Q4 2020 Liberty Media Corp Earnings Call
Ladies and gentlemen, thank you for Scott in Dubai.
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.
At that time, if you have a question. Please press star one on your telephone keypad asked.
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 and good morning, before we begin we'd like to remind everyone. On 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 the most recent form 10-K on Liberty media acquisitions for them.
One of the registration statement filed with the SEC. These forward looking statements speak only as of the date of this call and Liberty Media Liberty Media acquisition of expressly disclaims any obligation or undertaking the 70.
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 there or any change of events conditions or circumstances on which any such statement is based on today's call. We will discuss certain non-GAAP financial measures for Liberty media and Siriusxm.
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Adjusted OIBDA on an adjusted EBITDA, the required definitions and reconciliations for Liberty media and the Sirius XM. The kind of wanted to can be found at the end of the earnings press release issued today, which is available on.
Now I'd like to turn the call over to Greg, Let's say in the trees 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 Wendling.
I'd once again like to recognize and thank our management team and employees for the tremendous job they have done meaning for COVID-19 in difficult circumstances.
Beginning with Liberty Liberty, Sirius XM and I know, we continued our share repurchases repurchasing debt.
$9 million across the Olympics of NK shares in the November to January time frame.
As you know all of the discount persists and we repurchased at a look through price of 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 L. S next time.
In November we raised $929 million of a live exchangeable bond at 50 bps to repay our.
<unk> of exchange the whole maturing later this year and from the call spread.
Between the Olympics I mean, one that originated when we did the reattribution.
In terms of if we amended amended the wide margin losses and unencumbered the substantial portion of our lives equity.
Also after quarter end, we amended our siri margin loan increasing our borrowing capacity from 135 billion to $1 75 day.
Yeah.
Accordingly, we have generated substantial incremental borrowing capacity to go after that discount we continue to take advantage of it.
On the ownership of series six as the.
The January 29 stood at $76 four per cent.
We do expect to get the 80% ownership in this year and we recently announced a tax sharing agreement between Sirius XM and Liberty Sirius XM.
The series of Board of Directors evaluates capital return strategy every quarter and we'll continue to do so if the liberty get to the 80% ownership level as we expect later this year.
So looking at series of itself, we welcomed the Jennifer Witz, who.
Assumed her new CEO role in January.
The new car penetration.
The series had 80 per cent in the fourth quarter and we have line of sight to get to 82% in 2021.
Sirius XM hardware is now one out of every two cars on the road and the number of continues to climb.
Ethics himself paying households listening in the digital environment out of the car grew 40% in 2020.
And stitcher has the largest share of U S podcast listening audience available for advertisers.
We do make sure you listened to the podcast of the year of office Lady.
Those of you that you have been to our Investor day as 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 its 2022 for just one week after of housing the tour flow.
Literally there is robust demand as we noted for live music.
<unk> also acquired a majority of taking beeps, a ticketed livestream platform.
Current you to check out the series they have on Rufus Wainwright.
Terminate the turning to the Formula One group.
As I mentioned, we have of new sealed air of.
Stefano just mccallion 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 Arab Max for stop it in September of Dashboards.
'twenty 'twenty showed we have ample demand for hosting races, even on short notice for both new and historic tracks.
And on for many of you have seen everything you want to see streamed online as you get ready to tune in for season three of drive to survive, which drops on Netflix on March 19th.
In January we introduced Almac the spec.
We raised $575 million, that's the largest corporates back to date.
According to the banks, who were involved in making their bias because of the most oversubscribed back of all time in the first trade at 13 20 was the highest initial trade for earnings back to day Star.
<unk> has continued to trade well, but admittedly on thin volume.
We are actively in discussion with a number of targets in the TMT space.
The 20% interest in Almac.
Is attributed to the Formula One group.
And I would remind you that the formula One group has committed.
Two for purchase children of $50 million of $10 per unit in connection with the initial business combination when it occurs.
Turning to 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 and of course. Thank you.
Yeah.
We started the fun day for Hank guarantee the with $1 million from the break is plus $1 million.
Major League baseball and the Major League Baseball players Association to help grow diversity in baseball.
We are excited about our enhanced 2021 roster of coming off of winning the at least for our third straight season.
Did resign Marcellus moving up to a four year deal.
As you May recall, we came within one year, one win rather from going to last year's World series. So our guidance are ready to go for any free freemen coming off of the 2020 and O N V. P of Cooney lbs, and more are hungry and ready.
Spring training just start recently.
On Tuesday, our first strength spring training game is the Sunday, we expect <unk> to be the attendants at 25 per cent capacity.
Turning back to the home front, the three ballpark of office tower.
We are near completion of 70% leased.
Kitchen Cook.
And Papa John's will fully occupy their space by the summer of 2021.
97% of 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 in the dance, but are not yet sure of the seating capacity restrictions.
And we do have significant demand for both tickets.
The truest 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.
The Liberty Siriusxm group has taken a number of steps to boost liquidity and strengthen the balance sheet.
On the fourth quarter, we issued $920 million of live nation of exchangeable bonds on them.
Our one nation margin on unencumbered the substantial live nation of equity value of as part of Amendment.
Decreasing the share of underlying below the $53 7 million for the 9 million.
Subsequent to quarter end, we amended our Siri margin loan income.
The borrowing capacity to $1 75 billion up from 1.35 billion at year end.
Borrowing an additional $125 million.
Inclusive of this additional larger loan draw on Liberty Siriusxm group had attributed cash restricted cash and.
With investments of $1 1 billion, excluding the $83 million of cash and restricted cash held directly at Sirius XM.
We also had $1 1 billion of Undrawn margin loan capacity of the parent level.
Note that approximately $850 million of our cash will be used in 2021 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 of exchangeable bonds.
This value is based on estimates of the fair value or the fair value of liabilities at year end.
As of February 25th the value of the Sirius XM stock held at Liberty Sirius XM group was $19 billion and the value of our live nation stock was 6 billion, excluding the values of audition call spread held of Formula one.
The 370 471 million of year round.
We have $3 2 billion of principal amount of debt against these holdings total Liberty Siriusxm group attributed principal amount of debt was $12 8 billion, which includes $8 6 billion of debt.
The Sirius XM directly.
Formula One group had attributed cash and liquid investments of one point for billing, which excludes $265 million of cash held at Formula one.
The total in total of Formula One group attributed principal amount of debt. The three 6 billion, which includes $2 9 billion and up one 727 million of the corporate level.
At year end Formula of Formula one $500 million revolver remains undrawn.
At quarter end Braves group had attributed cash and liquid investments of restricted cash of 185 million on attributed principal amount of debt of 670 for Matt.
We are currently in compliance of all of that covenants across the portfolio.
With that I'll turn it over the seven of the discuss Formula one.
Thank you, Brian I'm free the first of all the none of it so the promo one.
Thank you to Liberty the S. I E. The teams in all of our partners for the World Welcome.
Before I start the want to thank Jay 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 case of head.
Last year was a challenge for everyone in the around the globe and everybody's on the sport felt the impact of the from debt.
For more of one delivered what many thought was impossible instead of the theme of races, Kolenda delivered safely and with huge enthusiasm from our expense.
72% zinc F. One of those improve over the past two years since the 8% believed that one is in good hands on the Liberty media.
71% rate they have satisfaction with being in that one cent of eight or higher for the.
The more funds believes Pune, one hand book each safely very very well during the global from Dennis with 90%, believing the safety measures put in place to allow races to go ahead and I'll be the handle well, 81% believed in F. One that's communicate well with the turns during the shut down from 73 per cent, believing that's one of those.
Handbook, the absence of fans of the race as well and 88% feeling positive about the command during 2000.
We all continue to see 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 the drivers of the sensitive for US one of the.
<unk> represent the soul and I'll be a basket of the sport the level of talent. We have today on the grade is one of the highest that's one of the history and we should celebrate that.
Number two.
Delivering an incredible for all the the things than its competition and action on the track, including 23 races. This year.
On the three enhancing the long term prospect of sport and shoot them at the attractive business model for all participants and attracting new protests, but the number for remaining committed to our action two hour rates of one platform focused on sustainability diversity and inclusion and community.
So we reflect on 2020, we were the sweeny proud to complete the successful 17 of race season. The last few races brought some new places to podium include in the psyche of G. P was so central Paris, mainly as opposed to the win alongside that's the other corner of lost tool at the same time and at the same rates, we were relieved to see.
The Roes young book away from the theory crash.
When two of man.
Support teams on the track and improve safety measure in the sport.
Most of the stop in the secured the window of our last ramping up the Derby, which capped the very successful season for Red Bull, who placed second in the construct of standing.
On the financial front, clearly we were impacted by COVID-19, but working in collaboration with our partners to mitigate these impacts.
Due to the reduced number of races duration of the season, the almost no fan attendance on Suprisingly prime of revenue declining a little bit of Texas. However, we worked with other promoters of the extent conflicts. We have mutually agreed the work with certain sponsor for the fab selected Reits into future years.
The first of these agreements with the spirit of partnership and lodging isolated the old kind of just the impact 2020, the spirit of collaboration together with the ongoing filmless overcomes the leave us well positioned with all of them on material 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 in several of the call over across the full of major social platform ahead of major sports such as N. S. L. M. D. P. G a tour of endeavor.
Many of them do it.
I've seen the fastest growth in the digital engagement compared to all of them. They just reported within the 99 per cent decrease in 2020.
On the T V. Our acreage all of this for Grumpy was $87 4 million very marginally down on 2019, but still higher than the average of 2018.
Compared to 72 other major sports with an international footprint, that's excluding the decline it doesn't 'twenty due to the pandemic.
We plan to engage more fans in 2021, and we have set for it on an exciting 22 races. Coloring book. This includes the addition of Saudi Arabia and much anticipate the race in net done that difference.
We will know the gave the challenge of the from then but.
But I'm pleased with how we have already been working with our partners. We were able to the stable Australia later in the year and announced it with sort of the more than 40 miles of the schedule.
Total compensation with promoters have been positive since the start of the year and every one of them has made it clear that the events should be going the I had the scaffold.
We'd love to welcome first back on the track and we'll be working with the local organizers on governments on that approach.
We are also grateful for the of course made by the government to allow formula one to continue to travel to other events. During the time of global current time, our highly robust safety procedures have proven we can travel and rates safely. Furthermore, we are evaluating the race weekend with the proposal to try on this.
Top of the screen trades per month of some races in 2021 the risk.
Both of which would that reminds the grades for the main events on Sunday.
For supported by the teams in principle of the meeting a few weeks ago, and we will work with them and the FAA to finalize the the stage before the start of the season.
On the sporting side, we are expecting other exciting season, we'd lose some of the limits say despite the for the unique and he started the eighth World Championship, we hope to see Ferrari, we that old day, he's doing the sport.
They have played back and I'm excited for all of the new faces in the lines up on the grid.
For most of the season, we were wondering where the central patents would find the draw the seats and we can't wait to see him pad up with Max of of stopping the.
Cloud and web spectacular 2020 season finished the third of infrastructure spending with the C band the Ricky I'll do a London noted on up together we.
You're welcome Aston Martin and iconic brand within the season of the champion of Sebastien Bell at the end of wheel. We also welcomed the total number of loans so to rename the alpine team he's doing well by the way you pull the way. These recent accidents and looking forward to see him of the stop of the season in the rate and of course, the world will be watching the may.
The seasonal mix Schumacher the pass.
The last year was momentous for Puma, the one signing the new Concorde agreement and reaching agreement on the introduction of the co step taking effect this year in 2021.
The next major able to COVID-19 related to the to the power of generally sort of engine.
<unk> of our collaborations the play.
They put them in the one and the teams devoted to free it's probably use the development from the start of 2022 on.
High level. The working group has been established we think who's probably with the manufacturer and supplier.
We looked at the next generation of the public units for 2025, the key objective of our carbon neutrality truly sustainable to us hybrid power unit significant cost reduction and of course attract the rest to the new power unit manufacturers, we believe that the sustainable tool of the hybrid engine.
B of very attractive the output for the Oems and their portfolios and provides another solution to deal to most of the their carbonization drive across the world I feel very positive about these problems of these EDA and eveready have very productive conversations with existing and potential Oems about the direction for one of these moving in.
Continuing on this topic, we confirm the we erased as one platform will become a little piece of the ESG platform with the three core pillars of the sustainability diversity and inclusion in the community. We are proud of the input. These plots of him as last year and will continue without what action to push forward.
As the sport.
In the coming weeks I wouldn't meet with all of the drivers to discuss with them. Our weird. He says we're on plans for the sheer the deal included the rollout of our apprenticeship internship and scholarship at other sport for underrepresented groups and very importantly that heroes role models and champions of progress in our sport inspired.
Fans around the world.
We are looking forward to seize them free of drive to survive hidden message on March 19.
We once again captured all of the DRAM and the storylines of 2020 and Theres No question. Betsy. This continues with the new parts of the sport.
I can't express enough my excitement for all of the opportunities for one that has in front of us and I look forward to update you on our progress, but please be sure to watch the season opening Grumphie Bahrain on March 28, and was that once again, thank the so much of which only over to you Greg. Thank you.
Thanks, Brian Thank Stefano.
Our listening audience. We appreciate your continued interest in Liberty media and hope you, all staying safe and healthy and.
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 Sirius.
That's sort of kicks in the 80%.
You know obviously you mentioned that the board will decide how capital allocation works both of that moment debt.
Given the flow through would be pretty small and.
Thank you of dividends will be taxed for both that is there an expectation that we should assume that we'll ship more towards dividends or buybacks for a lease.
We are on a path to sort of taking the come to the private and other any obstacles sort of on that path is that like the squeeze out of refinement of 90% anything you can share on sort of what happens for the capital equity capital structure sort of post.
The 80% level in the second bullet Stefano welcome.
I just wanted to sort of.
Get the of perspective you'd been mentioned.
You mentioned in the press, suggesting that you're looking for more quality over quantity in terms of races, and obviously, we're talking about expenses, you really think you'd need to change the format of the race weekend of uniquely.
The pay practices and making the the biggest tactical can you just talk about what you think of the opportunity to make the weekend of pick other event of got it. Thank you.
So I'll go first and chat a little bit about dividends capital allocation and alike.
First of all of it really is the decision of the full board.
You would note correctly that on the margin.
We.
We'd 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 of tilt, while we're looking at the the.
No the discount.
NAV running about just under 28% substantially tightened from the 45 per cent.
On the G M E Luo.
And we were running more like in the middle of 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 exclusion.
Exclusion so I don't think the huge from on the scale for Liberty, we are marginally more of.
Or end of towards dividends, but not massively but that decision really will be driven by management and the board.
As far as triggers.
That might involve.
I'd say the independent board will have to make their own decisions, but one thing that I think would likely be in the back of the minds of do we get to 90 per cent.
We could do a short form squeeze out merger of the remaining 10 per cent. 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 at the end.
End of directors will have voice about ensuring that the minorities and price appropriately protected.
Okay. That's my go to to 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 try to offer to the people that the come into the event to the people that are watching for the vision for the people that are really sounds of approval on some.
Some of that he was excited so the idea that we have share then I think that the we have received great feedback from everyone. In the sport is that the we will try to figure out something that would give us the quantified on Friday Saturday the spring twice the will determine the the grid order for the Sunday race. So, though it gets the thrill of the great we can't that would be.
The beneficial to all of the pontoon boats and this is something that we have the same thing with the with the with the themes of the airplane. The next few weeks at the other two presented the final for months before the top of the seasoning of the range, but that's the aim of what we are what we try to do this year in that respect.
Okay. Thanks, so much growth.
Our next question comes from David Karnofsky of J P. Morgan.
Alright, thanks for taking the question of weapons Toronto.
Can you discuss the freeze on the engine development and how you think this might impact on track competition and then just maybe expand a bit on your view of 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 that for one of his take you know we will have taken on this year with the cost of cats that is related to a certain part of the cost of mentioned the theme. The other part of it was the north.
Bacci about very both of US how we can capture the control of the investment of course as in the normal business on the power of units the for the buyer associates of the fact that we would anticipate for the end of the spending your money for the new engine, we will see how we can capture the attention of potentially manufacture but also.
Making sure that the ones that the book today I think the that's in the future. So we do believe by being the I bridge in the future is the.
The exact position that will allow all of the monies back two or three of them. That's just what the sort of portfolio Latonia certification for 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 position in.
Some of package in terms of being Oh visit the physical the technology of advanced research and put them on and making sure that the everyone can benefit from these the activity also two other sort of of wrote the relevancy extra the activities that can be beneficial to all deal to most of the money factor and by doing that we're gonna have a win win situations of lots of attention.
On the power of 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 besides of the basic thinking that the we're taking when we decided to go in total this balance.
Okay, and then I believe there's a number of ways promotion contracts expiring at the end of this year I think Singapore on was just wondering how you're thinking about F. In today's region versus maybe of adding new way for us and other flyway markets I think you've mentioned in South Africa recently, and then with regards of the Vietnam GP is there any update you can provide on.
On whether we might see that break at some point in the future.
Well, yeah, I mean for sure we are in the great moments because of.
Despite the pandemic, we had received it on an incredible number of requests bye bye bye that shows that the F. One of the sense of the sort of no totally from the organizer of the Oh all around the world, but also from the Motorsports community. The four of our strategic plan is that to the side first of all what is the rate that I mentioned in terms of.
The races in the year the the comfort that you are mentioning the Arctic spotty, but the debt out of discussion on ongoing because of the ones that you were considering that are really important and there is a lot of interest to progress in and keep them. You know also in the future we confirm.
As you know that the U S. A is very important and strategic markets for us and the.
We have of the Ainsworth another race in the U S. A we have already great partner and the most of them, but we are looking at for other solutions that are would be very important for us.
What I can see with Vietnam for whatever reason the happen D. C. We didn't have the race, but for sure that is a matter for east in general, but is very important for the strategic growth, although the business in the future and for sure. That's an add on where we're going to exploit the other opportunities for the future.
And if I could just add the stefanos comments, which I agree with you know we do not have an unusual number of promoter 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 there's more opportunity it had been behind.
Okay.
Our next question comes from Ben Swinburne of Morgan Stanley.
Thanks, Good morning, guys I.
I wanted to ask both definitely on 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 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 have happened are happening have gone backwards, you know E. P. L. A the Bundesliga and the at least the press suggests Syria.
The roll back and even in the U S. There's been some of them probably more tension 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 sensors 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.
Even more complicated the more challenging than it was a couple of years ago.
I'm proud of you aren't taking kind of on happy too.
Okay, I mean in my opinion of the see the ratio of ligand today. It is for sure the interest for one side, but very very good about the other I mean, what we can see the as you know on our business most of the book Custer partners out of the hugely important for us, but we can see all of them very good opportunity to do two <unk>.
And the and explore the beat to the modem to as I said to be complementary platforms and provide the data collection for the fan base both on the OTT World that these the steel or something on.
On the area that we will for sure give and I are very important the night for the future, but the to be honest I do believe that the eats we're able to attack as we are doing the.
The sport you know the commercial account because they used the rest is bad and we need to make sure that the the pool, we have the shape it up for the future give the complex to make sure that is the livable to defense and that's why we have a lot of activity connected to make sure. The first of all of of course, we don't lose the traditional and very religious fans, but we need to speak.
The language of the new support that 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 on that to be honest.
I agree with Stephane I was comments behind on a couple 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 Stefano to try and build fan interest in fan excitement and that's better on track competition, that's more balance field that we as we go into 'twenty. Two that's a lot of ancillary things like fan festivals like programming like drive the server.
All of those building fan interest.
Obviously, the esports component as well.
As an important component when you obviously the Gulf of renewal how much fan interest how much excitement of it.
Probably the most important component is how much competition. There is among 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 theaters 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 eye of all cost per hour et cetera.
One it looks like on like a relative value.
And I think a sign of Penn, which 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 would be the word benefit is.
As far as looking back of U S rights on 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 bundle breaks there is risk around.
What's the total amount paid two teams will be including the Braves I feel relatively good about the Braves are contracts of 27.
The first and secondly, we have a good contract with the far and away not the highest.
Hello somebody like the Dodgers, but in contrast, we have the largest broadband household audience. So the braves half of the largest territory with 12 million broadband households, sort of the gray you look at digital alternatives on the like we are probably in the best shape.
Compared to many of them.
And if it is new.
Alternatives arrived on the bundled potentially a weekend.
So tell me what that good luck on the at least this are the seeds of thank you. Thanks. Thanks.
[laughter].
Our next question comes from Bryan Kraft of Deutsche Bank.
Hi, good morning.
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 'twenty, one and 'twenty two there's obviously a lot of.
The focus in the market by investors on how quickly.
The businesses like these are going to be able to bounce back and you know weather.
Half of 'twenty, one looks normal or twenty-two looks normal so would just love to get your thoughts on 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 net balance sheet more conservatively in the future of just given the experience with the pandemic or are you still comfortable with that thank you.
So I'll start on the.
The opening is certainly not binary and it's on.
Binary of lot of ways because debt.
That's one and the Braves, we have multiple sources of revenue.
As the ones got three big pillars, right broadcast, which was impeded, but probably won't be needed less.
In 'twenty, one regardless of the pandemic sponsorship and advertising, which was impeded less in 2020 than than certainly the the fan component part of the promotion component, but again, probably less of 'twenty and 'twenty, one and then fans and we're gonna have a variety of alternatives where fans will lead to some degree.
Free there and I don't think again it'll be binary we're not necessarily going to see zero to 100, it'll be somewhere potentially in between.
More optimistic as we go to the end of the year, we're going to get to a 100 per cent of capacity.
And the same thing with the Braves multiple revenue streams, both television and.
On site, but we don't really have is we do have sponsorship it's not as large a component of it is at the formula one.
I think again not binary.
On the expectation is we'll probably start out of 25 per cent.
I mentioned already the majority of is relatively open.
We will be in far better shape from.
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 on 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.
Obviously live nation.
It doesn't have has obviously advertising and sponsorship doesn't have the broadcast elements of what's the most.
Sponsor of our vulnerable or affected by shutdowns.
Yeah.
Offset to that is global business really with the potential for very different responses, depending on where you are in the world.
Ah I think formula one in particular is preparing for a a.
A.
Our balance sheet debt is.
Invincible the whenever it comes and we're fully supportive of that 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.
But meaningful efforts there will still be up definitely you know work to be done throughout 'twenty one.
So that's kind of on you know that's probably somewhat of a non answer Brian because we certainly aren't on 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 they were 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 turning to the balance sheet question, you know I I.
Thank God.
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, there for strong growth of the F. One operating level and then when you look at the cash the flawed level is.
It's quite strong so I'm not really worried about the balance sheet.
Great. Thanks for the just the 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 2022 and when we bought the business. It had that approaching at eight times leverage and we substantially delever on 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 of the pandemic.
Got it okay. Thank you thanks for you, but I appreciate it.
Thanks.
Our next question comes from David Becker of Fernberg capital.
It makes a lot of for the question sort of piggybacking on the 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 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.
Being materially affected and each one or is that somewhat protected given the concessions you made last year and the.
Then sort of of the follow up to that I love to hear your thoughts to the extent you're willing to share on how the team payments structure.
Might affect earnings or EBITDA of one this year, specifically, maybe if you could frame the.
And weapons of 2019 levels of if your EBITDA level of pre teen EBITDA Q2 thousand 19 should we expect marginal upside.
In the current year.
So oh, I think promotion will be still reduced in 'twenty, one it certainly versus what we would have on the non pandemic here, we will have the restricted audiences.
For the fans at some of our events. So I do expect them for not here to make a forecast in part because some of this is still off of the year.
Floating around but also because that's the way.
We liked the unless you do.
So I you know like how much will be it'll definitely be it.
The impacted the amounts of which we'll see and Ah.
Going forward.
We have with the the new Cochrane agreement, we have a structure, which as we are.
The <unk> profitability, we have the opportunity to take back some of what.
Historically F. One earned 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 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 couldn't agree more and I think that the work is important that with the new governance of with the new conquered the agreement with the new you know.
On cost control measure you know eats given the sustainability of proof of the allow us the things bigger and this is something that I do believe that these are really the.
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 this the incredible championship.
Great. Thanks, Bob.
Thank you.
The next question today comes from David Joyce of biopsies.
Thank you very much of a 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 of.
Terrible the 20 in 19 of them grossing up for step ups escalators of number of events.
And then secondly on the briefs with the.
The Sinclair are of send agreements.
And the this has already touched on a little bit earlier on the call.
Where do you stand with the with them moving towards having a hybrid over the top model, how does that sort of play into your.
The economics and what are the two for further fan engagement.
Even those that could tie into your sports betting once that becomes.
Something on the horizon in Georgia. Thank you.
Thank you so we expect a 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.
Take the pain in 'twenty to the degree that we rightly had to make concessions to where some of our broadcasters on coal as much as possible was to make that of 'twenty event and bring 21 back to north of that as our open our expectation.
But COVID-19 could change out of it.
Morning.
And on the.
You know thinking about the R. S ends.
As I said, we have our contract runs for the end of 2007 you know.
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 can do or want to do.
I know there've been some discussions with baseball about the alternatives, but I do not expect of major change assuming we can run a full 162 games schedule on a normal pace. So I would expect we would have normal revenue streams from Sinclair in certainly.
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 with Sinclair that could be out of it we'll see again I'm not exactly sure what some of the Sinclair thinks the rights are to do some of those things but.
The Mr Mitch rapidly job.
And just the.
Finally on the the Covid impact for Formula one.
In broad strokes, how should we think about those promotion and sponsorship contracts been the cause of the mix between fixed and variable components is there is there.
General 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 or any triggers that they do have we will like what are you able to meet on the other hand.
Take.
Our partner, who has a large international airline doing.
They get shut down for all foreign travel you can decide whether you're going to be a good partner with them or not for the long term and and that's been our goal. So we will work with them in the way that we appreciate the pay it worked with us during the difficult time.
Alright, thank you.
Thank you.
Our next question comes from Jason Bazinet.
Okay.
Oh, thanks, so much.
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 unencumber some of the passive equity Stakes.
Was there something specific that you were that you were looking to do.
We're sort of need that you have causes more of just general optionality.
Well you know, we're in the Optionality and Jason, but I'll, let Ben or in a relatively new treasury interest.
Sure.
With respect to the Siri margin loan we didn't do the upsize, but we kept it because the same billion shares of collateralized and that loan as we had previously under the 135. So we're just maximizing our ability to access dollars.
With respect to the y.
It's really a function of what happened in the previous margin loan.
We repaid it and we had a substantial number of share if they were all on your line of secured debt.
The collateral pool, and so where are we right size the loans of 200 million Mi.
It took the even out of the shares underlying that.
For something that's closer to more of a realistic on TV for a larger one.
Okay I understand thank you.
Yeah.
The next question comes from John Tinker of Gabelli.
Thank you.
Terrific numbers and the battery on the phrase.
Unfortunately, I think get a little losses, giving those 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 analytes like you're writing up the value for us we don't need to do on our come on that.
You know I think you're right there is value in the battery price.
Sue.
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 price management team has done to create the secure environment, one where people are willing to come in on and it's opened up kind of demand.
Well.
We are on 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 developments. Thank you.
Thanks.
On the final question today comes from Matthew Harrigan of benchmark.
Oh, Thank you on even though our formula one probably generates more data on any of this for you.
The concert with AWS of Intel and Qualcomm It was really under dissolved in the under the answer on the scene with Bernie you got a lot of discusses the universal free on pre mail I think you've got a lot of loud too many of you have any more.
Ingalls and all of the out and cameras and the races. The eventually but could you talk about the potential bidder on how you see that developing it feels like you've made some strides, but there's still a lot of the headroom in terms of what you could do on the on the T V saw it in the video game side. Thank you.
No I think that's a great point math, if you think about.
The net.
If all the world.
Where we have increased starting on the sort of the broadcast side, where we have potential for increased digital players.
Players the <unk>.
Number of cameras, we have the angles, we have your ability to dial up or the angle. You won that really plays perfectly to the strength of those kind of game for players and different kind of straight linear.
So I think we are of sport and it will 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 ahead of it'll be great.
The other point is that all of that data proprietary data.
We have begun we began to take advantage of true.
The contract with the ISG that did not turn out as well as we'd like but as we go forward.
On the opportunities around that I do believe there is quite a lot of round gambling around spanning formation that is valuable and that we are in a very strong place relative to the most sports because of the amount of data and the amount of which of any of your proprietary so I think on both sides. That's a huge assets.
Thanks, Greg.
Thank you.
So with that operator, I think we're done thank you to our listening audience for your continued interest from 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. Thank you for your participation you may now disconnect.
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