Q1 2022 Liberty Media Corp Earnings Call
Ladies and gentlemen, thank you for standing by welcome to Liberty Media Corporation first quarter 2022 earnings call. During the presentation. All participants will be in a listen only mode. Afterwards, we will conduct a question answer session at that time. If you have a question. Please press star one on your telephone as a reminder, this conference is being recorded.
Next 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 that this call includes certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, and actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in Liberty Medias. Most recent forms 10-K, and 10-Q are Liberty media acquisitions.
Most recent forms 10-K, and 10-Q filed with the SEC. These forward looking statements speak only as of the date of this call and Liberty media and Liberty Media acquisition expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained herein to reflect any change in Liberty media Liberty media.
<unk> 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 and adjusted EBITDA, the required definitions and reconciliations for Liberty media and Sirius XM schedules, one and two 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 Liberty, President and CEO , Greg Maffei.
Thank you coordinate and good morning to all of our listeners.
Today speaking on the call. We'll also have formula one's president and CEO Stefano Domenicali.
Liberty's, Chief accounting and principal financial Officer, Brian Wendling.
So I'll begin with Liberty Sirius XM.
We received 872 million of gross dividends from CRE tax free in the first quarter, including the special and regular dividend, we because of the nature of our convertible bonds, we had to pass through a $30 million of that special dividend. We continued our share repurchases repurchasing 182 million across <unk> SMA and <unk>.
K from February to April .
We repurchased those at a look through price on CRE of about $3 56 a share.
We of course remain just disappointed with the discount and attack it as much as we can we are very focused on long term value creation for our shareholders.
Now looking at Sirius XM itself.
Solid start to the year continued to perform well financially despite a challenging auto market.
Revenue was up 6% monthly churn was wonderful down at one 6% and we had record <unk> up 9% new car penetration for Sirius XM is now at 83% and has enabled a fleet of 146 million cars here in the U S.
As expected self pay net adds were down slightly due to challenges in the auto market.
This was partially offset by strength in digital and we had a 50% increase in the subs listening digitally to our on demand content.
I'd also note, we launched our first ever streaming channel freakonomics dedicated to podcasts and available across all the platforms.
Essex and media was named the number one podcast AD network. According to Edison Research and we represent four of the top 15 podcasts in the country with the addition of <unk>.
Crooked media and this month.
Also beginning with this year's Masters Sirius XM has the exclusive audio provider for the 20th MIT and providing excellent programming across all four rounds.
Turning to live nation.
Five lives first best quarter ever.
Including a yet another record quarter at Ticketmaster and compared to 2019, a OIS up two times transacted GTD is up 39% and sponsorship is up 75%.
We expect a record 2022.
We've already sold 70 million concert tickets and expect double digit fan growth versus 2019.
Concert ticket pricing is up double digits over 2019 due to sand demand for the best seats.
And over 90% of our planned sponsorship net revenue is already committed.
Turning to Formula One group on the corporate side, we repurchased 348001 shares for $20 million or $56 14, a share.
And looking at that point itself.
Thrilling start to the 2022 season.
So far we've had battles back and forth on who will be on the podium each weekend.
Spread event at MLR brought exciting qualifying results and the format is working well with the new regulations and producing strong viewership numbers the spread audience is up 28% versus the qualifying last year at MLR.
We also see record demand in the U S. Early in the season on ESPN viewers for the Sunday race in both Saudi and Bahrain were up 56% and that was the most viewed race since ESPN reacquired the formula one rights in 2018.
The momentum in the United States continues with this weekend's inaugural Miami GP and of course, you can't have not heard about the announcement of our Las Vegas G. P for November 2023.
As we've noted before that'll be a night race down the strip and notably in differently than most places formula one that Liberty media, our self promoting the race in partnership with local stakeholders and live nation.
The build out for this track will require increased capex and opex to develop and it's truly provide you with numbers, but we intend to update you later this year.
I would note that Liberty media did enter an agreement to acquire 39 acres east of the strip to lock in circuit design and create capacity for the pit and panic among other hospitality and race support venues I expect that transaction will close in the second quarter and the purchase price was $240 million will be funded by cash on hand at the Formula One group level.
We announced numerous commercial announcements, including on the media rights signed an extension with box Hill group in Australia, and can now <unk> in France.
Sponsorship is off to an exciting start this year with several new deals, including two new global partners, MSC and Salesforce and.
And we look forward to more announcements as the year progresses.
We also look forward to seeing some of you this weekend in Miami.
Turning to Braves.
We started the season with a week long World series Champions celebration include.
Including delivering World Championships rings to the players.
We've completed less than 20% of the season, it's a long way to go and last season showed how far things can change over this 162 games. We are hovering at around the same record as last year and we all know how that turned out at least we did manage the split with the Mets over the last couple of days.
We are excited about our roster we signed for space met Olson, a 27 year old Atlanta Native we strengthen the bullpen with Janssen addition, and we're thrilled to welcome Ron Lacuna Junior back in the lineup this week.
While it is Julian the season financial performance has already been incredible.
Going to the season, we had the highest season ticket sales and more than two decades, we sold out all of our multi year premium seats for the first time ever and opened our renovated Delta club and retail and concession sales have been strong for the first few homes dance, including so selling out most of our gold program jerseys.
As you undoubtedly know a new CPA was signed in March.
There'll be minimal impact from the late starts since the last games were away games, and we still expect a full 162 games season.
In January we also completed the sale of three minor league teams.
And then final exciting news.
We raised debuted the digital Truest Park in April for future <unk> band opportunity engagement.
Turning briefly to Almac nothing to report.
Port today, obviously, we will announce when we have something that I would note the environment, which is very difficult as many of you know I think does favor us and we continue to look at some interesting opportunities and with that I'll turn it over to Brian for more on our financial results.
Thank you Greg and good morning, everyone. In January we settled exchanges of the 2.25% live nation exchangeable bonds.
For total consideration of 664 million.
Funded with cash and margin loan draws at quarter end Liberty Sirius XM group has attributed cash and liquid investments and liquid investments of approximately $634 million, which excludes $76 million of cash held at Sirius XM.
There was also 1 billion of Undrawn margin loan capacity at the parent level related to our Sirius XM and live nation margin levels.
As of May 1st the value of the Sirius XM stock held at Liberty Siriusxm Group was $19 7 billion and the value of the live nation stock held for $6 6 billion.
We have $3 billion and principal amount of debt against these holdings.
Total Liberty Sirius XM group attributed principal amount of debt is $13 9 billion, which includes $9 9 billion of debt at Sirius XM.
Formula One group had attributed cash liquid investments and monetize will public holding $1 6 billion at quarter end.
Which excludes $834 million of cash held directly at Formula one.
Total Formula One group attributed principal amount of debt was $3 4 billion, which includes $2 9 billion of debt at Formula one, leaving $454 million at the corporate level.
F. One 500 million dollar revolver is undrawn.
Formula one's leverage at the end of the quarter was three seven times meaningfully within our target leverage range of less than five times as of <unk>.
Quarter end, we're no longer in a period of covenant waiver.
Looking at a few cash items on Formula one formula one estimated cash tax rate in 2022 to be single digit mid single digit percentage of adjusted OIBDA, increasing modestly to low double digits in 2023 and thereafter as a result of the U K tax.
Tax rate increase that.
Effective next year.
Formula One is currently undergoing a project to refurbish and upgrade its UK based media and technology Center out of Big and Hell in the U K, where it's broadcast production and other technical activities and related staff our base.
Formula one expects to incur about $40 million of incremental capex associated with this project approximately half of which will be recognized in 2022 and the remainder next year.
This elevated capex excludes any capex necessary to support the launch of velocity I guess Grand Prix in 2023, and as Greg mentioned, we will provide updates on that later in the later in the year.
As a reminder, under the current Concorde agreement team payments now take the form of an entirely variable priced bond, which is now calculated based on F. Once adjusted EBIT rather than adjusted EBITDA.
The adjusted EBITDA measure that was using the previous agreements such that the calculation now takes account.
Capex, which is incurred through including depreciation costs in the calculation.
Finally at the Braves group at quarter end they have attributed.
<unk> cash and liquid investments of $311 million, which excludes 26 million of restricted cash raise.
Braves group had attributed principal amount of debt of $678 million.
As Greg mentioned the Braves completed the sale of three minor league teams in January proceeds are included in our financial results.
Disposition in the first quarter and you can see additional details on that in our 10-Q, which will get filed later today.
Liberty and our consolidated subsidiaries are in compliance with our debt covenants at quarter end.
With that I'll turn it over Stefano to discuss Formula one.
Thanks, Brian I'm thrilled to be my aim at this morning, as we have set for the inaugural Miami Grand Prix. This.
It is buzzing with excitement and we're looking forward to the weekend.
The 2022 season is off to a phenomenal start the many changes to the cause of regulation have resulted in improved racing. The cars now follow more closely enabling greater opportunities for wheel to wheel racing. We drive is trading position multiple times, making that I think most of a tangent.
Really above the moves.
Sprint is back and we held our first event of the season anymore that came down to the final few labs. It turned out to be a grand Slam weekend for reps heading qualified before winning both the race and the sprint and security of the extra point for the fastest lap.
The first strength of the seasonal recorded a total audience of $8 4 million.
28% versus qualifying at the same Grand Prix in 2021 with strong growth in Brazil and in the U S D.
Even though we can on this case for Italy website recorded up 74% increase in unique user compared to the email the GB in 2021.
Well, that's one social platforms. We so one of the 149 Media's video view up 36%. This is email that in 2021 and 45 millions engagements a 43% increase versus 2021. However, the start of the season. So far has karate, which has shown real.
Strength with a cat and shows the cloud could be leaving the drivers championship by 27 points redbull catching up and we expect the season to continue to create great racing and close that loop dropped.
The construction has continued to refine the new cars, we expect more surprises during the season and opportunities for great racing across the grid.
As confirm on our last earnings call, we will not be raising them rushing in September we had a current delinquency the options for the sport and hope to announce more information soon.
The action on the track is certainly drawing in the audience through email at the average the oldest grand Prix across the main Saturday and Sunday sessions is $23 8 million and is up 10% versus 2021 season average in the U S. The Saudi Arabian Grand Prix growth in over one 4 million average.
Viewers, the ninth highest of all times and second highest is on cable.
And at the raised himself the Fas back in huge numbers, we had record attendance Zimbabwe in Saudi we add the 140000 and fence over the weekend with full capacity Melbourne was the largest weekend ever in Australia in sporting history with 420000 fence. So long.
Advanced ticket sales almost every web suggests we may continue to see sellouts at the races for the remainder of the season, including here in Miami.
We were thrilled with the response to season four of drive to survive. This heaters most popular season yet.
On the opening weekend fans consumed 28 meters hours of drive to survive and the show was ranked number one in 33 countries looking towards that 2053 season, we announced that the booth of the Las Vegas Grand Prix in November 2023, this will be a Saturday nights release down the iconic strip we cannot.
<unk> of a more perfect marriage of speed them for that.
Staging of the race in the U S demonstrates the huge appeal and growth while wireless fourth Q.
In fact in the 24 hours following the official announcement wins as Vegas and anchor resort. So more request for hotel room reservation than any other one day period in their history.
You also saw the announcement generate four times more social media activity, then that 2020 for Vegas Superbowl announcement.
It is precisely these opportunities that led us to take on the promoted rule for this race, we believe acting as promoter will provide us with valuable insights across the globe.
As Brad mentioned that these will require investment on both the Capex and the op side and we plan to share more of these later this year.
Shelley on the res side, we announced that we extended the immediate romantic Grand Prix at they started chemo attract through 2025.
We are pleased with the progress made in the other commercial areas, especially with our new sponsors, including several in the technology space.
Its force has joined the exit global part in a multiyear deal. In addition to the growing and deepening the engagement with our fan base well the gain actionable insight around Alba Cabo footprint as we March toward our goal of net zero emissions by 2030.
The communications with Turner as the official broadcast connectivity provider of Formula one.
They would facilitate the transfer of more than 100 video season, 250 audio channel between the venues and the F. One media and technology Center in the U K in under 200 milliseconds, enabling us to reach over 500 million fans in the eight 180 <unk> territories.
We've already made great strides here on the ESG front as our move to remote broadcast operations. It doesn't 'twenty allows us to reduce our volumes of traveling and faith and stuff other base flat.
We also welcome the Lenovo as an official partner and we'll use that technology across our operations, we will leverage their extensive selection of premium hardware. They know that these next generation technology, such as us augmented and virtual reality.
Surely we will work together with Lenovo on projects around diversity and inclusion. We were also pleased to announce the renewal and expansion of our partnership with Workday a leader in enterprise cloud applications for finance and human resources.
Although the global space, we announced a multiyear deal with MSC cruises as a global partner and they plan to bring their cruise ships portside during selected Rumply weekends, and alpha salary Red smooth premium fashion brand has become the official premium fashion appeal supplier of whom rollout.
On the broadcast front with our new with our partnership with Gallup loose until 2029, we have seen significant viewership growth in France. The 2021 average viewership for each Grand Prix was up 18% over 2020 and up 50% compared to 2019.
And the first two Grand Prix of the season already ranked among the top five weighting of all times for F. One event from Calaboose.
As part of these access partnership Caribou subscribers, we now get access to F. One TV broke through my come out. We also in the U of a partnership with the folks that group in Australia in a multiyear deal every Grand Prix will be available in full K and folks tell with integrated the F. N T V app easily set top boxes from too.
'twenty three the F. One TV app will be available free to Foxtons subscribers and will provide multiple lives in reis feet comprehensive life timing data and exclusive programming on the end of the track.
F. One TV continues to see significant growth accelerating into 2022 from an already strong 2021 of the first race of the season embody the platform gained 427 key new users and concurrent viewers web up to 144% compared to 2021.
We continue to evolve on the gaming front and I'm feeling therefore manage at 2020 to the first management simulation game as part of a long term multi title agreement that will be released in December .
The game allows you to be the team principal choose your drivers and engineers imbalanced budget as you manage your team to victory.
And I'll give you a total or Christian or may even a gunter.
As you can see from our recent commercial announcement, our ESG goals are the major focus not only for us but also for our partners. We are moving towards our goal to be net zero carbon as a support by 2030 for the Marine group rate, we exceeded our target to offset our emissions our experienced promoter they bought.
International is who can demonstrate vision and speed by completing a major solar project that more than cover the energy required in itself. The anti rugby weekend. These successful agencies shows while we can do as a supporting community to make a positive contribution to reduce emission and our carbon footprint we.
We hope you enjoyed this weekend of raising as much as we plan to a multitude.
Firstly that and now I will turn the call back over to Greg. Thank you.
Thank you Stefano and Brian .
We hope you will tune into our inaugural Miami GP This weekend.
We do appreciate your continued interest in Liberty media and look forward to a healthy and productive 2022 and with that operator I'd like to open the line for questions.
Thank you if you would like to ask a question you may signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Once again star one for questions well go first to David Karnofsky with J P. Morgan.
Alright, thank you.
With the Las Vegas Grand Prix I was hoping you could discuss a little bit more of the decision to promote this yourself as opposed to a third party. This is primarily about capturing the financial upside beyond what you could get on a promoter fee would.
Would you look to apply this model elsewhere, and then Greg I think at the start of the call you mentioned $240 million purchase for land adjacent to the site in Vegas.
Wondering if you could provide some incremental detail on what you're buying here and kind of how that ties into the race logistics.
Yes.
Well I'll take a cut and that let Stefan I'll add I think I indicated were buying 39 39 acres for $240 million and that'll be the site of the pit and paddock and some other hospitality, we don't have any other financial details yet to release on what else will be spent.
On that site.
I think our decision to.
Promote vegas in conjunction with.
Our live nation and local partners is driven by a couple of things one proximity it's fairly easy relative to being in Denver to get to Vegas for us to do the work and we have some knowledge of the local U S market relative to many other markets.
But I think even more importantly, we see the opportunity to be a promoter as a way to expand our understanding of the business understand what how to be a.
The best Formula one product on the track for other promoters as well.
To look at an opportunity to grow our <unk>.
Knowledge, and our our understanding and potentially promote other races down the road.
And lastly, I think Vegas is going to be large and unique perhaps unique opportunity. So from a financial perspective, we think this one sets up pretty well to be worthy.
<unk> extra focus to become the promoter Stefano I don't know what you would add no. Thanks, Greg I think that's it.
Greg was very spot on it all the points that I would say that as we remember David.
It has been always a place where we do believe that the association between the values of from what a lot of the glamour and attracting the possibility to be at that our community is crucial but I would say on top of this our national are things that we can see around the business week, we can be seen the enabler to maximize.
Is what's potentially vegas can be for for a while in terms of awareness in terms of the visas creation and some of activating an area of the world, where we can bring internationally P and and I think that is a great win to win the business also for the ones that that investment there, but for sure what our knowledge of the business and our.
Opportunity to exploit with our live nation partners I think is the best in order to make sure that in next year in November we're going to have to raise that event will be spectacularly that would be unique as I would say, we can feel here in Miami already.
Thank you.
We'll take our next question from Bryan Kraft with Deutsche Bank.
Hi, Good morning, I had a high level question and then one on Formula one.
I guess, Greg first what are your overall thoughts on the economy and the interest rate environment and how are they impacting your decisions around capital allocation capital structure and potential new investments is now.
Now the time to let's say deploy capital for new investments given the decline in asset prices are you more of the mind that cash preservation as most important now.
And then on the Formula one side I guess, you know Stefano or Greg can you talk about how formula one benefits from.
From what appears to be really strong economics around the Miami Grand Prix.
Thank the terms there for Miami or are a bit more variable than some of your other race promotion deals. So any color there would be great and I guess as a follow up to David's question. It was anything that you were seeing in Miami did that help to inform your strategy to become the promoter for Vegas.
You saw that things were going so well there and saw an opportunity to participate in a bigger way in the upside and then I had one more just on the investment in Vegas and developing that in terms of order of magnitude how much bigger might the Vegas built out get in terms of dollar.
Universes, what you've already laid out for this year and how would you think about potential external financing there whether it's you know that specifically on the project, bringing in some of the creative stuff like you did maybe with the Braves and Atlanta. Thanks.
So I'm gonna parse us on the last one I don't think were ready to talk anymore about the outlays.
Outlays at Vegas, it will be bigger than a bread box, but manageable I don't think we'll need outside partners and I don't think we'll need that we have quite a lot of cash and one I'll, let Stefan talk a little bit about more about what Miami informed us and I'll talk more broadly about cash in the market. Thanks, Thanks, Craig Brian I mean, as you know in different form.
More related with the promoter is related to maximize the opportunity that they each place can glean camping to form of what and I think that's a it's clear that our what we can see and they just arrived to today's a go in Miami I mean, a device that the we have created us for more what is the image is great and you can in the kingdom.
Let's see two strategy. That's one how we can maximize the value for what we're bringing to the community, but also how we can maximize the value of our partners that are coming here, adding letting them for one can see is once again, the enabling factor all the creative business opportunity for them.
That is it from one he's bringing very highly to date because of the success of our international platform and of course are the fact that here, we invested together with that work for both of the Miami Dolphins because they knew the community. They have the right expertise to maximize in the shorter term as possible what we want to bring here.
Fulfill by one and as I said the success. He is already high before this type of event and of course. This is the first time. We are here, we can see a different business model of having a lot of cultural business that wants to develop that that's where they for the most of that is different from place to place. The so this is something that also from our side could be very important.
Two to learn in order to be even more effective whether they come to Las Vegas, and we're gonna be that example, with the promotion of it.
So on the on the larger question about the market environment.
<unk>.
Gary to try and imagine investing in small catching a falling knife in this interest rate environment and stocks, but I have to say in general we try and take a longer view.
There are opportunities that can create in these environments. Some of the best deals we've done like Sirius XM were created in difficult economic times, we are lucky to have not only cash availability at this back in at one <unk>.
Significant excess cash at both.
Strong free cash flows at serious and formula.
Formula one.
That I think that creates opportunity for us exactly when that'll be timed and when we'll make a decision.
We have a lot of benefits in our model, but we have some disadvantages. It's not like we can turn around and just say by 5% of the company and the market. When we think the bottom as you know, it's a longer cycle and finding deals, but I definitely think the environment will create opportunities for us and will be on the lookout.
Okay. Thanks to you both.
Thank you we'll take our next question from Vijay Jayant with Evercore.
Oh, Thanks on Formula one Oh on the Las.
Vegas race for next year should we think about it that as an incremental rates are we going to 'twenty four races, assuming you get a replacement for Russia. This year and again what is the policy to actually add more races. You know at least reading some of the drivers keep complaining that the two new races already is there like a regulatory process.
You have to go through with the FAA and with the teams anything on that would be appreciated and then.
On on some of the new races, coming back since Covid really Japan, and Singapore, they used to be a reasonable sponsors for them, that's pretty material ones I think.
Is that an expectation we should have that they come back I think Singapore Airlines and Honda.
Thanks, so much.
Thanks P. J I mean I can answer on the calendar as you know first of all we will have not published at the calendar for next year in terms of process, you'll know that he's an agreement within us.
Aims to discuss and that is on our side as the commercial rights holder to make sure that we find the right balance between the number of events historical event that new opportunities that can become because we have a world championship and I think if you think back a couple of years ago I was always the right value for having a good calendar.
Is it related to the demand and to the offer that we can provide and I think that today, we are always talking about 'twenty 'twenty four races, and that's the what we believe today is the right number considering this except that we are living today.
While we were talking about Las Vegas that would be in the calendar of course, that's the only thing that we have announced for next year and I would say on the other hand, you will see soon and what will be our strategy and we have to respect the process as we discuss and we got on iOS at the notes earlier that at the end of the upside of it because that's something that we want to keep it up with that.
I think the right way.
With regard to the local promoters and the slasher sponsorship with Japan, Singapore yesterday.
You know, we have already announced the Singapore life would be part of the promotional package the Singapore because for them. It's a very important partner and we respect that Japan. We are you will discover assumed debt of course for Honda for example, because of their decision to quit sufficiently for one you know they could be something especially that we want to recognize for them.
You bet. So this is part of the strategic discussion that we had happened with other promoters and I think that the the economical benefits of course will go into the system and of course also with us.
Great. Thanks, so much.
Thank you we'll take our next question from Stephen <unk> with Goldman Sachs.
Great. Thank you one of them Formula one revenue in the first quarter. It came in a little bit stronger, adding perceval as expected I'm. Just wondering if you could help us maybe unpack some of the drivers of that strength, maybe across media rights sponsorship rates come back up.
Other revenues even.
Oh.
I'm sorry.
Revenue beat expectations, Yes, Q1 was ahead, yeah, well I mean for Formula One obviously, we had two races versus one last year and we're really back to a more normal activities than we than we've been over the past couple of years. So you have full crowds.
And we had good sponsorship revenue as well also freight costs have been up a bit and some of those costs are obviously passed onto the team. So there's incremental benefit there, but you know normal activities compared to the past couple of years is really where we've seen about that yeah. If I could just add I think we've seen growth in almost every.
Every revenue category.
But the way we recognize revenue ratably across races, probably had the single largest impact. The fact that it was a two versus one in the first quarter recognizing that many of our revenue streams are recognized Ratably then could tie to the particular race.
Got it thanks for that and then maybe one for Greg on the sports Media rights I'm curious, how you think interest and ultimately the value of sports media rights could be impacted over the long term as some of these concerns around COVID-19.
Cyber risk ultimately play out do you think it helps them with their hand, given quite content or is the softening market something that you think FX context, but broadly.
Yes, I think.
It's a complicated topic.
And partly you know.
Where you sit is how you view it and when I say that I think there will be strains on.
On the Braves potentially over the long term as the R. S ends become less included in the bundle.
On a regular basis that will put pressure on.
Some of the RSM revenue streams. The Braves in particular have a very strong our S. N revenue stream and a lot of demand. So we may be less impacted than many but obviously that turmoil.
Yeah, it could be a negative on the other hand, you know.
Formula one has seen increases in demand and increases in viewership and we have the U S media rights as commonly known up for bid right now beginning for next year's season and.
And we have a lot of interest not only from traditional linear players, but digital players.
And the offset to some of the decline in cable subs is the increase in some of the digital subscriptions.
So that opportunity is I think in the net we're probably better off with more players bidding than.
Then the changing landscape.
Plus or minus and then charter which is not the focus of today's call. We have a whole another set of dynamics where in some cases, we're helped it in some cases, we may be hurt. So you really do either a lot changing in a lot of it depends on which company we're talking about.
Great Thanks for that.
We'll take our next question from Barton Crockett with Rosenblatt Securities.
Okay, great. Thanks for taking the question.
So I'm wondering I wanted to put one question out.
Which comes from an investor, but I thought it was a good question, which is looking at the Braves, they're trading right now.
Market value or maybe three five times or so kind of sales.
You know you've seen private market transactions for baseball teams and are close to seven sales range.
So the question is you know.
Why won't you guys take some more steps to try and achieve that value right now for the Braves.
What are the things that would seem to be open to you is that you now have a second a T P with formula one that now Braves. So it would be possible to split you know maybe the brakes off as an actual stock which might help with all your progress.
We get people thinking about private market transactions, maybe down the road.
Kind of curious what your thought process is there why you havent pursue those type of.
Opportunity to date.
A great question, even if it's not yours Barton from the investors still a good question the.
I think we're looking at all options and considering what we might do some of these things are more recent about when our ATB flexibility has occurred there are some issues also we're still looking at around CRE and what we might do there as you know we cross just crossed over the 80, there. We've just had formula one become an ATB.
So there are some moving targets and we evaluate all opportunities and I think your investors probably right I'm not sure seven times, we'll see but certainly the multiple we're trading it is lower than that multiple which has been in private transactions, whether it would still trade to that level of what it is a private sale transaction versus the public market transaction open question, but I do.
Agree that probably having the flexibility to do that we'd probably have improved trading over time.
Okay, and then also wanted to break it out you know I wanted to ask about.
The Rsi deal with the Valley Rsi.
And you know their pursuit, obviously of rights from teams to do.
Do the direct to consumer streaming service.
The Braves or not yet signed up for that but we did see that.
And of the brakes family of charter has done a recent deal with Sinclair that involved the our sense and.
You know I was just wondering in the past you guys have seemed very skeptical about.
Signing up for you know to have the Braves carried on that it seems like you werent really into that now charters done a deal with them I'm just wondering if there's any evolution in your thinking or whether it's still it seems like not likely that you wanted to do that.
Well I think that's evolving Barton as well, you know well and where charters as I kind of similar to that.
The answer I gave before where you sit.
Defines what you want to see happen, we have a a good RSM deal that runs out until 'twenty seven.
I still think that's probably more valuable lesson of any digital deal are there any incremental kind of digital deals that are around that potentially in there as you've seen growth in lots of kind of digital around.
Baseball and now people like Apple entering to buy rights. So I think it's evolving I Dunno valley is going to be the lead player they've got their challenges.
But we're certainly open to two are watching how the market evolves.
Okay, great. Thank you.
Thank you we'll take our next question from David Joyce with Barclays.
Thank you another question on Formula one please conceptually how should we be thinking about the principal versus agents.
You can see relationship on some self promoting this.
I'm not looking for any new financial specifics, but just you know accounting was would it be something where you live nation as the promoter is taking over the near the top line, but then they have the nuclear the operating expenses are in and therefore formula one would get something along the lines of it.
Ray's promotion fee plus a margin or is this something that is going to be.
That reflected directly on the new formula one's financials.
Or.
Partners He doesn't know how our partners reflected in that.
Yeah.
I'll start and let Brian give there really accurate answers are in general where the primary partner live nation is the from a financial perspective as the secondary partner. They have a role is very important but most of the capital investment most of the outlays will come from us.
From from live nation.
And we don't anticipate that this is going to be called out separately on our income statements won't be material in that sense. So the lines will generally be folded in promoter fees and the like sponsorship.
Sponsorship hospitality et cetera.
Ryan what it might you are correct me on that.
That's very accurate I would say, we'll consolidate as Greg said so.
So the revenue and Capex will be on our books as well as the cost and also as Greg said, we would expect that.
We need to ultimately fine tune. This once we have the race, but our expectation right now is that.
You would see.
Revenues go into their traditional buckets, So paddock club would go.
In the other revenue and then sponsorship and we'd go go where sponsorship currently goes and then you know to the extent, we're selling tickets, we would expect that that probably goes into our promoter revenues.
It will look very similar except for the fact that we're consolidating the costs, which normally.
And all of the revenue, whereas under normal promoter relationship we just have that fee.
Great. Thank you very much.
We'll go next to Jason Bazinet with Citi.
Another question on Formula one.
You mentioned that you may over time, maybe promote other leases and I guess, if you look at the 24 ish races or whatever some of those obviously, you're an iconic places where you'd probably won't self promote but if you just.
If you were gonna Blue Sky it how many of them.
23, other races that you wouldn't be self promoting would be in the bucket, where you might sell promote.
So I don't think we've been up I'll, let Stefano and I don't think we've announced any plans we're going to start to see.
Where.
How we do this hopefully make the success of it and we believe we can make it.
I would only cautiously say don't be so certain that places, which are iconic are places, where we will not eventually become a self promoter.
I wouldn't cast aside that opportunity definitely what might you add no show that Greg I think that the beauty if I may say that at this moment is a it's a because the new promoters are really putting new energy and you'll back into the system. I think is something that would have a collateral effect on that.
Additional for most of the needs to keep up the pace with respect when we do our respect a lot our promoters because they are the ones that are really working with us to make sure that we have a great day show around the world, but these are the these effect he's he's given us an incredible boost to make sure that the system is very active unless he lives whatsoever.
And into that into the platform and this is really.
What a great set is a never say never but with this in mind I would say we are very happy with the promoters that working with us. They are very very loyal a reliable partners of which we got to build up even a stronger future together.
That's great. Thank you.
Thank you, we'll take our final question from Matthew Harrigan with benchmark.
Oh. Thank you clearly you had to take off in the U S for Formula one, which is really going to help with ESPN and at the same time, you've got a lot of geopolitics geopolitical changes, so cheap going away, but whack a mole zero zero Covid, China, hopefully Shanghai comes back you, particularly with the desired.
Dolby or getting more better times in the U S.
It becomes even more appealing for U S. P. M would you be more inclined to look at bringing back looked more like nurburgring and maybe the.
Promoting yet you're yourself and some of the classic venues and kind of going more U S and Europe versus a.
A lot of you experienced in the second place.
In the middle East the Middle East and races are hugely successful and they're going to stay around but you know the world is changing so much it looks like formula one's a winter, but just how how complex. These are life of everything going on in the world, though on geopolitics right.
Well, what I can say, Matt is that the full one and we have proven to be let's say as flexible as possible also in the COVID-19 situation to maximize the fact that we wanted to have a great challenge and our duty to make sure that we first of all our World Champion Championship and we are investing there.
Either with parts of the ore either with or without some volt involved it does seem that to make sure that the strategic market that'll be coming closer to fulfill one would be part of it and you correctly to say the U S has an incredible boom in the last that I would say to us and they do this to make sure that we can even lead to much more of the effect on that but we have other out of the world doesn't it.
To be developed that need to be expected because of the tradition, but TV doesn't mean that you know at Sig something give us hope that the tradition is a great base or we shouldn't go to build up a better future Europe has to stay for short or with a good bunch of the number of races in our kolenda. They want to state that you were talking about new Hogan I mean, the German labs.
Cape is for sure. The voting today is collapsed at the wechat, knowing that there would be the normal promoter we need to see what could be the action if needed that we cannot cover that they collect that I'm sure. They still want to be specific on that there's something that could happen sooner it could be very important to be back on the calendar, but we don't have to forget that we have.
And we want people that are in the far east to our world because we so far have been affected by Covid, but there is a great potential to grow that we add to that.
Out of the World, which is Africa, all of which we may develop business. There. So it's a great moment for us to maximize the opportunities to see what would be.
On the right the right schedule in the future a whole lot we will not take the out of the equation that posed to me so that I mean some.
Some places where the rotational a principle because that means our leverage to be multiple markets. So as I said that is really all associated thinking with regard to our future calendar.
Just considering the German team are still dozens of new Oems coming in the form you'll wonder I know you can't be specific but it feels like there are a lot of positive things.
Still pushing in that direction or are you still having discussions with various people on that.
Well I can as you can imagine.
Yeah, Matthew we cannot be specific on that but the good news is that we can see what we read and and we know what doing the you know working with older manufacturer and then if I may on that specific point, but without saying anything related to something that we cannot say the good.
News that today for what is really showing the leadership in that they can have a logical landscape all the automotive business in the motor sports of course, and I were charges related to sustainable too in the future and our strong past, though we want to prove to the world that they are really serious in the network in a car.
Zero within 2030 is something that really gives us credibility and this is the reason why everyone not only the ones that you read I really interested to have stuck to that.
Perfect. Thank you.
Yeah.
Operator, I think there were done to the listening audience again. Thank you for your interest in Liberty Media and we said, we hope to see some of you.
Here in Miami and for those who are not able to get to Miami. We do encourage you to watch and hope to speak to you again next quarter, if not sooner. Thank you.
That will conclude today's call. We appreciate your participation.
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Yeah.