Q2 2020 Liberty Media Corp Earnings Call
[music].
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 in a listen only mode. Afterwards, we will conduct a question 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 all this tent no like to turn the conference over to Corky, John Chief portfolio Officer, and senior Vice President Investor Relations. Please go ahead.
Yeah.
Yes, I would like to remind everyone. This call include certain forward looking statement, we're gonna meeting of the private Securities Litigation Reform Act was 1995 actual events or results could differ materially there's a number of risks and uncertainties, including those 19, our most recent form 10-K intends to file with the.
These forward looking statements speak only as of the David This call and Liberty media expressly disclaims any obligation on to disseminate any updates or revisions to any forward. Looking statement. You can you hear and reflect he didn't really have expectations with regard to ARPU or any change in events conditions or circumstances on with any such statements.
Today's call they will discuss certain non-GAAP financial measures, including adjusted EBITDA and 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 to though which is available on our website now I'd like to turn the call over the Liberty President and CEO, Greg anything.
Good morning, Thank you Courtney.
Great began the call. We will also have formed a once chairman and CEO Chase Carey and Liberty's, Chief accounting and principal to principal officer.
That's a loss or other Brian one way.
First I hope you all helping it safe.
Have been enjoying your summer given these challenging circumstances.
That kind of like to again bank on management teams and employees they've done such an impressive job managing through this covered my team crisis.
So first looking at Liberty Sirius XM.
Oh, we completed the previously announced raw rights offerings as fully subscribed.
Generated proceeds of 754 million and we use that money to fully repaid the intergroup loan that Liberty Sirius XM had to the formula one good.
During that period, we pause or 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 at el affects them 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 apart its buybacks in Q2 do the market conditions in the depth of the cobot crisis, but recently extended their authorization by $2 billion.
We remain very focused on getting 80% absolutely.
Looking at serious itself like our other subscription business a serious that's probably proved resilient during the crisis.
Self pay net ads.
Subscriber adds were 264000 churn was down to 1.6%.
During the quarter regenerate over half a billion dollars of free cash flow.
We also announced the deal the acquired 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.
Strength and visibility into the business, we offer new 2020 guidance at Sirius XM.
Turning briefly to the Formula one grip and more from chasing a moment.
We returned to Racemi beginning July one now completed five races are still targeting a 15 to 18 race season.
And we continue to move the business forward.
We have a new lower cost capital build effective 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 it.
So with exciting racing.
Turning to our 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.
They recently reported results last week still bullish on the future of live events, even if the near term ticket is turbulent rather.
They've already sold nine team million tickets over 4000 concerts and festivals, which are scheduled for 2021.
Management expects live events can return to scale endless number 2021.
In a positive note 86, but just kind of fans opted to keep their ticket for reschedule shows even if they're offered refunds.
Two thirds of their fan keeping tickets for cancel festival. So they can go to next year's show.
Virtual conflicts are generating big demand with fans over 67 million fans youth 18000 virtual concerts globally in the second quarter.
We had over 150 performances for 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 in 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 to see the early with a 20 carries and we do wish him a speedy recovery.
But the Braves still hub for former first round picks and startup and starting rotation to Max free trial with them.
All right and to keep to sell.
Early in the year.
Our tickets opt is out in the season 40 cents returned.
And in return with a bang with a walk up over last week and as they do.
Hello.
Greg or 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 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 a Fridays close was 22 billion.
Which excludes valuable admission call spread which is held a formula 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 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 at the corporate level.
And lastly to the breaks we had attributed cash liquid investments and restricted cash and 329 million and attributed debt of 718 million.
With that I'll turn it over to test to talk more about Formula line.
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 began in July.
It was an exciting race that so 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.
The continued strength in ingenuity of Red Bull stop us a Ferrari emerges and Mclaren racing point is serious contenders.
Our data through the first for races, or the season, it 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 Carlos size.
There is open Cedar Mclaren went to Daniel 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 part of 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 to show that we stand United against racism and are doing more to address into quality and diversity and formula one.
While also taking moment to thank people around the world for the fortitude, they've shown and 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.
Specifically 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 ambac 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 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 and I've been working well.
Our priority, it's 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 a 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 in 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'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 do it at fluids nature of the ongoing pandemic it will not be possible for us to race in the Americas. This season.
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.
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 been tended to strengthen and expand our commercial partnerships. We believe our planned raised calendar 15 to 18 races, we'll be able to satisfy the vast majority of our contracted sponsorship revenue in 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 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 modify.
Paddick 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 for the first two seasons of the Netflix show drive to survive. The film crews are already at work filling the third season.
We're also partnered with you to 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 Grand Prix weekend for free and a 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 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 our return to racing in the revised cost cap, we have moved to finalize discussions around the concrete agreement.
We've had productive conversations with all constituents and we look forward to completing disagreement 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 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 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 and affair is 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 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 cover Liberty media and Liberty trip advisor on on Friday November Twentyth.
Cool 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. The 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 Ben Swinburn from Morgan Stanley. Please go ahead. Your line is 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 I don't know if you're willing to to to be this 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.
Oh 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.
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 Sirius.
The buyback did you guys buyback any shares between June 16th and and you know whenever you filed the 10-Q at least 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 to comment with the buyback. Thanks guys.
Okay.
Let me answer the second part first because it's sort of sets up the first part.
Yeah, I couldn't 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 way, 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 you know conversations on you know vaccines treatments and testing and 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 but we're planning on 2021 that looks.
You know like we would expect it which probably probably will be a 22 race calendar.
A calendar that probably starts and finishes about when our calendar has.
We may make it so there's a little more space in the front end of it you know at a 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 a tweak to at Nada.
I'm not a real restructuring.
You know clearly as this goes along yeah, we'll know more and Theres 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.
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 80 in NHL do as they get that 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 round.
Around the World I think as it relates to the sponsorship side yeah.
I think things went pretty quiet just isn't in the early stages I'd say, the first month to or to weather. The virus period, I think as 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.
Yeah, I think sponsorship is a place we.
We clearly believe there's real room to grow I think we were talking for the virus hit the about 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 a car foundations in pretty good place I'm getting to be the renewal we have for having you know.
Aware and advanced discussions that are very positive and the interest from new parties.
Is strong.
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 in a we have in front of us.
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 now open.
Hi, good morning.
Two questions first on Formula one.
Working capital usage is essentially neutral year to date.
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 short 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.
For example, those from the broadcast rights holders just trying to get a sense for what the potential cash need could be relative to the cash and you're out on the balance sheet. Currently and 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.
For example, where the reasons that you'd be doing it through the 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.
Yes.
Yeah sure.
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're aligning payments in a more with the races.
So yeah.
Payments, which would have been you know scheduled throughout the race season.
I would have started in March obviously, the race season, starting in July it's a different starts in a different than that.
Pace do it.
So not in 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.
And I say, there's no impact, but certainly the impact if we didnt get through our targeted ranges from people who paid us for that you know for those racist I'm with you know.
Would be limited I'm, just because of again, how were looking for payments to commit more against the races as are actually occurring.
Yeah, and I think in terms of working capital [noise].
And I say I don't really probably get that yeah.
You know that granular on trying to us because we got to so many moving parts, they're probably you know you some working capital evolved.
First to second quarter, we did it much in the way of operations. So there.
The limits the amount of.
Working capital. That's you know 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 in a normal year, just because as a result with they'd be in an earlier, but.
But there will be but I, but I don't actually.
With all those moving parts you know 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 you know, particularly if we manage our payments and receipts, but focus more on that then.
The 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, but are worth thinking about the long term, which as you know.
Serious faster Dong energy in Iheart, how much do you want to consolidate that.
You know 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 some of that 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 being their demands on the cash flow of Siri and opportunities on the cash flow assays 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, Brian Thats, 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 50% is that correct.
I think you meant to liberty Sirius or serious on yes.
Just area where.
We treated as one entity.
For that purpose Doug.
Okay. Thank you very much.
Yep.
Ladies and gentlemen, you signed at your question has been answered you mean, you move yourself into 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.
All right. Thank you just two for chase Henri solution 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 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 oral out at some races can you discuss others could impact our motor fee would this be per weighted based on how much of the could then you're you're able to fill X.
Sure.
So in terms of race promotion certainly in discussions to date, which obviously therefore beyond this year.
They're not 2020 being what we you know we certainly have races and started as one off some of them I mentioned, the and then really comments like Portugal, and Emily but on the longer term traditional type arrangements you know, we've actually got our calendar.
Pretty well set for you know, we haven't announced 2021, just going to focus 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 theres been no impact on.
You know that then obviously those are discussion as to when it began well before the virus and is certainly not.
You know had any negative impact and I think in some ways, yes. It is.
The importance of getting back to the world as we know what and re energizing actually seems to be enjoys it bigger topic that the positive you're talking about as opposed to the negative in a short term everybody still wrestles with how long Cyrusone, 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 in some ways. There's a pent up demand for this and obviously an important should we have places that want to attract people in the like the types of cities were in that obviously, you're very yeah. We're tourism.
On the general business as an important I'm getting exposure to the global.
To the World AWS important probably makes our platforms more important but.
Yeah, the comp the conversation in interest if not we've not seen any negative.
In our accounted 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 that we've talked too, but again, if not in any way to their interest hasn't diminished you know we're not into those started agreements we're not really into business terms. When we're talking a race, that's two or three years away 'cause it's yeah early.
So you're really talking more about the opportunity and once you can do with it you 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 players coming you have obviously.
We don't yeah, we're not going to if we don't expect Fannie first race, we think there's potential for up a very small number of fans is probably now magellan, but oh, and probably increasing not still on racist. None 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.
Very all over in some degree depend our are these long term partners or one off partners. So there are 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 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 questions now one for granted and I want to chase, Okay, great falling I heart.
Paul 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 much more synergies, we clearly don't get a lot of.
Oh, I heart combined Sirius XM.
Talking about right for the synergies because it tends to capture owning a minority non controlling stake and I hurt.
The change around broadcasting walls.
I think I'm pretty happy with what you've gotten them in Germany, Austria, lesser extent, maybe as well as you look to finalizing agreements and sounds like adding how five sorry in front on the long, but coming back should be positive for that I can you provide additional commentary and what are you considering for your back half partners over the last month.
And how you Mark for sports rights, specifically costs on the most important markets. 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 are there clearly ways, we could work together.
Probably ways, we can work together, even without an acquisition, but they get easier to degree of comedy ownership and the easiest evolves, if you're 100% Sonic 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 would 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 at all.
Oh My God Jake.
Okay, I guess I'd say in terms of the broadcast a landscape and it probably to some degree because.
Our deals are multiyear deals and so even now we're here and there do you also starting 2021. So we're not because you were not discussions about deals it for 2020.
And and again, our multiyear deals the virus is actually not had up yes.
I mean, if I guess, it's a positive but I don't know, but it's not really had a material impact on sort of.
The interest in the sport imminent that gets an event I mean events.
You continue to sort of.
Have a unique value I think we continue to see that varies from you know bike by country, Yeah, and it can generally you probably say that ends up the pay side of the world given its hanam subscription.
You know base.
It is slightly different than they've been an AD supported them service so.
And obviously the 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 enough 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 we would have been having yeah pre pre cobot yeah. It I think everybody has some you know you you know some anxiety about what the short term looks like but again I think it.
Yeah, a degree of confidence NIM, particularly as you know.
All the increase discussions about being at home and what you do at home you know obviously.
Watching things on 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 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 centers anymore 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.
Wanted to get your view on why just may or may not get an 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 might not be perceived moves, but the valuable proceed moves or look see value rather to move they made in podcast I guess.
I'd note that you know.
There is 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 been pretty much exceeds most whether 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 they'll be a 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 in one of the reasons, we've been able to all charge a premium and continued growth and very low churn enviable trying 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 it'll be at fairly low percentage.
And we are in the early innings of that which is going 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 that's high value content that hasn't yet come too.
Come on to podcast that we believe will come on to podcasts and a lot of it will be based on.
I, helping those people get onto the podcast well, which is why the reasons, we went out and 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.
Lets modifies tried to do and that's not where the board has been 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 seat.
Could you just discuss given that some of the that 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 launch schedule on the build out.
On the same means you'll be.
Sitting in the large towers Watson, you'll start 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 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 value and you know depending on where we stand a 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 is likely in the near term Dokey do get a fully step office space, maybe that'll be different and we're obviously not.
In a 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 on.
What I would try to alternative uses of capital.
Brian could you address where we on some of the rents.
Yeah.
So you know it would the battery they as Georgia started to open up the battery started to open up they started would take out at a limited number of venues.
Almost fully open now there's there's a in person dining at quite a few of the values are falling various safety protocols to make sure other patrons are safe and everything's claim.
The omni is looking up fairly well, especially those corner rooms that can see into the park as you might expect.
And the a loss just opened recently so.
Every everything's going pretty well at the better.
Thank you.
Thanks, John.
Our next question comes from the streets and that's an issue from Citi. Please go ahead. Your line is open.
I just had a question for Mr. Kerry.
In general investors like you as a manager and they like the Formula one asset and they like what you're doing libbey asset.
You said since inception that you were very focused on the long term.
He decisions on long term value creation not short term.
And at the beach emerged in sort of agreement.
Summation of all the decisions that you need 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 you sort of add up all of the puts and takes and decisions as it feels more like a 2020 to 2023.
The story thank you.
Look I mean I screening reality, if you go back in the beginning of this year he said.
I mean look a lot way back because I felt I feel we're actually.
Yeah, you're never exactly where you plan, but we were on pretty much. The track we had laid out three years ago, and we talked about 17 and 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 and 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 three.
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 in 19, and we have been clear we are expecting twentytwenty could be.
Another significant step forward and 2021 to continue to be a further step forward. So you know we were very much I think on a trajectory to moving and again it wasnt going to be in 12 months, but moving to delivering 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 made I think you know well clearly we've got initiatives like new cars in 2022, and other initiatives and we started the countries that you know to grow the sport in that are five to 10 year me in China in the U.S. are clearly not pay off 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 were at a good track and we've got a pretty predictable.
Business model.
So ex you know the virus you know we were.
Very much moving to de lever the type of growth.
Long term growth.
We had talked about obviously virus turned at all its head you know we at this point them. 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.
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.
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 expect in 2021 and 2022 to be largely back on the curve. We would have been on from 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 zinc 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 fits into some of the 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's just on the fly.
Anyway races that the Dan although later on there obviously more demanding from a logistics perspective, if their R&D snag.
Would you be able to pivot back to some of the circuits closer to home as anything contractually that preclude you from doing that thanks.
Okay first in the latter no there's not so fleet, which is you know again, we haven't announced the last handful of races.
And yeah, we are.
Treating options on yeah on all fronts I mean, there's probably some limitation on how late somebody gets you know if something came up you know 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 proud again it varies by market actually I'd say right now I mean, you mean because to me. The most important thing for ethylene TV pro and beyond getting it you know quality wise and yeah. We did 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 is to grow its access to consumers so.
In a number of places you know we are pursuing it more as a partnership and trying to develop a ways to have it be.
Something to enhance the exhibit enhance the experience for a traditional television partners customer with a product that is geared towards a Ah hey, a true enthusiast and so if that extra experience and work with our partners to to have that be something that we can be.
Squarely both share in the success of and.
And they benefit from so that certainly we'd have more you know 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 pass it I think probably that's the you know the 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 fixed has it fit into a world that obviously, it's continuing to evolve certainly the digital side of our world.
In 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 it when we just looking to continue to find ways to enhance and expand that so that whole.
All those opportunities in that field I think there.
Becoming an increasing really important part of the sport and it's obvious for at all.
In all aspects of the content portal, 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 thank you Jay.
Our last question today comes from Canada is Encaje left from Barclays. Please go ahead. Your line is open.
Thank you so maybe a one quick wouldn't see through.
<unk> distinctive acquisition I mean, it's going to replace it is being anchored won't be used car market and conversion do tend to be doing to that liquid detergent acquisition. You now have a potentially that came.
And now seems to be couple of different extension and be onto market.
It's really open up opportunities outside the U.S. do agree that experience then has to be flexible in its good to potentially and independent brand that can be used management.
Thank you for the question I think you know we have been expanding in ways outside the core of the obviously for awhile.
Look at the Pandora acquisition.
But your point about being.
Outside the car and outside the U.S. and certainly tool.
With the acquisitions, we made almost about content will go outside the U.S. how much is a play that smoking question.
Well the 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 on the market rent, partly because of the at least our crews as I mentioned been partly because some of the protections around the DMC I.
So.
I think we'll post that cautiously one of the things I would now these are the only our OEM auto partners will perversity would love to see us be more global because I would love to see as bundled across all markets. When they don't cause they are global players. So we.
We'll tip held outside the United States, we do have some obviously in Canada and Mexico already.
Historically cone door was in some of those markets English speaking markets outside the U.S., but we will be cautious in doing that so.
I.
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, and if so remote like.
Thank you very much yeah, the wall or if any.
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 <unk> earnings call.
The presentation, all participants will be any listen only mode. Afterwards, we will conduct a question answer session at that time. If you have a question. Please press star one when your telephone keypad. As a reminder, this conference is being recorded August 10th.
I'd like to turn the conference over to Court, John Cheap portfolio Officer, and senior Vice President Investor Relations. Please go ahead.
Thank you.
Yeah, I would like to like everyone. This call include certain forward looking statement within the meeting with the quite Securities Litigation Reform Act like 95, I feel like also results could differ materially there's a number of risk when I agree.
Okay. My most recent form 10-K, and thank you filed with the uptick.
Forward looking statements speak only as of today. This call Liberty media expressly disclaims any obligation on anything even some of the any updates or revisions.
We're lucky they need to take your own reflect even when you need the expectations with regard to ARPU or are you changing conditions or circumstances.
And that's it will be.
Today's call, we will discuss certain non-GAAP financial measures, including adjusted wiped out and adjusted EBITDA.
Why definitions and reconciliations for Liberty media and Sirius XM schedule wanting to be found at the end of the earnings press release issued today, which is available on our website.
I'd like to turn the call over the Liberty President and CEO, Greg Greg.
Good morning, Thank you Corp.
Todays call will also help formula one chairman and CEO Chase Carey.
Liberty Streep accounting principal to principal officer.
Net loss or otherwise.
Well I hope you all helping it's eight.
I've been enjoying your summer given these challenging circumstances.
Second I like to get back on management teams and employees the job such impressive job managing through its corporate banking crisis.
So first looking at Liberty Sirius XM.
We completed the previously announced <unk> rights offerings as fully subscribed.
Generated proceeds of 754 million and use that money to fully repaid began a good blow that liberty Sirius XM catching on <unk>.
During that period, we paused or share repurchases were prohibited for 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.
Thanks, I'm now stands as of July 28, 72.9%.
Sure. We also part it's buybacks in Q2 due to 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% that's really.
Looking at curious itself like our other subscription business it series such <unk>.
Well the proved resilient during the crisis.
Self pay net ads.
Subscriber adds were 264000 in terms of gobbled, 1.6%.
During the quarter, we generated over half a billion dollars that free cash flow.
We also announced that the although quite stricter, creating a full service platform for podcast graders publishers and advertisers and also announced a smaller deal simple cap.
The podcasts management analytics platform services.
During sex junket journeys to provide innovative programming. We're watching you actually included the BC Boys, Bob Marley Coldplay, Queen how much I'd like Freddie Mercury.
And comedian Jim GAAP again.
Strength and visibility into the business.
Could you 2020 garden at Sirius XM.
Turning briefly the Formula one im working traits in a moment.
We were trying to race in the beginning July one now completed five races.
Well targeting a 15 to 18 weeks either.
And we continue to move the business forward.
We have new lower cost capital build affected 2021, because you broadcasting in sponsorship deals.
The teams and all of our partners have been doing a tremendous job.
Turning to the truck.
Oh yesterday, we haven't starting right. So let's go.
Where red Bull and Max we're stopping had a great strategy that they execute on very well upon to it.
So with exciting rates.
Turning to our nation your top priority in recent months has been strength in the financial position.
And that's an amendment to the credit agreement, which extends the rubber carbon till the end of 2021 provides increased flexibility.
They recently reported results last week still bullish on the future of life events, even near term ticket is her brother.
40 sold my 18 million tickets over 4000, ecologists 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 fan opted to keep their ticket for rescheduled shows you that they're offered Republic.
Two thirds of their fans keeping tickets for cancer acceptable. So they can go to next year's show.
Virtual cards are generating good demand with fans over 67 million fans Youd 18000, virtual concerts globally in the second quarter.
We had over 150 performances for virtual wallet Lisa.
And we launched so we'll get some shows and permitted locations and put in New Zealand, France, Denmark, Spain, Germany sentiment and select cities across the U.S.
Now turning to brace glad to see braved the terms of field.
After a strong start with 11 six records, including 72 at home and they want all three series Schlitz Park.
Series play they are five and one which is tied to the most subsectors of the majors.
What very sad to see our number one like so okay and the season early with the 20 carries and do wish him a speedy recovery.
At the Braves still hub for form of course rockets and sharpened starting rotation did not straight shot meet them.
All right and to keep too so.
Ah early in the year.
Our tickets opt is out in the season, how do you sense returns.
Okay return with a bang for the walk off Homer last week in as they do.
While we wait for Greg to return I will hop out I'll continue on and on handed over to Jay.
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 apply to our first test Monday for the quarter ending March 31, 2022, providing the business additional flexibility to operate during this uncertain time.
Right 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 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 lung capacity at the parent level.
The value of the fear it took them common stock in live nation stock held at Liberty Sirius XM as a Fridays close was 22 billion.
Which excludes the value of the 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.
Formula One group attributed principal amount of that was 3.6 billion, which includes the 2.9 billion of that held directly by Formula one leading $733 million coupled with the corporate level.
And lastly for the breads, we had attributed cash liquid investments and restricted cash and 329 million and attributed debt of 718 million.
That I will turn it over to check 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 we are going to July.
It was an exciting rates 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.
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 emergence of Mclaren racing point of 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 site the nap.
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, San Carlos 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 Novell three bought as re signed with Mercedes for 2021.
Discontinued 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 Colgate 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 perfectly 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 ambac 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 that testing protocols that are being closely followed and I've 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.
At 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've we've returned to racing.
We now we have now announced 13 racism, 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 part of Mylan Perrigo 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, we look forward to being back in 2021.
Back 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, 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.
I 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 a renowned vehicle care products experts upgraded to an official sponsor for the next three years.
Wrapping tuned into the new reality, we partnered with zoo to deliver the first ever virtual Paddick 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.
Patrick path is 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 for the first two seasons of the Netflix show drive to survive. The film crews are already worked fell in the third season.
We're also partnered with you to the livestream, the Eiffel groundbreaking 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.
Further reduced to 140 million in 2022, and 135 million at 2023.
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.
What I returned to racing on the revised cost cap, we've moved to finalize discussions around the Concord agreement.
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 individual 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 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.
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 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.
Will include Curie, DCR 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 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 Ben Swinburn from Morgan Stanley. Please go ahead. Your line is no.
Thanks, Good morning.
Shane can you talk about I know, you're obviously laser focused on 2020.
But I'd love to 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 I don't if you're willing to to be this specific but I'm trying to figure out of 21 could be higher than 2019, or if the sort of global recession pressure on corporate spending has maybe changed the direction of that rather.
And in 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 continued.
Timelines around vaccination.
I'm just curious if thats.
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 calm that with the buyback thanks guys.
Okay.
Let me answer the second part first because the sort of sets up the first part.
Yes.
We are planning a.
2021 season that looks pretty much like what we would've expected it to look like.
The beginning of this year and.
And obviously, we qualify that way, 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 want us to realize.
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 and treatments and.
Testing and alike.
Obviously continue to evolve.
We also obviously racing 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 would probably probably will be a 22 raise calendar.
You know the calendar, the probably starts and finishes about when our calendar has.
We may make us so theres, 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.
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 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 MD 80 in NHL do with I get that 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 had 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 stage as I said, the first month or two whether the virus period I think as 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.
Were actually pretty good place in terms of renewals so.
Yeah, I think 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're making we'd acknowledged we probably weren't.
As far along in the 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 we continue to expect.
Rather than that and we've got our foundations in pretty good place debris renewal, we have for having you know.
We are advanced discussions that are very positive.
And the interest from new parties.
Is strong.
So.
As much as everything's fluid.
We feel pretty good about you.
Continuing to get to where we think we should be at the sponsorship world.
And the opportunity we have in front of us.
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, but I know, we just dropped it on but if you look in that I think it's that's outlet.
Okay. Thanks, Greg.
Our next question will come from Boeing path from Deutsche Bank. Please go ahead your line is old.
Hi, Good morning, one thats two questions first on Formula one.
Working capital usage has been essentially neutral year to date.
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 on except 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 need 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 what are the reasons that you'd be doing it through liver.
Pretty serious versus serious et cetera, the pros and cons of of those two options. Thank you.
So if you want to start on the.
Yeah.
Sure.
I, Yeah, I think largely in terms of.
Yeah.
Payments received from parties.
Not in all cases, but im I'd say the majority of our cases.
We're aligning payments, but I'm more with the racist I'm so yeah.
Payments, which would have been.
Scheduled throughout the race season that wouldn't start in March obviously, the race season, starting in July it's a different starts in a different than that.
At a pace do it so.
No not at all cases, but I think at the majority of it.
We've moved that was payments to be more along with the races. So.
That said there was no impact, but certainly the impact if we didnt get through our targeted ranges 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.
And I'd say I don't really probably get that yeah.
That granular on trying to us because we got to so many moving parts.
Probably you know your some working capital evolved mobs.
First to second quarter, we did as much as a way of operations. So there you know probably limits the amount of work.
Working capital that's we're generating one we're not.
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 revenue start working capital is not what would be at a normal year just because that's a result start with 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 we manage our payments and receipts, but focused more on that then.
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 grew up by heart I mean, obviously one of the reasons. We did the reattribution was to put bulletproof balance sheet in place at 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 to try and get back to normal course, which were reasonably confident.
2021.
Turning briefly to Iheart.
You know we are there some issues there but are worth thinking about the long term, which as you know.
Serious passes on 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 scary wants to do about getting to 80, something thats 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 series.
And opportunities on the cash flow assays that are interesting and Oh 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 appears like 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 met through Liberty Sirius for serious out 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 remember 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.
All right. Thank you are just too for chase Henri solution in the past I think you've discussed having a long list of location. The on a holder Graham Creek. So just wondering if you think depend demichele impact a willingness of local governments to subsidize and support races, either through 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 or elaborate some rates of can you discuss how that could impact the motor fee would this be prorated based on how much of the could then you are able to Phil. Thanks.
Sure.
So in terms of race promotion I'm certainly in discussions to date.
Yeah, which obviously there for our beyond this year.
They're not 2020 me what weve.
[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 Oh, no like to turn the conference over to Court, John Chief portfolio Office.
And senior Vice President Investor Relations. Please go ahead.
Before we begin I'd like to remind everyone. With this call include certain forward looking statement within the meeting of the private Securities Litigation Reform Act 95, actual events or results could differ materially there's a number of risks and uncertainties.
He knows Manhattan, our most recent one 10-K.
Yes.
These forward looking statements speak only of the nature of this call and Liberty media.
Ladies obligation.
Just how many any updates or revisions to any fort Mcmurray nuclear and reflect.
Really the expectations with regard to ARPU or any change in events or circumstances.
Okay. That's it.
On todays call, who will discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA. There are quite definitions and reconciliations for Liberty media Sirius XM. One. Good example, beyond that the earnings press release issued to though which is available on our website now I'd like to turn the call over the Liberty President.
Great Okay.
Good morning, Thank you coordinate.
Today's begin the call. We will also have formula one chairman and CEO Chase Carey and Liberty's, Chief accounting and principal to principal officer nickel ore out of Brian One way.
First I hope you all else healthy insane.
Been enjoying your summer given these challenging circumstances.
Second I like to again bank, our management teams and employees that's done 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 being in a 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 Alex 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 co the crisis, but recently extended their authorization by $2 billion.
We remain very focused on getting 80% add siri.
Looking at serious itself like our other subscription business is serious that's.
Proved resilient during the crisis.
Self pay net ads.
Subscriber adds were 254000 in terms of down to 1.6%.
During the quarter, we generated over half a billion dollars that free cash flow.
He also announced the deal to acquire stitcher, creating a full service platform for podcast creators publishers and advertisers and also announced the smaller deals simple cast with podcast management analytics platform services.
During sex them continues to provide innovative programming, we're launching new acts, including the BC Boys, Bob Marley Coldplay, Queen how much I enjoy Freddie Mercury.
And comedian Jim gap again.
With strength in visibility into the business, we offered new 2020 guidance at Sirius XM.
Turning briefly to the Formula One group Im working shapes in 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 build affecting 2021, we have new broadcasting on sponsorship deals.
The teams and all of our partners have been doing a tremendous job.
Turning to the truck.
Yesterday, we have exciting rate and Silverstone.
Where red Bull and Max will 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 strengthening the financial position.
And that's an amendment to their credit agreement would suspends the rubber carbon till the end of 2021 provides increased flexibility.
Are there recently reported results last week still bullish on the future of live events, even near term ticket is turbulent rabbit.
Already sold 918 million tickets over 4000 concerts and festivals, which are scheduled for 2021.
Management expects live events can return to scale in the summer of 2021.
In a positive note 86 to just kind of fan opted to keep their ticket per week schedule shows even if they are offered Republic.
Two thirds 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.
And we launched so slightly 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, they're off to a strong start with Elevensix records, including 72 at home and they want all three series Truest Park.
A replay they are five and one which is tied to the most such victories in the majors.
It was very sad to see our number one Mike so okay and the 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 woodmac freed shop NUKEM.
All right and to keep to sell.
Early in the year.
Our tickets opt is out in the season are these since returns.
And the return with a bang with a walk off Homer last week and as they do.
While we wait for Greg to return I will I'll continue on and then handed over to Jay.
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 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 cash 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 how the formula One group valued at 210 million at quarter end.
We have 2.1 billion in principle amount of debt against these holdings.
Total Liberty Sirius XM group attributed principal amount of debt is 12.6 billion, which includes $9.4 billion that 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 of that was 3.6 billion, which includes the 2.9 billion of debt held directly by Formula One leading 733 million a corporate level.
And lastly to the brags he had attributed cash liquid investments and restricted cash and 329 million and attributed debt of 718 million.
That I will turn it over to Ted talk more about formula walking.
Okay. Thank you, Brian and I guess I'll keep going.
Wait for Gregory turn 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 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.
The five races. So far we've seen Lewis Hamilton fighting for a seventh World Championship. The continued to strengthen ingenuity of Red Bull struggles a ferrari emergence of Mclaren racing point of 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 Atlanta 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 ambac ambitious sustainability diversity and inclusion strategy you 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 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.
At 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'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 Austria with service, TV, and 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 began to strengthen and expand our commercial partnerships.
I 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 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 path is 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 a third season.
We're also partnered with you to to live stream, the Eiffel groundbreaking 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.
Further reduced to 140 million in 2022, and 135 million in Twentytwenty three.
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've moved to finalize discussions around the Concord agreement.
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 its 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 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 Jason 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.
We will include Curie, DCR 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 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 Ben Swinburn from Morgan Stanley. Please go ahead your line is level.
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 I don't if you're willing to 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.
The change 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.
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 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.
Yeah, I couldn't we are planning a.
2021 season that looks pretty much like what we would have expected it to look like.
The beginning of this year and.
And obviously, we qualify that with 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 I was to realize.
Or 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 treatments and testing and the like we'll 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.
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 a tweak to at Nada.
I'm not a real restructuring.
Clearly as this goes along we'll know more and Theres always a 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 MD 80 in NHL do as I get that next season, and one of the soccer leagues football leagues in Europe do as their seasons, you don't 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 it because it relates to the sponsorship side yeah.
Big 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 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 sponsorships the place we.
We clearly believe there's real room to grow I think we were talking for the virus hit the about.
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.
We continue to expect rather than that and we've got our foundations in pretty good place.
Get on to read the renewal we have for having you know.
And 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.
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, but I know, we just dropped it on but if you look in that I think it's about life.
Okay. Thanks, Greg.
Our next question were called <unk>, Bryan Kraft from Deutsche Bank. Please go ahead. Your line is open.
Hi, Good morning, one that's two questions first on Formula one.
Working capital usage is essentially neutral year to date.
The fact 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 on et cetera, expectedly cut short 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, this 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 Iheart something closer to the 50% level that has received antitrust approval, what the reasons that you'd be doing it through liver.
Pretty serious versus Sirius XM, neither the pros and cons of.
Of those two auctions. Thank you.
So if you want to start on the right there yeah.
Yeah sure.
Yeah, I think largely in terms of.
<unk> payments received from parties.
Not at all cases, but im I'd say the majority of our cases.
We are aligning payments, but I'm more with the races.
So yeah.
Payments, which would have been.
Scheduled throughout the race season that would have started in March obviously, the race season, starting in July it's a different start in a different than that.
The pace do it so.
So not in 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.
And 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 for those raises would yeah.
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.
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, they're probably you know your some working capital evolves.
First or second quarter, we'd as much as a way of operations. So there you know probably limits the amount of.
Working capital that's we're generating one we're not yet, but we're not operating the business in the third and fourth quarter will obviously be operating the business, which will create working capital I mean, 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 off balance sheet sort of not.
You know, it's not probably one of the things like that I forecast or particularly we manage our payments of receipts, but focus more on that then.
The working capital, which would be pre I'll, probably reasonably ordinary course for reduced level of operations.
Yeah, I would like to just add on chases comment before I address Iheart I mean, obviously one of the reasons. We did the reattribution was to put bulletproof balance sheet and place it 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 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 as you know.
Serious faster growing Nbn iheart, how much do you want to consolidate that.
You know 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 scary wants to do about getting to 80 some of that thinks it's really wants to do about.
Potentially podcasts those haven't been big and I don't expect is gonna be huge going forward, but the point being their demands on the cash flow of silly 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 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 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 so, yes, I understand area where.
We treated as one entity.
For that purpose on it.
Okay. Thank you very much.
Yep.
Ladies and gentlemen, you signed Victor 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.
Alright. Thank you are just too for Chaves Henri solution 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 to the positive even because of a need to attract tourism.
In the future and then just for this season, assuming a limited number of fans or elaborate some races can you discuss others could impact motor if he 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 raced promotion certainly in discussions to date.
Which obviously there for our beyond this year.
They're not 2020 <unk>, yeah, we certainly have races and started as one off some of them I mentioned in the in the early comments like Portugal, and emulator, but on the longer term traditional type arrangements.
We've actually got our calendar.
Pretty well set for you know, we haven't announced 2021, just going to focus 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 theres been no impact on.
You know that then obviously those are discussion as to when it began well before the virus and is certainly not.
You know had any negative impact and I think in some ways.
He is.
The importance of getting back to the world as we know it and re energizing actually seems to be enjoys 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 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 an important should we have places that want to attract people on 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 you know our platforms more important but.
Yeah that caused the conversation in interest if not we've not seen any negative.
Given our calendar 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 that we've talked too, but again, if not in any way to their interest hasn't diminished 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 yeah early.
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 we don't expect fan I think the first race, we think there's potential for up a very small number offense is probably down the jello, but.
Okay, and probably increasing not.
Still on racist and on the latter part of the schedule. There 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.
But the situation is our deals are agreements.
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 in it but.
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 now one fifth grade and I want to chase that okay, great how high heart.
Awesome last November appeal. It so John that's happening the fact that didn't really see value in buying things that the momentum in valuation levels and left over synergies clearly they'll get a lot of.
All my heart combined.
Can you talk about.
It could potentially capture owning a minority non controlling thinking I hurt.
And then the change around the broadcasting walls.
That's a pretty happy with what you've gotten them in Germany, Austria, Rashad extent, maybe as well.
As you work to finalizing agreements and sounds like adding how sites for Ari and front on the long, but coming back should be positive for that.
To provide additional commentary and what you think hearing from the back half partner. This over the last month and how you doing mark for sports rights typically cost them most important market. Thanks.
Sure.
I'll go first chase.
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 the Greek 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.
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.
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 gets probably to some degree because.
Our deals are multiyear deals and even now we're here and there do you also starting 2021, so we're not because we're not in discussions about deals that are 2020.
And and again, our multiyear deals the virus is actually not had up 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 that event I mean events.
Continue to sort of.
Have a unique value I think we continue to see that varies from you know bike by country, Yeah, and it can Joe you, probably say that ends up the pay side of the world given its Adam subscription.
You know base.
<unk> is slightly different than they've been an AD supported service so.
And obviously the pay sport services had to navigate through not having sports, but I guess, they don't come back it probably reinforces the importance of those events following up 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 as it has significant impact on the discussions who would have been having.
Yeah pre pre cobot, yeah. It I think everybody has some.
Yeah, you know some anxiety about what the short term looks like but again I take it.
A degree of confidence yeah, particularly as you know.
The increase discussions about being at home in what you do at home you know obviously.
Watching things on 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 did I Miss.
Hi, Thanks for taking the question this one's about Sirius XM.
Greg and a 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 and are spending more on content because they either have alternative ways to monetize or they're not valued on near term profits seems like a similar case could be made for like spoken word content in the.
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.
You've seen the case, where.
Spotify has gotten enormous.
Benefit from the ports perceived moves they might not the perceived moves but the valuable proceed moves all look see value rather to move they 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 most whether it be in sports.
For me it.
To comply formula one or whether it be the fact that you can listen to the NFL and I'll be a 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 in 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 as I think Weve, Jim Meiers elegantly seen it.
And I totally agree is podcasting was 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.
Oh, and we are in the early innings of that which has gone to podcast.
There are certainly some of the people that have been sound to exclusives what all.
Oh.
We 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 and did stitcher and did simple cast.
The so we think the values there and podcasting I think the market may have over reacting and the positive fashion.
To the moves that others have made podcasting, but we'll see I don't think this is like a the complete well the 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.
And 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 the froze 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 towers Watson youre stuck a mixture.
You sell 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.