Q4 2020 Liberty Media Corp Earnings Call
[music].
Ladies and gentlemen, thank you for standing by.
Welcome to the Liberty Media Corporation, 2020 year and earnings call.
During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session.
And 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.
We'd 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 of 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 the range.
And the most recent form 10-K, and Liberty media acquisitions warm and hot.
And the registration statement filed with the SEC.
Forward looking statements speak only as of the date of this call and Liberty media and the media acquisition of expressly disclaims any obligation or undertaking.
And any updates or revisions and any forward looking statement contained herein to reflect any change and Liberty media Liberty Media acquisition Corp expectations with regard there to or any change in events conditions or circumstances on which any such statement and based on today's call. We will discuss certain non-GAAP financial measures for Liberty media and Siriusxm.
Yeah.
Adjusted OIBDA and adjusted EBITDA, the required definitions and reconciliations for Liberty media and Sirius XM and schedule of wanted two can be found at the end of the earnings press release issued today and which is available.
Now I'd like to turn the call over to Greg, Let's say and the Cadiz President and CEO. Thank you Courtney and good morning to all of you today speaking on the call. We will also have one of the ones you President and CEO Stefano Domenicali.
And Liberty, Chief Accounting Officer, and principal financial Officer, Brian.
And once again like to recognize and thank our management team and employees and a tremendous job they have done manager of Covid and difficult circumstances.
Beginning with Liberty Liberty, Sirius XM and I know, we continued our share repurchase is repurchasing $99 million across the Alex like.
Good day, and K shares and the November to January time frame.
As you know all of the discount persists and we repurchased and it looks your price of CRE of about $3 70 per share.
We do expect to continue to take advantage of the discount opportunity and <unk>.
Driven by some recent balance sheet turbines, we have and I'll let success.
And in November we raised $929 million of a live exchangeable bonds and 50 bps to repay our.
Why of exchangeable maturing later this year and fund the call spread.
Between the Olympics and seven one that originated when we get and the Reattribution.
In terms of and we amended the life margin loans and unencumbered and a substantial portion of our lives of equity.
Also at the core and we admitted our Siri margin loan and 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 and we continue to take advantage of it.
On the ownership of series six of them.
As of January 2019 stood at 76, 4%.
We do expect to get to 80% ownership and 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 gets to the 80% ownership level of as we expect later this year.
So let me get serious itself, we welcomed the Jennifer witz.
Her new CEO role in January.
The new car penetration at Siri had 80% in the fourth quarter and we have line of sight to get to 82% in 2021.
Sirius XM hardware who's now and one out of every two cars on the road and the <unk>.
Number of continues to climb.
Ethics, and self paying households, listening and the digital environment out of the car grew 40% of 2020.
And stitcher has the largest share of U S podcast listening audience available to advertisers.
What do you make sure you can listen to the podcast of the year Office Lady.
And those of you that you have been to our Investor day as you know how that can be lumpy.
Turning to live nation, we continue to have great demand for concerts, perhaps notably the weekend and sold over 1 million tickets worldwide for its 2022 tour just one week after announcing the tour and clearly there is robust demand as we noted the live music.
Well I also acquired a majority stake and beats a ticketing livestream platform income.
And I encourage you to check out the series they have on Rufus Wainwright.
Germany The force turning to the Formula One group.
As I mentioned, we have a new CEO there.
And I would just mccallion from whom you will hear in a minute.
We aren't planning for a record of 23 races. This year.
Notably the Orange the army is ready to welcome the Dutch G P and local hero Max for stopping in September and that works.
2020 showed we have ample demand for hosting races, even on short notice from both new and historic tracks.
And I'm sure. Many of you will have seen everything you want to see streamed at all why has your get ready to tune and for season three of drive to survive, which dropped on Netflix on March 19th.
In January we introduced Almac was back.
We raised $575 million, that's the largest corporates back to date.
According the banks, who were involved and maybe they're biased the most.
Oversubscribed basketball time, and the first trade and 13 20 was the highest initial trade for earnings back to day.
Stock has continued to trade well below adjusted volume we.
We are actively in discussion with a number of targets and the TMT space.
The 20% interest and Almac.
Is attributed to the Formula One group.
And I would remind you that the formula One group has committed.
Two four and purchase children and $50 million and $10 per year.
And in connection with the initial business combination of when it occurs.
Turning to the Braves.
We sadly lost some icons of the brands and this off season.
And we'd like to start by paying tribute to the notably Cerro Negro and of course.
Yeah.
We started the fund named after Hank guarantee the $1 million from the brands plus $1 million.
Major League baseball and the Major League Baseball players Association to help grow diversity and baseball.
We are excited about of our enhanced 2021 roster of coming off of winning the and.
And at least for our third straight season.
We did resign Marcellus and up to a four year deal.
As you May recall, we came within one year, one wind rather from going to last year's World series. So our guidance are ready to go right.
For any free freemen coming off of the 2020 and O N V P of Qunar.
And the Albion and more are hungry and ready.
Spring training good start.
On Tuesday, and our first strength spring training game is the Sunday, we expect fans to be attendants at 25 per cent capacity.
Turning back to the home front, the three ballpark of office tower.
We are near completion and 70% leased.
Just and 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 we believe bodes well for fans and true it this year.
We do expect to have fans and the dance, but are not get sure of the seating capacity restrictions.
And we do have significant demand for both tickets.
And the truth and Spa.
During training and.
As I noted, we look forward to a great 2021 season and.
Including the 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 and bank and a number of steps the boost liquidity and strengthen the balance sheet.
The fourth quarter, we issued 920 million of live nation of exchangeable bonds and amended our live nation margin loans unencumbered and substantial live nation the equity value of this part of it.
Decreasing the shares underlying the loans and $53 7 million of the 9 million.
Subsequent to quarter, and we amended our Siri margin loan increase and borrowing capacity. The one point to that and 5 billion up from $1 35 billion and you're at and borrowing an additional 125 nine.
Inclusive of all of this additional larger loan draw and Liberty Siriusxm group had attributed cash restricted cash and liquid investments of $1 1 billion.
Splitting it and $3 million of cash and restricted cash held directly at Siriusxm.
We also had $1 1 billion of Undrawn margin loan capacity and 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% live nation of exchangeable bonds.
And its values based on estimates of the fair value or the fair value of liabilities in Europe.
As of February 25th the value of the Siriusxm stock held at Liberty Sirius XM Group was 19 billion and the value of our live nation stock was 6 billion, excluding the value of the largest and cost per upheld the formula one.
The 370 471 million of year round and.
We have $3 2 billion of principal amount of debt against these holdings total Liberty Siriusxm group attributed principal amount of debt and $12 8 billion, which includes $8 6 billion of debt.
At the Sirius XM directly.
Formula One group had attributed cash and liquid investments of $1 4 billion, which excludes 265 nine of the cash held at Formula one.
And the flow and sort of Formula One group attributed principal amount of debt was $3 6 billion, which includes $2 9 billion.
They'd be the 727 million at the corporate level.
At yearend Formula Formula, one and $500 million revolver remains undrawn.
At quarter end Braves group had attributed cash and liquid investments and the stress tests and the $185 million and attributed principal amount of debt of 674 million.
And are currently in compliance and all of that kind of that's across the portfolio.
With that I'll turn it over and stuff and I will discuss formula one.
Thank you Brian and.
So at the first of all and all of it to the problem of what.
Thank you to Liberty the F. I E. The teams and all of our partners for the World and welcome.
Before I start there wasn't the same chase for the tireless work over the past four years and busy and a little cause of the nation that gives us the very strong foundation for the growth and the decades ahead.
And I see it was a challenge brought everywhere in the around the globe and everybody's on the sport felt the impact of the parent debt.
One of my one delivered what many thought was impossible 70 of races, gelande delivered safely and with huge enthusiasm from our expense.
72% I think that's one of those improve over the past two years.
The 8% believed that one is in good hands and the Liberty media.
71% rate their satisfaction with being and that's one fan of eight or higher.
And the more fun and believe Pune, one handle it safely very very well during the global pandemic with 90%, believing the seek to measure put in place to allow races. Google I had have been the handle well, 81% believed and F. One thats communicate well with hence during the shutdown and 73%, believing and that's one of them.
Handbook and the absence of fans of the race as well and 88% feeling positive about the can than during 2000.
We all continue to see that the gave the challenge of COVID-19, and V Shea of whether that would not preclude us.
Ladies and opportunities we see in front of US, which are number one group and the drivers at the center of the last one and they represent the soul and I'll be a bunch of but all of the sport the level of talent, we have today and the great and it's one of the highest that's one of the history and we should celebrate that number.
And number two.
Delivering an incredible product the things and its competition and actual and the check included 23 races. This year.
And the three and haven't seen the long term prospect of sport and shoot and that the attractive business model for all participants and attracting the new protests, but the number for remaining committed to our action to our release of one platform focused on sustainability diversity and inclusion and community.
So we reflect on 2020, we were the swimming crowd to complete the successful 17 of race season.
And the last few races brought some new places to podium, including the psyche of G P, which so central Pennsylvania and as supposed to the win all of them side. That's the bulk of corner of last rule and the same time and at the same rates, we were relieved to see Rome and grows young and walk away from the theory crash.
The one two of man.
Support teams of the track and improve safety measure in the sports medicine.
Most of the stop and secured the window of our last where I'm, bringing up the derby, which capped a very successful season of cobalt booth, who placed second in the construct of standing.
And the financial flows and clearly we were impacted by COVID-19, but work in and collaborations with our partners to mitigate these impacts.
Due to the reduced number of bases duration of the season and almost no kind of tenders and sue.
Practically primary revenue decline and architects and Heather we worked with outlook for them over because of the extent conflicts. We have mutually agreed the work with circle of sponsor to the <unk>.
For the full season, we are pleased with the reaction from our fans across multiple platforms. We made significant gains the grill and social platforms, making us the second fastest growing major sports league and till the fall over across the four major social classes and had the major sports such as N. S. L. M E P G a tool and die.
And do that really.
We have seen the fastest growth in the digital engagement compared to all of them. They just reported within the 99 per cent decrease in 2000 and twin.
On T V. Our acreage or just sort of grumpy was 87 point for media 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 the discrete as steep decline and it doesn't and 'twenty due to the pandemic.
We plan to engage more fans in 2021 and we.
The Florida and exciting 22 races calendar. This includes the addition of Saudi Arabia and much of dissipate the race in net doesn't that defense.
We will navigate the challenges of the from there and 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 announced the sort of the more than 40 miles of the skin.
All of compensation with promoters and have been positive since the start of the year and every one of them has made it clear that the events should be going that had the scale with.
We'd love to welcome first back on the track and we'll be working with the local organizes and the governments on the approach.
We are 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 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 and use.
Top of the screen Tres Palmas of some races. In 2021, the result of which would the two minds the grateful of the main events and something.
Supported by the teams and principal of the meeting a few weeks ago, and we will work with them and the FAA to finalize the bid stage the towards the start of the season.
And the sporting side, we are expecting and exciting season, we'd lose some of the let's say despite the flood of unique and he started April championship, we hope to see Ferrari, we that old and he is doing the sport.
They have played back and are excited for all of the new places and lines up on the grid.
Well most of the season, we will wonder at what stage of patents would find the driver's seat and we can't wait to see him pad up with Max and the stop the.
And the cloud and web spectacular 2020, the season finished the third and constructive steps and we'll see that every job of London noted and up together.
We welcome Aston Martin and iconic brand with the season of the Choppiness the best embedded at the end of the World. We also welcomed the retold the but not the long so two of renamed Alpine team he's doing well by the way you pull the way these rates and the accident and looking forward to see him of the start of the season and buy rate and of course, the world will be watching them.
Made the seasonal mix you might get a pass.
The last year was momentous fulfillment of one sign of the new Concorde agreement and reaching agreement of the introduction of the cost cap taken effect, Michigan and 2071 the net.
The major radio to Covid related to the to the power of usually thought of it.
Demonstration of our collaboration the SBA pooling of one and the teams devoted to free it's probably it was developed and from the start of 2022 of.
And the high level of work and group has been established we think who's probably with the manufacturer and supplier.
As we look to the next generation of the public units for 2025, the key objective of our cargo neutrality true.
The 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 will be of very attractive all peripheral of the Oems and their portfolios and provides another solution to deal with the most of the debt.
Amortization drive across the world.
Feel very positive about these problems and these EDA and 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 weird Ray says one lots of will become a little piece of the ESG plateau with the three core pillars of the sustainability diversity and inclusion and 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 I used to run plants for the sheer the deal included the rollout of our apprenticeship ease the machine and scholarship and other sport for underrepresented groups and their enforcement of that heroes role models and champions of progress and our sport.
That is by the fans around the world.
We are looking forward to seize them free of drive to survive he didn't actually sort of March 19th the true.
Once again captured all of the drama and storylines of 2020 and Theres No question that he just continue to bring new parts of the sport.
I can't express enough my excitement for all of the opportunities of approval. One has in front of us and I look forward to update you one of our progress but please be sure to watch the season opening grumpy and day rate on March 28, and with that once again. Thank the so much I will turn it over to you Greg. Thank you.
Thanks, Brian and thank Stefano.
And our listening audience. We appreciate your continued interest and Liberty media and hope you are all staying safe and healthy.
And operator, and with that I'd like to open the floor to questions.
Yeah.
Thank you as a reminder, ladies and gentlemen, please press star one to ask the question.
Our first question today comes from Vijay Jayant Evercore.
Thanks, I have two so that's the.
Greg obviously, the tax sharing agreement with serious debt sort of kicks in the 80%.
You know obviously you mentioned that the board will decide how capital allocation works both of that moment, but given.
Given the flow through would be pretty small and.
And I think the dividends will be tax free both that is there and expectation that we should assume debt will shift more towards dividends over buybacks. All of we will definitely on a path to sort of taking the come to the private and.
And are there any obstacles sort of on that back and say I like the squeeze out of requirement of 90% and anything you can share on sort of what happens to the capital equity capital structure sort of post.
And the 80% level and second Paul and Stefano Welcome I just.
I wanted to sort of get your perspective, you've been mentioned and the press, suggesting that you're looking for more quality over quantity in terms of races, and the so you're talking about expenses, you really think you'd need to change the format of the race weekend and uniquely.
Our pay practices and making it the biggest technical can you just talk about what what you really think of the opportunity to make the weekend of bigger event growth.
Thank you.
So I'll go first and chat a little bit about dividends and capital allocation and the like.
First of all of it really is a decision of.
The full board.
You would know correctly and 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.
It's really not that big and tell what we're looking at the the.
The.
No the discount.
And running about just under 28% substantially tightened from the 45% when the G M E world blew up and.
And then we were running more like in the middle of 30. So we are trying to but that's still quite large compared to even the 7% rate we would normally pay with the D. R D exclusion.
Exclusion. So you know I don't think the huge thumb on the scale for Liberty and we are marginally more.
And of towards dividends, but not massively but that decision really will be driven by management and the board.
As far as triggers.
And 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 and the back of their minds of do we get to 90 per cent.
We can do of 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 most of the symptoms really will be made by the full board and.
At some point the index.
Kind of directors will have voice about ensuring that the minorities and 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 and to improve and sum up show first of all of you say that that would of objective is try to offer and so the people that the come into the event to the people the other watching TV and so the people that are really signs of approval on some.
Some of that he's excited so the idea that we have shared and I think that the you have received the great feedback from everyone that in the sport is that the we will try to figure out something that would give us the qualified on Friday and Saturday does pinch waste that would determine the the grid order for the Sunday race. So that will gives the thrill of the great we can't the wood.
The beneficial to all of the party and boats and this is something that we have the trade and with the with the with the teams and the SA and the next weeks in order to present the final four months before the top of the seasonally in the range, but that's the aim of what we are what we try to do this year and depth of respect.
And so much book.
Yeah.
Our next question comes from David Karnofsky of J P. Morgan.
Alright, Thanks for taking the question welcome Throttled can you discuss the freezer and engine developed and and how you think this might impact on track competition and then just maybe expand a bit on your deal with F. One long term income goals in light of some of the Oems like GM and Jaguar moving toward the all electric vehicles.
Well. Thank you day before the question and I think that the what is important to say that the these ideal please and one ear and advance is connected to the new business sustainable approach the for one of his stake.
We will have taken of the shoe 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 box about very both of US how we can capture the control of the investment of course is in the normal business on the power units the Florida bias associated the fact that we would anticipate that the end of the spending newmar.
And these for the new engine, we were thinking of how we can capture the attention of potentially manufacture, but also making sure that the ones that the both today and I think the that's in the future. So we do believe by being the I bridge and the future ease of the exact position that will allow all of the manufacturer to have and axis.
All of these to the portfolio the totally of deprecation. So.
To do the normal business. So the fourth I think that most of the or putting in place and that you expect hadn't carbon neutrality fully sustainable fuels at the center and beat I, but gave us the really great position in terms of package and some of been Oh visit the political all the technology of advanced research and pool of one and making sure that the Ava was the.
Benefits from this activity also to have the sort of broke relevant and see 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 potential and are probably the only thing the different way of all of you and electric and having the cost control under under the control and of course.
<unk> been the align with our value will be sustainable for the future. So these out of the basic thinking that the will take and when we decided to go and follow this path.
Okay, and then I believe there's a number of race promotion contracts expiring at the end of this year I think Singapore and was just wondering how you're thinking about F. One and to these regions versus maybe of adding new wafers and other flyway markets I think you've mentioned and South Africa recently, and then with regards of the Vietnam GP and is there any update you can provide on.
And whether we might see that break at some point and the future.
Well, yeah, I mean for sure where and the great moment because of.
Despite the pandemic, we have received it and incredible number of requests bye bye bye and that shows that the F. One of the sense of the incidents no totally from the organized drove the of 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 right dimension of it.
The races in the year. The the comfort you have mentioned and unexciting, but they're out of the discussion are ongoing because of the ones that you were considering and a really important and there is a lot of the answers to progress and in and keep them. You know also in the future we confirm as you said.
As you know that the U S is very important and strategic market for us and the.
We are of the Ainsworth another race in the U S. A we have already great part and the last thing, but we ought to look in the four other solutions that are will be very important for us.
And what I can see with Vietnam for whatever reason the happened you see we didn't have the race, but for sure that these and add a far east and general debt is very important for this that because of growth of our business in the future and for sure that's and add up what we're going to exploit the other the opportunities for the future.
And if I could just add the Stefan and his comments, which I agree with you know we do not have an unusual number of <unk>.
Motor contracts expiring this year of pretty much in any year, we have of portfolio, where 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 and had been behind.
Thank you.
Our next question comes from Ben Swinburne of Morgan Stanley.
Yeah.
Thanks, Good morning, guys I wanted to ask both Stefano and Greg just a question around the sports rights are and sort of the the state of the market right now maybe Europe and U S.
And you guys had a very successful of at least based on the press reports renewal and Germany with Sky last year, but we've seen you know some of the some of the other deals.
Is that have happened or are happening has gone backwards, you know E. P. L. A the Bundesliga and and the least the press suggests Syria.
The roll back and even in the U S. There's been probably more tension unusual and 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.
Half, one and the Braves and if you think the market's gotten.
Even more complicated and more challenging than it was a couple of years ago.
I'm proud of you aren't taking kind of I'm happy to.
Okay, I mean, I and my opinion, the see the waste we're living today. It is for sure the interesting for one side, but very very good about the average I mean, what we can see the as you know and our business moguls. The the broadcaster partners out of a huge and important for us, but we can see all the 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 connection to the fan base built and the OTT World that these are still the.
And 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 if you're able to attack the as we are doing this.
And the sport you know the commercial accounts, because they sort of sits there and we need to make sure that the the spool we have the shape it up for the future given the complex to make sure that is the livable to defense and that's why we have a lot of activity collected to make sure. The first of all of course with the lose the traditional and and very religious fans, but we need to speak.
The language of the new support of the new fans of the young generation and so we have a lot of programs to make sure that this has happened already this year, so I'm positive of that to be honest.
I agree with Stephane and I was comments, but right out of a couple of more if I could debt.
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 and 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 the server.
All of them all of those building fan interest.
Obviously, the esports component as well.
And that's an important component when you obviously the Gulf of renewal how much fan interest how much excitement there is.
Probably the most important component is how much competition there is amount of potential bidders distributors of your product.
And candidly out of the best deal, we have probably as our UK deal and it was largely because there were several bidders highly interested and getting our product I do feel and Stefano notes, we have of relative value you've seen declines 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 cusp.
Per hour of et cetera F.
And that's why it looks like of 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 and that gets more expensive and some ways and provides a floor on what the value of some of the live sports can be historically of live sports like sort of 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 the potentially some of the new digital players entering and the F. Sniffed and we'll see if we can get them excited I do believe ultimately they will be comparison and that will be to our benefit.
As far as looking back and 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 Rs and.
And is that bundle breaks there is risk around.
And what the total amount paid two teams will be including the Braves I feel relatively good about the Braves.
Contracts of 27, and first and secondly, we have and good contracts and far and away not the highest.
Well below somebody like the Dodgers, but in contrast, we have the largest broadband households.
Audience. So the Braves half of the largest territory with 12 million broadband households, sort of the gray you look and digital alternatives and the like we're probably and the best shape.
Compared to many of them to benefit as new alternatives.
Alternatives arrived and the bundled potentially a weekend.
Well good luck and the out of at least as a series of 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 past of normalcy for your live event businesses looking out over 'twenty, one and 'twenty two and there's obviously a lot of you know.
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 whether that.
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 and 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 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.
And certainly not binary and it's not binary and a lot of ways because step one and the Braves.
Of multiple sources of revenue.
That's the ones got three big pillars, right broadcast, which was impeded, but probably will be competed less and.
And in 'twenty, one regardless of the pandemic sponsorship and advertising, which was impeded less in 'twenty and 'twenty then the.
And certainly the the fan component 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 be to some degree there and I don't think again I'll be binary we're not necessarily going to see zero to 100, and it will be somewhere potentially in between the line.
The more optimistic as we 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 is not as large of component of the visit formula one and I think again not binary.
And the expectation is we'll probably start out of 25 per cent.
I mentioned already the GA is relatively open.
We will be and far better shape.
The fan attendance and if you were in New York, or California, or some other locales.
And.
And it will be decided not by baseball, but by the local rules and 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 and the space of a flip of a switch and.
And 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.
And.
Offset to that is global business really with the potential for very different responses, depending on where you are and the world.
I think part of the one in particular is preparing for a a.
Our balance sheet that is and.
And vegetable whenever it comes and we're fully supportive of that the.
The I do think they will have fans and 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 and definitely work to be done throughout 'twenty one.
Uh huh.
So that's kind of and that's probably somewhat of a non answer Brian because we certainly aren't and the crystal ball business exactly but we are and the business of trying to prepare to make sure we benefit when it does open and they were prepared and that doesn't happen at the rate 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 and trying to the balance sheet question.
Think of.
One of the things about being part of the Liberty Group is you can we have the ability to.
Hopefully looking ahead and be thoughtful with the benefit of our operating companies.
The.
Formula one balance sheet is very very strong I think the operating levels that we have and 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 is.
And it's quite strong so I'm not really worried about the balance sheet.
Great. Thanks for the just to answer your question of real real quick on the leverage target of our stated leverage target on Formula one and five to five and a half times.
And as you recall, we have a our eight five Max leverage has been waived through March 31 of 'twenty and 'twenty, two and when we bought the business. It had debt approaching that of eight times leverage and we substantially deleveraged at 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 I appreciate it.
Thanks.
Our next question comes from David the tackle of Fernberg capital.
And it makes a lot of 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 of a variety of different scenarios. It seems as of the vaccine.
The rollout.
And for the most part is going better than expected and many parts of the world should we be thinking about which promotion revenue.
And being materially affected and each one or is that somewhat protected given the concessions you made last year and the.
And then sort of as a follow up to that I'd love to hear your thoughts to the extent you're willing to share on how the team payment structure.
And might affect earnings or EBITDA of one this year, specifically and maybe you could get pregnant and reference of 2019 levels of it.
EBITDA level of preaching the dog and <unk> 2019, two we expect marginal upside.
And the current year.
So oh, I think promotion will be still reduced and 20.
'twenty, one certainly versus what we would have and the non pandemic here, we will have to restrict the audiences and restricted fans and some of our events. So I do expect and we're not here to make a forecast and part because some of this is still off of the year.
Floating around but also because that's the way.
And I'll, let you do.
So how much will be it'll definitely be.
The amounts of which we will see.
And.
Going forward.
We have with the.
And the new Concord agreement, we have a structure, which as we.
The increase 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 and 21, 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.
And I couldn't agree more of and I think that the what is important that with the new government. So with the new conquer the agreement with the new and you know and cost.
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 <unk> perspective to be part of this the incredible championship.
Great. Thanks, a lot.
Thank you.
The next question today comes from David Joyce of pathways.
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 to 2019 and grossing up for step ups of escalators and number of events.
And then secondly on the briefs with the.
The Sinclair are of sin agreements and.
And the this was already touched on the little bit earlier in the call.
Where do you stand with the the with them moving towards having the hybrid over the top bottles and how does that sort of play into your.
The economics of it work of the due for further fan engagement.
And <unk>.
And does that could tie into your sports betting once that becomes.
Something on the horizon and in Georgia.
Thank you.
So we expect.
Fairly normal broadcast revenue stream and.
In light of our 23 races now.
Again, you know.
Crystal ball about exactly how COVID-19 plays out, but our goal was to try and.
Take the pain and 'twenty two.
Free that we rightly had to make concessions to what some of our broadcasters of alcohol as much as possible with the make out of 'twenty event and bring 21 back to normal well that is our hope and our expectation.
But COVID-19 could change that.
Morning.
And on the.
You know thinking about the R S and.
And like I said, we have our contract runs to the end of 'twenty seven.
And 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 see.
And they can do or want to do and how they are.
And some discussions with baseball about your alternatives, but I do not expect the major change assuming we can run a full 162 games scheduled on a normal pace I would expect we would have normal revenue streams from Sinclair and certainly.
Certainly in 'twenty, one and through the rest of the contract.
And I you know I.
Whether they're new engagement models and 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 their rights are to do some of those things, but all of that.
The Mr. Mr remedies job.
And just.
And finally on the Covid impact for Formula 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 and algorithm that's baked into the current correct or how should we think about that.
What I should think you'd look most of them are probably do not have triggers.
And what 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.
And basically 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 and the way that we appreciate that day it worked with us during the difficult time.
Right.
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 unencumber some of the passive equity Stakes.
Okay.
Something specific that you were that you were looking to do.
Or sort of need that you have tourism and more just general optionality.
Well you know, we're in the Optionality and Jason, but I'll, let and ore and a relatively new treasury answer sure with respect to the Siri margin loan, we did do and upsize, but we kept the cause the same billions of shares collateralized and that low and as we had previously under the $1 35. So we're just maximizing.
Our ability to access dollars with.
With respect of y.
And so it really a function of of what happened and the previous margin loans.
We repaid it and we had a substantial number of share of the underlying net scary.
And of collateral pool, and so when we right size the loans of 200 million we are.
Really took the amount of shares underlying that.
Something that's closer to a of a realistic LTV for larger loans.
Okay I understand thank you.
The next question comes from John Tinker of Gabelli.
Thank you.
Terrific numbers and the battery and the phrase.
Unfortunately, the things get a little lost giving those people focus on and do you have any and where do you have.
The considering any way highlighting the valuation of the what's the.
The proxy and a different way.
Uh huh.
And when we have great analyze and like you writing up the value for US we don't need to do one of our come on and that's no.
I think youre right, there is value and the batteries and perhaps.
The.
And it's a function both of Georgia being a relatively open places we've noted and I think really the great job and the <unk> management team has done to create and secure environment, one where people are willing to come and our and it's opened up.
Well.
We are and you know I'm not sure of it we're going to create a tracker and do something different around that but we'll try and make sure. We highlight appropriately that there is value and the battery and our real estate developments. Thank you.
Thanks.
And the final question today comes from Matthew Harrigan of benchmark.
Thank you, even though our formula one probably generates more data than any of the sport.
The concert with AWS, and Intel and Qualcomm It was really underdeveloped and under the answer on the machine.
Bernie and you've had a lot of discusses the universal in Korea, and pre email I think you've got a lot of loud too maybe happy more.
And look angles, and all of the out and cameras and the races, and eventually but could you talk about the potential bidder and how you see the out.
And it feels like you've made some strides, but theres still a lot of the headroom in terms of what you could do on the on the TV and the video game side. Thank you.
Yeah, No I think that's a great point math, if you think about.
The and.
And evolving world.
Where we have increased.
On the sort of the broadcast side, where we have potential for increased digital play.
Players the <unk>.
Number of cameras, we have the angles, we have your ability to dial up the angle you want and that really plays perfectly to the strength of those kind of digital players and different kind of straight and linear.
So I think we are of sport and it will be.
Benefit from that increased attention on the digital side of it in terms of viewing.
Different experience and one that the fans and Taylor I think you can see that opportunity you had and 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 or.
Contract with the ISG 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 that is valuable and that we are and a very strong place relative to most sports because of the amount of data and the amount of which of it is proprietary so.
I think on both sides and that's a huge asset.
Thanks, Greg.
Thank you.
So with that operator, I think we're done thank you to our listening audience for your continued interest and Liberty media and we look forward to speaking with you again next quarter if not sooner.
Yeah.
Okay.
Ladies and gentlemen that concludes today's conference call and thank you for your participation you may now disconnect.
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