Q4 2022 Liberty Media Corp Earnings Call

Speaker 2: In conference 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, keep it. As a reminder this conference will be recorded today March 1st.

Speaker 2: I would now like to turn the call over to Shane Kleinstein, Vice President and Investor Relations. Please go ahead.

Speaker 3: Thank you. Good morning. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the private security's litigation reform act of 1995. Actual events or results could differ materially due to a number of risk standards and certain views, including those mentioned in Liberty Media's most recent and informed 10K filed with the FEC.

Speaker 3: These four-looking statements speak only out of the date of this call and Liberty Media expressly displace any obligation or undertaking to disseminate any updates or revisions to any four-looking statement contained herein to reflect any change in Liberty Media's expectations with regard there to or any change in events, conditions or circumstances on which any such statement is based.

Speaker 3: On today's call, we will discuss certain non-gas financial measures for Liberty Media and CSXM, including adjusted Oibira and adjusted EBITDA. The required definitions and reconciliation for Liberty Media and CSXM scheduled one through three can be found at the end of the earnings press release issue today, which is available on Liberty's website.

Speaker 3: Now I'd like to introduce Greg Muffin, Liberty President and CEO . Thank you, Shane, and good morning to all of you.

Speaker 4: Today speaking in the call, we will also have Formula One's President, CEO of Stefano Domenicale and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendley.

Speaker 4: First, let me start with an update on the split off the braves and the creation of Liberty Light Tracker.

Speaker 4: We filed the amended S4 and we still expect completion in the second quarter.

Speaker 4: Let me try to eliminate serious exam.

Speaker 4: We expect we will have a simplified structure following the recapitalization of LSEXM and the creation of the LSEXM. We will have a delay tracker. And we are focused on rationalizing this structure in the near term.

Speaker 4: Looking at its serious ex-cell in the underlying asset, reported strong, forth quarter results with record height, R-Pool, and EBITDA, and record low-turn. Management did give more cautious forward looking commentary given.

Speaker 4: Multiple headwinds were experienced here in early part of 2012.

Speaker 4: The top of the funnel in terms of news for the subscribers is still pressured if the SAR has dropped from about 17 million in 2019 to something like 13 and a half million last year.

Speaker 4: The ad market remained soft, especially in the first half of 2023, and we are seeing moderating marketing spend ahead of the fourth quarter app event.

Speaker 4: Plus, we've had some cash impacts. We expect peak satellite cap-ax in 2023, and we are now a taxpayer, something which previously we had not yet.

Speaker 4: We do expect these incremental satellite CAPEX will moderate in 2024 with nearly no incremental satellite CAPEX by 2027.

Speaker 4: by the end of the year. We're also stepping up some tech investments for long-term success.

Speaker 4: We are building improvements around commerce and identity to reduce friction and the new app will have more personalization as it has within 360L.

Speaker 4: We do expect these negative trends in the ad market and the SAR will turn.

Speaker 4: and we have a resilient business model with meaning free cash flow. So we still remain optimistic about our longer term prospects.

Speaker 4: the Zillian Business Model with Meaning-Free Cash Flow. So we still remain optimistic about our longer-term prospects. Turning the live nation.

Speaker 4: Continue seeing credible demand. 2022 attendance was up 24% over 2019.

Speaker 4: We are at all time high for concert attendance.

Speaker 4: Despite many markets, they'll be enclosed during part of the year.

Speaker 4: We've seen especially strong international markets with 70% of net new tickets sold in 22-22, where two international clients.

Speaker 4: And we expect another record year of demand in 2023.

Speaker 4: Ticket sales in 2023 are up 20% versus the same time last year.

Speaker 4: And last year it also benefited from 20 million of tickets that were rescheduled from prior period to do the COVID.

Speaker 4: last year also benefited from 20 million of tickets that were rescheduled from prior period to the COVID. Formula One Group.

Speaker 4: Great end of the 2022 year attendance records were set we were up 36% over 2019. Our fan base is increasing diverse.

Speaker 4: with new fans being younger and the share of females within the fan base 40% larger than the share in the established fan base. That's then the new fan base

Speaker 4: new fans being younger and the share of females within the fan base 40% larger than the share in the established fan base. That's been the new fan base. The US is especially strong.

Speaker 4: One in three fans globally started following F1 in the last four years and the US is even higher at one in two.

Speaker 4: This is a result of many efforts.

Speaker 4: And most of them related to our efforts to drive.

Speaker 4: The access to our drivers across the whole channel not only drive this find theworker's drive.

Speaker 4: but the driver pretends on social pages, coverage in large use, publications, late night comedy appearances on people like Jimmy Kimmel.

Speaker 4: And it's interesting to note, for example, look at our Instagram followers and comparing goats.

Speaker 4: Lewis Hamilton has 31.5 million versus Tom Brady at 13.6 million.

Speaker 4: F1 is clearly getting into the mentality of America.

Speaker 4: and looking at the younger talent.

Speaker 4: LeClerc has almost 10 million and LeCodon chick is at 8 million. Again, we're doing pretty well.

Speaker 4: We will have three U.S. races in 2023, the second year of Miami capitalizing on the first year success with several improvements around hospitality and security.

Speaker 4: We expect the sporting world to be super excited as we are for the inaugural Las Vegas GP.

Speaker 4: F1 lost biggest social media garnered over 170 million impressions and over 5 million engagements since September of 2022. And we launched LVGP TikTok last weekend.

Speaker 4: The first post had over 500,000 views in the first 24 hours.

Speaker 4: over 535,000 views in the first 24 hours. Let me turn to the braids.

Speaker 4: We reiterate that we believe the split-off will better highlight the value of the braves.

Speaker 4: We grew baseball revenue in 2022, even though we had experienced less postseason gains, capitalizing on the tailwinds from our 2021 World Series win.

Speaker 4: We had year-over-year growth across ticket sales, sponsorship, concessions and retail.

Speaker 4: We sold 3.1 million tickets.

Speaker 4: and led Major League Baseball with 94% of our inventory being sold.

Speaker 4: Demand for the season and single ticket games set, ticket remains high for the 2021-2023 season.

Speaker 4: Bleacher's report called the braze front-off, the front-office, the number one, in Major League Baseball for the 2023 season and we tend to agree. We were happy to extend manager Brian Sitter through 2025.

Speaker 4: and GM Alex Amp Dopolis invested smartly in your off season.

Speaker 4: Adding to the already core talent we have by locking them up in multi-year deals.

Speaker 4: This team is built on young talent.

Speaker 4: and it's positioned for long term success, and we very much look forward to the opener on March 30th. And with that, let me turn it over to Brian to talk a little bit more about our financial results.

Speaker 5: Thank you, Greg, and good morning, everybody. At quarter-end, Liberty Series 6M Group had a trivited cash and liquid investments of approximately 305 million, which excludes 57 million of cash held at Series 6M. There's also 1.3 billion of undrawn margin-loan capacity at the parent level related to our Series 6M in live nation.

Speaker 6: marginalized.

Speaker 5: As of February 28th, the value of our CRSXM stock held at Liberty CRSXM Group.

Speaker 5: was 14.1 billion in the value of the life nation interest was 5 billion.

Speaker 5: We have 2.8 billion in principal amount of data against these holdings. Total Liberty Series XM group, a attributed principal amount of data is 13.1 billion, which includes 9.5 billion of data that's down at the Series XM level. We have 2.8 billion in principal amount of data that's down at the Series XM level.

Speaker 5: Formula One Group had attributed cash, liquid investments, and monetizable public holdings of 1.8 million a quarter end, which includes 752 million of cash at Formula One.

Speaker 5: Total Formula One group attributed principal amount of debt was 3 billion and this includes 2.4 billion of debt down at the Formula One level, leaving 565 million at the corporate level.

Speaker 5: 3-1-4, F-1 refinanced, its tarblown and revolver to track the brakes.

Speaker 5: and an extended maturity. F-1 repaid $477 million of its term loan being in connection with this refinancing using cash on hand. And a year end, $4 million, $500 million revolvers are drawn. $4 million, leverage at the end of the year, was 2.7 times.

Speaker 5: On the F1 operating business, given quarterly variability in the year over year phrase calendar, reminder that this business is best analyzed on an annual basis.

Speaker 5: Total revenue grew 20% in 2022 with growth across all primary revenue streams.

Speaker 5: Other F1 revenue grew 63% to the $180 million with approximately 110 million of the revenue growth coming from hospitality and experiences and approximately 55 million coming from increased

Speaker 5: Team payment as a percent of the pre-team Oibida as reported was 66.

Speaker 5: percent in 2022 down from 68 percent in the prior year. Benefiting from the team, the terms of the 2021 Concordia Agreement.

Speaker 5: As a reminder, other costs of Formula One revenue are largely variable in nature and relate to both primary and other F1 revenue opportunities.

Speaker 5: Other costs increased from 20% of total revenue in 2021 to 23% of total revenue in 2020.

Speaker 5: to. Primarily driven by compression and freight margins with significant air charter cost inflation, inflation during the year as well as increased cost of servicing our additional hospitality offerings.

Speaker 5: SGNA as a percent of total revenue was basically in line with historical averages in 2022. As mentioned in Q3, we did have some modest increases in personnel costs due to the change in the company's LTIP from a stock to a cash-based long-term bonus program, and increased headcount to support growth.

Speaker 5: Also included in SGA in 2022, it was 19 million of costs from the Las Vegas Grand Prix, mostly related to personnel and marketing initiatives. Looking at 2023, we look forward to a record 23 race calendar. The calendar will consist of 14 fly-away races compared to 12 fly-away races in 2022.

Speaker 5: As we've discussed before flyway races typically pay higher fees than the European.

Speaker 5: races. And on Las Vegas is previously communicated, we expect total revenue approaching $500 million, looking at total race specific economics, Vegas is projected to be in the top five of all races in year one in terms of total profit to the company.

Speaker 5: The panic building is progressing on schedule and the concrete structure will be completed by the end of March.

Speaker 5: CAPEX related to the PADEC building will be incurred at the formula on corporate level and track related CAPEX is expected to be incurred at the F1 off-co level. The majority of our CAPEX span will be incurred at the corporate level primarily because your round activations of PADEC building will be separate from form.

Speaker 5: We will not be providing a forward looking allocation between F1 off-co and Formula One corporate CAPX.

Speaker 5: but you'll be able to see it in our historical numbers as they get reported.

Speaker 5: LVGP will pay rent and other fees out of Formula One op-code to the Formula One corporate for use of the building during the race period, which will show up in our financial statements as revenue at the corporate level, but will eliminate and consolidation.

Speaker 5: We also expect the receipt of advanced payments primarily related to ticket sales to impact year-over-year comparability and working capital flows in the first year of the Vegas race.

Speaker 5: Nearly all LVGP revenue will be recognized in the fourth quarter when the race takes place. We'd expect grandstand and GA tickets as well as sponsorship revenue to be recognized in primary F1 revenue as race promotion and sponsorship revenue respectively.

Speaker 5: We expect hospitality tickets will be recognized within other Formula One revenue. On cost recognition, we expect the vast majority of the race related costs to also be recognized when the race takes place as cost of that one revenue. So there will be some SGNA incurred throughout the first few quarters of 2023.

Speaker 5: Finally, at the Braids Group, at quarter-end, they had attributed cash in liquid investments of $151 million, which excludes $22 million of restricted cash. Braids Group had attributed principal amount of debt of $546 million at the end of the year.

Speaker 5: Liberty and Arkansas did subsidiaries are in compliance with their debt covenants at quarter-ent and with that I'll turn it over to Stefano to discuss four milla one. Thanks Brian . 2022 was a fantastic season on track commercially with our partners and financially in our results.

Speaker 7: back competition battle down to the last race without pinning McLaren both fighting for fourth place.

Speaker 7: The feedback from the drivers made it clear. The new regulation meant the cars could raise more closely and we so sang great results on the truck.

Speaker 7: This action, during the season, fueled our growing fan engagement. 2022 saw requisite tenders at Grand Prix events. We welcomed more than 5.7 million fans to race weekend. Up 36% compared to 2019. The man is continuing in 2023.

Speaker 7: with cell out crowd expected at the number of racist deceased.

Speaker 7: For more one, was once again the fastest growing major sport league on the planet in 2022 in terms of social media followers. We had 60.6 million total followers, out 23% from 2021, and so significant growth in markets like the US.

Speaker 7: were social followers were up 42% best 2021 to 4.5 million. Additionally across f1.com and the f1 app, Unicuses were up 11% best 2021 to 125 million.

Speaker 7: On viewership, cumulative TV audiences for the 2022 season was 1.54 billion, and average viewership per race was 70 million. US viewership was 36% compared to 2021, with an average of 1.2 million viewers tuning in on race days.

Speaker 7: Looking at some other markets, eat the new viewership grew to 22%. Australia was up to 20%, and Germany viewership grew 9%.

Speaker 7: With our newer, younger democratic, the digital share of F1 video minutes consumed grew from 60% in 2021 to 34% in 2022.

Speaker 7: As an endosment of F1 growing global popularity, technological relevance has to sustainability of forts.

Speaker 7: Ford announced their return to F1 from 2026 in a new partnership with Rappel.

Speaker 7: Ford is a celebrated name in motorsport with the story of F1 history dating back into the 60s and they are the third most successful engine manufacturer in F1 history.

Speaker 7: We expect force involvement as a technical engine provider, we will bring value not only to Red Boot but to the sport.

Speaker 7: The growing fan engagement has benefited both new and renewed commercial agreements.

Speaker 7: F1 grew revenue across all primary sources. Promotion, meteorite and advertising and sponsorship.

Speaker 7: In addition, our Father Club Hospitality Product performed especially well in 2022. It's first full season of operations since the onset of the pandemic.

Speaker 7: We welcome 50,000 guests over the season with sell out at 12 out of 19 events.

Speaker 7: In 2023, we are focused on optimizing the value of our paddle club by expanding the premium services we offer, continuing to enhance the guest experience and adjust in pricing.

Speaker 7: Turning to recent updates on our commercial agreements. On race promotion, we extended our race in Zandold from 2024 and 2025, and the 23 Dodge Grand Prix is already sold out. The promoter has focused on sustainability and a bit of fun travel.

Speaker 7: With 99% of general admission ticket dollars in 2022, arriving by public transportation, bike, or on foot. We sign a number of large broadcast agreements throughout 2022, including renewing our partnership with Sky in major European markets and with the ESPN in the US. More recently,

Speaker 7: We entered into a multi-year media write agreement with B in sport to exclusive broadcast F1 in 10 territories across Asia. Our Fox Sport Agreement in Mexico was extended through 2025. We also renewed our partnership with PlaySport in Belgium for 2023 and 2024.

Speaker 7: and our agreement with Dazun in Japan through 2025.

Speaker 7: F1TV continues to grow in popularity among new and heritage fans. The project is now available in 120 countries. On sponsorship, just last week we announced the addition of Qatar's ways as a global airline partner under multi-year agreement.

Speaker 5: They will also be the title sponsor at three races Looking forward that are a number of areas we continue to explore for additional sponsorship opportunities including travel financial services food and beverage telecommunication and more

Speaker 7: Our team is continuously building financial engagement opportunities to capitalize on our momentum. The fifth season of Dry to Survive, 8th on February 24th.

Speaker 7: The 2023 F1 ISPOR Qualifier Round is being held through May 25th and we hope to be done the strong engagements from last year when 1.3 million players attempted to qualify.

Speaker 7: The new license program, F1RK, launch its first location London in December , hosting over 600 F1 guests and celebrities at the official launch party, who is pretty excited on F1 with 60 full motion racing simulator.

Speaker 7: The second venue will open in Birmingham, in the fourth quarter of 2023, with additional locations planned to follow. A new F1 exhibition will also launch in Madrid later this month and remain there before moving to Milan in time for the Italian Grand Prix.

Speaker 7: This is a 90 minutes immersive experience guiding visitors through the past, present and the future of the sport, and is planned to visit 25 cities around the world over the next decade.

Speaker 7: We are counting down to the start of 2023 season, but rain testing finished the last week, and with another year of improvements to the track, we are expecting even fiercest competition on the track.

Speaker 7: Ferrarium Mercedes are certainly eager for their comeback. There will be new faces on the grid with Nick DeVries, Oscar Piaftrey and a promising young American driver Logan Surgeon as well as the return of Nico Hook.

Speaker 7: The 23 race calendar is a vehicle for Formula One. We made the decision not to replace China on the calendar, but the most economic benefit of a replacement race was not worth the logistical and sustainability consideration for F1 and our teams.

Speaker 7: There will be six Prince event held in Adedvajan, Austria, Spak, Qatar, Austin and Brazil. The spring series have been successful in driving attendance and engagement across the entire weekend for our promoters and broadcast partners.

Speaker 7: The 20th of calendar will feature three racing in U.S., including taking to the street of Las Vegas for a night race in November .

Speaker 7: We announced HyniConsumer as the title sponsor and team mobile as the exclusive wireless provider.

Speaker 7: The plan to deploy an advanced 5G public network or race weekend that will power our customer app and enhance efficiency of the fun experience.

Speaker 7: Our second wave of public ticket sales will launch soon. And in spring, the world begins on resurfacing the track roads with digital plants in place to minimize disruption to the last biggest flow of traffic in the process.

Speaker 7: We have made a long-term investment in Las Vegas, which we expect to set us up to the race for decades to come. And finally, we made several announcements furthering our efforts in sustainability, diversity and inclusion. F1 recently announced a global charity partnership with UNICEF to help bring quality education to the world's most vulnerable children.

Speaker 7: building on F1 long history of promoting STEM education worldwide.

Speaker 7: We also look forward to the boot of F1 Academy 2023. The series intend to maximize the potential of young female drivers to reach the highest level in motorsport, providing those currently in go-carting or other junior categories with access to the fundamentalist leaders needed before racing in F3.

Speaker 7: and working up to Formula One. The series because of five teams run by current F203 teams, each entry 3 cars to make up are 15 cars per inch. The first season will comprise 21 total races, ending as a support event at the Austin Grand Prix in October .

Speaker 7: I'm delighted that today we have announced Susie Wolf as the managing director of the F1 Academy. She has a wealth of experience as a driver and team principal and will provide huge value to the project.

Speaker 7: Wrapping 2022 and looking at 2023, I think F1 is the strongest position it has ever been.

Speaker 7: This year, we launched a new Brad campaign demonstrating F1 Place in the sporting entertainment world, giving new fans a reason to actively engage with the 2023 season and keep coming back for more. F1 is an unmissable and extraordinary spectacle.

Speaker 7: an adrenaline-fueled and intoxicating world of action, innovation and entertainment, both on and off the track.

Speaker 7: where the extraordinary potential of technology and the war comes together to make the difference between winning and being forgotten.

Speaker 7: This is not ordinary sport. This is Formula One. Avanti Tuta. So full speed ahead.

Speaker 7: And now I will turn the call back over to Greg. Thank you. Ciao

Speaker 4: Thank you, Stephanie, and thank you, Brian .

Speaker 4: And to our listening audience, we appreciate your continued support of an interesting Liberty Media.

Speaker 4: listening audience. We appreciate your continued support of an interesting Liberty Media. And with that operator, I'd like to open the line for questions.

Speaker 2: Absolutely, thank you. At this time we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad.

Speaker 2: A confirmation to help indicate your line is in the question queue. You may press start 2 if you'd like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

I first question comes from the Jay-Janaught with Evercore. Please proceed with your question.

Good morning.

Greg, with the Braves' hot spin about to get done and the recapitalization, the reattribution of Liberty Live, and you sort of talked about the rationalizing the structure of Liberty Sirius, I think. Can you sort of talk about the prospect of doing a hot spin of Liberty Sirius post-

the reattribution. Is there any limitations on that? When you did Liberty entertainment many years ago, even before you talked about a combination with Direct TV, you did a hot spin and then over time. Is that something that's something potentially possible structurally and from a tax efficiency perspective?

And then for Stefano, you have, I think, 10 global sponsors. You talked about a lot more opportunities in different verticals. Is there more opportunity to have more global sponsors? Or are we sort of tapped out at that? And if I could, one final, looks like the logistic costs.

that is sort of paid by the teams, but the seems sort of elevated. And I'm trying to understand is some of the inflation impact of that being passed on to the teams? Is that something we should expect to continue or was that sort of a one-off factor? Thank you.

Okay, I'll start BJ. That was so long ago. That was other than those questions I've ever once got lost. Thank you. So, look, we have lots of things we could do, including a spin of theory. But I think there are probably discussions to be had with...

the Sirius XM independent board members about the best structure moving forward if we were to do something. But all elements are on the table, all options are on the table. And as we said, we looked, we're looking at those with renewed vigor and we believe we're much better to execute on any of those post the Liberty Live reattribution and the brave spin.

Thanks Vijay for the question. I start for the second. This logistic cost is true last year was a combined factor that we had to pay for that.

and included the team, but I would say the first signal that we see already this year is going in the right direction of these logistics cars to be reduced and on that respect that is also the other element that we are trying to be even more efficient in order to make sure that the things are done in the proper way.

And this is very, very, very important to share that. And on the other side, with regard to the partners, of course, we want to keep the exclusivity as a main value. And we don't want to put on the other side the final number of that. It's important that we give the right value.

to the global partner but also to the other verticals that are coming into the equation because you know we never had such a strong pipeline so it's up to us really to make sure that everyone is the right visibility and value for what is the invention related with us.

Great, thanks guys. Bye.

Our next question is from Ben Schwinburne with Morgan Stanley . Please proceed with your question.

Thanks, good morning. Two formula one questions. I guess first for Greg or Stephanie, everyone to take it or both. It's pretty clear, and I think Stephanie made this point last year that the value of the teams has significantly increased, especially from where you bought deep business years ago.

But I don't know if I have a clear idea of how that benefits F1, the company, and ultimately shareholders. I think it does, but I'd love to get your perspective. And in particular, I'm going to be the award of asking the first Concord Agreement question for 2026. But does this allow or enable or support your ability to sort of continue on this task?

Because we're getting a lot of questions on that this morning 80 million op-co in Q4. Is there a way for us to think about how sort of recurring that level of GNA is as you move into 23 and then you mentioned marketing and I guess when you guys talk about a top five

economic race for Vegas? Are you including these incremental G&A costs that are happening outside of the quarter? That's it. Thank you. So, Stefano, I'm happy to take a cut and then I'll let you lead other way. So, one of the things we are...

Credit chase and credit stephenos, what's easier for me to go first and give them the credit. One of the things that we at Formula One with Liberty's help have been trying to do is build a mentality that I'll credit the NFL for, which is one league that we benefit when everybody benefits. And yes, the teams compete very hard on Sunday, but on Monday we need to think about growing the entire ecosystem.

And it was critical that we have healthy teams so that we could have a healthy league.

And it was critical that they had a prospect of making money, even the teams towards the back of the grid, so that we could have a prospect of also making money.

And they've seen radical increases in their value. We've seen pretty good increases in our value. But we're here to play the long game. And it doesn't mean we won't have disagreements with the teams about how much of the pie is ours and how much of the pie is theirs. But trying to build the mentality that as you gain, we gain, and vice versa, and that we're playing the long game here is really part of our goal.

And so I think we will have, you know, a strengthened hand in the next nowadays 100 concrete agreement, not...

a whip hand, but a hand saying, hey look, we're here to grow the value and you're going to be benefit from it and we want to see your team values grow dramatically. Step in O, please correct me.

Now, I totally agree Greg, if I may add just two considerations. Something financially means also the strength of the entire system to invest with also the strategy to engage more with fans and partners that will have an undirected effect on the

to the growth and the strength of the business itself. And we don't have to forget that not many years ago the Ts were suffering and we as F1 were there to support them financially. And this is something that we don't have to forget. That's why.

we need to believe that the more value we give to the team, the more value we go back to the system and to the entire business. Again, Ben on the SGA and APs, I'll talk about it from the four-year basis first, but...

You've seen an increase, obviously related to the Las Vegas Grand Prix, that's 19 million. That was elevated in the fourth quarter because we had our launch event and marketing activities around initial ticket sales. We also talked about the L-Tip moving from stock compensation expense to a more like a personal expense. That's in there now. You won't see that increase, so it's in the base.

And then there's other one-time items in there. There's higher legal and professional fees associated with a couple different matters, an ERP implementation, and a few other one-time items that are affecting SG&A.

So, on your question about whether SG&A is included in our statement on top five rates, it most definitely is. So, on your question about whether SG&A is included in our statement on top five rates,

Great, thanks everybody. Thank you. Our next question is from Barton Crockett with Rosenblatt Securities. Please proceed with your question.

For the Switch years to sports teams and just wanted your kind of views Greg on what's behind the kind of vibrant activity we're seeing right now in acquisitions of sports teams in many sports at premium prices.

You know, I'm thinking of the talk around Manchester United, Milwaukee Bucks

In Exxon's maybe Washington Commanders, certainly Denver Broncos, there seems to be a lot of crisis coming in that are way above What were kind of the values that these teams were carried at and things like Forbes or Sportico and I'm just wondering if you have any thoughts about why and You know if this could be applicable to baseball and

Probably unique thoughts on the value of sports teams. You've seen a lot of commentary about...

These are trophy assets, there's a limited number, you know, they've been good stores of value, that increase in global popularity only means that they have more interest globally and more potential investor interest globally. I think those are all true, isolating which of those factors hard to for me to say.

I think that's certainly going to be true of the Atlanta Braves.

is true of them as a, on their trading value, the longest continuously operating franchise in the United States, storied history of winning, storied history of economic success, hard to think of a more perfect franchise in many ways. Obviously there are changes coming in the ecosystem.

but it seems more likely than not. But about our relative position, I feel very good. Having the largest cable household or broadband household territory, having a very large dedicated fan base, having a relatively modest...

RSN fee given the scale of that territory. All anecdotal evidence we know suggests that we have the most profitable RSN for the RSN owner and distributor. So there's plenty of confidence that there are reasons why they would want to stay engaged. And there are a lot of other broadcast outlets which would want to be involved with the braves given the strength of all the things I started with. So the disruption is certainly there. The potential.

But I feel very good about our relative position and frankly the financial health of the Braves gives me more confidence in that too. Okay, that's great. Thank you. Our next question comes from Stephen Alezdik with Goldman Sachs. Please proceed with your question.

Great. Good morning. Maybe for Greg on F1. I think you said that roughly a third of the fans started following F1 over the last few years and that certainly makes sense with looking at the attendance increases. Maybe looking ahead, could you talk a little bit more about your confidence in converting the fans that have come into the sport maybe because the driving survive or social media over the last few years into lifelong.

growth and interest in F1 in many, many ways. That's with new innovations on the track, ensuring more competitive racing, with new innovations around the weekend, like the sprint races. Lots of ways to grow fan interest on the track. Lots of ways to grow fan interest in some of the things we do off the track, exposing the drivers.

Drive to Survive was obviously a key part, but not the only one. I think, you know, we're helping and the teams are helping create what will be a very exciting movie next year with Brad Pitt and the directors of Top Gun Maverick and the producers of Top Gun Maverick, all of which we think will be another thing to sustain growth.

The Las Vegas race is going to be a massive noise maker for RS4. And it will open up our sport to many people who previously were not aware. While there are 16 and 17 year olds who were crazed and get up every Sunday morning to watch, there are many people who really do not follow Formula One. It will be hard to miss.

Formula One after Las Vegas. It will be loud and we will get a lot of attention. So we're not only thinking about things which are current, but we're thinking about things for the long term to try and sustain that interest, convert that interest into long term fans. And I think we have a lot on the plate and many more in front of us that we're working on to do that. Stefano, what would you add, please?

Yeah, I would say that the main sporting pillar are for short coverage. We talk about racing on the sporting side, on the technical side, on the financial side. These are elemental, which we really are focused because we have shown in the short term that we've found the ideas to improve the aspect of the racing itself. But if you have to add...

another dimension related to the fact that we are an entertainment platform that is growing. We are working on new form of fan engagement with different social content, with new way of connecting with media, but also we don't have to forget one thing that I would say is getting more and more relevant. The way that we...

are doing our sport in a context where we are talking about very important values, where we are talking about the diversity in our project, where we are talking about our social responsibility, where we are talking about our ideas to develop on the sustainability side of it. I think that all these new elements of discussion are elements that are tracking new people, new fans of Formula One, and also we have the opportunity to talk about these things with the different voice.

And the tone of voice, of course, is different depending on who we want to engage with. But we are a platform of connectivity. So, a platform of connectivity means that all the elements that are able to attract interest has to be discussed and operated in the way that hopefully we have shown to be very serious

Thanks for that. And just one more quick one. I probably mentioned that team payments came down as a percentage of pre-team share address of EBITDA or EBITDA in 2023. We know those are variable. I was wondering if you would be willing to speak to, at what point we started to see, some of that operating leverage come through in 2022.

maybe what investors could expect to see on this front in 2023. Yeah, so as you rightly point out team payments were a source of margin expansion in 2022. That was offset by the freight compression that we've talked about, higher hospitality costs, although we still have very attractive margins in the paddock club. But as we've talked about before with the 21 Concord Agreement, as our profitability grows, we have increased leverage on those team payment calcs.

in particular, I wondered if you would discuss puts and takes for OPEX as we move beyond 2023, given that 2023 OPEX includes some one-time costs for the O&O event in Vegas.

And then the second question is on your global popularity. It's obviously on the rise and we all agree that the US is going to see a wonderful benefit from Vegas. And as it happens, I wonder if as you look at other professional sports leagues in the way they leverage their brands, what best practices outside of the core?

events are you looking at that you think you might be able to replicate it F1 thanks. So I'll take the the FX1 first but as we pointed out freight margins have been one of the biggest pressures on our other cost of revenue and we've we've basically absorbed that in 2022 so you wouldn't expect to see that.

revenue number and overall profitability but you'll see how tax increase associated with Vegas as you would expect. But yeah, we would expect leverage as we move forward.

Does.

Continue to hold.

Yeah, can you hear me Peter? Yeah, thanks, Stefano. Hello. Okay, sorry, I was losing the light. Now, I think that the global popularity, as you said, is growing. And this is a fact. And I would say what we are bringing home is the fact that all the other sport league business.

are really interested in understanding how our growth was so fast and dramatic. But of course we are quite humble in that approach because we want to learn from everyone around the world what we can capture in order to increase our way of growing.

I think that is one key that is very important is the way that we engage with our drivers, with the fans. And they are really the voice, the authentic voice of the business we are in. We feel that sharing with them the responsibility of that fan engagement is giving us an incredible attraction because then...

that attractive approach will turn into business if you think about gaming, if you think about the fact that the fans want to attend to the race, if you see that the fans want to follow the count of our social media. So I think this is the really one of the key elements that is quite unique and I think on that we will work even harder to make sure that this voice is even stronger.

Thanks so much. Next question. Our last question is from Jason Bezanet with Citi. Please proceed with your question. I just had a quick question on Formula 1. If Vegas is as successful as you expect it will be, can you just talk about gating factors or constraints?

that are ahead of you in terms of expanding that into other cities. I'll take a cut now. Let's definitely add. Vegas is unique for many reasons.

One, the economic opportunity is large. We're not operating in a country which liberty is reasonably familiar. It's pretty close to us. The ability to go negotiate and make something happen on a street circuit rather than an own circuit made it easier in many ways. There wasn't a problem.

a promoter, natural promoter. It was a role that was good for us to fill in, and it was good for us to test some of the theories we had about promoter. So it was a unique opportunity and great, it's a great test lab. Could there be other cities? I think there are many countries where it's obvious we would be less effective as a promoter than the US.

in 2023 and Vegas.

Definitely what mind you had. Yeah I couldn't agree more I think that is absolutely totally right and we don't have to forget that in such a short time we moved in a new dimension that is being the promoter

in a way that no one was thinking before possible. So first step for us is to make sure that we need to make sure that Vega is right first at the first attempt. So total focus on that. And then of course, I'm sure that this will an incredible push for all the promoters to see what can be done better.

So I think that already by doing that will be an incredible push for everyone to push for a better quality result from everyone. We have a huge demand around the world to host Grand Prix, not to the U.S., but to the referee. So this could be an experience that can be used to better organize the rumpers in the future.

But so far, let's make sure that we are totally focused on making Vegas super special events. I got it. Thank you very much. So operator, I think we are done. So to our listening audience, thank you for your interest in and false support for Liberty Media.

We hope to speak with you next quarter, if not sooner, and I think, operator, we can end the line there. Thank you. This concludes today's conference. We thank you for your time.

speak with you next quarter if not sooner and I think operator we can end the line there. Thank you this concludes today's conference we thank you for your time you may now disconnect your lines.

Thank you. Thank you.