments of 1.4 billion, which excludes 324 million of cash of Formula one.
The Formula One group attributed principal amount if that was 3.6 billion, which includes the 2.9 billion is that held directly by Formula one leading 733 million a corporate level.
And lastly to the breads, we had attributed cash liquid investments and restricted cash and 329 million attributed debt of 718 million.
That I will turn it over to Ted talk more about when there were walking.
Okay. Thank you, Brian and I guess I'll keep going.
Wait for Greg return at some point.
We were thrilled to return to racing with the launch of our 2020 season in Austria. The first me going in July.
It was an exciting race that saw a lot of competition in the midfield with an action packed last few labs that are Atlanta Norris his first podium Finnish deferred.
In the five races. So far we've seen Lewis Hamilton fighting for a seventh World Championship. The continued strength in ingenuity of Red Bull struggles a ferrari the emergence of Mclaren racing point is serious contenders.
Our data through the first for races or the season it produced solid viewership growth across the race weekend.
Especially in key markets like China, and when there is tremendous growth on our digital platforms measured in video views social media interactions and traffic across the web site than App.
The drama in the Paddick built this summer as a number of driver changes were announced for 2021.
For already decided not to renew for time World champion Sebastian Vettel and instead sign Carlo size.
Is open ceded Mclaren went to the on the Ricardo which will make for a strong and entertaining pairing with land of Norris.
Right no decided to fill their vacancy with former champion Fernando Alonso Valerie bought as re signed with Mercedes for 2021.
Just continued speckle speculation around Sebastian Vettel so more to come.
Just prior to the start of the season Landstar, we launched our we races, one initiative to tackle the major issues that we as a sport and a society are facing.
We used our restart the show that we stand United against racism and are doing more to address inequality in diversity and formula one while also taking moment the thank people around the world for the fortitude they've shown against the global Cobot 19 pandemic.
We will be establishing a task force to lessen and identify the right initiatives required to increase diversity and inclusion across formula one.
This is typically focused on identifying employment and education opportunities and the required actions to effect change.
We're in the process of creating a foundation that primarily finance internships and apprenticeships with within Formula one for underrepresented groups.
These effort to build on the embankment ambitious sustainability diversity and inclusion strategy as set out in November 2019.
Which set goals of having a net zero carbon footprint by 2030, and ensuring all of our events are sustainable by 2025.
Getting back to racing there's been no easy feat I'd like to thank the FAA our employees the teams and drivers are promoter partners at local authorities.
Together, we developed an extensive code of conduct and testing protocols that are being closely followed at a bit working well.
Our priority has always been to safely transport, everyone and to enable those individuals to operate in a safe and secure manner.
We've been publishing our testing results each week as we believe it's good to provide this transparency.
It's Silverstone, we saw firsthand, how our safety procedures are robust and effective sadly Sergio Perez tested positive for the virus.
But our tracing cast procedure handled the situation safely and with efficiency with no impact on the race weekend for the wider sport.
It shows how far we've come since Australia, and as a testament to the diligent way that we we've returned to racing.
We now we have now announced 13 races in the revised calendar and expect to get to between 15 and 18 races in 2020.
The newly added three races, bringing exciting circuits that were not part of the original 2020 calendar quarter mile and Portugal will be a completely new circuit, while we welcome back analog and Nurburgring that of hosted World Championships World Championships in the past.
Unfortunately, due to the fluid nature of the ongoing pandemic it will not be possible for us to race in the Americas. This season.
I look forward to being back in 2021.
We expect to release the final details of the 2020 calendar in the coming weeks.
While we've been extremely focused on 2020 season, we continued to progress the business for the long term.
We reached a long term exclusive rights agreement with Sky Deutschland, beginning in 2021.
Sky Deutschland will provide fans in Germany with full coverage of every Grom parade and include Germany's first 24, seven channel dedicated to Formula one.
We also announced agreements in Austria with service, TV, and RF and in Russia with match TV.
In the process of finalizing finalizing the last couple of TV deals for 2021.
We've also be tended to strengthen and expand our commercial partnerships. We believe our planned raised calendar 15 dating races, we'll be able to satisfy the vast majority of our contracted sponsorship revenue and twentytwenty.
To name a few recent updates liquid Molly the globally renowned vehicle care products experts upgraded to an official sponsor for the next three years.
Adapting to the new reality, we partnered with zoom to deliver the first ever virtual Paddock club experience.
Beginning with the race and hungry guests are treated to a range of experiences and we're working to expand this offering to our global partners and F. One teams.
Furthering the fan outreach, we announced a new podcast seriousness modified.
Patrick passes hosted by well Buxton and in these exclusive episodes. He will speak the drivers team principles and legend to the sport.
On the video front and following on the strong results of the first two seasons of the Netflix show drive to survive. The film crews are already worked filling the third season.
Also partnered with you to the lifestream, the Eiffel Grand Prix Nurburgring, Germany.
This is the first time fans from select European countries will be able to view the entire grom pretty weekend for free on the Formula One you to channel.
Before our returns that track, we took the opportunity to revisit the cost cap of 175 million announced last October.
The new cost cap of 145 million will be introduced in 2021.
It will further reduce to 140 million in 2022 and 135 million in 2023.
This was advanced the objective to improve the competition in action on the track and at same time make the sport healthier and more attractive business for all.
With a return to racing on the revised cost cap, we have moved to finalize discussions around the Concord agreement.
With that productive conversations with all constituents and we look forward to completing this agreement in the near future and solidifying the sport for the longer term.
We've also been focused on the corporate operations a formula one during the second quarter, we for furloughed over 50% of our workforce. We're pleased to bring back the majority of our employees with a return to racing.
We also focused on our balance sheet and announced an amendment to our debt covenants, which provides flexibility until March 31 Twentytwenty too.
These actions along with digital diligent approach to our spending will enable us to whether this difficult time.
Given all the challenges in 2020 were proud of what we've been able to an accomplished and expect to accomplish.
I've been a regular contact with the majority of our commercial partners to discuss the reduced race calendar and the expectation that many of our races will not have fans.
Clearly this is going to impact our revenue in multiple areas, but it's still depends on how the remainder of the year unfolds.
We appreciate in value our long term partners and we expect to resolve any contractual issues in a fair and straightforward manner.
We are confident our plans for 2020 and look forward to 2021, when we think we can return to our prior expectations for Formula one.
Now I'll turn the call back to Greg.
Thank you Chase welcome and thank you Brian.
Given the ongoing pandemic.
We have decided that Liberty's investor day, this year will be virtual and will happen over two days.
Because no one as much as we love to should have to get into video call for that long.
Thursday November 19th we will probably Liberty media and Liberty trip advisor on on Friday November Twentyth.
I will include cure rate do you see I Liberty and Liberty broadband.
We'll run from 11 to eastern on both days more details will be provided on our website. Please mark your calendars.
As always we appreciate your continued interest in Liberty media and again I Hope you all stay safe and healthy.
And with that operator, I'd love to open the floor for questions.
Thank you Sir just a quick reminder, ladies and gentlemen, it is star one of your telephone keypad. If you wish to ask a question on today's call.
We'll now take our first question from Ben Swinburn from Morgan Stanley. Please go ahead. Your line is now open.
Thanks, Good morning.
Shane can you talk about I know, you're obviously laser focused on 2020.
But I don't ask you a couple of questions about next season.
On the sponsorship front are you able to give us any sense for how you're thinking that it's coming together for next year and if you're willing to to be this specific but I'm trying to figure out of 21.
The higher than 2019, or Steve sort of global recession pressure on corporate spending has maybe changed the direction of that revenue line.
And then secondly, I'm wondering if you're thinking about.
A later start to the season next year.
Just because it's obviously, what's going on with the with the virus in sort of continue.
Timelines around vaccination.
I'm just curious if that's it.
Options that you guys are exploring yet or if it's too early.
And then I just had one for Greg Greg you again, reemphasize the discount that Liberty Sirius.
The buyback did you guys buyback any shares between June 16th and and whenever you filed the 10-Q at last we'll see we'll let the number looks like on the share count front because it doesn't look like you did and I didn't know if that was because you are boxed out or some other reasons trying to reconcile the comment with the buyback thanks guys.
Okay.
Let me answer the second part first because it's sort of sets up the first part.
Yes.
We are planning a.
2021 season that looks pretty much like what we would've expected at the looked like.
The beginning of this year and.
And obviously, we qualify that with we don't have any better visibility as anybody else. What this virus is going to look like as we go forward I do think want us to realize.
We are about five months into the virus and our season in March would be still seven months away. So there's a long time and conversations on.
Vaccines and treatments and testing and alike.
Obviously continue to evolve.
We also obviously raising 22 countries. So we deal with a much bigger mixed bag of issues throughout this.
We're planning on 2021 that looks.
Like we would expect it which probably probably will be a 22 raise calendar.
On.
A calendar the probably starts and finishes about when our calendar has.
We may make us so there's a little more space in the front end of it you know the calendar in the second half is little busier. So we've got a little more flexibility built into it but I think thats, probably up to tweak to at Nada.
I'm not a real restructuring.
You know clearly as this goes along yeah, we'll know more and there's always a possibility we make some adjustments as we go forward but.
At this point, we're planning we're planning races that left fans.
Yeah, we've been in touch with most of our eventually getting nobody nobody has visibility to this will obviously have a lot of sports ahead of us.
What will the MD Eightys NHL do as they get the next season and what are the soccer leagues football leagues in Europe do as their seasons get going so I think we do at the benefit of a lot of things that will be in front of us.
As a as template to round.
Around the world it because it relates to the sponsorship side yeah.
I think things went pretty quiet just in the early stages I'd say, the first month or two whether the virus period I think if people adjusted to working from home engaging in a different way I mean, obviously virtually in connecting into like.
If you feel pretty good about the traction.
In the last few months, yeah, we're actually in a pretty good place in terms of renewals. So.
I think sponsorship has a place we.
We clearly believe there's real room to grow.
I think we were talking for the virus hit about.
The head when we were making we'd acknowledged we probably weren't.
As far along into growth as we expected but still.
Yep.
As strong as ever about the growth opportunities for us the interest is good so.
So we continue to expect.
Growth in that and we got our foundations in pretty good place I'm getting on the <unk>. The renewal we have for having you know.
Well in advance discussions that are very positive.
And the interest from new parties.
Is strong.
So.
As much as everything's fluid.
You know, we feel pretty good about you.
Continuing to get to where we think we should be in the sponsorship world.
And the opportunity we have in front of us.
Thank you, Okay, and I've been I'm happy to try and answer the other.
So we were blacked out promoted Q2 during the rights offering and we had our normal course blackouts prior to our earnings.
We are the most is disclosed or more details in the press release, so but I know, we just dropped it on but if you look in that I think it's that's out like.
Okay. Thanks, Greg.
Our next question will come from Bryan Kraft from Deutsche Bank. Please go ahead. Your line is no of them.
Hi, good morning.
That's two questions first on Formula one.
Working capital usage is essentially neutral year to date, you expect that to change it on the second half based on what you know at this point in time.
Related to that season were to be Arctic set expectedly cut short shorter than the 15 18 race plan would you be into position where you'd have to refund fees collected for this season already on for example, those from the broadcast rights holders just trying to get a sense for what the potential cash needs could be relative to the cash that you're out on the balance.
Currently and then my other question is on the strategic fraud, Greg. If you were to increase your equity stake in high hard and something closer to the 50% level that has received antitrust approval, where the reasons that you'd be doing it through liberty Sirius versus Sirius XM, though the pros and cons of.
Of those two auctions. Thank you.
[noise] say, if you want to start on that.
Yeah.
Sure.
I, Yeah, I think largely in terms of.
<unk> payments received from parties.
Not in all cases, but im I'd say the majority of our cases.
We are aligning payments in a more with the racist I'm so yeah.
Payments, which would have been.
Scheduled throughout the race season that would have started March obviously the race season, starting in July it's a different start going a different than that.
The pace do it so.
No not at all cases, but I think at the majority of it you know we've moved that was payments to be more aligned with the races. So.
As I say, there is no impact, but certainly the impact if we didnt get to our targeted gracious from people who paid us for that you know for those races, what would be limited I'm just because of again, how were looking for payments to commit more against the races as they're actually occurring.
Yeah, I think in terms of working capital [noise].
And I'd say I don't really probably get that.
You know that granular on trying to up because we got to so many moving parts.
You know there probably you know your some working capital evolves, but obviously first to second quarter, we'd had a much in the way of operations. So there you know probably limits the amount of.
Working capital, that's we're generating when we're not.
We're not operating the business and the third and fourth quarter will obviously be operating the business, which will create.
Working capital clearly doesn't impact on our revenue start working capital is not what would be at a normal year, just because that's the results aren't what they'd be at an earlier, but.
But there will be but I, but I don't actually.
With all those moving parts, if we've got to liquid it up balance sheet sort of not.
It's not probably one of the things like that I forecast or particularly because we manage our payments of receipts, but focused more on that and.
The working capital which would be.
I will probably reasonably ordinary course for a reduced level of operations.
Yeah, I'd like to just add on shakes his comment before I address I heard I mean, obviously one of the reasons. We did the reattribution was to put bulletproof balance sheet and placing formula one.
And it sets up Holdco and I think we've done that so I I echo chases points, where.
We're very much focused on getting through 2020 and set ourselves in place that no matter what happened in 2020 were prepared to try and get back to normal course, which were reasonably confident.
For 2021.
Turning briefly to Iheart.
You know we.
There are some issues there but are worth thinking about the long term, which is you know.
Syria, the fastest dong energy and Iheart, how much do you want to consolidate that.
How would you want to account for that there are a lot of operating synergy potential there, but candidly given the opportunities we have at Sirius XM.
We like Iheart, but we don't feel any rush.
To do that we've all noted the discount we've all noted some of things that security wants to do about getting to 80. We've noted some of the things it's really wants to do about.
Potentially in podcasts those haven't been Dave and I don't expect they're going to be huge going forward, but the point being their demands on the cash flow of series.
And opportunities on the cash flow assays that are interesting and yes, I heard is a great management team, we like the business.
But clearly advertising is challenged in this environment, we want to watch and see what happens.
Thanks, that's one follow up on that right. The antitrust approval in that applies to either scenario, whether it would be acquired through serious or iheart up to the 50% is that correct.
I think you meant to Liberty Sirius for serious out yes.
To stay ARIA where.
We treated as one entity.
For that purpose on it.
Okay. Thank you very much.
Yep.
Ladies and gentlemen, who signed Victor question has been answered you remember you yourself in the queue at any stage by pressing star too.
Our next question will come from David Karnovsky from JP Morgan. Please go ahead. Your line is open.
Hi, Thank you just two for Chaves Henri solution in the past I think you've discussed having a long list of locations. The on a holder Grand Prix. So just wondering if you think dependent demick will impact a willingness of local governments to subsidize and support races, either to the negative because of pressure the finances or maybe to the positive even because of the need to attract tourism.
In the future and then just for this season, assuming a limited number of fans are allowed at some races can you discuss others would impact motor fee would this be prorated based on you know how much of the could then you are able to fail X.
Sure.
So in terms of race promotion.
Certainly and discussions to date.
Which obviously there for beyond this year.
2020, <unk>, yeah, we certainly have races and started as one off some of them I mentioned in the and they're really comments like Portugal, and emulator, but on the longer term traditional type arrangements.
You know, we've actually got our calendar.
Pretty well set forth yeah, we haven't announced 2021, just because the focus on 2020, but were pretty were close to sort of finalizing 2021, we've got a couple agreements to complete where we started about the business terms agreed and got a paper it theres been no impact on.
You know that then obviously those are discussions or would it began well before the virus.
Certainly not.
Had any negative impact and I think in some ways. It is.
The importance of getting back to the world as we know it and re energizing actually seems to be it's always a bigger topic. The the positive you're talking about as opposed to the negative in the short term everybody still wrestles with how long is virus in Alaska, Yes, but I think there is a broad based assumption.
That's a world has to continue to recover and businesses have that everything has to start to operate and in some ways. There's a pent up demand for this and obviously an important should we have.
Places that want to attract people and the like the types of cities were in that obviously, you're very yeah. We're tourism.
And their general business as an important I'm getting exposure to the global.
The World AWS important probably makes our platforms more important but.
That caused the conversation in interest if not we've not seen any negative.
Given our Keller for 2021.
The conversations we have right now are probably early stage because they're not for next year. We've got next year as I said, it pretty much done and we're just.
Finishing the agreements for it.
So we're not pushing 2022 and beyond but there are still parties.
You know, we've talked too, but again, if not in any way to their interest hasn't diminished you know, we're not getting to that we started with agreements we're not really into business terms. When we're talking a race, that's two or three years away 'cause. It's early stage, so you're really talking more about the opportunity and once you can do with it things around it so it's not.
The detail the substance.
The agreements we have this year I mean, it's such a unique year I mean, they're all over the plate assuming you have obviously.
We don't we're not going to if we don't expect validate the first race, we think there's potential for up a very small number offense is probably down but shallow but.
And probably increasing not still on races and on the latter part of the schedule. They're certainly we hope that fans as many as possible.
In some places the government's want to get a little closer to the date to determine what's up.
But the situation is our deals are agreements you know very all over in some degree depend our are these long term partners or one off partners. So there are a lot up there a lot of moving parts at some of them to have.
Variables.
But.
You know, but you know you again itself. It differs in each place which is always the case you know with our with our agreements.
Thank you.
Oh well.
Well take our next question from James Ratcliffe from Evercore. Please go ahead. Your line is open.
Hi, Thanks for taking the questions one fifth grade and I'll ones. The chase I could break out how high heart.
Awesome last November the analysts say, John said, something you have tested didn't really see value than buying things that the momentum in valuation levels and left for synergies clearly they'll get a lot of <unk>.
Oh, I heart combined Sirius XM you talk about.
If you could potentially capture owning a minority non controlling thinking I heard.
And then the chase around the broadcasting rules.
Pretty happy with what you've gotten them in Germany, Austria, Rashad extent, maybe as well.
As you work to finalizing agreements thing sounds like adding how high salary and front on the long, but coming back should be positive for that I can you provide additional commentary and what you've been hearing from a broadcast partners over the last month and how you doing mark for sports rights typically cost than most important market. Thanks.
Sure.
I'll go first chase.
On on Iheart.
I think you point out that you know a minority stake would make some of the issues around synergies more difficult, but I don't necessarily think impossible in terms of how you share.
Advertising sales, how you share digital buildouts, there clearly ways, we could work together it probably ways. We can work together without an acquisition, but they get easier to degree of comedy ownership and the easiest evolves if you're 100%. So I think your point is fair.
You know we.
The one thing I noticed John talked about valuations, obviously valuations have come down, but the business is more challenged as well.
Oh, we weigh all back and ultimately the goal would be to get to full consolidation whether that takes longer or.
It's not something we can do out of the blocks.
Well as I said right now were causing on all of it.
Oh God Jake.
Okay, I guess I'd say in terms of the broadcast a landscape and it get probably to some degree because.
Our deals are multiyear deals and even now we're having there do you also start in 2021. So we're not because we're not in discussions about deals that are 2020 and again our multiyear deals.
This is actually not had up yeah, yeah, yeah, I mean get hit the positive, but I don't know, but it's not really had a material impact on sort of.
The interest in the sport event I think it's an event I mean events.
Continue to sort of.
Have a unique value I think we continue to see that varies.
By country, yes, it can generally you're probably say that the.
The pay side of the world given its Adam subscription.
You know base.
Yeah, it's slightly different than been an AD supported them service so.
And obviously the pay sports services that navigate through not having sports, but I guess they.
Come back it probably reinforces the importance of those events buttoned up.
The sports platforms, but yes, I would actually say end up in the broadcast world.
Probably just the nature of the long term agreements.
It hasn't been up it hasn't had a significant impact on the discussions we would have been having yeah pre pre cobot yeah. It I think everybody has some you know you know some anxieties about what the short term looks like but again I think it.
Yeah, a degree of confidence, particularly if you know.
All the increase discussions about being at home and what you do at home you know obviously.
Watching things on the screen and it's become more important than ever.
Great. Thank you.
Our next question comes from Brian Russo from Credit Suisse. Please go ahead your line is.
Hi, Thanks for taking my question this one's about Sirius XM.
Greg and one of your past analyst days I think you made a case that TV in film business has challenges because certain technology companies have entered the space and are spending more on content. They either have alternative ways to monetize or they're not valued on near term profits.
It seems like a similar case could be made for like spoken word content in the audio space.
Wanted to get your view on why this may or may not be kind analogy.
What the implications could be for serious and Uh huh.
Thanks.
I think it's an imperfect and algae there are certainly elements that might be worth considering.
You've seen the case, where.
Spotify has gotten enormous.
Benefit from the ports perceived moves they might not see moves, but the valuable perceive moves.
See value rather to move they've made in podcast.
Yes.
I'd note that.
There's a certain base level that is music that all players have there's a certain.
I'm out of differentiated content and if you look at the amount of differentiated content that superiority serious 40 has.
Pretty much exceeds modes for they'd be in sports.
For me it.
Two things like Formula one or whether it be the fact that you can listen to the NFL and MLB.
You can listen to Oh, there's most CNBC you've got comedy I would say, there's already a breadth of differentiated content in Sirius XM, which is one of the reasons, we've been able to all charge a premium and continued growth and very low trend enviable trial against those other services.
And position ourselves very well.
Our view is I think we Jim Meiers elegantly sooner.
And I totally agree is podcasting is gonna be interesting part of the business.
Ultimately it will have some percentage of listening it will still be fairly low.
It's going to be important, but we'll be at fairly low percentage off and we are in the early innings of that which is going to podcast.
There are certainly some of the people that have been sound to exclusives what all.
Oh.
You will have an audience, but there's so much content that's high value content that hasn't yet come too.
Come on to podcast that we believe will come up to podcasts and a lot of it will be based on.
Helping those.
People get onto the podcast well, which is why the reasons. We went out did stitcher and get simple cast.
The so we think the values there and podcasting I think the market may have over reacting in a positive fashion.
To the moves that others have made podcasting, but we'll see I don't think this is like a the complete world video, where you're going to have guys with other b. I don't have a playing a big way people with other outside monetization schemes have had not entered in force because.
They can sell some other kind of surface or product and monetize to podcast, that's not what spot buys tried to do and that's not where the boil. The spent so far it's been a lot much less differentiated business and we already have a lot of unique content. So we'll see.
Gosh I appreciate that thank you.
We'll take our next question from John Tinker from Gabelli and company. Please go ahead. Your line is open.
Hi, I'm switching gears.
The baseball the.
Could you just discuss a given that some of the the you had some rent so what the attendance is being like at.
The the stores and the restaurants and the.
Battery Park and secondly.
Giving you a wonderfully on time and launch schedule on the build out.
On the same means you'll be.
Sitting in the large child watching youre stuck game mixture.
You sell some I think the rental apartments or how do you sort of see the property as part of your portfolio.