Q4 2022 Liberty Media Corp Earnings Call

Speaker 1: I.

Speaker 1: The.

Speaker 2: the Liberty Media 2022 year-end 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 you remind of this conference we will be recorded today March 1. I would now like to turn the call over to Shane Kleinstein.

Speaker 3: Vice President and Vester Relations, please go ahead. Thank you. Good morning. Before we begin, we'd like to remind everyone that this call includes straightforward looking statement 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 risks and uncertainties, including those mentioned in Liberty Media's most recent form 10K filed with the FEC.

Speaker 3: These four-looking statements speak only as of the date of this call, and Liberty Media expressly explains that 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. On today's call, we will discuss certain non-gaunt financial measures for Liberty Media and CSXM.

Speaker 3: including adjusted Oibata and adjusted EBITDA. The required definitions and reconciliation for Liberty Media and Serious Sex and scheduled one through three can be found at the end of the earnings press release issue today, which is available on Liberty's website. Now I'd like to introduce Greg Maffe, 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 1's President Seo, Stephanie Odominicale and Liberty's Chief Accounting and Principal Financial Officer, Brian Winley. First, let me start with an update on the split-off of 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. Let me turn to Liberty Series XM.

Speaker 4: We expect we will have a simplified structure following the recapitalization of LSEXM and the creation of the LSEXM. We are focused on rationalizing this structure in the near term. Looking at its serious XM, the underlying asset.

Speaker 4: Reported strong, fourth quarter results with record high ARPU 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 2023.

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 revamp.

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

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

Speaker 4: these incremental satellite capex will moderate in 2024 with nearly no incremental satellite capex by

Speaker 4: We're also stepping up some tech investments for long-term success. 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 so our 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: Turning the live nation.

Speaker 4: Continue seeing credible demand. 2022 attendance was up 24% over 2019. We are at all time high for concert attendance.

Speaker 4: despite many markets still being closed during part of the year. We've seen especially strong international markets with 70% of net new tickets sold in 22-22, were to international clients.

Speaker 4: And we expect another record year of demand in 2023. 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: and last year it also benefited from 20 million of tickets that were rescheduled from prior period due to COVID. Formula One Group.

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

Speaker 4: The US is especially strong. 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 and most of them related to our efforts to drive the access to our drivers across Old Channel not only drive this revive.

Speaker 4: but the driver presents on social pages, coverage in large use, publications, late night comedy appearances on people like Jimmy Kimmel. And it's interesting to note, for example, look at our Instagram followers. In comparing ghosts, Lewis Hamilton had 31.5 million versus Tom Brady at 13.6 million.

Speaker 4: F1 is clearly getting into the mentality of America. And looking at the younger talent, LeClaire has almost 10 million, and LeCadon 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's 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. F1 Las Vegas social media garnered over 170 million impressions and over 5 million engagements since September of 2022.

Speaker 4: And we launched LVGP TikTok last weekend. The first post had over 500 insulated 35,000 views in the first 24 hours.

Speaker 4: We'll be turning to the braves. We reiterate that we believe the split-off will better highlight the value of the braves. 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. 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 game set, ticket remains high for the 2021-2023 season.

Speaker 4: Bleacher's report called the braze 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 Alexander Thopolis invested smartly in the off season, adding to the already core talent we have by locking them up in multi-year deals.

Speaker 4: Alex Anthopolis invested smartly in the off season, adding to the already core talent we have by locking them up in multi-year deals. 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 over to Brian to talk a little bit more about our financial results. Thank you, Greg, and good morning, everybody. At quarter-end, Liberty Series XM Group had a trivited cash and liquid investments of approximately 305 million.

Speaker 4: which excludes 57 million of cash held at Sirus XM. There's also 1.3 billion of undrawn margin-loan capacity at the parent level related to our Sirus XM and live nation margin loans. As of February 28th, the value of our Sirus XM stock held at Liberty Sirus XM Group was 14.1 billion in the value of the live nation interest was 5 billion.

Speaker 4: We have 2.8 billion in principal amount of debt against these holdings. Total Liberty Series XM group, the attributed principal amount of debt is 13.1 billion, which includes 9.5 billion of debt that's down at the Series XM level. Formula One group had attributed cash, liquid investments, and monetizable public holdings of 1.8 billion in quarter end, which includes 752 million of cash at Formula One. We have 3.3 billion in principal amount of debt, which includes 752 million of cash at Formula One.

Speaker 4: 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. 3.4 F1 refinanced its terminal loan and revolver to track the rates and an extended maturity. F1 repaid 477 million of its terminal loan being in connection with this refinancing.

Speaker 4: using cash on hand and a year-end formula one's $500 million of dollars of dollars on draw. Formula one's leverage at the end of the year was 2.7 times. On the F1 operating business, given quarterly variability in the year over year of race calendar, reminder that this business is best analyzed on an annual basis.

Speaker 4: Total revenue grew 20% in 2022 with growth across all primary revenue streams. Other F1 revenue grew 63% to or $180 million with approximately 110 million of the revenue growth coming from hospitality and experiences in approximately 55 million coming from increased rate. Team payment is a percent of the pre-team of Oibeda as reported with 66%

Speaker 4: Other costs increased from 20% of total revenue in 2021 to 23% of total revenue in 2022.

Speaker 4: Primarily driven by compression and freight margins with significant air charter cost inflation during the year as well as increased cost of servicing our additional hospitality offerings. S-GNA 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 cost.

Speaker 4: do the change in the company's LTIP from a stock to a cash-based long-term bonus program, and increased headcount to support growth. 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 rights calendar.

Speaker 4: The calendar will consist of 14 fly-away races compared to 12 fly-away races in 2022. As we've discussed before, fly-away races typically pay higher fees than the European races. And on Las Vegas is previously communicated. We expect total revenue approaching $500 million.

Speaker 4: 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. The paddock building is progressing on schedule and the concrete structure will be completed by the end of March. CapEx related to the paddock building will be incurred at the formula and corporate level and track related capEx is expected to be.

Speaker 4: incurred at the F1 off-co level. The majority of our CAPEX spend will be incurred at the corporate level primarily because year round activations at the PADC building will be separate from 4-minute long. We will not be providing a forward looking allocation between F1 off-co and 4-minute-one corporate CAPEX, but you'll be able to see it in our historical numbers as they get reported.

Speaker 4: 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. We also expect the receipt of advance payments primarily related to ticket sales to impact your over-year comparability and working capital flows in the first year of the Vegas race. Nearly all LVGP revenue will be recognized in the fourth quarter when the race takes place. We expect grandstand and GA tickets as well sponsorship revenue to be recognized in primary F1 rep.

Speaker 4: to cash, raise group had a tribute to principal amount of debt of 546 million at the end of the year. Liberty and Arkansas did subsidiaries are in compliance with their debt covenant at quarter-ent, and with that I'll turn it over to Stefano to discuss 4 million.

Speaker 5: Thanks, Brian . 2022 was a fantastic season. On track, commercially with our partners and financially in our results.

Speaker 5: Max Verstappen's 15 wins broke records with the most wins in a single season. The Rebel team won their first constructor championship since 2013.

Speaker 5: and the knee pack competition battled down to the last race with Alpin and McLaren both fighting for fourth place. The feedback from the drivers made it clear. The new regulation meant the cars could race more closely and we saw some great results on the track. This action, during the season, fueled our growing fan engagement.

Speaker 5: 2022 so record the tenders of Grand Prix Vests. We welcome more than 5.7 million fans to race weekend. Up 36% compared to 2019. The man is continuing in 2023 with sell-out crowd expected at the number of races decisions. Formula 1 was once again the fastest-growing major sport league.

Speaker 5: Additionally, across F1.com and the F1 app, Unicuses were up 11% best 2021 to 125 million. On viewership, cumulative TV audiences for the 2022 season was 1.54 billion, and average viewership or raise was 70 million.

Speaker 5: US viewership was up 36% compared to 2021, with an average of 1.2 million viewers tuning in on race days.

Speaker 5: Looking at some other markets, it had a viewership grew to 22%, Australia was up to 20%, and Germany viewership grew 9%. With our newer, younger democratic, the digital share of F1 video minutes consumed grew from 60% in 2021 to 34% in 2022.

Speaker 5: As an endosment of F1 growing global popularity, technological relevance issues to the ability of Ford's, Ford announced their return to F1 from 2026 in a new partnership with Rappl. 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 and human factor

Speaker 5: in F1 history. We expect force involvement as a technical engine provider, will bring value not only to Red Booth but to the sport.

Speaker 5: The growing fan engagement has benefited both new and renewed commercial agreements. F1 grew revenue across all primary sources, promotion, meteorite and advertising and sponsorship. In addition, our PADO Club Hospitality product performed especially well in 2022.

Speaker 5: its first full season of operations since the onset of the pandemic. We welcome 50,000 guests over the season with sell out at 12 out of 19 events. In 2023, we are focused on optimizing the value of our paddle club by expanding the premium services we offer.

Speaker 5: continue to enhance the guest experience and adjust in pricing. Turning to recent updates on our commercial agreements. On race promotion, we extended our race in Zandvole from 2024 and 2025, and the 23 Dodge Grand Prix is already sold out. The promoter has focused on sustainability from travel. With 99% of general admission ticket holders in 2022.

Speaker 5: arriving by public transportation, bike or on foot. We signed a number of last broadcast agreements throughout 2022, including renewing our partnership with Sky in major European markets and with the ESPN in the US. More recently, we entered into a multi-year major ride agreement with the INSport

Speaker 5: to exclusivity broadcast F1 in 10 territories across Asia. Our FOX port agreement in Mexico was extended through 2025. We also renewed our partnership with Playsport in Belgium for 2023 and 2024, and our agreement with Dazone in Japan through 2025. F1 TV continues to grow in popularity among new and added-

Speaker 5: to explore for additional sponsorship opportunities, including travel, financial services, food and leverage, telecommunication and more.

Speaker 5: Our team is continues to build in financial engagement opportunities to capitalize on our momentum. The fifth season of dry to survive, 8th on February 24th.

Speaker 5: The 2023 F1 is 4 qualifier round, is being held through May 25th and we hope to be done the strong engagement from last year when 1.3 million players are tempted to qualify.

Speaker 5: 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 pleased to examine on F1 with 60 full motion racing simulator.

Speaker 5: The second venue will open in Birmingham in UK 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 5: 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. We are counting down to the start of 2023 season, but rain testing finished last week, and with another year of improvement to the track, we are expecting even fiercest competition on the track.

Speaker 5: Ferrarium Mercedes are certainly eager for their comeback. There will be new phases on the grid, with Nick DeVries, Oscar Piafri and a promising young and American driver, Logan Surgeon, as well as the return of an equal hooker. The 23 race commander is a vehicle for Formula One.

Speaker 5: We made the decision not to replace China on the calendar, as the most economic benefit of a replacement race was not worth the logistical and sustainability considerations for F1 and our teams. There will be six sprint events held in Azerbaijan, Austria, Spa, Qatar, Austria and Brazil. The sprint series have been successful in driving attendance and engagement across the entire weekend for our promoters and broadcast partners.

Speaker 5: The 2023 calendar will feature three races in the US, including taking to the streets of Las Vegas for a night race in November . We announced Heineken Silver as the title sponsor and T-Mobile as the exclusive wireless provider. The plan to deploy an advanced 5G public network on Race Weekend that will power our Th Cult.

Speaker 5: 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.

Speaker 5: A fund recently announced a global charity partnership with UNICEF to have bring quality education to the worst most vulnerable children.

Speaker 5: building on F1's long history of promoting STEM education worldwide. We also look forward to the boot of F1 Academy in 2023. The series intends to maximize the potential of young female drivers to reach the highest level in motorsport, providing those currently in go-karting or other junior caterers with access to the fundamental experience needed before racing in F3.

Speaker 5: and working up to Formula 1. The series will consist of five teams run by current F2 and F3 teams, each entering three cars to make up a 15-car grid. The first season will comprise 21 total races, ending as a support event at the Austrian Grand Prix in October . I'm delighted that today we have announced Suzy 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 5: RAP in 2022 and look in 2023, I think F1 is the strongest position it has ever been. This year, we launched a new brand 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.

Speaker 5: F1 is an unmissable and extraordinary spectacle, an adrenaline-filled and intoxicating world of action, innovation and entertainment, both on and off the track, where the extraordinary potential of technology and teamwork comes together to make the difference between winning and being forgotten.

Speaker 5: This is not ordinary sport. This is Formula One. Avanti Tuta. So full speed ahead. And now I will turn the call back over to Black. Thank you.

Speaker 4: Thank you, Stefano and thank you, Brian . And to our listening audience, we appreciate your continued support of an interesting Liberty Media. With that, I would like to open the line for questions. Absolutely. Thank you.

Speaker 2: 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. A confirmation to help indicate your line is in the question queue.

Speaker 2: You may press start 2 if you 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 start keys.

Speaker 2: I first question comes from the Jay-Janaught with Evercore. Please proceed with your question. Good morning.

Speaker 6: A great of the brave, 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 Series, I think. Can you sort of talk about the prospect of doing a hot spin of Liberty Series post?

Speaker 6: 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 staff now.

Speaker 6: 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?

Speaker 4: Thank you. Okay, I'll start. BJ, that was so long ago, those questions, I almost got lost, but thank you. We have lots of things we could do, including a spin of Siri, but I think there are probably..

Speaker 4: Discussions to be had with the Sirius XM independent forward 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 so he said we looked, we're looking at those with renewed vigor and we believe we're a much better execute on any of those posts.

Speaker 5: the Liberty Live re-attribution and the Brave Spin? Stefano? Yes, thanks Vijay for the question. I start for the second. This logistic cost issue last year was a combined factor. 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 logistic costs to be reduced. And on that respect, there is also the other element that we are trying to be even more efficient in order to make sure..

Speaker 5: that the things are done in the proper way. And this is very, very important to share about. And on the other side, we 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 part, but also to the other verticals that are coming into the equation. Because...

Speaker 5: 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 investors related with us. Great, thanks guys.

Speaker 2: Our next question is from Ben, a Shwinburn, 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 for us, certainly both. It's pretty clear, and I think Stephanie made this point last year, that the value of the teams.

Speaker 2: agreement question for 2026, but does this allow or enable or support your ability to sort of continue on this path of operating leverage into the new agreement because of the amount of value creation at the team level? So that's that's I guess the maybe more interesting question. And then I'm going to try, and O'Brien you guys don't like to give guidance, but I just wanted to take another take a stab at the

Speaker 2: 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 a quarter? Thank you. So, Stephano, I'm happy to take a cut and then or let you lead other way. Okay.

Speaker 2: 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, Stepinal, I'm happy to take a cut and then or let you lead other way. Yep. One of the things we are...

Speaker 2: I'm gonna credit Chase and credit Stefano so it's easier for me to go first and give them the credit. One of the things that we at Formula One with Liberty's Health have been trying to do is build the 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.

Speaker 2: 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 a strengthened hand in the next cockpit agreement.

Speaker 2: 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.

Speaker 5: Stefano, please correct me. Yeah, no, 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.

Speaker 5: will have an undirected fact to the growth and the strength of the business. And we don't have to forget that not many years ago, the teams 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.

Speaker 5: We really believe that the more value we give to the teams, the more value we go back to the system and to the entire business.

Speaker 4: Yeah, I've been on the SGN APs. I'll talk about it from the full year basis first, but...

Speaker 4: 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 personnel expense. That's in there now. You won't see that.

Speaker 4: 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 and an ERP implementation and a few other one-time items that are affecting SGNA. So on your question about whether SGNA is included in our statement on top five rates, it most definitely is. Great. Thanks, everybody. Thank you.

Speaker 7: Our next question is from Barton Crockett with Rosenblad Securities. Please proceed with your question. For the Switch years to Force Teams and just wanted your kind of views Greg on, you know, 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 Box, in XSUNs, maybe Washington Commanders, certainly Denver Broncos. There seems to be a lot of prices coming in that are way above.

Speaker 7: 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 in your view and

Speaker 7: And is there any potential for this to be disrupted by all of the noise around local TV rights and the risk of that carries to an important revenue stream?

Speaker 2: A couple thoughts. I mean, I don't have any probably unique thoughts on the value sports teams you've seen. A lot of commentary about these atrope the assets. There's a limited number. You know, they've been good stores of value. that.

Speaker 2: Increasing global popularity only means that they have more interest globally and more fan and more potential investor interest globally. I think those are all true isolating which of those factors hard to for me to say.

Speaker 2: I think that's certainly going to be true of the Atlanta Braves is true of them as a under-training value. The longest and the opportunity to operate in franchise in the United States. Story history of winning. Story history of economic success.

Speaker 2: hard to think of a more perfect franchise in many ways. Obviously there are changes coming in the ecosystem.

Speaker 2: I feel pretty good about those changes for a bunch of reasons.

Speaker 2: I do think you will see net revenue declines across all of baseball with the decline of I think that's in the short term at least that's almost inevitable with some of these contracts are done and there may be operations which prevent that but it seems more likely than not.

Speaker 2: 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 those, that territory.

Speaker 2: All anecdotal evidence, we know suggests that we have the most profitable RSN for the RSN owner and distributors. So there's plenty of confidence that there's 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.

Speaker 2: You know, the disruption is certainly there, the potential, but I feel very good about our relative position, and frankly, the financial help of the Braves gives me more confidence in that too. Okay. That's great. Thank you.

Speaker 8: Our next question comes from Steven Alecznik 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

Speaker 2: much definitely to add.

Speaker 9: Look, we are...

Speaker 2: Very focused on sustaining the growth in interest in F1. In many, many ways, that's with new innovations on the track ensuring more competitive racing with new innovations on around the weekend like the Sprint Races. Lots of ways to grow fan interest on the track. Lots of ways to grow fan interest.

Speaker 2: in some of the things we do off the track and exposing the drivers. Drive to Survive was obviously a key part but not the only one. I think we're helping and the teams are helping create what will be a very exciting movie next year with Brad Pitt and the...

Speaker 2: directors of Top Gun Maverick and the cruisers 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

Speaker 2: No, he's made her for our sport and know it and it'll 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

Speaker 5: 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 find the ideas to improve the perspective of the race in itself. But if we 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 funding equipment.

Speaker 5: 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

Speaker 5: the diversity in our project when we are talking about our social responsibility, when 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 a different voice.

Speaker 5: 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 on. Thanks for that. I'm just going to...

Speaker 4: 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.

Speaker 4: But, as we've talked about before with the 21 Concord Agreement, as our profitability grows, we have increased leverage on those team payment counts.

Speaker 4: And as we pointed out before, there's some one-time items in SG&A, so we would expect some leverages.

Speaker 4: out before there's some one-time items in SGNA so we would expect some number. Great.

Speaker 8: Our next question is from Peter Cipino with Wolf Research. Please proceed with your question. Hi, good morning. Pleasure to be on a Liberty call.

Speaker 10: Question on F1 operating expenses 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...

Speaker 10: 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 that happens I wonder if as you look at other professional sports leagues in the way they leverage their brands what what best practices outside of the core events are you looking at that you think you might go to replicate it F1. Thanks

Speaker 4: So I'll take the OPEX one first, but as we pointed out, freight margins have been one of the biggest pressures on our other cost of revenue. And we've basically absorbed that in 2022, so you wouldn't expect to see that continue as we go forward. And hopefully you'd see some leverage there.

Speaker 4: Hot fatality costs, as we just said, there's good margins. Vegas will play in. We haven't given the OPEX number. We've just given the revenue number and overall profitability, but you'll see OPEX increase associated with Vegas, as you would expect. We would expect leverage as we move forward.

Speaker 4: hospitality costs, as we just said, there's good margins. So Vegas will play in. We haven't given the OpX number. We've just given the revenue number and overall profitability, but you'll see OpX increase associated with Vegas as you would expect. But yeah, we would expect leverage as we move forward. Definitely, I'll let you handle a second.

Speaker 4: As we just said, there's good margins. So Vegas will play in. We haven't given the OpX number. We've just given the revenue number and overall profitability, but you'll see OpX increase associated with Vegas as you would expect. But yeah, we would expect leverage as we move forward. Definitely, I'll let you handle a second. Yep.

Speaker 5: Can you hear me, Peter? No, 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.

Speaker 5: are really interested in understanding how our world was so fast and dramatic. But of course, we are quite humble in that of course, 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 very important is the way that we engage with our drivers with the fans.

Speaker 5: and they are really the voice, the authentic voice of the business we have in. We feel that the sharing with them the responsibility of that to fund 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 drive then the fans wants to attend.

Speaker 5: to the race if you see that the task wants to follow the count of our social media. So I think this is 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.

Speaker 5: if you see that the fans want to follow the count to no 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.

Speaker 8: Next question. Our last question is from Jason Bezzanette with City. Please proceed with your question. You just had a quick question on Formula One. Can you just, if Vegas is as successful as you expect it will be? Can you just talk about getting factors of constraints? Yes.

Speaker 7: that are ahead of you in terms of expanding that into other cities. Thanks.

I'll take a cut now. Let's definitely add. Thank you. It's as unique for many reasons.

One, the economic opportunity is large. We're not, we're operating in a country that with 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 promotion. 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. There may be somewhere we could operate reasonably effectively, or maybe have some form of co-promotion.

And that could be interesting. But I do not, I think Vegas is relatively unique in terms of being the kind of place where we would go all out and do what we have done and what we are doing here in 2023. Definitely what might you add? 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, but it has been 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 qualitative result from everyone. We have a huge demand around the world to host Grand Prix, not only in the US but also in Paris. So this could be an experience that can be used to better organize.

rump in the future. But so far, let's make sure that we are totally focused on making Vegas super special event. 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. You may now disconnect your lines.