Q4 2020 Liberty Media Corp Earnings Call
Ladies and gentlemen, thank you for standing by.
Welcome to the Liberty Media Corporation 2020 year end earnings call.
During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press star one on your telephone keypad.
As a reminder, this conference is being recorded today February 26th.
I would now like to turn the conference over to Courtney Chun Chief portfolio Officer. Please go ahead.
Thank you good morning, before we begin 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 could differ materially due to a number of risks and uncertainties, including those mentioned in Liberty media and most recent form 10-K, oar Liberty media acquisition for them.
S. One registration statement filed with the SEC.
Forward looking statements speak only as of the data for this call and Liberty media and Liberty Media acquisition.
And the obligation or undertaking.
Any updates or revisions to any forward looking statement contained herein to reflect any change in Liberty Media Liberty Media acquisition Corporation expectations with regard thereto or any change of events conditions or circumstances on which any such statement of space.
On today's call, we will discuss certain non-GAAP financial measures for Liberty media and Sirius XM.
Adjusted OIBDA and adjusted EBITDA, the required definitions and reconciliations for Liberty media and the Sirius XM kind of wanted to can be found at the end of the earnings press release issued today, which is available.
Now I'd like to turn the call over to Greg, Let's say in the Cadiz, President and CEO. Thank you Courtney and good morning to all of you.
Today speaking on the call. We'll also have formula one's new President and CEO Stefano Domenicali.
Liberty, Chief Accounting Officer, and principal financial Officer, Brian.
I'd once again like to recognize and thank our management team and employees for the tremendous job. They have done mainly from COVID-19 in difficult circumstances.
Beginning with the Liberty Sirius XM and I know, we continued our share repurchases repurchasing $99 million across the L. A N K shares and the November to January time frame.
As you know all of the discount persists and we repurchased at a looks from price on CRE of about $3 70 per share.
We do expect to continue to take advantage of the discount opportunity in part driven by some recent balance sheet turbines, we have at <unk>.
In November we raised $929 million of a line exchangeable bond at 50 bps to repay our.
Life exchange of a maturing later this year and from the call spread.
Between the Olympics I mean was it originated when we did the reattribution.
In terms of we amended the line margin loans and unencumbered of a substantial portion of our lives equity.
Also after quarter end, we amended our siri margin loan increasing our borrowing capacity from 1.35 billion to 175 day.
Yeah.
Accordingly, we have generated substantial incremental borrowing capacity to go after that discount if we continue to take advantage of it.
On the ownership of series six of them and the <unk>.
January 29 stood at $76 four per cent.
We do expect to get to 80% ownership in this year.
We recently announced a tax sharing agreement between Sirius XM and Liberty Sirius XM.
The Siri Board of directors evaluates capital return strategy every court.
We'll continue to do so at the Liberty gets to the 80% ownership level as we expect later this year.
So let me get serious itself, we welcomed the Jennifer Witz, who assumed her new CEO role in January.
The new car penetration at series of had 80 per cent and the fourth quarter and we have line of sight to get to 82% in 2021.
Sirius XM hardware Who's now one out of every two cars on the road and the number continues to climb.
Ethics net self pay households listening in the digital environment out of the.
The car grew 40% of 2020.
And the Stitcher has the largest share of U S podcast listening audience available for advertisers.
Please make sure you listened to the podcast of the year Office Lady.
Those of you that you have been to our Investor Day, you know how much we loved the office.
Turning to live nation, we continue to have great demand for concerts, perhaps notably the weekend sold over 1 million tickets worldwide for the 2022 tour just one week after of housing the tour clearly there is robust demand as we noted for lot of music.
<unk> also acquired a majority of them, taking beeps, a ticketing livestream platform.
I encourage you to check out the series they have on Rufus Wainwright.
Chairman of the board of trying to the Formula One group.
As I mentioned, we have of new C O there.
Given the Cali of from whom you will hear in a minute.
We are planning for a record 23 races. This year.
Notably the Orange the army is ready to welcome the Dutch G P and local hero Max for stoppage in September of Dashboards.
2020 showed we have ample demand for hosting races, even on short notice from both new and historic tracks.
And now for many of you I haven't seen everything you want to see strained at all why has your get ready to tune in for season three of drive to survive, which dropped on Netflix on March 19th.
In January we introduced Almac the spec.
We raised $575 million back for the largest corporates back to date.
According to the banks, who were involved and maybe they're biased because some of the most oversubscribed stack of all time in the first trade at 13 20 was the highest initial trade for earnings back to day.
Stock has continued to trade well, but admittedly it's been volume.
We are actively in discussion with a number of targets in the TMT space.
The 20 per cent interest and Almac.
Is attributed to the Formula One group.
And I would remind you that the formula One group has committed.
Two for purchase children and $50 million of $10 per unit in connection with the initial business combination of when it occurs.
Turning to the Braves.
We sadly lost some icons of the brands in this off season.
And we'd like to start by paying tribute to the notably fill knee growth kind of.
Of course, thank you.
We started the fund named out for Hank guarantee the $1 billion from the Braves plus $1 million.
Major League baseball and the Major League Baseball players Association to help grow diversity in the baseball.
We are excited about our enhanced 2021 roster of coming off of winning the yet.
At least for our third straight season.
We get resign Marcellus June of two of for your deal.
You May recall, we came within one year, one win rather from going to last year's World series. So our guys are ready to go ready.
For any free freemen coming off of the 2020 N O N V. P of cooling of Albion and more are hungry and ready.
Spring training did start recently on Tuesday, and our first strength spring training game is the Sunday, we expect fans to being of 10 minutes of 25 per cent capacity.
Turning back to the home front, the three ballpark of office tower.
We are near completion at 70% leased.
Kitchen Cook.
And Papa John's will fully occupy their space by the summer of 2021.
97 per cent of the batteries tenants are operational which speaks to the relative openness of Georgia and.
And we believe bodes well for fans of true it this year.
We do expect the have fans from the dance, but they're not yet sure of the seating capacity restrictions.
And we do have significant demand for both tickets.
True it and spring training.
As I noted, we look forward to a great 2021 season, and including hosting the MLB All star game on July 13th.
So with that let me turn it over to Brian for some of our financial results.
Thanks, Greg and good morning, everyone.
Liberty Sirius XM group has taken a number of steps the boost liquidity and strengthen the balance sheet.
For the fourth quarter, we issued $920 million of live nation of exchangeable bonds.
Our live nation margin line unencumbered of substantial I've mentioned equity value of the Spartech Amendment.
Decreasing the shares underlying the loans was $53 7 million for nine months.
Subsequent to quarter end, we amended our Siri margin loan income.
The borrowing capacity to $1 75 billion up from 1.35 billion at your at the borrowing an additional 125 million.
Inclusive of all of this additional margin loan draw the Liberty Siriusxm group had attributed cash restricted cash and.
With investments of $1 1 billion, excluding a $3 million of cash and restricted cash held directly at Sirius XM.
We also had $1 1 billion of Undrawn margin low capacity at the parent level.
Note that approximately $850 million of our cash will be used in 'twenty and 'twenty one to settle the call spread between the Formula One group and the Liberty Sirius XM group and to repay our 2.25 per cent live nation exchangeable bonds.
This value is based on estimates of the fair value or for the fair value of our liabilities at year end.
As of February of 25th the value of the Siriusxm stock held at Liberty Sirius XM group was $19 billion the value of our live nation stock was 6 billion, excluding the value of the lobbies and call spread held at Formula one.
The 370 471 million of year round.
Of $3 2 billion of principal amount of debt against these holdings total Liberty Siriusxm group attributed principal amount of debt of $12 8 billion, which includes $8 6 billion of debt.
The Sirius XM directly.
Formula One group had attributed cash and liquid investments of $1 4 billion, which excludes 265 million of cash held at Formula one.
And sort of Formula One group attributed principal amount of debt was $3 6 billion, which includes $2 9 billion up one, leaving 727 line of the corporate level.
At year end Formula of Formula one $500 million revolver remains undrawn.
At quarter end brakes group had attributed cash and liquid investments and restricted cash of the $185 million and attributed principal amount of debt of 674 million.
We are currently in compliance on all of the covenants across the portfolio.
Of that I'll turn it over for stepping up to discuss the formula one.
Thank you, Brian I'm, sorry, the first of all day and all of it so the equivalent of one thank.
Thank you to Liberty the F. I E. The teams in all of our partners for the World Welcome.
Before I start the one to say chase for his tireless work over the past for years and building a little bit of deflation that gives us the very strong foundation for the growth in the the case that the.
Last year was a challenge for everyone around the globe and everybody uses of the sport felt the impact of the from them.
One of my one delivered what many thought was impossible instead of the races, kolenda delivered safely and with huge enthusiasm from our clients.
72 per sensing if one does improve over the past two years, 68% of BT. That's one is in good hands on the Liberty media.
71% rate their satisfaction with being in that one fan of eight or Ohio for the.
The more funds believe tumor one handled safely the anybody well during the global from dentists with 90 per cent, believing the safety measures put in place to allow races to go ahead and I'll be the handle well, 81% believe in F. One that's communicating well with 10 some of the shut down from 73%, believing that's one of those.
And book the absence of fans of the race as well and 88% feeling positive about the coming due in 2000.
We all continue to do that the gave the challenge of COVID-19 of this year, however that would not preclude us.
For these and opportunities we see in front of US which are number one boot in the drivers of the sense of the last one I they.
And the soul and all of the impossibility sport the level of talent. We have today of the grade is one of the highest that's one of the study and we should celebrate that.
Number two.
Delivering an incredible product the strength in its competition and action on the check into the plenty of three races. This year.
The three enhancing the long term prospect of sport and she wouldn't have the attractive business model for all participants and attract the new protests, but the number for remaining committed to our action two hour of weird. He says one platform for.
Zone sustainability diversity and inclusion and community.
So we have like the 2020, we were the swing the crowd to complete the successful 17 of race season. The last few races brought some new places to podium include in the psyche of GP with Tso said for your pet as cleanly as opposed to the win alongside that's the bulk of the law school at the same time and at the same rate we were relieved to see.
Roman grow John book away from the theory crash.
The link to remain the.
The support teams of the track and improve safety measure in the sport.
Thanks for stopping the secured the window of our last ramping up of W, which kept the very successful season for Red Bull, who placed second in the constructor stamping.
On the financial flows clearly we were impacted by COVID-19, but we're getting the collaboration with our partners to mitigate these impacts.
Due to the reduced number of races duration of the season, the almost no kind of tenders on the Suprisingly prime of revenue declining architects. However, we work with that work for them over because of the extent conflicts. We have mutually agreed the work with certain sponsor for the fan of selected Reits into future years.
The proceeds the agreement with the spirit of partnership and lodging isolated the old construct the input of 2020 the.
The spirit of collaboration together with the ongoing jumbos all of countless leave us well positioned with all of our material of commercial partners are we entering 2021.
For the full season, we are pleased with the reaction from our fans across multiple platforms. We made significant gains the growing social platforms, making us the second fastest growing major sports league until the fall over across the full of major social platform had the major sports such as the NFL NBA P. G H two N W.
Definitely.
We have seen the fastest growth in the digital engagement compared to all of our major sport within the 99 per cent decrease in 2020.
Oh, the T D. Our acreage the oldest for grumpy was $87 4 million very marginally down on 2019, but still higher than the average of 2018.
Compared to February two other major sports with an international footprint. That's excrete of these declining doesn't 'twenty due to the pandemic.
We plan to engage more fans in 2021, and we have set for an exciting 22 races calendar. This includes the addition of Saudi Arabia and much of dissipate the race in net doesn't evidence.
We will navigate the challenges of the pandemic, but I'm pleased with how we have already been working with our partners. We were able to the schedule of Australia later in the year and analysis of it sort of the more than 40 miles of the schedule.
Oh, the compensation with promoters and Ive been causes the since the start of the year and every one of them has made it clear that the events should be going that had the scaffold.
We'd love to welcome back from the track and we'll be working with the local organizing the governments on that approach.
We're also grateful for the of course made by the government to allow formula one to continue to travel to out of events. During the time of global point of time.
Our highly robust safety procedures have proven we can travel and rates safely for the mall, we have evaluated the race weekend with the proposal to try a new type of the sprints weights, Paul because some of the races. In 2021, the result of which would that reminds the grades for the main event from something he's supposed supported by the teams in print.
You pulled out the meeting a few weeks ago, and we will work with them and the FAA to finalize the details of the towards the start of the season.
On the sporting side, we are expecting that excited the season, we'd lose some of the limits say despite the for the unique and he started eighth World Championship, we hope to see Ferrari, we that the old that he's putting the sport.
They have played back and I'm excited for all of the New places in the lines up on the grid for.
For most of the season, we will wonder if by the central patents would find the job of seat and we can wait from seeking pad up with Max of the stop the.
For the cloud of web spectacular 2020 season finished the third the infrastructure spend with the C band the recapture of London noted end up together.
We welcome Aston Martin and iconic brand with a season of the champions Sebastian value beyond the wheel. We also welcomed the retold the but nonetheless, so two of rename the alpine team he's doing well by the way. He told the way these races in the accident and looking forward to see him of the stop of the seasoning of the rate and of course, the world will be watching that.
The the seasonal mix Schumacher the pass.
The last year was momentum fulfillment of the one signing the new Concorde agreement and reaching agreement on the introduction of the cost cap taking effect. This year in 2021 the net.
The major able to COVID-19 related to the to the power of nearly sort of engine.
Demonstration of our collaboration the SBA put them in the one and the teams devoted to free it's probably was developed from the start of 2022 of.
The high level of working group has been established we think who's probably with the manufacturer and food supplier.
As we look to the next generation of the public units for 2025, the key objective of our carbon neutrality.
All of these sustainable two of hybrid power unit significant cost reduction and of course of black from the the rest to the new power unit manufacturers, we believe that the sustainable two of the hybrid engine will be of very attracted all per for the Oems and their portfolios and provides another solution to be able to most of the their car.
Monetization drive across the world.
The very positive feel about these problems of these Ed and I have already had very productive conversations with existing and potential Oems about the direction for one of these moving.
Continuing on this topic, we confirm the we erased as one platform will become viable of piece of the ESG plateau with the three core pillars of the sustainability diversity and inclusion of the community. We are proud of the impact. These plots of him as last year and will continue without what action to push forward as the score.
In the coming weeks I will meet with all of the drivers to discuss with them. Our weird. He says from plans for the sheer the deal included the rollout of our apprenticeship ease the machine and scholarship made up of sport for underrepresented groups and very importantly that heaters road moguls and champions of progress in our sport.
Despite the fans around the world.
We are looking forward to seize them free of drive to survive he'd been nicely as of March 19, the two.
Once again captured all of the drama and story lines of 2020 and Theres No question that she does computer the new parts of the sport.
I can't this question of my excitement for all of the opportunities of football one has in front of us and I look forward to update you on our progress, but please be sure to watch the season opening ramping by range on March 28, and with that once again. Thank the so much I will turn it over to you Greg. Thank you.
Thanks, Brian Thank Stefano.
For our listening audience. We appreciate your continued interest in Liberty media and hope you all staying safe and healthy.
And operator with that I'd like to open the floor of the questions.
Thank you as a reminder, ladies and gentlemen, please press star one to ask a question.
Our first question today comes from Vijay Jayant Evercore.
Thanks, I have two for us.
Greg obviously, the the tax sharing agreement with serious that sort of kicks in the 80% of.
You know obviously you mentioned that the board will decide how capital allocation works both of that moment, but you know given.
Given the flow through will be pretty small.
I think the dividends will be taxed for both of that is there an expectation that we should assume that will shift more towards dividends over buybacks all of our weeks of especially on the path to sort of taking that from the private.
And are there any obstacles sort of on that that is that like the squeeze out of requirement of 90% anything you can share on sort of what happens for the capital equity capital structure sort of post.
The 80% level and second for Stefano Welcome I just.
Wanted to sort of get your perspective, you've been mentioned in the press, suggesting that you're looking for more quality over quantity in terms of the races, and you know obviously you're talking about expenses.
Really think you'd need to change the format of the race weekend of uniquely you know pay practices and making it the biggest Mexico can you just talk about what what do you what do you think of the opportunities to make the rig.
Can't think of events got it thank you.
So I'll go first and chat a little bit about dividends capital allocation and the like.
First of all of it really is the decision of.
For the full board.
You would know correctly that on the margin.
We would probably have a slight tilt towards the dividend, we at Liberty media Liberty Siri compared to where we once were but it's really not that big a tilt while we're looking at the the.
The.
No the discount to.
N of running about just under 28% substantially.
Substantially tightened from the 45 per cent.
When the G M E Lu up.
And you know that we were running more like in the mid to low 30, So we have tightened it.
But that's still quite large compared to even the 7% rate we would normally pay with the D. R D exclude.
Exclusion. So you know I don't think the huge from on the scale for Liberty, we are marginally more of.
Or in of towards dividends, but not massively but that decision is really will be driven by management and the board.
As far as triggers are.
Of that might involve I would say the independent board will have to make their own decisions, but one thing that I think would likely be in the back of their minds of do we get to 90 per cent.
We could do a short form squeeze out merger of the remaining 10%. So some directors Mike you know think about the pace at which we would get to that kind of a number.
But again those decisions really will be made by the full board and.
At some point.
Directors will have voice about ensuring that the minorities of price appropriately protected.
Okay. That's my go to the answer to the question with regard to the format on the on the won't be of thinking into improving some of show first of all of you say that that would of objective is the fly two off for so the people that the come into the events of the people thought the watching TV for the people that are really the signs of pool on some.
Somebody that he's excited so the idea that we have share then I think that the you have to see the great feedback from everyone that in the sport is that the we will try to figure out something that would give us the quantified on Friday Saturday the pinch waste that will determine the the grid the order for the Sunday race. So though it gives the of thrilled of the great we can't that would be.
The beneficial to all of the pop in boats and this is something that we of the trade and with the with the with the themes of the airplane. The next weeks you know the to present the final for months before the top of the seasoning of the rain, but that's the aim of what we have worked with try to do this year in that respect.
Thanks, So much book.
Our next question comes from paying for the Karnofsky of J P. Morgan.
Alright, thanks for taking the question weapons Toronto.
Can you discuss the free zone engine developed and how you think this might impact on track competition and then just maybe expand a bit of your view of the F. One for long term income goals in light of some of the Oems like GM and Jaguar moving toward the all electric vehicles.
Well. Thank you David for the question I think that the what is important to say that that these idea of prison one of it in advance is connected to the new business sustainable approach. The for one of his take you know we will have taken of the shoe with the cost of cats that is related to a certain part of the cost of mentioned that the the other part of it was north of.
But very important was how we can capture the controls of the best when of course I was in the normal business on the public debate the for by Associates of the fact that we would anticipate that the end of the spending your money for the new engine, we will see how we can capture the attention of potentially manufacturer, but also.
Making sure that the once out of the book today out of it. So that's in the future. So we do believe by being the hybrid in the future ease of the.
Exact position does allow you know all of the mother's day two of two of them access to at least for the portfolio. The totally electrification for two to the normal business. So the Florida I think that most of the of putting in place in that respect hadn't carbon neutrality fully sustainable fuels of the center and beat I, but gave us a really great positioning.
Package in terms of Dean overs at the Pinnacle of technology of advanced researching pool of Oman, and making sure that the every walk of benefit from this activity also to wherever the sort of wrote the relevancy extra the activities that can be beneficial to all of the automotive manufacturer and by doing that we're going to have a win win situation and a lot of attention.
Low power the only thing the different way of the only been electric the having the cost control under under the control and of course being the align with our value will be sustainable for the future. So these out of the basic thinking that the we're taking when we decided to go in total of this pump.
Okay, and then I believe there's a number of ways promotion contracts expiring at the end of this year I think the Singapore and the U S. Just wondering how you're thinking about F. One step into these regions versus maybe of adding new way for us. Another flyway markets I think you've mentioned South Africa recently, and then with regards to the Vietnam GP is there any update you can provide.
And whether we might see that rates at some point in the future.
Well, yeah, I mean for sure we're in the great moments because of.
Despite the for them. We have received an incredible number of requests bye bye bye that shows that the F. One of the sense of the interest not totally from the organized drove the over all around the world, but also from the Motorsports commodity for our strategic plan is that to the side first of all of what is the dimension of it.
The races in the year the the comfort that you are mentioning the out of expiring, but the thereafter of discussion of ongoing because of the ones that the weather considering that I really important and the ease of lots of interest to progress in and keep them. You know also in the future we confirm as you said.
As you know that the U S. A is very important and strategic markets for us and the do you ever be able to add another race in the U S. A we have already great Party and the last thing, but we are the looking at for other solutions that are will be very important for us.
What I can see with Vietnam for whatever reason the happened you see we didn't have the race, but for sure that is a matter for east in general that is very important for the stuff you see growth of our business in the future and for sure. That's in there that well be going to exploit the other opportunities for the future.
And if I could just add for Stefan his comments, which I agree with you know we do not have an unusual number of per.
For motor contracts expiring this year of pretty much in any year. You know we have a portfolio for a certain number of get renewed every year. Just like we are of a certain number of broadcast contracts that get renewed every year and in general because we think demand will rise for our sport.
We don't fear that we actually appreciate that because we think theres more opportunity of had been behind.
Thank you.
Our next question comes from Ben Swinburne of Morgan Stanley.
Thanks, Good morning, guys I wanted to ask both Stefano and Greg just a question around the sports rights.
And sort of the the state of the market right now, maybe Europe and U S. You.
You guys had a very successful of at least based on the press reports renewal in Germany with Sky last year, but we've seen you know some of the some of the other deals.
That has happened or happening has gone backwards, you know E. P. L. A the Bundesliga in and at least the press suggests Syria.
The roll back and even in the U S. There's been you know so probably more pension the unusual and Greg obviously with Sinclair and what's going on there and Fox sports is clearly tricky with cord cutting. So maybe can you guys just give us sort of of centers you as you move through 'twenty, one and 'twenty two how are you feeling about your position both with.
For one and the Braves and if you think the market has gotten.
Either more complicated the more challenging than it was a couple of years ago.
That's one of you aren't taking kind of a happy too.
Okay I mean in my opinion the see the wish you are living today is for short of interest for one side, but very very good about the out of it I mean, what we can see that as you know on our business most of the broadcaster partners out of the hugely important for us, but we can see a very good opportunity due to the.
And the and explore of beat for the modem to as I said to be complementary platforms and provide the data collection for the time base both in the OTT world, but these are still the stuff.
And the area that we will for sure give and I are very important the night for the future, but the together I do believe that the eats we're able to attract as we are doing the.
The sport you know the commercial account because they sort of sees there and we need to make sure that the the pool, we have the shape it up for the future give the context to make sure that is the livable to defense and that's why you have a lot of activity connected to make sure. The first of all of course, we don't lose the traditional and am very religious fans, but we need to stick.
The language of the new support of the new fans of the young generation. So we have a lot of programs to make sure that this has happened already this year, so I'm positive about that to be honest.
I agree with Stephane I was comments, but I had income of more if I could then for.
You know we've done a lot over the last few years. Thank you Chase and now thank you Stefano to try and build fan interest in fan excitement and that's better on track competition, that's more balanced field that we as we go into 'twenty. Two that's a lot of ancillary things like fan festivals like programming like drive us from.
Volume all of those building fan interest.
Obviously, the esports component as well.
It's an important component when you obviously Gulf of renewal how much fan interest how much excitement there is.
Probably the most important component is how much competition. There is a lot of potential bidders distributors of your product and candidly you know the best deal, we have probably as our UK deal and it was largely because there were several bidders highly interested in getting a product I do feel as Stefano notes, we have of relative value you have seen.
And some of the other higher cost European alternatives, but if you look on any kind of basis about what the cost per eyeball cost per hour, etc.
If one looks like of relative value.
And I think a sign of bandwidth I'm sure you can appreciate with the rising cost of alternatives like scripted content as that gets more expensive in some ways. It provides the floor on what the value of some of the live sports can be historically of live sports book, So expenses, maybe not quite as much when scripted continues to rise.
So I'm excited about <unk> prospects, but above all we would benefit from increased competition, which is potentially some of the new digital players entering in the estimate and we'll see if we can get them excited I do believe ultimately they will become bidders and that will be the work benefit.
As far as looking back at U S Reits and the Braves.
Obviously, we've had a world where the bundle has caused a lot of overbuy, whether it be for a sport of all kinds of sports programming, including the R. S N and as that bundled breaks there is risk around.
What's the total amount paid two teams will be including the Braves I feel relatively good about the brace.
Contracts for 27 first and secondly, we have a good contract with the far and away not the highest.
Buffalo somebody like the Dodgers, but income.
Contracts, we have the largest broadband households.
So the brands have the largest territory with 12 million broadband households, sort of the Gray you look at digital alternatives from the like we are probably in the best shape.
Compared to many of them to bed.
It is new.
Alternatives horizon of the bundled potentially a weekend.
So tell me what that good luck in the out of at least this sees the thank you. Thanks. Thanks.
Yeah.
Our next question comes from Bryan Kraft of Deutsche Bank.
Hi, good morning.
A couple of questions first can you Greg can you talk about your current expectations for what I'll call. The path to normalcy for your live event businesses looking out over 21 of 22, there's obviously a lot of focus.
The focus in the market by investors on how quickly.
Businesses like these are going to be able to bounce back and you know whether back half of 'twenty, one looks normal or twenty-two looks normal so would just love to get your thoughts on what Formula One live nation, the Braves, what that what that path looks like for them.
And then just quickly on the leverage target for Formula. One can you just remind us what your target leverage ratio is and is there any thought to running that balance sheet more conservatively in the future just given the experience with the pandemic or are you still comfortable with that thank you.
So I'll start on the.
You know the opening it's certainly not binary and top binary of lot of ways, because that's one and the Braves.
Multiple sources of revenue.
As the ones got three big pillars, right broadcast, which was impeded by probably the leading paid less.
In 'twenty, one regardless of the pandemic sponsorship and advertising, which was impeded less in 2020 then the.
Certainly the the fan component part of the promotion component, but again, probably less for 'twenty and 'twenty, one and then fans and we're gonna have a variety of alternatives where fans will be to some degree there and I don't think again, we'll be binary we're not necessarily going to see zero to 100, it'll be somewhere potentially in between so I'm more optimistic as we go.
Go to the ended the year, we're going to get to 100 per cent of capacity.
And the same thing with the Braves multiple revenue streams, both television and.
On the site, but we don't really have is we do have sponsorship it's not as large of a component of it the visit formula one.
I think again not binary.
The expectation is we'll probably start out of 25 per cent Ah I mentioned already the GA is relatively open.
We will be in far better shape from the.
For the fan attendance than if you were in New York, or California, or some other locales.
And it will be decided not by baseball, but by the local rules of authorities.
So the expectation is we will have increasing numbers there.
But again not binary I don't think we're going to go from 25 to 100 in the space of a flip of a switch and obviously live nation.
It doesn't have has obviously advertising and sponsorship doesn't have the broadcast elements of which the most.
The responsive are vulnerable or affected by shutdowns.
<unk>.
Both sides of that is global business really with the potential for very different responses, depending on where you are in the world.
So I think one of the one in particular is preparing for a a.
Our balance sheet that is.
Invincible the whenever it comes and we're fully supportive of that the.
The I do think they will have fans at events. This year of certainly you've already seen some of that and it will grow the announced earnings slightly ahead of expectations I think just yesterday.
Uh huh.
But meaningful efforts there will still be of definitely you know work to be done throughout 'twenty one.
So that's kind of of you know that's probably somewhat of a non answer Brian because we certainly aren't in the crystal ball business exactly but we are in the business of trying to prepare to make sure we benefit when it does open and that we're prepared if that doesn't happen at the rates of pay or change of pace that we would like and I think all three of those businesses are well prepared.
And that sort of trying to the balance sheet question.
I think.
One of the things about being part of the Liberty group as you can we have the ability to.
Hopefully looking ahead and be thoughtful for the benefit of our operating companies.
The.
Formula one balance sheet is very very strong I think the operating levels that we have on of our agreements are fine and I, obviously, they're strong growth of the F. One operating level and then when you look at the cash the flawed level.
It's quite strong so I'm not really worried about the balance sheet.
Great. Thanks for the interest to answer your question of real real quick on the leverage target our stated leverage target on Formula One is five to five and a half times.
And as you recall, we have a our 825 Max leverage has been waived through March 31 of the 'twenty 'twenty two of them and when we bought the business. It had that approaching that eight times leverage of wheat substantially delever. It not only true cash operations generated but we did have a primary equity issuance as well so both of those are.
The reduced the leverage even prior to the pandemic.
Got it okay. Thank you for thanks to the I appreciate it.
Thanks.
Our next question comes from David Beckel of Bahrenburg capital.
It makes a lot of for the question sort of piggybacking on your commentary about reopening I was wondering if you could help us think about a revenue recognition for the promotion side really all of the revenue streams under of a variety of different scenarios. It seems as if the vaccine.
The rollout for.
For the most part is going better than expected in many parts of the world should we be thinking about wage promotion revenue.
In materially affected and each one or is that somewhat protected given the concessions you made last year and the.
And then sort of the follow up for that.
The here your thoughts to the extent you're willing to share on how the team payments structure Manav.
Might affect earnings or EBITDA of one this year, specifically, maybe if you could frame it in the.
And weapons of 2019 levels of.
Your EBITDA level of preaching EBITDA Q2 thousand 19 should we expect marginal upside.
In the court of appeal.
So oh, I think promotion will be still reduced in 'twenty one.
Certainly versus what we would have in the non pandemic here, we will have restricting the audiences.
The fans at some of our events. So I do expect that we're not making a forecast in part because some of this is still off of the air.
Floating around but also because that's weird.
So unless you do.
So how much will be it'll definitely be it.
The amounts of which we will see.
And.
Going forward.
We have with the new Concord agreement, we have a structure, which as we know.
The increased profitability, we have the opportunity to take back some of what historically F. One earn comparatively over the years the rates get a little more attractive for us whether we'll hit that in 'twenty, one given the risks around the pandemic I'm not as confident but in the years going forward as we continue to have a fully healthy business I do believe are.
Our share of the margin will slightly increase Stefano would you add anything.
I Couldnt agree more and I think that the what is important that with the new government. So with the new conquered the agreement with the new.
You know cost control measure you know eats given the sustainability of proof that the allow us the things bigger and this is something that I do believe that these are really the right. The fundamentals the that drives the that's the way both from the commercial point of view and also from the perspective to be part of the sale.
Political championship.
Okay. Thanks, Bob.
Thank you.
The next question today comes from David Joyce of biopsies.
So thank you very much of couple of questions. One on the broadcast side of the of Formula One business for for this year would there be any lingering COVID-19 related impacts or should we think about it as being sort.
Sort of comparable the 20th 19, and grossing up for step ups escalators of number of events.
And then secondly on the briefs with the.
The Sinclair are of sent agreements.
And the this was already touched on a little bit earlier in the call.
Where do you spend with the the with them moving towards having a hybrid over the bottle. The hold is that sort of play into your.
The economics of it work of the due for further fan engagement.
Yeah.
Is that could tie into your sports betting once that becomes something.
Something on the horizon in Georgia. Thank you.
Thank you.
So we expect.
Fairly normal broadcast revenue stream.
And in light of our 23 races now.
Yes.
Crystal ball about exactly how COVID-19 plays out, but our goal was to try and.
Take the pain in 'twenty to the.
Free that we rightly had to make concessions to where some of our broadcasters of encore was as much as possible was to make that of 'twenty event and bring 21 back to normal so that is our open our expectation.
But COVID-19 could change out of just isn't.
And on the.
You know thinking about the R. S ens.
As I said, we have our contract runs of the end of 'twenty seven.
I know Sinclair is trying to do some different things, it's not clear to me exactly what rights Sinclair has to do some of the things that they think they.
They can do or want to do.
There've been some discussions with baseball about the alternatives, but I do not expect of major change.
We can run a full 162 games schedule on a normal pace I would expect we would have normal revenue streams from Sinclair in certainly in 'twenty, one and through the rest of the contract and I you know I.
Whether they're new engagement models that help us from Sinclair and that could be out of it we'll see again I'm not exactly sure what some of the Sinclair thinks their rights are to do some of those things but low.
That's the Micha micha rapidly job.
And just the.
Finally on the Covid impact for <unk>.
For me, a little one and in broad strokes, how should we think about those promotion and sponsorship contracts and the cause of the mix between fixed and variable components is there is there.
General Bill the algorithm, that's baked into the contracts or how should we think about that.
But I think you look most of them are probably do not have triggers.
Any triggers that they do have we will likely be able to meet on the other hand.
Take.
Our partner, who is the large international airline doing.
The basically gets shut down for all point travel you can decide when you're going to be a good partner with them or not for the long term and and that's the power goal. So you know we'll work with them in the way that we appreciate the pay it worked with us during the difficult time.
Alright, thank you.
Thank you.
Yeah.
Our next question comes from Jason Bazinet.
Okay.
Oh, thanks, so much I guess, how the extra liquidity is always a good thing, but I was wondering if there's any color that you might add in terms of these amendments that you did the unencumbered of some of the passive equity Stakes.
Okay.
Something specific that you were that you were looking to do.
For somebody that you have floors at the more just general Optionality.
Well you know, we're in the Optionality and Jason, but I'll, let Ben or in a relatively new treasury answer sure with respect of the Siri margin loan we did do the upsize, but we can't just because of the same billion shares of collateralized in that low end as we had previously under the 135. So we're just maximizing.
Our ability to access dollars.
With respect of life.
It's really a function of what happened in the previous margin loans.
We repaid it and we had a substantial number of shares of all your line of Securities.
The collateral pool, and so when we rightsize the loans of 200 million the appropriately took the amount of shares underlying that.
The next close for a realistic LTV for a bunch of them.
Okay I understand thank you.
The next question comes from John Tinker of Gabelli.
Thank you.
That's terrific numbers in the battery and the price.
Unfortunately, the things get a little losses, given most people focus on <unk> do you have any.
Would you ever consider in any way highlighting the valuation of the let's see.
The property in a different way.
John when we have great analyzed like you're writing up the value for us we don't need anyone of them were come on that's Uh huh.
I think you're right there is value in the battery is impressive.
And it's a function both of Georgia being a relatively open places we've noted and I think really the great job that the bridge management team has done to create the secure environment.
One where people are willing to come in and it's open as.
Doing well.
We I'm you know I'm not sure of it we're going to create a tracker or do something different around that but we'll try and make sure. We highlight appropriately that there is value in the battery and our real estate development. Thank you.
Thanks.
Of the final question today comes from Matthew Harrigan of benchmark.
Oh, thank you.
Even though our formula one probably generates more data than any of the sport.
Concert either of you.
Where else of Intel and Qualcomm It was really under dissolved in the under the.
The answer on the scene with Bernie you got a lot of successes universal free on pre email I think you've got a lot of loud too maybe having more low.
The angles and all of that in the cameras and the races. The rest.
The only but could you talk about the potential bidder and how you see that developing it feels like you've made some strides but they're still of lot of the headroom in terms of what you could do on the on the T V sort of in the video game side. Thank you.
Yeah, No I think that's a great point, Matt if you think about.
The.
And evolving world of.
Where we have created sort of.
On the sort of the broadcast side, where we have potential for increased digital players.
Players the number of cameras, we have the angles, we have your ability to dial up the angle you won that really plays perfectly to the strength of those kind of different players and different kind of straight linear.
So I think we are of sport.
Benefit from that increased attention on the digital side in terms of viewing.
Different experience and one of the Phantom Taylor I think you could see that opportunity and it will be great.
The other point is that all of that data proprietary data. We have begun we began to take advantage of through our contract with IFC that did not turn out as well as we'd like but as we go forward and look at the opportunities around that I do believe there is quite a lot around gambling around spanning formation.
And that is valuable and that we are in a very strong place relative to most sports because of the amount of data and the amount of which of the proprietary so I think on both sides of the huge asset.
Thanks, Greg.
Thank you.
So with the operator I think we're done thank you to our listening audience for your continued interest in Liberty media and we look forward to speaking with you again next quarter if not sooner.
Ladies and gentlemen that concludes today's conference call. The thank you for your participation you may now disconnect.
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