Q3 2020 Liberty Media Corp Earnings Call
[music].
Ladies and gentlemen, thank you for standing by welcome to the Liberty Media Corporation plenty plenty gets caught that earnings call.
During the presentation, all participants will be in listen only mode.
Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press star one on your pent up on it.
As a reminder, this conference is being recorded November 5th.
I would now like to turn the conference over to Courtney Tom Ti portfolio Officer. Please go ahead.
Good morning, Ive already and we'd like to remind everyone that this call.
Statements within the need in the private Securities Litigation Reform Act of 1995 actual events were held number materially due to a number of risks and uncertainties, including those mentioned in our most recent form 10-K, and 10-Q filed with the FTC. These forward looking statements speak only as of the date of this call and the media expressly disclaims any obligation or undertaking.
[noise] disseminate any updates or revisions to any forward looking statements contained herein.
Any change in Liberty Media's expectations with regard there.
For any change in events conditions or circumstances on which any such statements made on today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA.
Adjusted EBITDA, the required definitions and reconciliations for Liberty media and Sirius XM schedules. One two can be found at the end of <unk> press release issued today, which is available on our website. Please.
Please refer to register Herbert home Liberty Investor meeting on Thursday November 19, we will cover Liberty media.
On Friday November 20 will include series D. C. I Liberty broadband from 11 am to two PM eastern on both days after the presentation on both days javelin agreements I, along with presenting Ceos will host humane sessions. These pre submitted questions by Friday November 13, two investor day at Liberty.
Media Dot Com you can find the link to register and all of these details on our home page now I'd like to turn the call over to Gregory fan Libertys, President and CEO.
Thank you and good morning.
Today's speakers on the call. We will also have a formal launch German studio Chase Carey.
And.
Liberty, She's retiring and principal financial officer, Brian went away.
I'd again like to recognize and thank our management teams of employees that have done such an impressive job managing through this cold and my team Corey.
So let's start with Liberty Sirius XM.
Where we restarted share repurchases during the quarter purchasing 110 million across both our spectrum and K shares from August August through October.
These discounts stubbornly remains but we will take advantage of it as we can and.
We repurchased seriously look through price of $3 to 66 cents per share.
As I said, we expect to continue to take advantage of the discount the opportunities.
Our ownership as of October 20 years at Sirius XM stood at 74.4% and we remain focused on getting to an 80% ownership level that you're looking.
Looking at Sirius XM itself like our other subscription businesses jurisdiction has proved resilient during the current crisis.
Self pay net add subscribers during the quarter were 169000, and we expect by year end to be at 90% of our original projections given the challenges of 2020.
New car penetration increased to 78%.
With our recent OEM agreements I expect penetration to be over 80% in the next few months and even higher in the years to come.
During the quarter Sirius XM returned capital of $544 million, primarily through repurchase of its own stock.
We also announced the Jennifer which will become the new CEO in January Jim Meyer has done so admirably will remain with us as vice chairman.
And Sean Sullivan joined Us as CFO.
I'm. So pleased that he will stay on and involved as non executive chair I'm also thrilled that's Stefano Domenicali will join us as Steego in January.
The rich history in Formula one and his appointment has been met with resounding positive feedback inside and outside the pattern.
I'm not going to comment on live nation now because it reports later today.
Returning to the Braves is amazing seasons embrace it clicks their third straight Natalie's title in one unit wildcard Fnl divisional series.
When we went to seven games into the Nlcs against the eventual World series winning Dodgers.
It was sad to see it and before we got to the World series, but we are confident that the future is bright or our team.
Some other notable accolades include pretty cream and reserved receiving a big named player of the year and nationally outstanding player in the 2020 players twice awards being named Baseball America player of the year and named a finalist for the National League MVP the.
The winter of which will be announced on November 12th.
A lot of Laconia Junior led the NL with an 11 four three aspect ratio to homeruns.
He also had a 19.
Run leadoff home runs in his career could you did the mostly off hall runs through players first three seasons in history eclipsing Barry bonds.
Congrats also to Mac Street.
First Golden glove of his career.
A few battery updates 96% of the battery is open.
This January we have open seven new concepts, representing 100000 square feet of new.
Capability in retail and.
And the weekly vehicle traffic in October is on par with pre covid levels.
And year to date, we're at 85%.
So with that I'm going to turn it over to Brian.
A little more on our financial results.
Thanks, Greg and good morning, everyone Liberty.
Liberty Siriusxm group had attributed cash restricted cash in liquid investments of $104 million, which excludes $44 million of cash restricted casual directly siriusxm.
We have $870 million of Undrawn margin lung capacity of the parallel.
The value of the Siriusxm common stock and live nation stock held at Liberty Siriusxm as of November 4th was 22 billion. This excludes value of the line. They should call spreads held at Formula One group valued at $276 million a quarter on.
We have 2.1 billion in principle amount of debt against these clothing.
Total Liberty Siriusxm group attributed principal amount of that is 11 1 billion, which includes seven 9 billion of debt held directly a serious excellent.
Formula One group had attributed cash in liquid investments one $4 billion.
Which excludes 139 nine of cash out with that Formula one.
Formula One group attributed principal amount of that was three 6 billion, which includes the 2.9 billion in depth at the F. One level, leaving 739 at the corporate level.
Hello.
Hello.
Yeah.
Thank you. Thank you so much I couldn't care, who was supposed to taste carpet on Scott.
Can you send <unk> excuse me I think I can put out he ended up getting to be confident. Thank you for your patience. Please continue to.
Okay would you like to continue on.
Dan.
[laughter] became dieting backing me okay.
So everybody is on other than the Denver people, Okay I can tell you.
Okay never mind okay.
Go ahead.
I don't know, whether where we cut off one change you can tell us how far it got cut off and Brian willing.
So.
Maybe just talking about cash at the Formula One I think sort of finishing up on the $500 million.
Actually the sentence would cut off if one's revolver or $500 million revolver is undrawn with let me let me, let Brian given you've got about a few more sense is why don't you start with the data formula one Brian repeat that.
Redundant for a few little.
Got to chase after that okay.
Thanks, hopefully not repetitive, but formula one group had attributed cash and liquid investments of 1.4 billion at quarter end.
Which excludes a 139 million of cash that formula one.
For you on group attributed principal amount of debt was 3.6 billion, which includes the 2.9 billion you've got held directly at one level, leaving $730 million at the corporate level.
And guidance Chase just pointed out at one $500 million revolver is undrawn very.
Lastly onto the Braves group at quarter end that attributed cash liquid investments and restricted cash of 240 million.
Attributed principal amount of debt of 714 million.
The brands amended debt agreements related to the team revolver in ballpark funding.
During the quarter securing covenant relief through March 31, 2020 to September 32021, respectively.
We expect grades to be out of compliance at year end on small mixed use loan and are working with the counterparty on the necessary waivers.
Note that we previously received a waiver on such covenants through Q3.
Now I'll turn it over to chase to talk about formal could today.
Thanks, Brian.
We're proud of the way the Formula one our teams and our partners have managed through this year.
We had require three key priorities to execute once the virus hit us in March 1st to keep our fans engaged with a championship season and other initiatives that maintain the momentum we built coming into 2020 and to do so safely.
Second while mitigating the financial impact from the virus this year prior.
Prioritize strong long term relationships with our commercial partners.
And third enhance the long term growth of the sport by completing agreements and regulatory changes to strengthen the competition and action on the track.
Governance of the sport and the business model for the teams in Formula one.
Well, we still have four races to go we believe we are well on our way to achieving our goals.
Executing the rate schedule safely has been challenging and our success to date is a tribute to the partnership of everybody at Formula One the FDA and our teams.
Most do not realize the complexity involved in delivering the formula one 2020 competition, which require about 2500 personnel at the track.
In 2020, we will ultimately race in 12 countries traveling for many locations requiring us to navigate constantly changing regulations on both ends.
But the 17 race schedule beginning in early July we met our goal of 15 to 18 race calendar.
Building. This schedule was a bit of a jigsaw puzzle is 13 of our originally planned 22 race locations canceled.
Look this is an opportunity to create special interest for fans by adding races, where we had not raised in years if at all.
We feel very good about the fan reaction to our season to date.
While many sports has struggled with viewership this.
This year, our viewership is up modestly over last year to achieve these results in a season with Mercedes dominance Ferrari struggles while so many other sports have seen steep declines is a solid achievement.
Our digital growth has been even more dramatic formula one is the fastest growing sports league in terms of followers across Facebook Twitter Instagram and you too with a 17% growth rate between March and September.
Formula One also saw the highest year on year growth for social engagement with growth of 70%, which is more than three times higher than its closest competitor.
We've had some special moments cap by Lewis Hamilton, becoming the sports lifetime leader in wins with his 92nd victory in Portugal, and subsequently winning is 90 threerd enamel surpassing the previous record of 91 step by Michael Schumacher.
Congratulations to Mercedes setting new boundaries, but becoming the only constructor to ever win seven consecutive constructors titles after.
After Lewis Hamilton's win and Angela.
The Eiffel Grand Prix at the Nurburgring marked a return to the podium for down your cardio in Reno.
Returning submitted with another podium in Ampla at.
At this race for the first time in our history, we partner with you to the stream the entire weekend for fans across selected European markets. We.
We look forward to continuing our unique partnership with you tube as another way to engage our fans.
In September we raised twice in Italy, which produced some outstanding racing.
There were multiple red flags in a multi car collision on a restart.
In Tuscany, only 12 cars finished and Alexander Al Bond got his first podium.
Bonds that produced one of those thrilling races in years and gave us a snapshot of the future with the youngest podium so far with PR ghastly, securing its made and when he has joined in the podium by Carlo signs Atlanta Stroll, yes.
We have to see more of these unpredictable outcomes with the 2022 regulations.
The pattern has been a flurry of activity with driver changes for time champion Sebastian Vettel dancing, Indeed find a seat with racing point.
Well. So you have other drivers secure receipt such as Sergio per as an equal number.
Nico doesn't even have a permanent seat this season, yet as scored 10 points.
There's heavy speculation about the new driver lineup from Haas, and Netflix has been capturing the drama as they fill season three of dried to survive.
Continuing on the topic of engagement the 2021 season of our F. One E Sports series presented by Aramco got underway in October with Alfa Romeo, claiming the top spot.
We're in the middle of a second event right now with racist competing for an industry, leading 750000 dollar price pot.
We've continued to see tremendous growth with E. Sports is over 237000 participants attempted to qualify this year we.
We will have a live broadcast double last year, which will be streamed online via f. ones official channels on Facebook Youtube Twitch Leah.
As well as broadcast by International TV partners.
With regard to our Twentytwenty results. We recognized early on this was going to be an unprecedented and uniquely challenging year financially.
The most significant impact on our promotion revenues, there's only two of our 13 events to date have add fans and.
Those were capped at less than half capacity and only in Portugal will be able to offer a limited Paddick club.
There were significant impacts and sponsor revenues this year and some canceled locations that material local sponsors.
The fewer number of races reduced title sponsors and general inventory and the lack of hospitality precluded some elements of sponsored benefits.
The virus also made the completion of new sponsor chip agreements more difficult.
Our television revenue saw the lowest percentage impact among our three primary revenue catheter categories. However, we still significant.
We have reached revised agreements with all but a couple of our material commercial partners for 2020.
We approach these agreements for the spirit of partnership.
Almost all cases, we could have taken a much firmer position, if we simply enforced our contracts as written.
We believe it best to approach these discussions with the sense of fairness to maintain our momentum.
On the cost side, we aggressively reduced costs where possible.
Some of our operating costs like freight and travel were naturally reduced with the revised calendar.
Other discretionary costs were largely eliminated.
On the operating cost level, we implemented furloughs freezes and cuts in expenses expected discretionary compensation.
Our price fund expense to the teams is contractual and will increase as a percent of revenues.
All in all the financial impact this year, a significant but manageable by both us and the teams and positions us well as we go forward.
Our third priority was to implement key initiatives for the long term growth and health of sport.
We achieved much more than most expected key elements include a cost cap on team expenditures to improve competition and the business model for both existing and potential new teams.
New technical and sporting regulations for 2022 that will improve action on the track for fans.
A five year agreement with teams to better balance price, one distribution and provide improved stability in an enhanced sense of partnership.
Streamline governing structure to better grow and improve the sport.
Advanced initiatives on both diversity and sustainability.
Strengthened our balance sheet to provide both the ability and the ability to be opportunistic during this period of continuing uncertainty.
We still have much to do in a current focus as our engine we need to address the cost and performance of the current engine and you continue to define the path forward for our next engine.
It will be a centerpiece for our sustainability goals.
We expect to announce a 2021 calendar soon which will which will look much like our original 2020 calendar, where the March start early December finish in a record setting number races, including Saudi Arabia as Greg mentioned.
We're planning for events with fans.
Provided experienced close to normal and expect our guidance to be honored.
The television area, we have one material market to finalize or otherwise well position for next years next year. Likewise in our sponsorship category. We're finalizing our last renewal and actively engaged in a number of new sponsor opportunities.
If the virus does not present plans. We expect 2021 was pretty close to the 2021, we would have originally planned 12 months ago, meaning.
Meaning continued growth on 2019, and the previously expected growth in Twentytwenty.
That being said what is obviously not predictable as the virus.
What I do believe more strongly than ever is that the world will in due course conquer the virus and when it does that life unique global events like Formula one.
We'll be more popular than ever as people look to the shared experience of sports and our array of partners will have a greater than ever need to reengage with fans and consumers.
In closing I want to highlight what I believe is our most important achievement in 2020, the appointment of Stefano Domenicali as the new CEO of Formula One effective January one.
Stefano combines a richer experience and expertise in formula one with the commercial knowledge of leading one of the world's iconic brands Lamborghini during the past six years, yes.
He is respected throughout the motor sport the commercial world that will hit the ground running with that I will turn it back to Greg.
Great. Thanks, Jason Thanks, Brian.
We hope you will join us for our virtual Liberty Investor meetings.
On November 19th November Twentyth.
We do appreciate your continued interest in Liberty media and hope you are all staying safe and healthy with.
With that operator, I'd like to open the line for questions.
Thank you, ladies and gentlemen, as a reminder to T cell static one to ask a question.
I never take our first question from Bryan Kraft from Deutsche Bank.
Hi, Good morning. Please go ahead.
Thank you good morning, I had two first for Chase wondering if you could put some context around Honda his decision to leave Formula one as an engine supplier should we be concerned at all that the shift toward electrification by key teams might impact the future participation in F. One and then Greg on the live nation side I saw them.
Experiment was recently conducted in Germany to test the safety of concert goers with various safety measures in place that experiment concluded that there was low transmission risk to concert attendees. When certain measures were taken so I don't know if you had seen in sort of live nation was involved but I was just curious if.
If you had seen it knew anything about it and if so if there were any implications for potentially being able to return to concerts earlier. Thanks.
Okay.
I guess two things for them.
On the decision and I think one it was it.
From my perspective, largely driven by.
Challenges X.
Economic challenges at them the overall Honda entity.
Closed the auto industry in general is having some challenges and I think Honda clearly.
His sales.
His living is struggling with those challenges. So I think that gives them. The the core issue. There is no question their economics around the engine that we're going to address.
But but I kind of felt those pressures exist today and they had to make some decisions I.
I think on the flip side, we actually are getting you know.
Increasing support.
And not just from the players that are in the sport. The Oems that are in the sport, but a Oems that aren't there actually incredibly enthusiastic about our sustainability future, where we're going to next generation engine.
Yeah, I don't know if you saw the where there was a quite a couple of months ago from the CEO of Volkswagen.
It could have been couldn't have been more positive about where we're going and the importance of us as a platform. So I think as we continue to flush out and put more information out there about our next generation engines sustainability goals, we are actually getting increasing support and interest.
From both existing partners and potential new partners about the importance of that.
To their future.
Great. Thanks Chase.
Thank you live nation, I'm, just a little bit familiar with the German.
Efforts that you've mentioned Brian.
I'd note a couple of things and I think most of your aware this 86% of the fans who had concerts pro postponed because of the cold virus have said don't send my money back a week and I will go.
Go to the concert when you are ready so demand is there among our.
Customers fly.
Why is also there.
We have artists who wanted to work.
You've seen efforts to begin towards like the German thing, but other things as well.
And really some combination of safety measures and I think there are other experiments like the one you mentioned to Germany, but elsewhere as well some combination of safety measures rapid testing and eventually a vaccine will.
We'll bring live concerts back in a big way with a huge amount of pent up demand and a huge amount of pent up supply so I.
We remain quite bullish there is a cost to waiting obviously live nation is.
Burning cash.
Cash flow at weights, but I remain very optimistic about the ultimate team.
Tam there that the market and the ultimate terminal value in fact, I think in many ways. It could be strengthened because sadly other players are not as strong as live nation, and we will probably be able to take advantage of it both in terms of our share and in terms of recruit terms with Andy's artists in the way.
Thanks, Thanks Chase Thanks, Greg I appreciate it.
Thank you and I will take our next question from Peter right now.
From Evercore.
Thanks, Greg.
Thank you.
Thank you Greg.
Obviously, you talked about gold and then doing nothing.
Honestly it.
I understand.
Right noncash.
Hey that you could try to quantify that.
Eight TB can you sort of explain to us how that could be done I'm correct in that game and it didn't get pretty close to 80%, that's something but nothing imminent.
And potato, obviously, you haven't really seen the details of the new Green tea.
The shape that suggested that there is a waterflooding agreement and how the teams are going to be as well that will depend on better operating leverage coupon than the one company.
Any detail on that and.
What that could be profitability going forward would be great.
Thank you.
Oh, great. So thanks PJ for the question. So it is it possible that it done in the correct way.
We might be able to achieve ATP status.
Active trader business status for Sirius XM.
But that would involve some issuance of shares it would involve some hopes and its not guaranteed that we would still get to being an ATP.
The priority, they're getting to the 80.
'cause it really allows upon the conclusion of the tax sharing arrangement with Sirius XM. It allows us to.
Moved capital in a tax free manner up to LLS XM.
Thats really the priority ATP would be kind of nice icing on the cake, but I would note that we are already approaching ATP status.
For example, we already have it at the Braves, we're approaching it a formula one January of 2022, it will become an eight to be so our flexibility there in within Liberty media is pretty good on ATP, you can never happen up 80 bps, but you're not going to commit a natural acts to try and make this won't be comedy TB the priority.
To get to 80.
The.
And I guess I mean, if I understood. The question I figure, it's around the Concord agreement and the split between us and the teams.
And if that's the question yeah, we won't go into I'm not going to be.
Real details on it but but from a high level essentially what our premise was if we can grow the business.
We should.
Receive benefits from growing it if we don't grow the business.
It goes the other way so I think it's an incentive enough ability to.
They get a you know a bit more of the of the upside if we can successfully grow it tickets all done with making sure everybody has a healthier model. When you combine the cost cuts that you guys have with the revenue distribution to every team should be better off but I would guess, we believe and successor should associate formula one.
Thank you Doug.
Thank you and now that they couldn't next question from Ben Swinburne from Morgan Stanley. Please go ahead.
Thank you Greg are we going to get a video monetize at the Liberty Investor Day, [laughter] wipe that out too [laughter].
Dan to fluctuate Cobot Cobot has caused many changes and you may not exactly the same thing, but we try not to disappoint. So we will have something for you don't great. Yeah, Okay I know recently.
As you heard about it maybe if there is [laughter] goodness, Brian answer too.
Okay. Thank you very much.
Yeah I wanted to ask.
Asking Greg going back to the management changes at Sirius XM, Yeah, I think the market Youve been very positive on Gen. James performance over the years I think that's a widely held view of the market seems to be I don't know react with some surprise about Jim's departure Davids departure.
Jennifer Dallas elevation, maybe it was tied to the Howard thing I don't know I was just wondering if you could talk a little bit more about you know you're the chairman of the board there what what if anything will change at Sirius XM.
Going forward under the new team, if anything and maybe just spend a little more time, there and then for chase.
Hopefully this will probably be her last earnings call with us I'm guessing, but would love to hear from you again, if you want to come back [laughter].
Any update on the Miami plans, if I think that that may be on that on the to do list for 22, and if you if it if that's likely do you think you go to 2024 races or how high on the race count is sort of practical thank you Tim.
Okay.
So.
And I I think we were surprised by the market reaction.
And you you know maybe with hindsight, we should have been smarter, but the combination of changing out there.
Proceed to be changing out the CEO and the CFO at the same time.
Plus the overhang of potentially was how were going to sign.
Let's put it in context.
Jim is been with us to see over eight years.
I loved Jim Jim has done an amazing job, but.
But I'll give you I'll tease him and say, there's always been a little bit of a hamlet like aspect because if you've noticed you take in relatively short term extensions and he has rightly said I have other interests I love serious I've done a great job here I'm proud of what's been accomplished but I have other interests, including is racing at Indy and open wheel.
So.
I think this was a natural evolution for Jim and we are likely or sorry, we're blessed to have him stay honest Vice chairman and keep the benefit is expertise. He would also tell you change is good and that.
Ah you know, having Jennifer in a new CEO come in somebody who's both been around a long time, but also had new perspectives will be a positive tempered by some continuity with himself and myself.
So all of those I think Jennifer is absolute natural evolution and you know 18 years experience and has been as close to Jim and around.
The business as long as anybody in his life elevated roles as anybody.
As far as the tenure of David David did a lot of great things David is a very smart guy very able guy.
But it was somewhat of a time for natural change there as well with the changing of the guard. So I think we haven't Sean any very experienced CFO, who knows the entertainment business and will be a great addition, and add new perspective.
And as you know the other overhang as we talked about was the potential to Howard you know lots of people speculating with.
Without a lot of reasons, but nonetheless, speculating that Howard would not renew with Siri you see most of the obviously, we don't have a signed deal but you've seen most of the commentary suggests Howard is likely to retire and I think that's correct.
I wouldn't.
I want to I want to see the ink on paper and I'm sure. We'll you know Howard.
Deserves the right make his own announcement, but most people are forecasting that he is likely to resign.
So I think some of that overhang is now been removed I think the market is get will get very comfortable with the both continuity and Jim I'd like to think myself and the Jennifer for the power that she is he Sean for the addition, they can be and see us resign Howard and a lot of positive things going for it business is doing.
Very well.
Thank you.
HM Okay and on Miami, you know, we're still actively engaged and actually to that conversation with the Dolphin group leadership, a few weeks ago I think both of US you know decided that when the virus issues sort of came to the forefront and the uncertainty associated with it you know we were better off.
Off going a little slower and trying to get to a place where we had a bit more visibility.
Do you know how this is going to play out so.
So I think we're probably as excited as ever about the opportunity in Miami, but I think we felt the prudent thing, but felt the prudent path forward.
<unk> was stuff to make sure we are confident I'm like and we feel pretty good about next year I mean, our early events are all which are the ones. We probably had the most the deepest conversations all seem confident about having.
Having fans and having events that you know, it's not normal feel pretty close to normal. So we are getting great enthusiasm, but no. There's still uncertainty. So I think Fred for a new race, we want to launch in a right way I think we both.
I thought the right thing was to try and.
Yeah sort of go a little slower until we had a little bit better visibility on whether it's in vaccines are treatments are tests or what have you.
And ultimately growing the sport.
In the U.S. is as we've said all along it's not just on a 12 month proposition its a longer term proposition. So I think it's.
More importantly, we do it right then fast and you know the virus. Obviously you know represents yeah. Yeah, yeah, yeah challenges until you have a better sense of itself. So.
So certainly we're still engaged but I think we will.
We will continue to sort of you know monitor the broader environment and see what makes sense to you again you have to.
The move to the next phase.
Thank you.
Thank you and then we take our next question from David Karnovsky from JP Morgan. Please go ahead.
Thank you pick that up on regarding any contracted jump in or reading from a broadcast it sponsors but <unk>.
In fact, I must be allocated for the quarter based on the proportionate races are within maybe comes back there's another <unk>.
Specifically and then should we expect any potential adjustment the contract or maybe be reflected in future years or is everything maybe tie up.
Hi, good morning.
Chase why comment until we take one I'll, let you comment to the degree you'd like on what years that Dan, but if you want Brian when we might be able to help on the quarter allocations.
Well, Brian I'll, let John Yeah from accounting you can go first then I'll I'll add them.
Yeah, I would say you know there's there's a portion that the pro rata effect of Reits is having to embrace.
Versus the 17 for this quarter, but then obviously the promoter revenue stream has been impacted by not having fan and then since we went down to 70 right. There were also some adjustments.
On the broadcast side and then the sponsor specific adjustment.
Related to specific location. So what are those recognized broadcast revenue I think the question is is the broadcast revenue sharing.
I think the things yeah I mean.
Yeah, I think it is largely recognized in the way we would have recognized it which is you know the events are event specific in the broadcast and sponsorships that aren't tied to a vigil races are still spread across all the races. As they come. So I think as you know, it's obviously different calendar, but I think the principles underlying or the sales and and I'd say the impact the impact.
Actually when you look beyond to be our AARP.
[laughter] I cant say, there might work tweaks or something that obviously, we have some things like making hole on sponsorship it largely the issues. We've dealt with this year, if theyre not issues that.
You know that a predominantly fall into subsequent years, so it's not completely but yeah, but largely the issues are ones. We've taken this year.
One of our core objectives, why this and I think we said before you know sort of whether we helped me. We believe in 2021 were pretty well positioned but as we get past the virus and if you had the business as we know it was before the virus.
So our goal has been to absorb the change is short term and protect the business.
As it should be and it would be in the ordinary course long term. So I guess there is none but that was you know there are some tweaks here and there are some things that you know.
The deal with but it's by and large issues, we dealt with this year.
Okay, and then I'd be careful understandably, they hinton livestream idle DP you to you know maybe a an early step for more digital distribution or is it more of a one off experiment with the platform.
No look I made it and Theres no question. These digital players are going to be a bigger and bigger part of our future and so one of our.
Yeah, you know as you get up increasingly mature broadcast world in a maturing in a pay world and can trillion dollar digital companies that are getting deeper and deeper into content.
Is there an incredibly important part of our future. So we are looking to continue to try and expand.
Those relationships and we've got an array of things we're in active discussions with animal all the key players there about various initiatives to.
Expand and build on whether it's.
You know the.
Events themselves are things around the events the library.
Yes that is an area, we certainly expect such as long term or short term to be an increasing area of activity for us. So it is it.
It is trying to find places we can again, if we could do two things and and build and expand those relationships.
Hi, good.
Thank you well now take our next question from David <unk> from that on that topic on like that.
Please go ahead.
Hey, Thanks, a lot two on one first I was hoping you could tell.
Then on the evolution of the policy should talk last time, you updated you said that there are progressing nicely as the Concorde agreement signing really celebrated the talk in any way and can you maybe frame what you use them, but you should be thinking about in terms of growth or specific opportunities next year.
Then second question just on.
If one operating cash flow for the year you know then.
And im quite negative as indicated through the first nine months, but is there a potential in Q4 to see some of that come back such that the operating cash flow will be all a little bit less severe than what we're seeing today.
So on the sponsor front.
Yeah, we I think as I said on the yen and the in the opening comments you know, we're finishing off where it should be a pretty good place on renewals and I think weve navigated the two issues.
We had to navigate through before getting new ones obviously.
Adjustments for this year and renewals, we're finalizing the one renewal left so I didn't feel good about that I think we feel we've got probably one adjustment to navigate them. When they were still actively finishing up so I think we feel we're in a good place and you know weve actually had great support from our sponsors they have been.
I think we.
Really you know people couldn't feel better about.
The way, we're heading into next year with them and the enthusiasm and support.
Yeah, we are.
Our on the new sponsor front engaged with in a number of key categories that we think are opportunistic made it yeah, I think probably it's fair to say that.
The virus doesn't make those conversations easier obviously to get him here you know you'd like to.
Sit down people face to face you know that it's.
Tough to do you'd like to be able to get it.
To meet and walk through gives a week we are engaging.
People are figuring out how to move forward, we feel good about the interest we'll find out will you will see in the next in the coming in coming months to what degree we can turn some of these into new relationships. So I think we do feel good about the activity.
The uncertainty around the virus, probably again as you know certainly not for the short term you know is something we have to deal with and I think we have to be smart about how do we deal with.
You know.
Yeah peoples, but entities concerns about what you know what what's going to be the impact of the virus and the short term policy.
Positively probably some of the areas. We're most excited about or probably areas that actually are not.
Or in places that are not as impacted by the virus has others sort of things.
Things like travel and hospitality her got much more impacted than tech driven.
We think we are you know we think there are categories that fit our sport that actually have gone if theyve been pretty strong through the through the period of the virus. So we were hoping to that.
Our goal is to.
You know to really continue to build sponsorship as well as the others to them you know him to build on the curve that would have existed.
From pre virus I mean, obviously this year is down because of stuff.
The impact of the virus, but we're looking to get back in the curve that would have been good.
But we would have anticipated and im pretty virus and ER and I don't think you know, it's our perspective is that different I mean, Ben Ben. Thank you Susan and it came in so probably a little awkward Lincoln and literally almost at the virus hit but he's on it's been on the ground based on changes in the team there. So so we've got.
Hey.
It sort of fresh and organization.
And and you know at this point that really picking up speed in terms of some of these commitments. So I think we.
You know we have to continue to battle through the uncertainty around the virus, but.
But you know I think we feel.
Feel good about the reception, we're getting I think it's helped by the momentum in the business I think people. We know from all the partners. The you got the momentum and strength of the business I think the momentum this season.
So we've been able to maintain in the sport have given.
People confidence and.
And.
And excitement about the future I.
Operating cash flow I mean, clearly you know the second half of the year.
<unk>.
In the first half we had just cost so we didnt have revenue and with most of our players you know they be deferred payments. So yeah. So we have a much more.
The cash flow that will will come through and our expenses are more spread across the year on on our end.
The expenses will get will come through and to some degree we probably supported the teams and cash flow Oh on timing of some of the payments and the like so so you know the cash flow will improve for us. This week, obviously deal with more operation center, earning earning money that would have been paid earlier in the year and were deferred until we started racing.
Great. Thanks.
Thank you well now be thinking then next question from trying to steal from credit Suisse.
Right.
Hi, Thanks for taking the question. So this is in reference to how serious happens capital return may change once every reaches the 80% ownership.
Or the summer the former CFO of serious suggested he didnt pay management recommending to the board.
The dividend be significantly increased.
Obviously today, the management and the board look different but Greg once.
Once you do own 80% would you recommend that they change the capital return strategy and if so how would you think a case that this would be in the best interest not serious shareholders. Thanks.
Well I. Thanks for the question, Yeah, I think that the board has seen a chain.
Changing capital strategies over time, we did have a dividend before we buyback at various levels and those will be evaluated in conjunction with management.
As we go quarter to quarter.
Obviously from Liberty's perspective.
Dividends are nice because it allows us to go after the discount.
But we've also had dividend increases for everybody else benefit of everybody else, but I don't think we have a plan or or 10, now and it will be evaluated with management the board dot.
Understood all right. Thanks.
Thank you.
Thank you.
I never take our next question from Brandon Ross from like <unk> <unk>.
Good morning, Good morning, guys. Thanks for taking the crop sales.
Maybe this is for Greg or Chase I wanted to get your perspective on this year's significant decline in sports ratings.
You said one year old one was an exception to that trend maybe why do you think you guys were able to Buck the trend and then what do you think is causing the broader issues and.
There are longer term concern for you.
As the sports rights supplier with the Braves and the Columbia along.
Hi, Chase you want to take a shot and then I'll I'll add or revenue.
Sure if you wanted to Africa.
I guess, let me you know you sort of give a perspective I guess on the you know the two issues I mean broader sports industry and us [noise].
I think on the broader sports industry yeah.
I think probably a couple of things going on.
<unk> impact it.
Some of it was that you know the.
[noise] the overlapping of everything coming started being at the same time.
So as opposed to being spread out you ended up at the end of the NHL the M.B.A. on top of.
And baseball football all on top of each other so.
So I think that.
The competition of these events, you know well with each other for eyeballs.
Yeah, I think you know clearly.
Yeah, Yeah, clearly had a significant impact on the <unk>.
On the events.
And I guess I'd tell you if that's the biggest I mean, if you look at what the public as a site in the public's cited.
To some degree.
You know having fans not fans I take it I think it varied by sports to what degree. It does I guess, if you look at US I think one of the benefits. We have is fans aren't a big part of our television experience none other than the pre race the post race.
Watching a race on TV without fans, there's no crowd, there's no noise. There's no cheering. It's not you know if you don't those things don't aren't.
Part of Yeah Formula one race, so I think that lack of fans to the varying degrees with sports I think to what degree does it take or what does it missed some of the energy the excitement the passion. So I think thats, probably more not as big a factor as the you know the competition <unk> political ad.
Specs as you know the political issues that are sort of the bled into sports I think you know have not been a positive.
I don't know how much I'd say it's up.
You know, it's a you know it's a negative but I think for some fans you know certainly you know the fans at one sports just to be funny, you know and they want to go to it to escape daily life not be reminded of stuff the.
The challenges of.
And the problems of the world they want it.
And you go then I have a good time of their friends and care for their team.
And so I think you know again play not as big an impact, but probably not up you know not a positive and.
Yeah, I think for us.
I think the fact that we you know we were we were probably different makeup baseball with the one sport like US I mean, the other sports got interrupted in the middle and they came back with a condensed sort of you know kind of conclusion to the season <unk> are the virus affected us literally three days before our season started in Australia. They were on the ground.
Australia, So we didnt start and we.
Yeah, we came back with them, we put together a season that we thought you know could engage and excite fans I think we did a good job of keeping fans engaged with social media and other vehicles.
You know going going into it so we could build some momentum.
I think we benefited from bringing them some bringing momentum into this season, but I think in a nutshell I you know I think.
Yep Yep.
If it is a broader question is do I worry about popular.
Popularity of life, you know a little unique live events I actually I really feel quite strongly the world you know Mrs and the worlds.
You know the World you know really wants to reengage with them and I think that.
It was a passion for four or whether its events like ours or other sports events.
I think if anything I think people there is pent up and there's demand that people want to get I think its a.
You know people have talked about what are the what are the long term changes coming coming out of the virus era and one of them I don't know I couldn't believe more strongly as.
They will not be <unk>, it will not impact the popularity you know.
Live events I think if anything there's.
There's an absence of it that is you know that people are longing for and and I think we see that are our partners to add on that are increasingly looking for ways to reengage with fans and with the type of events that we put on.
Well that I think you know I agree with a lot of changes observations protecting.
The lights it up to me you went from a you know no sports too too much sports.
Out of season politic, distracting, both potentially encore and off court with the national election, you know a lot of factors.
How much of that secular and how much of that cyclical how much of the ratings declines are secular or cyclical argue no I would note.
You know I won't you guys quoted our chairman about sports being the bundle that blew the whole the bundle I think that's largely right and I think sports is probably going to have somewhat of a rebound, but how much is secular versus cyclical hard to know.
I would now both of our.
Our particular sports product did pretty well.
I mean, the one at particularly growth early when it probably was less competitive just in terms of how much sports was out there and the Braves had good numbers pretty much all season, partly because we had a good team.
And it's a you know weve had eight over the last several years I think 44% growth in TV audience over the last three years part of that you know driven by a good team and a new stadium and the like the longer term question of how much direct to consumer changes. The mix is a is to be seen we have the benefit of formula.
I want to think of being under monetized on our product compared to many sports and we have the benefit of the Braves being a very large territory relative mode. So you certainly want to think about the impact of those changes, but in both cases I feel pretty good about our situation.
Great and just because you guys have the access to the data in all international markets, probably a little more closely.
Are you seeing similar trends internationally to what we're seeing in the U.S. [noise].
The sports viewership.
Yeah.
Brent Chase I'll, let you go first but I've been I get my sense.
So I guess I mean for US yeah, yeah, but they're probably other factors that are bigger I mean actually yeah, then that trend. So it's a little tough to sort of differentiate what impact. It just a question for already struggling and this year.
He has a significant impact.
In you know Margaret you made I guess, Italy, first and foremost, but realistically you know who they are.
Yeah, there are uniquely uniquely important team I mean, as I said in the comments you know I mean.
Thanks.
Probably one of the things I feel best about us that's achieving their results with a you know where that competition.
Competition that lack the drama at the top you would've liked and you know and lacked an iconic team being as competitive.
As they happen and.
And I think to some degree its you know its why you need to continue to freshman and find different energy, whether it's new tracks or other things to excite.
So, but I think for us it's tough to have you know it that you know I think we you know we went through all that pretty well.
Right you know in some degree because we don't really compete in the same way you know inside the markets I don't.
I'm not close enough to sort of track what does the balloon distillate Doin', Germany, and what is serious due in Italy and in what is now and.
And while that you could do in Spain.
So you know that the.
The international market get so big broad and diverse I, probably the U.S. a little easier to track just you know the sports have you.
More data as you noted its you know to some degree we're.
It's not as directly relevant for us given that we're a global global platform.
Yes, I agree with you made this comment I know you know in much the same way you noted that the lack of.
Ferrari being as competitive as they we might like.
You've heard us mainly from other places. It's also the case you know wouldn't want Alonzo was hot Spain was good win back for stopping it's hot and when he's there you've got you know ratings in the Netherlands, and the like salary. So a lot of this is not only team specific driver nationality specific as well.
Got it thank you guys.
Yeah.
Thank you well now be picking up steam come back seems that from eat I need.
Great and kind of the question.
Okay.
First is just on I think went to India in the car T and Meyer shaken out that you guys made any batsman and their team I. Just wondering if you can talk about the rationale for that investment in another you see an opportunity to work more broadly, but yeah. The racing League.
Yeah.
We did make a relatively small investment Meyer, saying, we did that because.
We're interested in motor sport we are.
Our lucky enough to own the pinnacle of motor sport, but we think there's a lot of opportunity, particularly when you add it grow both formula one and other sports and get a better view a better understanding of how some of that operates to become a player at one level and indycar was attractive to us.
And we got an opportunity to invest with a group, we respect and ER again, not a huge amount of money, but we'll learn something and it will get better and.
Got it and then.
One more if I could I, they're gonna broadcast deals that you did this year you either retain or bought back some of the streaming rights or others, there's right still sit with broadcast partners.
Can you update us on how you think about the importance of owning those digital rights and why you own them in some markets versus others.
Yeah, I wouldn't say the broadcast I mean, yeah broadcasters own them, probably in more places we own them. It's a matter of getting to what degree you know the <unk>.
The way, we you know exploit them is.
You know requires agreements with the broadcasters so they get more so I think it's always an issue to the broadcasters looking for protection from what they consider competing.
Impeding product so so I think in.
In some places it's more a partnership there we have to work with the broadcaster to get him to develop it.
And it really it's deal by deal I mean, you know, it's a you know that.
You know the over the top platform. We said before you know for US is really a way to monetize the most passionate fans who want the distant richest experience. We think that's actually good for us and good for the broadcasters, but they're different buyers got so it takes time to work work through those sorts of things.
Some progress there is a more relaxed it.
Take our core relationships are certainly priority one so.
I think if we can find a way to do anything and expand and build on yeah and build that they know that the digital platform we.
We do it if it becomes you know eight.
A real impediment, we'll look for other ways some of it ends up being.
How big of a deal what are they very insensitive moving parts to it. So so I think it really becomes a part of the larger relationship Directionally I think we continue to want to believe it's up it's up.
It's an important long term dimension to our business that again for sport that has such passionate fans like ours to be able to tap into them. You know I think we have continued to make headway. So we don't want to go to war with broadcasters over it I'd say in general with the renewals. We've done we find we get increasing flexibility and so I think that's more is how do we can.
Can you get more flexibility to exploit this in a way that we can do in a way that works with our broader broadcasters are comfortable with as they grow into a you know a recognition of the digital world is going to be a bigger part of it and to the degree we can monetize it there at benefits all of us in terms of optimizing kind of the.
The value of a consumer out there. So so I think directionally I think we feel very good almost no.
The number of the deals we've done this year.
Yeah, we think we get increasing flexibility to exploit on and better terms.
Yeah that whether its us doing it alone or advanced discussions with broadcasters are we do it in partnership with them. So it's not one where we are trying to change the world in 12 months, but I think overtime you know.
Continue to give us more flexibility.
To exploit all these avenues hum.
Traditional and digital platforms to for our product.
Got it okay. Thanks right.
Well I think this is our last question operator, thank you.
Yes, they've been taking the last question from John thinking from <unk>.
Hi, Thank you.
Congratulations on good financials would backtrack could you just talk a little about how the.
C B a wage agreement discussion might go and how that might affect you going forward.
Well I'm not sure they were great financials, because we'd like you know many others in the baseball world.
Suffered a lot from the lack of in yeah in person fans at events, but I think credit to our management team for making just great adjustments that they did to sustain the business and keeps fan interest.
I think you know the reality is baseball lost a lot of money. This year and then lets fans are in the seats next year it will be.
A challenging business as well.
I'm not really going to comment on CB eight negotiations, but the long term reality must be that if there is not a.
You know as much revenue coming in.
Likely to put pressure on what teams can pay for players that's.
That's it seems like an economic back.
And beyond that you know what I'm sure that will cause tension because players want to get paid as much as they can understandably a the teams are only going to have X amount of resource. So I think there will be challenges around that and we'll see what happens.
Good luck thanks.
Thank you John Thanks, all for joining and we look forward to your <unk>.
Liberty media.
Thanks, guys.
Thank you Jason.
This concludes today's call. Thank you for your participation you may now disconnect.
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