Q3 2020 Liberty Media Corp Earnings Call
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Ladies and gentlemen, thank you for standing by back on because the Liberty Media Corporation plenty plenty Appeals court that earnings calls.
During the presentation, all participants will be in listen only mode. After.
Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press star one on your kinda food.
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, I've already said, we'd like to remind everyone that this call includes certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 actual events or results to differ materially due to a number of risks and uncertainties include.
No as mentioned in our most recent form 10-K, and 10-Q filed with the ITC.
Forward looking statements speak only as of the date of this call and the media expressly disclaims any obligation or undertaking.
Any updates or revisions to any forward looking statement contained herein to reflect any change in liberty Media's expectations with regard there right.
Or any change in events conditions or circumstances on which any such statements. Please.
Today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA and adjusted EBITDA, the required definitions and reconciliations for Liberty media and Sirius XM schedules. One two can be found at the end of the earnings press release issued today, which is available on our website. Please.
Please remember to register for virtual Liberty Investor meeting on Thursday November 19, we will cover Liberty media and with me here, but.
And Friday November 20 will include jury GC I Liberty broadband from 11 am to two PM eastern on both days after the presentation on both days driveline and greatness I, along with presenting Ceos will host the 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 Greg to say Libertys President and CEO.
Thank you and good morning.
Hey speaking on the call. We will also have a woman one's chairman and CEO Chase Carey.
And.
Liberty, Chief accounting 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 cobras lighting Corey.
So let's start with Liberty Sirius XM.
Where we restarted share repurchases during the quarter purchasing 110 million across both our flex time and K shares from August August through October.
He just count stubbornly remains but we will take advantage of that as we can and.
We repurchased sure he looks in 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's served 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 90% of our original projections impressive 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 agenda for which will become the new CEO in January Jim Meyer, who has done so admirably will remain with us as vice chairman.
And Sean Sullivan joined Us as CFO.
The chase 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 paddock.
I'm not going to comment on live nation now because it reports later today.
Turning to the Braves is amazing seasons embrace a quick third third street <unk> title in one and a wildcard handheld 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 great for our team.
Some other notable accolades include pretty Freeman reserved receiving a big named player of the year and nationally outstanding player in the 2020 players Choice 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 N L with an 11 four three aspect ratio to homeruns.
He also had a 19.
Run leadoff home runs in his career continued is the mostly off home runs through players first three seasons in history eclipsing Barry bonds.
Congrats also to Max free.
First Golden glove of his career.
A few battery updates 96% of the battery is open.
And then you couldn't be on hold for today's confidence.
And they sent by is that experience because temporary interruption into this confidence. Thank you for your patience. Please continue to home.
Okay would you like to continue on.
And at the speakers by adding back in <unk> <unk> <unk>.
Okay.
So everybody's on other than the Denver people, Okay I'll continue.
[laughter], Okay never mind okay.
Go ahead.
I don't know, where the where we cut off one James you can tell us how far it got cut off and Brian went like.
So.
Maybe just talk about cash and I'm at the Formula One I think sort of finishing up on the $500 million I think it was actually the sentence would cut off f. ones revolve our $500 million revolver is undrawn with what we like.
Brian given you've got about a few more senses why don't you start with the data formula one Brian repeat that it will be even if it's redundant for if you will.
Got to chase after that okay.
Thanks, hopefully not repetitive, but formula one group had attributed cash and liquid investments 1.4 billion at quarter end.
Which excludes a 139 million in cash of Formula. One total 41 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 of debt at the corporate level.
And just chase just pointed out at one $500 million revolver is undrawn very.
Lastly onto the branch group at quarter end man attributed cash and liquid investments and restricted cash of $240 million and attributed principal amount of debt. So.
114 million the brand's 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 the talk about pharma market today.
Thanks, Brian.
We're proud of the way the Formula one our teams and our partners have managed through this year.
We had three prior 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.
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 the 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're 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 FAA 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 rate 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.
We took this as 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 in Ferrari struggles while so many other sports theyve 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 Youtube 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.
Graduations, the Mercedes setting new boundaries are becoming the only constructor to ever wins seven consecutive constructors titles after.
After Lewis Hamilton's when enabler.
The Eiffel Grand Prix at the Nurburgring marks a return to the podium for Daniel Ricardo and read out a return submitted with another podium and Angela.
This race for the first time in our history, we partnered with you to the stream the entire weekend for fans across selected European markets.
We look forward to continue 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 album 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 the PR ghastly securing is made and when he has joined in the podium by Carlo signs and Lance drawl.
We have to see more of these unpredictable outcomes with the 2022 regulations.
The Paddick has been a flurry of activity with driver changes for time champion Sebastian Vettel did anything indeed find a seat with racing point.
Let's see of other drivers security such as Sergio per as an equal number.
Nico doesn't even have a permanent seat this season, yet as scored 10 points.
As heavy speculation about the new driver lineup from Haas and Netflix is been capturing the drama as they filmed season three of drive 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 you tube Twitch Leah.
As well as broadcast by International TV partners.
With regards to our Twentytwenty results. We recognized early on this was going to be an unprecedented and uniquely challenging year financially.
The most significant impact was 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, where we able to offer a limited product club.
There were significant impacts on sponsor revenue this year, some canceled locations that material local sponsors.
A 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 capture categories. However, we still significant.
We've reached revised agreements with all but a couple of our material commercial partners for 2020.
We approach these agreements for the spirit of partnership in almost all cases, we could have taken a much firmer position, if we simply enforced our contracts as written however, we believe it best to approach these discussions with a 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.
Our 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 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 help the 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 Twentytwenty, two 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.
Greenline 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 at 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 bands that provided experienced close to normal and expect our goal is to be honored.
The television area, we have one material market to finalize and otherwise well position for next years next year. Likewise in our sponsorship category are finalizing our last renewal and actively engaged in a number of new sponsor opportunities.
If the virus does not present plans, we expect 2021, we'll be pretty close to the 2021, we would've 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'll turn it back to Greg.
Great. Thanks, Jason Thanks, Brian.
We hope you all 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 were 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, please press star one to ask a question.
And now we think our first question from Darwin 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 a shift toward electrification by key teams might impact the future participation in F. One and then Greg on the live nation side Thats all in.
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, a two things and then on the Honda.
Honda decision and I think one it was.
From my perspective, largely driven by.
Challenges X.
Economic challenges at them the overall Honda entity.
The auto industry in general is having some challenges and I think Honda clearly.
It is yes.
His living a struggling with those challenges. So I think that gives them yes. The the core issue. There is no question their economics around the engine that we're going to address.
But but I think kind of helped those pressures exist. It today and they had to make some decisions.
On the flip side, we actually.
We're getting.
The increasing support.
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.
I don't know if you saw the where there is a quite a couple of months ago from the CEO of a Volkswagen.
It could have been couldn't have been more positive about where we're going and the importance of us as the platform. So I think as we continue to flush out and put more information out there about our next generation engine to sustainability goals, we are actually getting increasing support and interest.
From both existing partners and potential new partners about the importance of that.
Up 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 you are aware this.
86% of the fans, who had concerts 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 they are among our.
Customers.
Why is also there we have artists who want to tour.
Who 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.
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 while it waits, 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 artist Emily.
Thanks, Thanks Chase Thanks, Greg I appreciate it.
Thank you well now take our next question from TJ Diane from Evercore.
Thanks, Greg.
Thank you.
Thank you Greg.
Obviously, you talked about gold have been doing this and.
Oh understood it.
I understand if done right now.
Non cash.
Hey that you could sort of quantify in HCV can you sort of explain to us how that could be done I'm correct in that game and it's a.
Pretty close to 80%.
But nothing imminent.
And and potato, obviously, you haven't read anything into details on the news.
If we deem that.
The shape that suggested that there is no easy water pulling agreements and how the teams are going to be a bit.
Well that will give us better operating leverage coupon than the one company and any detail on that.
Well that could be profitability.
Well it would be great. Thank you.
Oh, great. So thanks BJ for the question. So it is it possible that it done in the correct way.
We might be able to achieve eightd status.
Active trader business status for Sirius XM.
But that would involve some.
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, because it really allows upon the conclusion of the tax sharing arrangement with Sirius XM. It allows us to move.
Moved capital in a tax free manner up to LS XM.
That's 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 and we're approaching it a formula one January.
2022, it will become an HBP so our flexibility there within Liberty media is pretty good on ATP, you can never have enough atps, but you're not going to commit unnatural acts to try and make this one become an HDD the priority is to get to eight.
Yeah.
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 you know if thats the question.
Yeah, we won't go into I'm not gonna go into.
Real details on it, but yes, but from a high level essentially what our premise was if we can grow the business yeah, 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 as a healthier model. When you combine the cost cuts that you guys have with the revenue distribution every team should be better off but I would guess, we believe its successor should associate formula one.
Thanks, Good luck.
Thank you.
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. That's your day [laughter] life that too [laughter].
Dan to fluctuate.
Oh, good 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.
Please go ahead.
As you heard about it.
[laughter] goodness.
Brian answer too.
Okay. Thank you very much.
Yeah I wanted to ask.
Ask you, Greg going back to the management changes at Sirius XM, Yeah, I think the market Youve been very positive on Jan Jim's performance over the years I think thats a widely held view of the market seems to be I dunno react with some surprise about Jim's departure Davids departure.
Get ever Dallas elevation, maybe it was tied to the Howard thing I don't know I 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 I 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 Nick on the to do list for 22, and if you if it if thats likely do you think you go to 2024 races that how high on the race.
Count is sort of practical thank you.
Okay.
So Dan I think we were surprised by the market reaction.
And you know maybe with hindsight, we should have been smarter, but the combination of changing out perceived to be changing out the CEO and the CFO at the same time.
Plus the overhang of potentially was how are we going to sign.
But let's put it in context.
Jim.
He's been with us to see over eight years.
I Love, 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 on as vice chairman and keep the benefit is expertise. He would also tell you change is good and that.
Ah you know, having Jennifer and 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 you know I think Jennifer is an 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, 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 national change there as well with the changing of the guard. So I think we haven't shown a very experienced CFO, who knows the entertainment business and will be a great addition, and add new perspectives.
And as you know the other overhang as we talked about was the potential to Howard you know lots of people speculating with.
Got 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 are you seeing most of the commentary suggests Howard is likely to retire and I think that's correct.
I would.
I want to I want to see the ink on the paper and I'm sure. We'll you know how it.
Deserves the right make his own announcement, but most people are forecasting that he is likely to be tight.
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 and I'd like to think myself and the agenda for the power that she is he Sean for the addition that you can be entity has resigned Howard and a lot of positive things going forward business is doing.
Very well.
Thank you.
HM Okay and on Miami, you know, we're still actively engaged and actually that conversation with it.
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 going a little slower in trying to get to a place where we had a bit more visibility.
To you know how this is going to play out so.
So I think we're probably as excited as good as ever about the opportunity in Miami, but I think we felt the prudent I think both felt the prudent path forward.
Well just to make sure we are confident 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're getting great enthusiasm but.
No there's still uncertainty so I think Fred for a new res, we want to launch in a right way I think we both.
I thought the right thing was to try and get.
And sort of go a little slower until we had a little bit better visibility you know whether it's in vaccines are treatments are tests or what have you.
And ultimately growing the sport.
In the U.S. as as we said all along it's not up it's not a 12 month proposition its a longer term proposition. So I think it's.
More importantly, we do it right then fast and you have the virus, obviously 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 monitored the yeah, the broader environment and see when it makes sense to you again you have to.
The move to the next phase.
Thank you.
Thank you and now they take our next question from David Karnovsky from Teekay Morgan. Please go ahead.
Hi, Thank you I'll get tied up on regarding any contract congestion or rebates and the broadcasted sponsors but.
Well the impact from the allocated to the quarter based on the proportion of races are where they need to come back as a mother.
Specifically and then should we expect any potential adjustment the contract or maybe be reflected in future years or is everything that any tie up.
In 2020.
Chase Wow, you comment until late Phase 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.
Yes 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 right is having temporary.
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 some sponsors specific adjustment.
Related to specific location. So what are those recognized broadcast revenue I think the question is is the broadcast revenue <unk>, Yeah, I think the things I mean.
Yeah, I think it is largely recognized in the way we would have recognized it which is you know the adventure within specific in the broadcast and sponsorships that aren't tied to a vigil races are still spread across all the races as they come.
'cause, it's obviously different calendar, but I think the principles underlying are the same and and I'd say the impact the impact when you look beyond the AARP AARP.
[laughter] I cant say, there might tweaks or something that obviously, we have some things like making hole on sponsorship at largely the issues. We've dealt with this year, if they're not issues that.
You know that a predominantly fall into subsequent years. So it's not completely but you know, but largely the issues are ones. We've taken this year you know one of our core objectives why is it like we said before you know sort of whether we hope and we believe in 2021 were pretty well positioned but as we get.
Pass 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 you know 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 some things that you know.
The deal with but it's by and large issues, we dealt with this year.
Okay, and then Keith I'd be curious to understand the decision to 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. He's 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.
Pay world and Kim 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 a variety 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.
The events themselves are things around the events the library, but 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.
You know it is trying to find places we can again, if we could do two things and and build and expand those relationships.
Thank you.
Thank you I'm going to take the next question from David Katz from pattern Thats coming from Michael.
Please go ahead.
Hey, Thanks, a lot or two on one first I was hoping you could fill us in on the evolution of the policy should talk last time, you updated you said that there was up nicely.
The Concorde agreement signing really celebrated the talk in any way and.
Can you maybe frame what using but you should be thinking about in terms of growth or specific opportunities next year and then second question just on.
If one operating cash flow for the year you know it's been in quite negative.
I indicated during the first nine months, but is there a potential in Q4, we see some of that come back such that the operating cash flow as well.
Maybe a little bit less severe than what we're seeing today. Thanks.
So on the sponsor front you know.
Yeah, we I think as I said on the yen and the in the opening comments you.
You know, we're finishing off were actually pretty good place on renewals and I think weve navigated. The two issues you know we had to navigate through before getting new ones obviously.
Adjustments for this year and renewals, we're finalizing the one real left so I think 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 were in a good place and you know weve actually had great support from our sponsors they've been.
You know I think we.
Really you know field couldn't feel better about the.
The way, we're heading into next year with them and the enthusiasm and support.
You know we.
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 that it's.
Tough to do you'd like to be able to get it to.
To meet and walk through get so we you know we are engaging.
People are figuring out how to move forward, we feel good about the interest we'll find out we'll we'll 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 up.
For the short term 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.
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 as others sort of you know, obviously things like travel and hospitality her got much more impacted than tech driven.
You know we think we are you know where do you think they're categories that.
Fit our sport that actually have gone if you have been pretty strong through the through the period of the virus. So we were hoping that.
Our goal is to.
You know to really continue to build sponsorship as well as the others to attempt 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 that.
We would have anticipated you know pretty virus and ER and I don't think you know what our perspective is that different I mean, then that you then think as he was in.
It came in so probably a little awkward linkedin literally almost that 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.
<unk>.
Sort of fresh and organization.
And and you know at this point that really picking up speed in terms of some of these commitments, though I think we.
You know we have to continue to battle through the uncertainty around the virus, but oh.
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, you know is that.
So we've been able to maintain in the sport have given.
People confidence and Uh huh.
And excitement about the future I mean 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 didn't have revenue.
I'm with most of our players you know they be deferred payments. So yeah. So we have a much more.
The cash flow that will you know will come through and our expenses are more spread across the year on on our end the expenses will get they'll come through and to some degree we probably supported the teams and cash flow.
You know and 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 operations and are hurting earning money that would have been paid earlier in year that were deferred until we started racing.
Fair enough. Thanks.
Thank you well now be thank you then next question from Brian There's still some crazy <unk> <unk>.
Right.
Hi, Thanks for taking the question. So this is in reference to house here a sex happens capital return May change once every region the 80% ownership.
Or the summer the former CFO of serious suggested he didnt see management recommending to the board.
Dividend be significantly increase.
Obviously today, the management and the board look different Greg.
Once you do own 80% would you recommend that they change the capital return strategy and if so how would you make a case that this would be in the best interest of theory shareholders. Thanks.
Well I. Thanks for the question are you I think that the board has seen a check.
Changing capital strategies over time, we haven't given out before we can buyback at various levels and those will be evaluated in conjunction with management.
As we go quarter to quarter.
Obviously from Liberty's perspective.
The dividends or night, because it allows us to go after the discount.
But we've also had dividend increases for everybody else the benefit of everybody else, but I don't think we have a set plan or or 10, now and it will be evaluated with management and the board dot.
Understood all right. Thanks.
Thank you.
Thank you.
And how they can connect I think sometime down the road from like <unk> <unk> <unk>.
Good morning, Good morning, guys. Thanks for taking the questions.
Maybe this is for Greg or Chase wanted to get your perspective on this year's significant decline in sports ratings.
I used to inform the 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.
Their longer term concern for you.
The sports rights supplier with the Braves and but on the old one.
Hi, Chase you want to take a shot and then I'll I'll add are you sure. If you wanted to Africa.
I guess, let me and I try to give a perspective I guess on the you know the two issues I mean broader sports industry analysts [noise].
I think on the broader sports industry yeah.
I think probably a couple of things going on.
Impacted it.
Some of it was that the you know the.
The overlapping of everything coming started being at the same time now initiative 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 I'd say, except you know that.
The competition of these events you know well with each other for eyeballs you know I think you know clearly.
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, you know without fans and Theres no crowd, there's no noise. There's no cheering. It's not you don't get on those things don't aren't part of a formula one race.
So I think that lack of fans to varying degrees.
With sports I think to what degree does it take off it didn't miss 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.
The political aspects of it that you know the political issues that are sort of the blade into sports I think you know we have not been a positive I don't know how much I'd say, it's up it's up it's a negative but I think for some fans you know certainly.
You know their fans that wants sports just to be funny enough and they want to go to it to escape daily life not be reminded of the challenges of.
So the problems of the world they want to.
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 a you know a lot of positive.
And Oh.
You know I think for us.
I think the fact that we you know we were we were fairly different make up 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 on Australia and they were on the ground.
And in 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 you know going going into it. So we can build some momentum.
I think we benefited from bringing you know some bringing momentum.
Into the season.
But I think in a nutshell I you know I think beyond that.
Yeah. If you if the broader question is do I worry about who you know popularity of life you know a little unique live events I actually I really feel quite strongly the world Mrs and the worlds.
You know the world really wants to Reengage with them.
And I think the.
It was a passion for Ford, 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 as it gets.
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.
They will not be up yeah will not impact the popularity of live events I think if anything.
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.
Fans and with the types of events that we put on.
All 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 holiday.
Tracking both potentially encore and off work 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 of secular or cyclical argue no I would note.
You know I I won't you guys quoted our chairman about sports being the bundle that blew the whole the bundle I think that's right and I think sports is probably going to have somewhat of a rebound of how much is secular versus cyclical hard to know.
I would now both of our.
Our people are sports product did pretty well.
Formula one at particularly growth early when it probably was less competitive just in terms of how much sports was out there and the Grace had good numbers pretty much all season, partly because we had a good team.
And it's a you know we've had a 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 in 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 to smoke. So you certainly want to think about the impact of those changes, but in both cases I feel pretty good about our situation.
Okay, and just because you guys have 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].
With sports viewership.
Yeah.
Brent Chase I'll, let you go first but I've been I get my sense.
So I guess, what it means for us and yes, there 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.
Has the significant impact.
In markets, I mean, I guess, Italy, first and foremost, but realistically you know they are you know.
There are uniquely uniquely important team I mean, as I said in the comments I mean.
I think.
Probably one of the things I feel best about us that's achieving their results with a you.
In a way that topic.
Competition that lack the drama at the top you would've liked and lacked an iconic team you know being as competitive.
As they happen and the.
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 I think for US it's tough to have you know it that you know I think we you know when we went through all that pretty well I 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 international market get so big broad and diverse I, probably the U.S. a little easier to track just you know the sports have.
No more data as you know it's to some degree we're a <unk>, it's not as directly relevant for us given where 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.
Rory, beating its competitive but they we might like probably.
Probably hurt us mainly from other places. It's also the case you know when when Alonzo with <unk>, 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 the lot of this is not only team specific driver nationality specific as well.
Got it thank you guys.
Yep.
Thank you well now be common symptom that seems that from eat I mean.
Great and kind of the question.
I was like Oh the.
First is just on I think one of the India can be cartoon Meyer shaken out that you guys made any batsman and their team.
Just wondering if you can talk about the rationale for that investment and whether you see an opportunity to work more broadly, but you gotta recently.
Yeah.
We did make a relatively small investment my are saying.
We did that because we're interested in motor sport we are.
Our lucky enough to own the pinnacle of motor sports, 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 in a indycar was attractive to us.
And we got an opportunity to invest with a group, we respect and again not a huge amount of money, but we'll learn something it will get better and.
Got it and then.
One more if I could I it.
Doesn't it broadcast deals that you did this year, you're either retain or bought back some of the streaming rights and for others. There's right still sit with broadcast partners I 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 radio broadcasters own them probably in more places.
We own them, it's a matter of to what degree you know the the way we you know exploit them as.
As 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.
Competing products. 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 deepest and richest experience. We think that's actually good for us and good for the broadcasters, but they are different baskets. So it takes time to work work through those sorts of things.
Some progress there's a more relaxed it I think our core relationships are certainly priority one so.
I think if we could find a way to do it thing and expanded build on yeah and builds up you know that the digital platform.
We do it if it becomes a you know a real impediment, we'll look for other ways. Some of it ends up being.
How big of a deal what do they vary in sense of the moving parts to it so and 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 to.
It's an important long term dimension to our business pick 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.
When 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 the as they grow into up 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 the.
To them the value of a consumer out there.
So I think Directionally I think we feel very good almost no.
Number of the deals we've done this year.
You know I think we get increasing flexibility to exploit on and better terms.
Hmm 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 don't.
Continue to give us more flexibility.
To exploit all these avenues traditional.
Traditional and digital platforms to for our product.
Got it okay. Thanks, Greg.
Well I think this is our last question operator, thank you.
Yes, they were taking the last question from John thinking from <unk>.
Hi, Thank you.
Congratulations on good financials with backdrop could you just talk a little about how the.
TV a wage agreement discussion might go and how that might affect you going forward.
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 and events, but I think credit to our management team for making it the great adjustments that they did to sustain the business and keeps fan interest.
I think 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 it seems like an economic back.
And beyond that you know and I'm sure that will cause.
Tension because players want to get paid as much as they can understandably.
The teams are only going to have X amount of resources. 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.
In Liberty media.
Thanks, guys.
[noise] Jason.
This concludes today's call. Thank you for your participation you may now disconnect.
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