Q1 2021 Liberty Media Corp Earnings Call
[music].
Ladies and gentlemen, thank you for standing by welcome to the Liberty Media Corporation 2020, Q1 earnings call.
During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press star one on your telephone keypad.
As a reminder, this conference is being recorded may 7th.
I'd now like to turn the conference over to Courtney Chun Chief portfolio Officer. Please go ahead.
Thank you.
Four we begin we'd like to remind everyone. On this call includes certain forward looking statements within the meeting of the private Securities Litigation Reform Act of think of 95 actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in Liberty media is the most recent form 10-K on 10-Q on Liberty media acquisitions forms S. One registration statement filed with the SEC.
These forward looking statements speak only as of the date of this call on Liberty Media and Liberty Media acquisition expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained herein to reflect any change in liberty media or Liberty media acquisition of corporations expectations with regard there to or any chain.
In events conditions or circumstances on which any such statement is based on today's call. We will discuss certain non-GAAP financial expenses for Liberty media, and Sirius XM, including adjusted OIBDA and adjusted EBITDA, the required definitions and reconciliations for Liberty media and Sirius XM schedules one through three can be found at the end of the earnings press release issued today.
Which is available on Liberty Media's website now I'd like to turn the call over to Greg Maffei, Liberty's President and CEO. Thank.
Thank you Courtney and good morning to all of you out there.
Today speaking on the call. Besides myself, we'll have formula one's president and CEO Stefano Domenicali.
And Liberty's, Chief accounting and principal financial Officer, Brian Wendling.
Beginning with Liberty Sirius XM, we continued our share repurchases purchasing of $114 million across <unk> and K shares from February through April the discount stubbornly remains and we repurchased at a look through price of.
On series of just over $4 per share.
We do expect to continue to take advantage of that stubborn discount opportunity.
Our ownership of Siriusxm as of April 26 stood at 77, 3%.
Im looking at Sirius XM itself, they're off to a fast start this year with self paid sub growth of it.
Sub growth of 83%.
The trial starts in the first quarter were the highest in the company's history and they recorded record low first quarter churn.
We're also experiencing rapid growth and off platform advertising revenue.
360 L. The next generation platform is now in 2 million vehicles, providing valuable data and offering engaging features.
We expect it will be about 25% of this year's installs.
We are now of the largest digital AD platform in North America, reaching almost two thirds of online audio listeners.
We're also continuing at Sirius XM, our expansion in the podcast segment with our acquisition of 99% and visible.
Furthering our content creation capabilities.
Turning to live nation.
You may have seen in today's earnings release from them concerts are back and in high demand for data in 2021. In fact, we of book twice as many shows in 'twenty one as we did in 19.
Brian The 2021 ACM entertainer of the year's on going on tour and the railroads festival with headliner David Matthews band is another notable addition.
Following up on acquiring the majority stake in beeps, we've begun our ticketed live platform and start equipping 60, plus concert venues to offer turnkey live streaming events we.
We continue to help of artists expand revenue and creative opportunities connecting them with more fans via <unk> and other means.
Looking at the Formula One group, we had phenomenal racing the season as Stefano will outline a little bit more in a minute, it's exciting to see the battle between Lewis and Max it's going to be a very competitive youre also for third place and the constructive championships of lots of exciting racing.
The teams continue to execute well given the ongoing challenges from the pandemic.
Turkey will replace Canada in June showing the.
Sustained demand to expand Gp's.
We've also extended our agreements with Canada and Japan.
Looking forward of the first we are looking forward of the first sprint qualifying race in July at Silverstone and there'll be two more of those during the rest of the season.
The drive to survive.
Our programming on Netflix continues to grow on popularity of its third season, and it's also getting recognized on the awards circuits, both in the U S and Canada.
And finally, we look forward to seeing all of you in Miami in 2022.
Turning to brace.
After a slow start to the season. Our record is just under 500, and we are close to <unk> and the end of leased of game of half out of first place.
We were helped by sweeping the net over the last three games.
Braves are number one at home runs the season and also number one on average attendance almost 16000 per game that is if you exclude Texas, which we'd be third including Texas.
While on <unk> was named nationally play of the months of our April Tableau standard of all three pinch hit homeruns in April the most by any Braves player in the calendar month for it and its franchise history and as of today, we expect to expand capacity.
Two of 100% of fans after opening the season at 33%.
Notably in partnership with Emory healthcare, the Braves are offering vaccine shots before enduring games against filling.
The end to get vaccinated those games will receive two free tickets to the future Braves games as well.
And finally of the Braves looking at the battery kitchen crop is expected to occupy their office space in July and Papa John's later in the summer demand for remaining office space remains very strong and the <unk>.
<unk> and the omni hotels had high occupancy on Friday night.
And sorry of night games are the nights in March with several of the first sellouts on game nights.
We continue to make good progress on <unk> the stack.
The spec market has changed the way we believe it to our benefit of some of the euphoria of Japan of.
January and February has deflated, we believe the recent weakness in the pipe market plays well for Liberty, given our strong balance sheet, our capabilities with investors and the support that we have.
Finally, we wanted to share with you that we have recently published our SaaS B disclosure on our website as a part of our ongoing ESG efforts.
So with that I'd like to turn it over to Brian to discuss our financial results on a little more detail.
Thank you, Greg and good morning, everyone Liberty Sirius XM group had attributed cash restricted cash and liquid investments.
Of approximately 1 billion, excluding $67 million of cash and restricted cash held at Sirius XM the spa.
Balance is prior to paying the Formula one group $384 million to settle the live nation call spread in April.
The settlement of the lot of initial call spread was the non taxable transaction among the tracking stock groups.
We also have $1 1 billion of Undrawn margin loan capacity of the parent level.
No debt a portion of our cash will be used in 2021 to repay our 225% live nation exchangeable bonds.
Based on the fair value of the bonds at quarter end of the amount of cash used would be $514 million.
As of May six the value of the Sirius XM stock held by Liberty Sirius XM group was nearly $19 billion and the value of the live nation stock held was $5 billion.
We have $3 2 billion in principal amount of debt against these holdings.
Total Liberty Siriusxm group attributed principal amount of debt is $13 2 billion, which includes $9 billion of debt held directly at Sirius XM.
Formula One group had attributed cash and liquid investments of $1 4 billion of quarter end. This excludes the $429 million of cash of held directly at the other one opco.
Post quarter end 401 group received the additional $384 million that we just discussed and proceeds related to the lot of nation call spread total.
Total of Formula One group attributed principal amount of debt was $3 6 billion, which includes the $2 9 billion of debt held directly down at up one leaving $724 million on the corporate level.
And if one of $500 million revolver remains undrawn.
Please note that during the three months ended March 31, 21 of one began reclassifying certain components of previously reported in other revenue and the primary F. One revenue the better aligned with the way of management currently evaluates the business.
Components reclassified in the primary up one revenue.
Generally related to F on TV subscriptions certain half two and half three related fees broadcast origination and support fees and digital advertising among others.
Additional detail on this re class, including the impact.
For the years ended 12 31 19 in 'twenty. It can be found on schedule III to our earnings release, which will be posted on our website.
At quarter end of the Braves group had attributed cash liquid investments and restricted cash of $218 million and attributed principal amount of debt of $678 million $676 million.
Liberty on our consolidated subsidiaries are in compliance with our debt covenants at quarter end.
And with that I'll turn it over to Savannah, the discuss formula one.
Thank you Brian and good morning also from my side. So it doesn't count the one that has begun with the huge under Jim momentum in the past few weeks, we announced the segment rates in the U S. In Miami Gardens, with the huge and positive reaction from our fence. The teams in all of our partners I think the.
Take away from the U S. Starting in 2022 provides a great opportunity for our sport and will ensure we continue to increase our strong focus and it's probably the growth there.
Last week, we announced that we'll have some of the 100 people meet the Supreme quality claim performance of three races. In 2021. Following 19 will support from all of the teams.
Vince will be exciting for all of our events provide more on track action over the next weekend.
Our partners and the teams greater commercial opportunities two of US one of the vendors for the new form of already reported a surge in peak of savings following the news that they would be hosting one of the Citibank.
We have announced the three years extension of the Japanese Grand Prix.
That has always been on important ways for Formula one and we cannot wait for the price to cheer on day one.
We have extended our partnership with the Canadian ground fleet by two years and welcome the New announced last week by the Bell media as entering into the agreement to acquire the molecule base and maybe other waste removal of paying the racing group, which is the great news for the long term to true and development of.
The race in Canada.
While the global situation is fluid to the COVID-19 pandemic full of one that's shown the piece as well.
The ability to overcome the issue.
On us and continues today safety just last week, we provide the these can be the case, while we are not able to waste and kind of of this year. We have secured the replacement rates in Turkey at short notice, meaning we have Nokia used the number of releasing the Columbia for deposits.
Other people, but it is very exciting to see the level of interest from both the new and historic locations to host exemplary and this gives us possible option with the required for 2021, but those are good opportunities for the future.
We have had very good conversation with all of our promoters and all of whom we expect the race of the season to go ahead of plan and just this week. We have had the confirmation. The 1000 fans will have 10 getting Barcelona, the studies going on free.
And the multiple will welcome approximately 40% of the capacity of the grandstand flow the rates into the wintertime.
Non side of the business start of the year of the track that AC on the track has been equally exciting dramatic.
We kicked it off of our 22 weeks of season in Bahrain and haven't had the three <unk> races to date, which with the close of apples overtake it and the tag closer together that in the recent years, although it has grown as mentioned with this bathroom for the championship playing now this could be of Golden year per formula one.
The season operating but did not disappoint with the stop in the security proposition. It was of cleaning race between Mexico Luis that was only the side within the final laps the windows of strong showings by noise in Paris.
And the Japanese Luca.
So none of the score point in his first epsilon rates for the alpha salary and it looks like yes, it probably just kind of get ahead the.
The backlog for the first continuing to email or whatnot.
Nathan start of the law.
Line in the rain and carry through for the weighted impressive given the he's starting the third yeah and he's seen.
Late surge of Paris on the notice me. That's one of them is taking quality find on securities pulse on the program showing the continued strength of Macquarie.
Last week on the Portugal, let's say the spend the doctor's turned challenge from Red Bull as Lewis Hamilton clinched the hub for victory on imports now.
Both of the starting on COVID-19 and Louis ahead of the stopping of check on the <unk>.
Doug of delays so the Red Bull get passed on the phases of the hanging from before the seven kind of jump as it fully of brilliance of it takes on both of these teammates belt December stop with the cliffs victory.
Once again shows that there is a real battle of underweight four Bcf type of and we add on that the only the three day reshaping the.
Competition for the third of the social appears in the construct of stemming the cloud and is making the early pace Bob day any themes in the midst feel have something to prove and it is great to see fit out of the heat the need to try to get.
The spectrum of Formula one is resonating with fans of engagement is very high to date, we had the data for the first two races at both of the 24 principal markets, we monitor and the show television viewership growth over both 2020 in 2019 with particular strength in Italy, the Netherlands, France, the U K the U S in the spring.
On the digital from unique users for Epsilon web and App have been up 77% on the equivalent rates in 2020, and social engagement and also pleased with all of the 13 media interaction in both of the first two race week.
We continue to grow our social media following the reach of $36 5 million. After the immediate on the GP up from 35 million under the theory of it.
That's one TV, our otp product of also stopped the the second of strongly with the record viewing peak concurrent view of each race weekend out of around three times higher of the 2020 season average and the engagement measured by the maintenance view with the over the course of the weekend is that more than 60% on the last year.
We launched an updated version of the App for the season that provides plenty of additional features include the high video quality and allows us to control the viewing experience. The new version also makes it easier to find pumped it in other collection, which includes over 2000 hours of footage and coverage of everything from peak in the last 50 years along with that.
Our latest series set to change in the dream of fun TV is now available in the 188 territories with the theme of that policy the pro available in the 85.
Season, three of drive to survive the Booth of March 19, and continues to build mass global popularity for the sport, reaching number one on Netflix in 27 different countries and also globally.
And on the old utmost daily basis, we hit on it.
About how the show was broken into the new non typical science. It was great. The to the visions of the 2020 season and seen the best story of the volatility of mainly drivers changes I do highly recommend debt as of nine which is the terrifying exhilarating and expiring.
The share was nominated for the sport any port of pending city of sport documentary and many of the short list and the momentum we can aggregate for the UK broadcast of awards.
The into the season, we have had numerous sponsorship announcements we were pleased with new over to build the partnership with the DHL a relationship which now spans across several of the case. These extended partnership will include enhances emboldened and that's why on the esports events and the present of F. One digital channels as the official possible we welcome zoom.
It is as per Martin of the seats got provide the ancillary thing from the official dose of.
From an award in addition, we announced the advisors and drive culture official supplier and the welcome global citizen of charity partner for all of what we raise is one initiative.
We continue to engage fans through esport and half the very successful series of visual Grand Prix during the off season.
But on the drivers along with homeless dogs on future prospects complete the to win the share of the one I'm going to thousands of dollars price point and their challenges.
As part of the continuum of the four to improve diversity and inclusion of Formula one as part of our of Weird I suppose while on the initiatives, we announced the theme of the only qualification of the routes for the F. One the sport to see this broke SAP issue.
This is our first female only competition and we hope it will encourage more drivers from the passionate and talented teammates in rates and community with the goal of becoming the first ever seen main driver to be signed by end of official F. One esports secrecy.
The closing Formula one is off to a strong start in 2020 of US building off of the foundation put in place the last few years the April.
Persist in these absolutely strong and the competition on the check is clearly I want to thank all of the dedicated employees of the Formula One full day continuous diligence and hard work and I Hope you will watch the Spanish grumpy this weekend.
Now, let Tony on the pulled back to over to you Greg. Thank you very much.
Thank you Stefano and thank you Brian.
And to the listening audience. We appreciate your continued interest in Liberty media, Okay. Most of the health and safety.
And with that operator, we will open it up for questions.
Yes.
Thank you so on.
If you would like to ask the question again, Please press star one on your telephone keypad, if you're using a speaker phone. Please make sure youre on mute function is turned off to allow your signal to reach of equipment again that the star one to ask the question.
We will now take our first question from Jeff asked this on the research.
Please go ahead of your line is open.
Good morning, I had one on Siri and one on a formula one.
Greg It at 77, he ownership stake of Siri.
The all else being equal the probably going to crossover to 80 plus in the third quarter.
Dividends go tax free just wanted to get your latest thoughts on whether series is going to raise the dividend materially.
Or are you happy with the status quo on letting your buyback sort of continue the right hire and then on <unk>.
Just was wondering about the color on how the $145 million cost cap is going relative to your expectations. Thanks.
Paul I'll take the Syrian I'll, let Stefano speak to the cost cap on sorry look we I think that.
The pace may be just slightly aggressive Jeff I think it might be it depends on the stock price where series buying but it might be in Q4.
And then on one of those two quarters, we're likely to pass any.
Obviously any dividend policies that are put on.
It will be decided by the full board there but.
We have lots of alternatives on which we could.
Either.
Take advantage of those dividends to continue to go after the discounted Syria.
At the <unk>, rather of Siri to increase the dividend or potentially.
So and of that buyback hold ourselves above 80 and use the capital.
On to buyback our own stock. So they are really multiple ways to get the same result, which is we're going after the discount.
Whether it's.
Through their dividend, increasing or selling of the buyback we will be attacking the discount.
Definitely let me turn it to you about the cost GAAP.
Thank you, Greg and Jeff as you know cost of capitals being one of the most important of significant think that's full of Wilmington.
Nishu. This is managing the fact, not only because of the savings that the teams will make in the future, but also in the change of the mentality. The the major team has to apply with the organization to make sure that they can really be effective with the deferred line of expenditure and this is just the first step into a new way of managed and support the former one.
And I think thats facing if I see what is happening around the world that they don't want to focus just on the revenue side I think the footwear on is just top of the properties on the other way around but of course, the avenues crucial but now we have just taken the first step into the cost GAAP, we gonna take all the cost cutting of the area that does not close the in this moment.
And for the future, but we are putting assured but these are also of the covenants of the theme has been a huge step in making sure the the formula of sustainable products suite.
Alright, thank you.
Okay.
Thank you we will now take our next question from day at Morgan Stanley.
Please go ahead your line is open.
Yes.
Hi, good morning.
Greg just on the cash balance at Liberty Formula One I think it's a 1 billion eight and.
All signs point to a strong year ahead I'm just wondering at what point does that.
Some excess cash in the eyes of Liberty.
And then Stefano I have a couple of questions around the drivers, which I wondering if you can humor humor me a bit.
I have gotten questions from from investors around the retirement of Lewis Hamilton and bet on what that might mean to the sport and sort of the business I know theyre coming back in the coming back for next year at least but as you think about that and sort of the outsized impact they have on the sport you know how do you how would you suggest we think about it if it matters and how.
Do you manage that.
And then I was curious moving on.
On Miami, obviously huge.
Opportunity in the whole U S market as well as an American driver important.
N F. One in terms of driving popularity of here in the U S and do you have any expectations that we might see one anytime soon thank you.
So on the cash at Formula one really at the Holdco level one level.
I think of couple of things on our first of all we put that cash in place to ensure.
The health of the whole ecosystem not only the formula one.
The business that we own but really the teams and to ensure that we have liquidity and we did use some of that liquidity of four seven teams during.
During the pandemic, we still have.
The uncertainty about exactly what our revenues will be in 2021, you heard already we've had to cancel for example, Canada and put Turkey, and we are getting paid for that but those are a way reduced levels compared to what we would get if we had full fans. So we have a fairly large.
The contingency in our own budgeting for the potential that we will not get the kind of revenues that we hope and therefore that cash is useful you may also know that we committed in.
In the fourth purchase agreement with Almac. This back at least $250 million would go towards the pipe in any transaction. If we were to complete one so I think we're going to see potential per opportunities.
In that market that could be attractive to us as the spec market gets more turbulent that plays to way as I mentioned earlier, our strength and we wait may want to put some of the cash on that but as the year progresses, and we get more certainty about promoter revenue.
We will look at what we do with that cash on how to utilize it.
<unk>.
What is the most efficacious way to deliver value to our shareholders.
Yeah.
If I May know, Greg then because of the question related to the drivers there that the lease on that but the short leasehold is of great that Jim is doing an incredible job on the sports on side and some of image. It was able to grow the the former one and other AD is one of them they'll tell you specifically related to former one but total on itself is strong the strong.
Again the <unk>.
Drivers of <unk>.
The always in a place where the one day the may retire I don't know what Louis with building, we are talking with them, but of course now let's focus on these actual season is full of boosted to make sure that will be the OLED driver of that theyre going to win the eight titles.
In the history of from day one.
But the full one is solid and robust and for sure. What other leads of the season of Louis you know from a wildly the react they will move forward. The the good news is that Lewis of the old hope when the state will have an incredible season in terms of amendment with the new cars with the new challenge and push all of this will maybe that interest in all of them.
If it was decided that it's the way around I mean, the good news is that the four one we have so many good drivers today that the police the challenge of the chance would be even stronger and therefore of course, whatever all of these of the season, the lowest with respect but some of the line is really the solid and strong where they've got to Miami with the American drivers it is important.
The answer for me, it's very clear of these yes.
We have we are working with teams of play to understand what is really the possibility for the American drove the to come to the attention of approval on team in the short term. This could come I don't see that as being very pragmatic and realistic coming as the next two three years, but maybe after yes, I know that the team's watching of the good drivers.
But the if they're ready would be a big boost for the American tax because as we know facing drivers the puts the enthusiasm passion. The people wants to see these guys in the Florida. The hope of that we have is that the very very soon we have on the American drivers competing against so the addition of the promo on chocolate.
Thank you.
Yeah.
Thank you so on and then I will take our next question from Brian of Deutsche Bank.
Please go ahead good morning, Hi, Thank you good morning.
Would you be willing to size the onetime settlement impact on the first quarter of Formula One revenue for US and then separately, it's great to see Miami on the calendar next year I know, it's something you've been working on for three or four years.
Can you tell us about your plans for the event, maybe contrast, it to Austin and how significant do you think it will be for growing the sport in the U S and related to that you broadcast contract with ESPN is up for renewal I believe after next season. So how are you thinking about the opportunity with ESPN given their focus on ESPN plus.
Now Miami on the calendar and also the just the general progress you've made so far and growing in the U S. Thanks.
So I'll, let Brian talk about.
One time events in the first quarter revenue and then.
Hi.
On a weigh a little on ESPN and I'll, let Stefano as well the Brian start yeah as it relates to the settlement we can't comment on the specific details, but it did impact our results, but obviously when you look at the year over year results.
The fact that we have the the one race versus zero last year on the proportionate of revenue recognition was the material driver of that but we can't comment on the specific zone.
On the.
On the issue of the U S and ESPN look when we put that up.
Among the various broadcasters in alternatives.
A little over a year ago.
Chase.
And I was in total agreement had the belief that we were going to grow in popularity in the U S and our hand would be strengthened so due to both now doing Miami and doing drive to survive and all of the other things that we have going on from fan festivals to digital engagement. All of those are building our interest in the U S on us.
Stefano noted.
Many groups that heretofore have not been interested I have people coming up to me, who are saying I'm obsessed with formula one because of drive to survive.
Who are not our typical audience of women.
Teenagers.
Many different kinds of audiences that are expanding which is great. When we did that we took a shorter deal with ESPN that had a broader.
Set of exposure for us in terms of their eyeballs, but.
But it was not the highest.
The current deal we can get and it was not the longest deal we could get and in fact of with the opposite it was the least amount of money. The most amount of eyeballs in the shortest period of time because of our belief was that we would have a much stronger hand, as we went forward among the various bidders.
That is a good bet. It's one that we are winning and all of the reasons. We outlined before I think we will have a much strengthened.
Strengthened when we go to renew against that ESPN and other alternatives Stefan on what might you add.
Absolutely. The again I think that you know the good news is that the.
We are talking about some other race in the US Miami would be from culture with the digital kilos of window, what gives you the.
The way, we got a structure of the the show around it and the incredible news that the you know just a couple of weeks up the announcement day, the attention where they've got some of these events is really massive and and the expectation of getting the level of doesn't want the and this is the reason why we are building.
No.
On a good series of the communication.
Communications you'd see this of the.
The program in terms of communication with the with the medical community, because we want to maximize everything out of it.
I cannot say for example, one thing that it would be fantastic we've done the share.
The state of the Miami Gardens, with the Miami Dolphins the races multiple because of their you know they want to start the leaving the atmosphere and this will provide us the right platform in order to be the heavy lift showed the the value that we're going to generate from U S will be even higher and thus really the fundamentals of strategic thinking behind the fact.
If we go back to race in the United States.
Great. Thank you so much.
Thank you sort of and I tell you. The next question from Vijay.
Cash evercore.
Please go ahead.
Hi, good morning, So I have a couple of questions on Formula one.
Primarily probably for Stefano.
So what do you.
Thinking about rates promotions. This year, obviously, you have twice the races, but with or without fans in the different proportions of the fan how should we think about that are you getting flow promoter of revenues lettings.
Letting some of it based on plan on getting non non hosted in the rest of any any sort of thoughts because thats sort of the sort of the segment that has the most of the variability.
And then.
We've been seeing a lot more press releases coming out on sponsorship on Formula one with the new sponge, Japan is there a resurgence on that or is that sort of more of like a formalized process of letting us know on what's going on.
Because that seems to be probably one of the biggest growth drivers for the business long term and find the one for Greg.
Greg maybe it's too premature but from.
The other one becomes an ATB and Jan next year.
And you'll have grain from the ATB.
Any thoughts on what structurally you could do or would like to do if you can share. Thanks.
Thank you Vijay I mean, the first question related to the to the fact that of course, we out of the situation that is evolving with regard to the to the.
And this is of the people of track Greg goes on as I mentioned.
But we need to monitor the race by race case by case of course, the more we go in the hands of the more it's likely that the opening up.
The the defense will not have the direct effect on on the revenues, but the.
We have also content, but we cannot get into the page rather a rebuild of expected the attendance of the people of has no influence on the what would be the.
The effect on other so it's really a mixed situation, but the need to evolve the message I didn't get the question with the depth of responses should be J can you repeat that for me. Please.
Yes, definitely I mean, theres been lot of announcements zoom and bunch of other answers you've announced more recently I'm, just kind of incentives debt sort of a lease the sims.
Sponsorship.
In Formula one more recently or is it sort of the better disclosure for us.
No. It's just to show you just to show the fact that the interest 241 is getting back again at the levels that we really believe is the right. One so the fact that the despite the pandemic situation, but all of the company's debt.
The willing to engage and be our apartment is a great sign of trust on what we're beating of the future and we need to expenses.
The approach even stronger on the future.
And as far as structural.
Changes, we have no plan or intent today, obviously, having a second ATB today, the only ATB we have at Liberty media is the Braves, having a second ATB gives us flexibility if we want to create other spins.
But we have no plans today.
Alright, thanks, so much.
Thank you we'll now take our next question from David ask J P. Morgan.
Please go ahead.
Alright, thank you.
On the F. One.
We've seen Disney moved to shut down in Stark sports channels.
Parts of the Asia, just kind of interested to know how this impacts your first directly as I believe the carry of the series, but on a higher level of how you think this pivot to streaming will impact demand for sports content and some of those regions and then maybe just separately Stefan Stefan on as you noted viewership seems to be on a nice uptick.
Through the rates of so far would be interested to get your thoughts on how much you attribute this to the <unk>.
Red Bull Mercedes dynamic versus kind of the actions that you've taken off the track like chart the size like the social media outreach.
Well, if I may start from the cycling of David It's clear that the the by the show rates, but the engagement from residents of payment for the piece of it there's no doubt, but the thing is that there's one element. The other element is the fact that we really are engaging with more people that can be lumpy from quarter. One. Therefore, the fact that we are able to.
The attract other people too.
The way of languages that were not used to.
The produce before I think is also helping the fact of the viewership and the engagement the Medicaid for them because of the about not only the TV.
The social media platform and other.
Total OTT is showing that there is a lot of attention the lot.
So the interest for sure.
What is at the end of the track is very very important that there's no doubt the Bobby and this is for sure the.
A good sign for us.
Yeah.
Good.
I would totally agree.
But stefan on once you comment on the rest of it and then I'll add.
The first part.
Sorry, Greg on the language on my side of it.
Maybe you want to repeat your question because I don't think we cover sure Yeah sure of the question was about Disney and they're moved to shut down the star sports.
I think of parts of Asia, just wondering how that empower.
And then just your higher level thoughts on you have to have with the streaming and kind of what that means for demand.
So Stefan on why don't you sort of from commenting and then I'll give you I may have some views. Thank you.
Yes, absolutely. Thank you gave I mean, David we have of course as you know agreements in place. So we are expecting you know for that to be totally of postal. So we don't see that that's the problem, we see actually a big opportunity in terms of the growth of the Tvs and the engagements Seeger and Thats part of the world to find other solution, but the we are working on of course.
But the on the on this year the finite shouldn't be the with respect to anything that would happen.
So I think more broadly if you think about it.
More platforms is a positive for us and yes. They are the some of the legacy platforms may decline or even be eliminated but in general we're seeing new platforms created that as an opportunity to just the way that.
Yeah on here in the United States when satellite came in and eventually win.
Sales and other fiber alternatives came that created upward pressure on content costs.
Because of the bidding I think we will see the same opportunity and what we do worldwide at Formula One as usual, we'll have a tradeoff on exposure, which for ATV offers against <unk>.
In many cases higher short term rates for either over the top platforms or even more streaming platforms over the TV platforms like satellite or streaming platforms and will weigh on our total dollars available.
The against the exposure that we get from things like generally promoter value and advertising and sponsorship so.
I'm not so worried about these.
Sort of slower growth platforms being cut out by people like Disney on much more excited about the opportunity on the digital platforms, particularly the gain scale.
Oh.
Okay.
Okay.
Thank you we will now take our next question from David back on the outside of Aaron Berg.
Please go ahead it makes a lot of.
Great. Thanks, I've got two on F. One on just you.
Wanted to talk a little bit about the spring race format, maybe get a little bit of the thinking behind that it obviously adds incremental value to your partners, but more specifically as it relates to future economics do you expect this to add to the value you receive from your partners or is it more of.
Of just adding value to existing agreements and then secondarily.
Going back to the U S market and with the the TV deal and play in a few years.
I'm sure you've paid attention to what Ww. He did with Peacock I'm wondering if there is potential to sort of leverage the <unk> TB over the top platform in the way that can sort of augment.
The broader value of your U S broadcast and overall TV distribution rights.
Thank you David I mean with regard to the sprint sprint format I think.
It will be.
Beneficial to everyone on the.
If I had to answer straight delay to the the last part of the question of course, we expect to have more value of it first of all debt is action that would be very very positive in some of that type of debt will be organized because from Friday to Saturday presented there is something to talk about a lot.
A lot of action a lot of intensity.
That of course, this will have a bearing the effect on the people that will attempt of the race and this has been the.
The welcomed by all of the organizer and the very possibly the weight on top of it of course, that's something that we are offering to our media partners because we can create the new content. We can generate other form of entertainment in a new format that can be never deployed before and all sorts of the partners that have the chi.
Chance to on the previous to be in the 342 times of south of the even if the promo will be different of course, because the the center of the weekend will be the rates on some of them, but this is something that we believe that the levels on impact on the on the financial point of view.
On top of the of adding the excitement of what these rates is all about.
With regard to the.
The market the TV deal and the leverage.
And related to all of our tools, we believe that this will enable us to discussing the future even additional way all of the integrating our FTB OTT.
OTT platform that is going very very well in the future and therefore that will allow us to balance sheets from the fact that the market will be interest in other sports and the commitment that will be very very big on our side to make sure that this will happen.
Got it if I could add to what Stefano said on that I think we certainly watch what Ww day with Peacock and I think it's.
Somewhat indicative of the longer term trend.
Very few sports I believe have enough content to run their own over the top service as their primary vehicle. There's just not enough content. If you look at WWE they have tonnage.
Compared to us and so F on TV is a great asset.
For our.
Connectivity with fans and for our connectivity in particular with our most hardcore fans, but I don't believe its the plants are traditional broadcasters or other other over the top broadcasters, who are looking for a broader set of content of relationships. So I think we certainly watch that it's consistent with our view and I do believe.
We'll see that kind of opportunity with larger digital platforms and F. On television can be a part of the solution with them as you know.
Alright, thank you.
Thank you we will now take our next question from David Joyce with Barclays. Please go ahead.
Thank you two topics one is just another clarification on the promotion.
When you say it was worth the time does that mean it was just one promoter or the.
Are there any others the lingering out there and was within the range of the typical promotion fee.
And then secondly on sponsorship how should we think about the range of sponsorship types of contracts like how many of our based solely on the particular races versus the proportion of revenue that is really allocated across the season.
And are there any other types of new sponsorship structures. Thank you.
But I can I can do the promoter piece. It was one race and that's disclosed in our earnings release.
As it relates to the typical range of a promoter agreement we have a wide range. So it falls within that range yes.
The.
David the way they got to the sponsorship of the range of course depends on the on the on water.
The package that we have we have the official partner.
We have other kind of the relationship and the old relate the two really the rights of the thing on the half.
And so we have little impact of just about that all consistent with the seasonal with the old then touch on per ship.
Not related to the single event itself.
Yeah.
Alright, thank you.
Okay.
Okay.
Thank you. So we will now take our next question from John asked of Gabelli.
Line is open. Please go ahead.
Hi, Thank you.
Switching gears.
Sports gambling.
Probably saw I think dropped kings swings and so on so what are the benefits you might see from a.
And with the same.
Same plateau of Bali as it is now instead of anything that could actually help you.
John.
Take a shot at that I think.
All of those benefits are going to be secondary of not primary.
You'll have increased fan engagement there may be a.
Georgia is soon to open it appears.
Gambling will become legal in the near term in Georgia, it's not today, but it has been on the balance it looks fairly favorably inclined on the next in the coming cycles.
I think that will provide us some marginal revenue opportunities there, but I don't view it as a huge revenue line for us directly I view it secondarily of the interest and if we and baseball MLP can capitalize on that more broadly I think it just continues to draw on the fans not not clear that it is.
No of revenue line on the P&L directly.
Yeah.
Just as the second broader question on sports, you're probably seeing some of the disruption in England.
For the fans became engaged since the about around the Super League of saying.
Yeah, and just generally.
The fair amount of disruption that a lot of talk of P/e companies buying into Siri, a nothing happening is that an area, where you might see some opportunities or is the fact that the soccer team can be relegated to just makes it too risky.
No.
John we have looked at as many of those opportunities as we can possibly find.
We do think it's interesting we can debate what.
What's going on in each of the various leagues and where they stand in terms of their cycles on unlikely broadcast revenue and other kinds of opportunities. We do look to our experience both at Formula One and the Braves and what we'd like to think we have done positively with the league at Formula One and what we'd like to think we have done positively around things like.
Truest and the battery and think about how we can apply the skill sets that are inside liberty at various opportunities.
And we tried to sell that we have been a a good and long term strong owner.
Perhaps different than some of the other Americans have been perceived or how it's been received we haven't yet found the intersection of where somebody wants us and we want them, but we continue to look.
And I do think that disruption over there does create opportunity we have gone through we watch the Super League of interest because.
Before we were involved.
With Formula one there was certainly the talk of a breakaway at Formula one, which did not come to pass and we feel very confident we understand breakaways very well and I think we've pretty much eliminated debt opportunity of potential at Formula One is the side note.
Thank you.
Thank you. So we will now take our final question for today's conference from match U S. Benchmark. Please go ahead. Thank you.
Even apart from the Max for stop and literally banging wheels with the Lewis Hamilton on always seemed relatively cortisol off the track you'd probably have the most competitive of seasonal since I think 2012 for your Ferrari is coming back the Macquarie on land in the north.
It's on or off and I was just curious you've got a broad suite of changes coming next year on.
The competition on the track more competitive.
Does that give you on the pause the true nationwide.
Thank you Mark next year, even if this year seemingly is proceeding so strong right out of the gate.
Do you have any and all of the real real debt.
Okay.
Continue the roll on.
Well Matthew the changes has been already discussed the teams are already working on new cars of new regulation and the trading as already left the station. So we are very pleased because we are convinced that this year ease of that'd be a great season of next year with the changes that has been the plan there will be another great opportunity.
The showcase of what these formula one of them terminals.
The deal of always keeping the attention.
At the center and therefore, there is no other things, but the checking of everything.
All of his day to make sure that the changes will be Matthew from the cosmic <unk>.
Like the burden the possibility to have the biggest like that's the only two of three drivers, but even more and thats the objective.
From a really revealing.
Yes.
Look we're lucky the season's great.
The work that was done in the cockpit agreement.
By Chase and Ross Brawn and others.
We hope to only increase the competitive next year and we're very excited of Stefano noted about what's going on now and even more excited about what we can do in the coming years I think with that operator, we are done for the day. Thank you very much to all of you listening out there for your interest in Liberty.
And we look forward to speaking with you again next quarter if not sooner.
This concludes today's call. Thank you for your participation you may now disconnect.
Yeah.
[music].
Okay.
[music].
[music].
[music].
Ladies and gentlemen, thank you for standing by welcome to the Liberty Media Corporation 2020, Q1 earnings call.
During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session at that time. If you have the question. Please press star one on your telephone keypad.
As a reminder, this conference is being recorded based on.
I would now like to turn the conference over to Courtney Chun Chief portfolio Officer. Please go ahead.
Thank you 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. Its most recent form 10-K on 10-Q.
The media acquisitions forms S. One registration statement filed with the SEC. These forward looking statements speak only as of the date of this call on Liberty Media and Liberty Media acquisition expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained herein to reflect any change in liberty media or Liberty media.
Acquisition of corporations expectations with regard thereto or any change in 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 Sirius XM, including adjusted OIBDA on an adjusted EBITDA the required definitions and reconciliations for Liberty media and Sirius XM.
Schedules one through three can be found at the end of the earnings press release issued today, which is available on Liberty Media's website now I'd like to turn the call over to Greg Maffei, Liberty's President and CEO. Thank.
Thank you Courtney and good morning to all of you out there.
Today ill begin the call. Besides myself, we'll have formula one's president and CEO Stefano Domenicali.
And Liberty's, Chief accounting and principal financial Officer, Brian Wendling.
Beginning with Liberty Sirius XM, we continued our share repurchases purchasing of $114 million across <unk> and K shares from February through April the discount stubbornly remains and we repurchased at a look through price of.
On series of just over $4 per share.
We do expect to continue to take advantage of that stubborn discount opportunity.
Our ownership of Siriusxm as of April 26 stood at 77, 3%.
Im looking at Sirius XM itself, they're off to a fast start this year with self paid sub growth.
Sub growth of 83%.
While starts in the first quarter were the highest in the company's history and they reported record low first quarter churn.
We're also experiencing rapid growth and off platform advertising revenue.
360 out of the next generation platform is now in 2 million vehicles, providing valuable data and offering engaging features.
We expect it will be about 25% of this year's installs.
We are now the largest digital AD platform in North America, reaching almost two thirds of online audio listeners.
We're also continuing at Sirius XM, our expansion in the podcast segment with our acquisition of 99% and visible.
Furthering our content creation capabilities.
Turning to live nation.
You may have seen in today's earnings release from them concerts are back and in high demand for data in 2021. In fact, we of book twice as many shows in 'twenty one as we did in 19.
Brian The 2021 ACM entertainer of the year's on going on tour and the railroads festival with the headliner David Matthews band is another notable addition.
Following up on acquiring the majority stake in Vieques, we've begun our ticketed live platform and started equipping 60, plus concert venues to offer turnkey live streaming.
Hence we.
We continue to help of artists expand revenue and creative opportunities connecting them with more fans via deep and other means.
Looking at the Formula One group, we had phenomenal racing the season as Stefano will outline a little bit more in a minute.
You can see the battle between Lewis and Max it's going to be a very competitive youre also for third place and the constructive championships of lots of exciting racing.
The teams continue to execute well given the ongoing challenges from the pandemic.
<unk> will replace Canada in June showing the <unk>.
Sustained demand to expand GPS.
We've also extended our agreements with Canada and Japan.
Looking forward of the first we are looking forward to the first spread qualifying race in July at Silverstone and there'll be two more of those during the rest of the season.
Drive to survive or.
Our programming on Netflix continues to grow on <unk> on its third season, and it's also getting recognized on the awards circuits, both in the U S and Canada.
Finally, we look forward to seeing all of you in Miami in 2022.
Turning to Braves after a slow start to the season. Our record is just under 500 and we are close third in the least of game in the half out of first place.
We were helped by sweeping the net over the last three games.
Our number one on home runs of the season and also number one on average attendance almost 16000 per game that is if you exclude Texas, which we'd be third including Texas.
Bryan Caronia was named nationally play of the months of our April Tableau standard of all three pinch hit home runs in April the most by any Braves player in the calendar month for it and its franchise history.
And as of today, we expect to expand capacity.
Two of 100% of fans after opening the season at 33%.
Notably in partnership with Emory healthcare, the Braves are offering vaccine shots before enduring games against Philly Vince.
And to get vaccinated those gains will receive two free tickets to future range games as well.
And finally, the <unk> looking at the battery kitchen crop is expected to occupy their office space in July and Papa John's later in the summer demand for remaining office space remains very strong and the aloft and omni hotels had high occupancy on Friday night.
And Sir of night games are the nights in March with several Scott Sellouts on game nights.
We continue to make good progress on Almac the stack the <unk>.
Back market has changed the way.
We believe it to our benefit of some of the euphoria of Japan.
January and February has deflated, we believe recent weakness in the pipe marketplace, well for Liberty, given our strong balance sheet, our capabilities with investors and the.
The support that we have.
Finally, we wanted to share with you that we have recently published our SaaS B disclosure on our website as a part of our ongoing ESG efforts.
So with that I'd like to turn it over to Brian to discuss our financial results on a little more detail.
Thank you, Greg and good morning, everyone Liberty Sirius XM group had attributed cash restricted cash and liquid investments of approximately $1 billion, excluding $67 million of cash and restricted cash held at Sirius XM.
Of this balance is prior to paying the Formula One group $384 million to settle the live nation call spread in April the <unk>.
Settlement of the lot of initial call spread was the non taxable transaction among the tracking stock groups.
We also have $1 1 billion of Undrawn margin loan capacity of the parent level.
On a portion of our cash will be used in 2021 to repay our 225% live nation exchangeable bonds based on the fair value of the bonds at quarter end the amount of cash used would be $514 million.
As of May six the value of the Sirius XM stock held by Liberty Sirius XM group was nearly $19 billion and the value of the live nation stock held was $5 billion.
We have $3 2 billion in principal amount of debt against these holdings.
Total Liberty Sirius XM group attributed principal amount of debt is $13 2 billion, which includes $9 billion of debt held directly at Sirius XM.
Formula One group had attributed cash and liquid investments of $1 4 billion of quarter end. This excludes the $429 million of cash of held directly at the other one opco.
Post quarter end 401 group received the additional $384 million that we just discussed and proceeds related to the live nation call spread.
The total Formula One group attributed principal amount of debt was $3 6 billion, which includes the $2 $9 billion of debt held directly down at F. One, leaving $724 million of the corporate level.
And if one of $500 million revolver remains undrawn.
Please note that during the three months ended March 31, 21 of one began reclassifying certain components of previously reported in other revenue and the primary up one revenue the better aligned with the way of management currently evaluates the business.
Components reclassified in the primary up one revenue.
Generally relate to ethanol on TV subscriptions certain half two and half three related fees broadcast origination and support fees and digital advertising among others.
Additional detail on this re class, including the impact.
For the year's ended 12 31 19 in 'twenty. It can be found on schedule three to our earnings release, which will be posted on our website.
At quarter end, the Braves group had attributed cash and liquid investments of restricted cash of $218 million and attributed principal amount of debt of $678 million $676 million.
Liberty in our consolidated subsidiaries are in compliance with the debt covenants at quarter end.
And with that I'll turn it over to Savannah, the discuss formula one.
Thank you Brian and good morning also from my side. So 2021 has begun with the queue gentlemen, Jim momentum in the past few weeks, we announced the segment rates in the U S. The Miami gardens with the huge and positive reaction from our fans the teams in all of our partners.
Take the waste in the U S. Starting in 2022 provides a great opportunity for our sport and will ensure we continue to increase our strong focus and strong growth.
Last week, we announced that we'll have south of the 100 kilo meet the sprint qualifying formats three races. In 2021, following non human support from all of the teams.
<unk> will be exciting for all of our fence provide more on track action over the weekend.
Our partners and the teams greater commercial opportunities sales person.
One of the vendors for the new form of already reported a surge in Pekin state following the news that they would be hosting one of these events.
We have announced the three years extension of the Japanese Grand Prix.
This has always been on important ways for Formula one and we cannot wait for the price to cheer on day one.
We havent dependent that work partnership with the Canadian ground fleet by two years and welcome the new announced last week by the Bell media as entering the.
We have the two acquired the molecule base and maybe at least through multiple of staying away from group, which is the great news for the long term future and development of the Asa in Canada, while the global situation is too fluid to the COVID-19 pandemic for one of the show.
Ability to overcome the issue.
And compete in today's safety just last week, we provide the these can be the case, while we are not able to away from kind of this year. We have secured the replacement rates in Turkey at short notice, meaning we have Nokia used the number of they seem the Columbia.
The one is very exciting to see the level of interest from both the new and aesthetic location to host the exemplary and this gives us the possible option with required for 2021, but both of the opportunities for the future.
We have had very good conversation with all of our promoters and all of whom we expect the race of the season to go ahead of plan and just this week. We have had the confirmation that one thousands of fans will have 10 gearing, but none of the steadiness of lumpy and debt multiple will work on approximately 40%.
All of the capacity of the advanced on for the rates into at the time.
Alongside the busy start of the year off the track the basing on the track as the equally exciting dramatic we kicked it off of our 22 rates of season in Bahrain and haven't had the three treating races to date, which with the close of that overtake it and the Tac closer together that in the region.
The teams, although it's grown as mentioned with this bathroom for the championship playing now this could be of Golden year for Formula One.
The season operating buffet did not disappoint with the stop in security proposition because of pleading race between maximin Luis that was only the sizes and the final laps the.
Wed also strong showings by noise in Paris, and the Japanese Luca.
You'll get to know the score points in these first at flow rates for Alto <unk> and it looks like yes, it probably just because of yet I had.
The bulk of for the full first continuing to email the web has an amazing stat of the line in the rain and carry through for the weighted.
Impressive given the start in the third yes, indeed, the <unk> central Paris.
That's sort of mistaken qualified in the securities part of the program showing the continued strength of Macquarie.
Last week on the Portugal, let's say the spend adults of certain challenge stronger.
Lewis Hamilton clinched the hub for victory on imports of milk with both of the stopping of Poland. Louise The ahead of the stopping of check from the start of delays. So the red Bull get passed in the phases of the Hammond from before the seven kind of tempers the pull it all green until the stakes on both of these teammates of December stop at the bleach victory at once.
Again shows that there is a real battle on the way for the CEO title and we add on that the only the three day races in the.
The competition from the Thursday, It's also appears in the car.
<unk> expenses.
On the cloud on is making the early pace, but mainly themes in the midst still have something to prove and it is great to see fit out of the heating he's tried to get.
The effect of the Formula one of these rates of Nathan with fans of engagement is very high to date, we had the data for the phase two races that both of the 24 principal markets. We monitor and this showed PD viewership growth over both 2020 in 2019, with particularly strength in Italy, the Netherlands, France, the U K the U S within the space.
On the digital from unique users for Epsilon web and App have been up 77% on the equivalent rates in 2020, and social engagement and also increase with all of the printing media interaction in both of the first two way suite.
We continue to grow our social media following the reach of $36 5 million. After the immediate on the GP up from 35 millions of the theory of it.
That's one of TV, our otp profit as also stopped the second of strongly with the viewing peak concurrent view of each race weekend out of around three times higher of the 2020 season average and the engagement measured by the media deal with the over the course of the weekend is that more than 60% on the last year.
We launched an updated version of the App for the season the <unk>.
Many of additional features include the high video quality and allows us to control the viewing experience. The new version also makes it easier to find comfort in our collection, which includes over 2000 hours of footage and coverage of everything from peak in the last 50 years, along with our latest series debt to changing the dream of faulting.
He is now available on the 188 territories with the beat on that part of the CD pool, if they live within the 85.
Season, three of drive to survive the booth on March 19, and continues to build global popularity for the sports reaching number one on Netflix from 27 different countries and also globally.
And on the all utmost daily basis, we hear.
About how the show was broken into the new non typical plans. It was great. The to the these are the 2020 season and it seemed the best story of the virus the old mainly drivers changes I do highly recommend depths of nine which is a terrifying exhilarating and expiring. The show was nominated for the support any port of <unk>.
Pending city sports documentary and made the show at least in the momentum in cash equities.
For the UK broadcast awards.
Heading into the season, we have had numerous sponsorship of announcements we were pleased with new overbuild of partnership with the DHL a relationship which now spans across several vacates. The extent of that she will include the enhances emboldened and that's why on the esports EBITDA and.
And the president of <unk> digital channels as the official part wasn't doing let's say this is the Martin as of seats got provide them instead of other things because of the official dose of from an award. In addition, we announced the advisors and drive the culture official supplier and welcome global citizen of charity partner for all of what we raised as well.
The initiative.
We continue to engage the path to esports and have the very successful <unk> of visual Grand Prix during the off season.
Current drivers along with the homeless dogs on future prospects competing to win of a share of the one uncle thousands of dollars price point in their challenges.
Bulk of the convenience the Fortunately true diversity and inclusion of Formula one as part of all of the weird I suppose while on the initiatives, we announced the team of the only qualification of route for the F Y E sports the ceded broke cap issue.
This is our first female only competition and we hope it will encourage more drivers from the passionate and talented teammates the rates and community with the goal of it will be covering the first ever seen main driver to be signed by an official F. One esports seriously.
In closing Formula one is off to a strong start in 2021 building of the foundation put in place the last few years the eggs.
Houston is absolutely strong and the competition on the second thing I want to thank all of the dedicated employees of the Formula One full day continuous diligence and hard work and I Hope you will watch the Spanish grumpy this weekend.
I'll, let Tony the pulled back to over to you Greg. Thank you very much.
Thank you Stefano and thank you Brian.
To the listening audience. We appreciate your continued interest in Liberty media and hope you all stay healthy and safe.
And with that operator, we will open it up for questions.
Yes.
Thank you.
So if you would like to ask a question again. Please press star one on your telephone keypad, if youre using a speakerphone. Please make sure you're on mute function is turned off to allow your signal to reach of our equipment again that the star one to ask the question.
We will now take our first question from Jeff aspect of this is the research.
Please go ahead of your line is open.
Good morning, I had one on Syria, and one on the Formula one.
Greg It at 77 key ownership stake in theory.
The all else being equal you are probably going to crossover to 80 plus in the third quarter.
Dividends go tax free just wanted to get your latest thoughts on whether series is going to raise the dividend materially or are you happy with the status quo on letting your buyback of sort of continue the right higher and then on <unk> just.
Just was wondering about the color on how the $145 million cost cap is going relative to your expectations. Thanks.
Paul I'll take the Syria, now, let Stefano speak to the cost cap on sorry look we I think that.
The pace may be just slightly aggressive Jeff I think it might be it depends on the stock price and where series buying but it might be in Q4.
We're in it on one of those two quarters, we're likely to pass any.
Obviously any dividend policies that are put on <unk>.
It will be decided by the full board there.
We have lots of alternatives on which we could.
Either.
Take advantage of those dividends to continue to go after the discounted Syria.
The <unk>, rather of Siri to increase the dividend or potentially.
And of that buyback hold ourselves above 80 and use the capital.
To buyback our own stock. So there are really multiple ways to get at the same result, which is we are going after the discount and whether it's through.
Through their dividend, increasing or selling of the buyback we will be attacking the discount.
Definitely let me try to you about the cost cap.
Thank you, Greg and Jeff as you know cost of capital as being one of the most important of significant think that's full of London's disease. This year.
And the fact not told the because of the savings that the teams will make in the future, but also in the change of the mentality that the.
The team has to apply with the organization to make sure that they can really the effectively the different line of the expenditure and this is just the first step into a new way of medicines for the former one and I think that the you know you're facing if I see what is happening around the world that everybody is focused just on the revenue side I think that's the one is just top of the parts of that.
On the other way around the of course revenues crucial but now we have just taken the first step into the cost of capital we do not take all the cost cutting of the area that does not close the in this moment the at the edge of for the future, but we are putting assured but he's out also of the problems of the theme, which has been a huge step in making sure the the formula of sustainable products suite.
Alright, thank you.
Yes.
Thank you we will now take our next question from Dan at Morgan Stanley.
Please go ahead your line is open.
Hi, good morning.
Greg just on the cash balance at Liberty Formula One I think it's 1 billion eight and all.
All signs point to of a.
The strong year ahead, I'm, just wondering at what point does that.
Become excess cash in the eyes of Liberty.
And then Stefano I have a couple of questions around driver, especially I wondering if you can humor humor me a bit.
I have gotten questions from from investors around the retirement of Lewis Hamilton and bet on what that might mean to the sport and sort of the business I know theyre coming back in the coming back for next year at least but as you think about that and sort of of the outsized impact. They have on the sport you know how do you how would you suggest we think about it if it matters.
How you manage that and.
And then I was curious moving on.
On Miami, obviously huge.
Opportunity in the whole U S market as well as an American driver important.
N F. One in terms of driving popularity of here in the U S and do you have any expectations that we might see one anytime soon thank you.
So on the cash at Formula one really at the Holdco level one level.
I think of couple of things to note first of all we put that cash in place to ensure.
The health of the whole ecosystem not only the formula one.
The business that we own but really the teams and to ensure that we have liquidity and we did use some of that liquidity for some teams during.
During the pandemic, we still have.
The uncertainty about exactly what our revenues will be in 2021, you heard already we've had to cancel for example, Canada.
Canada, and Turkey, and we are getting paid for that but those are a way reduced levels compared to what we would get if we had full fans. So we have a fairly large.
The contingency in our own budgeting for the potential that we will not get the kind of revenues that we hope and therefore that cash is useful you may also know that we committed in.
And the forward purchase agreement with Almac. The fact that at least $250 million would go towards the pipe in any transaction. If we were to complete one so I think we're going to see potential for opportunities.
In that market that could be attractive to us as the spec market gets more turbulent that place to way as I mentioned earlier, our strength and we wait may want to put some of the cash on that but as the year progresses, and we get more certainty about promoter revenue.
We will look at what we do with that cash on how to utilize it.
<unk>.
What is the most epic efficacious way to deliver value to our shareholders.
Yeah.
If I may know Greg than does the the question related to the drivers with the depth of the soundness of the shortly some of these are great.
He is doing an incredible job on the sporting side and some of the image. He was able to grow the the former wanting other AD is one of them they'll tell you specifically related to <unk>, but total on itself as strong or stronger on the drivers.
Drivers of churn business.
I'd always in a place where the one day the may retire I don't know what Louis with the wind we are totally within but of course now we just focus on the actual season is full of boosts of to make sure that will be the only driver, but they are going to win the eight titles.
In the history of from the one about.
But the full one is solid and robust and for sure whatever the needs of the seasonal of Louise.
From a wildly the react that will move forward for the the good news is that we lose.
As we all hope wouldn't state will have an incredible season and from the amendment with the new cars will be the new challenge and push all of these will maybe that interest in on him.
If it was decided that it's the way around I mean, the good news is that the per one we had so many good job is today that the police the challenge of the chance will be even stronger therefore, the of course, what other all of these of the season, the lowest with respect but still more on these were the solid and strong with regards to Miami with the American drivers it is important.
The answer for me, it's very clear these yes.
You know we have.
Working with teams of play to understand what is really the possibility for American drive the to come to the attention of the approval on theme on the short term. This could come I don't see that as being very pragmatic and realistic timing of the next two three years, maybe after yes, I know that the teams are watching are the good drivers that the.
The ready would be a big boost growth.
For the American tax because as we know you know face of drivers the puts the enthusiasm passion. The people wants to see these guys and therefore, the hope of though we have is that the very very soon we have on them most of them.
Drivers of competing against all of this is the promo on chocolate.
Thank you.
Thank you so I mean I would take our next question from Brian <unk> Deutsche Bank.
Please go ahead of good morning.
Hi, Thank you good morning.
Would you be willing to size the onetime settlement impact on the first quarter of Formula One revenue for US and then separately, it's great to see Miami on the calendar next year I know its something <unk> been working on for three or four years what.
What can you tell us about your plans for the event, maybe contrast, it to Austin and how significant do you think it will be for growing the sport in the U S and related to that you broadcast contract with ESPN is up for renewal I believe after next season. So how are you thinking about the opportunity with ESPN and given their focus on ESPN plus.
Now in Miami on the calendar and also the just the general progress you've made so far and growing in the U S. Thanks.
So I'll, let Brian talk about.
The one time events in the first quarter revenue and then.
Ill.
Want to weigh a little on ESPN and I'll, let Stefano as well the Brian start yes, as it relates to the settlement we can't comment on the specific details, but it did impact our results, but obviously when you look at the year over year results.
The fact that we have the the one race versus zero last year on the proportion of revenue recognition was the material driver of that but we can't comment on the specific zone.
Yeah.
On the on the.
On the issue of the U S. On ESPN look when we put that up.
Among the various broadcasters in alternatives.
A little over a year ago.
Chase.
And it was in total agreement had the belief that we were going to grow in popularity in the U S. In our hand would be strengthened.
Due to both now doing Miami and doing drive to survive and all of the other things that we have going on from fan festivals to digital engagement. All of those are building our interest in the U S and as Stefano noted and many groups that heretofore have not been interested I have people coming up to me, who are saying I'm obsessed.
First with Formula one because of the drive to survive.
Who were not our typical audience.
Women.
Teenagers.
Many different kinds of audiences that are expanding which is great. When we did that we took a shorter deal with ESPN that had a broader set of exposure for us in terms of their eyeballs, but it was not the highest.
The current deal we can get and it was not the longest deal we could get and in fact it was the opposite it was the least amount of money. The most amount of eyeballs on a short period of time, because our belief was that we would have a much stronger hand, as we went forward among the various bidders I think that is a good bet. It's one that we are winning and all of the reasons we.
I outlined before I think we will have a much strengthened.
Strengthened when we go to renew against that ESPN and other alternatives stepping on what might you add.
Oh, absolutely Yeah again, I think that's you know the good news is that the.
We are talking about the other way in the.
The us Miami digitally culture with the digital he loves the window.
The weighted if we got a structure of the the show around it and the incredible news that the you know and.
Just a couple of weeks up the Elwood announcement day the attention.
They've got to this event, because really massive and the expectation of getting the level of doesn't want the and this is the reason why we are building.
On a good feeders of all.
The communications, let's see.
The program thermal communication with the medical community, because we want to maximize everything out of it.
I cannot keep the anticipated for example, one thing that the would be fantastic we've done the share.
With the state of the Miami Gardens, with the Miami Dolphins the.
The the races multiple because there you know they want to start the leaving the atmosphere and this will provide us the right platform in order to be at that day.
So the the value that we got from you actually would be even higher and thats really the fundamentals of beds.
I think you'd be on and the fact, the because I have to race in the United States.
Great. Thank you so much.
Thank you sort of and I tell you. The next question from Vijay.
Evercore piece.
Please go ahead.
Hi, good morning, So I have a couple of questions on Formula one.
Primarily probably for Stefano.
So what are you thinking.
Think about rates promotions. This year, obviously, you have twice the races, but with or without fans in the different proportions of the fan how should we think about that are you getting flow promoter revenue lettings.
Letting some of it based on fans are getting non non hosted in the rate of any any sort of thoughts because thats sort of the sort of on the segment that has the most of the variability.
And then.
We've been seeing a lot more press releases coming out on sponsorship on Formula one with the new sponge, Japan is there a resurgence on that or is that sort.
More like a formalized process of letting us know on what's going on.
Because that seems to be probably one of the biggest growth drivers for the business long term and find the one four or Greg maybe it's a little premature but.
One of the one becomes an ATB and Jan next year.
And you'll have grades of the ATB.
Any thoughts on what structurally you could do or would like to do if you can share. Thanks.
Thank you Vijay I mean, the first question related to the to the fact that the of course, we have the situation that is evolving with regard to the to the.
Attendance is of the people of tracked well Gregg those are the mentioned the kingdom.
We need to monitor the race by race case by case of course, the movie going ahead of the more of a it's likely that the opening up.
The the defense will not have the direct effects on on the revenues.
Also content, but we cannot get into the day to add we don't expect that the attendees of the people of has no influence on the what would be the.
The effect on other so there's really a mixed situation, but the need to evolve the message I didn't get the question with regard to the sponsorship B J can you repeat that for me. Please.
Yes, definitely I mean, theres been announcements zoom and bunch of other answers you've announced more recently I'm just kind of incentives the sort of a lease the spot.
And the ship in Formula one more recently or is it sort of the.
Ben of disclosure for us on.
No.
Just to show you just to show of the fact that the interest to full one is getting back again at the levels that we really believe is the right. One so the fact that the despite the pandemic situation, but all of the company's debt.
The willing to engage and be our apartment is a great sign of trust on what we're beating of the future and we need to expenses.
The approach even stronger in the future.
And as far as structural.
The changes we have no plan or intent today, obviously, having a second ATB today, the only ATB we have at Liberty media is the Braves, having a second ATB gives us flexibility if we want to create other spins.
But we have no plans today.
Alright, thanks, so much.
Thank you we'll now take our next question from David ask J P. Morgan.
Please go ahead.
Alright, thank you.
On the F. One.
We've seen Disney moved to shut down and start sports channels.
Parts of the Asia, just kind of interested to know how this impacts your first directly as I believe the carry of the series, but on a higher level of how you think this pivot to streaming will impact demand for sports content and some of those regions and then maybe just separately stepped on.
Seven of them as you noted viewership seems to be on a nice uptick.
Through the rates of so far would be interested to get your thoughts on how much you attribute this to the rebel Mercedes dynamic versus kind of the actions that you've taken off the track like chart the size like the social media outreach.
Well, if I may start from the cycling of David It's clear that the the by the show rates, but the engagement from residents of payment for the piece of it there's no doubt, but the thing is that this is one element of the other element is the fact that we really are.
Engaging with more people that the 11th for more one therefore, the fact that we are able to attract other people too.
Each of the way of languages, we're not used to.
We use before I think is also helping the fact of the viewership and the engagement of the Medicaid for them because of the about not only the TV media thinking about the social media platform and then the other element of OTT, we showing that there is a lot of attention the lot.
The lead times for sure.
What is happening on the track is very very important that there's no doubt the Bobby and this is for sure.
A good sign for us.
Yeah.
Good.
I would totally agree.
But separately why don't you comment on the rest of it and then I'll add.
The first part.
Sorry, Greg on the language.
We're excited.
Maybe you want to repeat your question because I don't think we cover sure Yeah sure of the question was about Disney and they're moved to shutdown the star sports.
I think of parts of Asia, just wondering how that empower you directly and then just your high level thoughts on the activity.
We have with the streaming and kind of what that means for demand.
Stefan on why don't you sort of from commenting and then I'll give you I may have some views. Thank you yes.
Yes, absolutely. Thank you gave I mean, David we have of course as you know agreements in place. So we are expecting you know for that to be totally the post. The so we don't see that there's a problem, we see actually a big opportunity in terms of the growth of the Tvs and the engagements Seeger and debt talked of the world to find other solutions that the.
We are working on of course, but the on the on the share the finite shouldn't be the with respect to anything that would happen.
So I think more broadly if you think about it.
More platforms is a positive for us and yes. They are the some of the <unk>.
Legacy platforms may decline or even be eliminated but in general we're seeing a.
New platforms created that as an opportunity to just the way that.
Here in the United States when satellite came in and eventually win buyouts on other fiber alternatives came that created upward pressure on content costs.
Cause of the bidding I think we will see the same opportunity and what we do worldwide at Formula One as usual, we'll have a trade off on <unk>.
Exposure, which for ATV offers against from.
Many cases higher short term rates for either over the top platforms or even more streaming platforms over the TV platforms like satellite or streaming platforms, and we will way our total dollars available.
The against the exposure that we get for things like generally promoter value and advertising and sponsorship so.
I'm not so worried about these.
Sort of slower growth platforms being cut out by people like Disney on much more excited about the opportunity from the digital platforms, particularly the gains scale.
Okay.
Thank you.
Okay.
Thank you we will now take our next question from David back on the outside of Ehrenberg.
Please go ahead of it makes a lot of the.
Great. Thanks, I've got two.
On F. One on.
I wanted to talk a little bit about the current race format, maybe get a little bit of the thinking behind that it obviously adds incremental value to your partners, but more specifically as it relates to future economics do you expect this to add to the value you receive from your partners or is it more of.
Part of just adding value to existing agreements and then secondarily on.
Going back to the U S market and with the the TV deal and play in a few years I'm sure you've paid attention to what took the W. E did with Peacock I'm wondering if there is potential to sort of leverage the <unk> TB over the top platform in the way that can sort of augment the broader value of.
Your U S broadcast and overall TV distribution rights.
Thank you David I mean with regard to the sprint the sprint format I think.
It will be better.
Officials to everyone on the.
If I add two answers day delay to the the last part of the question of course, we expect to have more value out of.
The first of all debt is action that would be very very positive and some of that type of debt will be on a good idea because from Friday to Saturday to Sunday, there is something to talk about.
A lot of action on lot of intensity debt is something that of course this will have a.
That was the effect on the people that will attempt of the race and this has been the.
The welcomed by all of the organizer and in the very possibly the weight on top of it of course, that's something that we are offering to our media partners because we can create the new content. We can generate other form of entertainment in a new format that that's the never deployed before and all sorts of the partners that have the <unk>.
Chance to on the previous to be in the 342 times of south of the even if the promo will be different of course, because the the sensor of the weekend will be the rates on some of them. But this is something that we believe that the will have also on impact on the on the financial point of view.
On top of the of adding the excitement of what these rates and it's all about.
With regard to the.
The market the TV deal and the leverage.
And related to all of our tools, we believe that this will enable us to discussing the future even additional way all of the integrating our FTB OTT.
OTT platform that is going very very well in the future and therefore that will allow us to balance sheets from the fact that the market will be interesting other sports and the commencement of it will be very very big on our side to make sure that this will happen.
Got it if I could add to what Stefano said on that I think we certainly watch what Ww day with Peacock and I think it's.
Somewhat indicative of the longer term trend.
Very few sports I believe have enough content to run their own over the top service as their primary vehicle. There's just not enough content. If you look at WWE they have tonnage.
Compared to us and so F on TV is a great asset.
For our free.
The connectivity with fans and for our connectivity in particular with our most hardcore fans, but I don't believe its the plants are traditional broadcasters or other other over the top broadcasters, who are looking for a broader set of content of relationships. So I think we certainly watch that and it's consistent with our view and I do believe.
We'll see that kind of opportunity with larger digital platforms and F. On television can be a part of the solution with them as you note.
Great. Thank you.
Thank you we will now take our next question from David Joyce with Barclays. Please go ahead.
Thank you two topics one is just another clarification on the promotion.
When you say it was worth the time does that mean it was just one promoter or other.
Are there any others the lingering out there and was within the range of the typical promotion fee.
And then secondly on sponsorship.
How should we think about the range of sponsorship types of contracts like how many of.
Are based solely on the particular races versus the proportion of revenue that is really allocated across the season.
And the other types of new sponsorship structures. Thank you.
But I can I can do the promoter piece it was one rates and that's disclosed in our earnings release.
As it relates to the typical range of a promoter agreement we have a wide range. So it falls within that range yes.
The.
David the with regard to the sponsorship of the range of course depends on the on the on what the.
The package that we have we have the official partner.
We have other kind of relationship and the all the I relate the two of really the rights of the thing on the half.
And so we have little impact on just about that all consistent with the seasonal with the old on subprime.
And not related to the single event itself.
Yeah.
Alright, thank you.
Okay.
Yeah.
Thank you. So we will now take our next question from John asked of Gabelli.
Is open please go ahead.
Hi, Thank you.
Switching gears.
Sports gambling.
Probably saw I think dropped kings swings and so on.
What are the benefits you might see from all of our.
Sandwich.
The same player on Bali as it is now instead of anything that could actually help you.
Yeah.
Yes.
Take a shot at that I think.
Those benefits are going to be secondary of not primary.
You'll have increased fan engagement there may be.
Georgia is soon to open it appears.
Gambling will become legal in the near term on George its not today, but it has been on the balance it looks fairly favorably inclined on the next in the coming cycles.
I think that will provide us some marginal revenue opportunities there, but I don't view it as a huge revenue line for us directly I view it secondarily of the interest and if we and baseball MLP can capitalize on that more broadly I think it just continues to draw of the fans not not clear that it is.
No of revenue line of the P&L directly.
And just as the second quarter question on sports, you're probably seeing some of the disruption in England.
One of the fans became engaged since the about around the Super League Youre, saying.
Yeah, just generally.
The fair amount of disruption that a lot of talk of PE companies buying into Siri, a nothing happening is that in the area, where you might see some opportunities or is the fact that the soccer team can be relegated just makes it too risky.
No.
John we have looked at as many of those opportunities we can possibly find.
We do think it's interesting we can debate what.
What's going on at each of the various leagues and where they stand in terms of their cycles on Luckily broadcast revenue and other kinds of opportunities. We do look to our experience both at Formula one and the Braves and what we'd like to think we have done positively with the league of Formula one of what we'd like to think we've done positively around things like Ah.
True it and the battery and think about how we can apply the skill sets that are inside liberty at various opportunities.
And we tried to sell that we have been a a good and long term strong owner.
Perhaps different than some of the other Americans have been perceived or how P has been perceived we haven't yet found the intersection of where somebody wants us and we want them, but we continue to look and.
And I do think that disruption over there does create opportunity we have gone through we watch the Super League with interest because of.
Before we were involved.
With Formula one there was certainly the talk of a breakaway at Formula one, which did not come to pass and we.
We feel very confident we understand breakaways very well and I think we've pretty much eliminated that opportunity or potential at formula one at the side note.
Thank you.
Yeah.
Thank you sort of when it would take our final question for today's conference from match U S. Benchmark. Please go ahead. Thank you.
Even apart from the Metro stop and literally banging wheels with Lewis Hamilton always seemed relatively cortisol off the track you'd probably have the most competitive of seasonal so I think 2012 through the Ferrari is coming back from Macquarie.
Land on north.
It cetera, and I was just curious you've got a broad suite of changes coming next year on.
The competition on the track more competitive.
Does it give you any pause the true.
Thank you Mark next year, even if this year seemingly is proceeding so strong right out of the gate.
Do you have any and all of you reaffirmed your EBITDA itself.
Reassess the painters.
The roll on.
Well Matthew the changes has been already discussed the teams are already working on new cars and the regulation and the training is already left the.
Station. So we are very pleased because we are convinced that this year is already a great season of the next year with the changes that has been the plan there will be another great opportunity to showcase of what these formula one from terminals on the ability of always keeping the attention.
The center and therefore, there's no other things, but the checking that everything in terms of.
All of these days to make sure that the changes will be Matthew from the cosmic <unk>.
Highlights of burden that the SCB is to have a bigger site not only two of three drivers, but even more and thats the objective.
Thanks stuff from a really a riveting, but yes.
Look we're lucky the season's great.
The work that was done in the cockpit agreement.
By Chase and Ross Brawn and others.
We hope to only increase the competitive next year and we're very excited as Stefano noted about what's going on now and even more excited about what we can do in the coming years I think with that operator, we are done for the day. Thank you very much to all of you listening out there for your interest in Liberty and we look forward to it.
Speaking with you again next quarter, if not sooner.
This concludes today's call. Thank you for your participation you may now disconnect.