Q1 2023 Liberty Media Corp Earnings Call
Welcome to the Liberty Media Corporation 2023, Q1 earnings call. During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press star one on your telephone keypad as a reminder, this conference.
Is being recorded May 5th I would now like to turn the conference over to Shane <unk> Vice President of Investor Relations. Please go ahead.
Thank you and 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 Securities Litigation Reform Act of 1995 actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in Liberty Medias. Most recent Form 10-K, and 10-Q filed with the SEC. These forward looking statements speak only as.
As of the date of this call and Liberty media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements 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-GAAP financial measures for Liberty media and Sera.
That includes including adjusted OIBDA and adjusted EBITDA, the required definitions and reconciliations for Liberty media and Sirius XM and schedules one through three can be found at the end of the earnings press release issued today, which is available on Liberty Media's website now I'd like to turn the call over to Greg Mustang and Liberty's President and CEO .
Thank you Shane and good morning.
Today speaking on the call. We will also have formula one's President and C E O.
Stefano Demeanour Kelly.
Liberty's, Chief accounting and principal financial Officer, Brian Wendling.
I'm going to first update you on the split up of the Braves the creation of the new Liberty Live tracker, we filed the amended S. Four and are pleased with the speed of the SEC review.
We believe we are nearing the end of that FCC process, and we are still targeting completion before the end of the second quarter.
Turning first to Liberty Sirius XM.
We continued our efforts to delever and simplify the balance sheet. There, we raised $575 million of three and three quarter, Alex like some converts and we use the proceeds to repurchase seven.
703 principal amount of <unk>, including <unk>.
591 billion of the one and three eights basket convert and $112 million of the two and $2, 125% CRE exchangeable.
We also repaid the remaining balance of those in April .
That was a reduction in gross debt just over $400 million year to date, including the April activity.
The reclassification of the <unk> and tracker without the life stage will simplify our structure further and we continue to be focused on rationalizing CRE and <unk> structures in the near term.
Let me look at Sirius XM itself.
As expected, we had a challenging first quarter due to the SAR in AD market trends. We expect this is the low point of the year on net pay net self pay net adds.
Due to the lower Q4 trial starts the seasonal Q1 higher churn and the pullback in marketing as we will wait to rollout our new app.
Advertising did performed better than expectations and podcast and continues to be a bright spot.
We saw solid progress in rolling out 360, L. A revolutionary new product enhancement, which leverages the best of our content and interactivity.
We expect 40% of Triptan creation, 40% penetration of new car trials by year end 2023.
We see a good conversion lift in vehicles with 360 L, particularly as consumers are aware of and use advanced features.
We did take cost out of the business at <unk> with an 8% workforce reduction in March.
And we are confident we will see improvement in operating results for the year with likely positive self pay net adds in the back half of the year and the cost savings and AD revenue seasonality benefiting EBITDA.
EBITDA.
As a result serious exam on their earnings announcement raised both.
And free cash flow guidance $50 million each.
We were excited to named top areas. The new CFO . He was previously our chief accounting officer, Who's been with Sirius XM since 2009 and has a detailed knowledge of financial and strategic elements of the business, we do wish Sean well in his new role and his success on the course.
Turning to live nation.
Tremendous quarter continued growth in.
In live events across all of its segments with a great Q1, as I said, even against a pretty reasonably strong comp last year that there were some international markets that we're not open.
In the prior period.
Ticketing <unk> was up 60% Oi was up a stunning 53% to $320 million.
And they converted 59% of the OE into.
Into a $190 million of free cash flow.
We look forward to yet another expected record year at live with about 90 million tickets sold for live nation shows year to date, we expect to manage 600 million tickets globally.
We will host a record number of fans even against a strong 2022 comp which benefit from rescheduled shows in prior periods.
We believe the AOI at life and compound at double digits for the foreseeable future.
On the legislative updates, we continue to make solid progress and hope the market will begin to recognize the momentum there.
We continue to gain momentum on the Air Ticketing Act and the proposed bill in the Senate called the ticket Act is actually a significant positive first step towards implementing initiatives we support.
Turning now to the Formula One group on the corporate side.
We paid $202 million of cash Alice exam to settle the intergroup interest in connection with the repurchase of the basket converts.
That's an effective buyback of $3 1 million shares at $65 a share proportionate to the amount of the convert repurchase.
The F. One season is back after several weeks off beginning here with the exciting Miami race. This weekend.
I would note we had our first F. One accelerate conference yesterday with successful this business summit brought together leaders in sports Tech and media. We expect we will have further iterations of that in the future.
We announced format tweaks to sprint events.
Now a standalone event with separate points and no impact to the grid the GP itself.
I also expect we will see continued improvements in this format.
And three full days, resulting in three full days are on track.
We continue to see growth in the sport the back who sprint weekend television audience was up 7% versus the 2022 GP in part due to the spreads.
Continuing from here in Miami, we see growth in the U S fandom unfold this way.
The Saudi GP was on ESPN and cables, most live GP on record to date.
U S. Social media followers are up dramatically, 43% in the first quarter versus the prior year.
In the U S is now formula one's biggest audience across Instagram Youtube tick tock and Snapchat.
Quick update on Vegas, we completed the wave one and two ticket sales with strong demand. The final wave three sales are expected later this spring.
We remain confident in our sponsorship pipeline with many big deals already announced.
<unk> recently added Virgin at hard rock.
The construction of Patrick building itself is over 60% complete capex.
Capex is running in line with expectations modestly exceeding.
Our original cost of land purchase.
Alright reiterate these were reiterating the race specific economics for year, one we expect total revenues will approach $500 million.
And we do expect it will be a top five race.
And profit economics.
On the balance sheet F. One leverage at quarter end was two two times.
This will trigger a 25 basis point permanent reduction in the margin on our existing term loan b, regardless of future leverage ratios.
Turning to the Braves.
Great start to the season 'twenty two intern best record in the MLR and leading lease by six games.
Ronald Laconia Junior was named NFL player of the month for April .
Major League baseball and stone basis it runs.
We had the largest home opener crowd in Truest Park history, we've seen incredible ticket demand.
Season to date.
We stopped selling season ticket sales for the first time in franchise history and started a waitlist before opening day.
We expect to sell over half the games this season.
Baseball is clearly benefiting from Mlps rule changes games have more action and less downtime across major League baseball you've seen stolen base attempts up over 30%.
Versus last year to the highest rate since 2012.
Games are about 30 minutes shorter versus last year and dropping below three hours.
Looking at the Braves themselves and innovations there we already plan to implement a new.
We already planned and when our new Pos system. This year to enhance our fan experience and this will help mitigate any impact to concessions from shorter gains and we are actually seeing favorable trends in concessions year to date.
Let me turn it over to Brian for more on our financial results.
Thanks, Craig and good morning, everyone.
Quarter end Liberty Siriusxm group had attributed cash and liquid investments of approximately $377 million, which excludes $53 million of cash held directly at siriusxm.
There is also a $1 5 billion of Undrawn margin loan capacity at the parent level related to our Siriusxm and live nation margin loans.
As of May four the value of our Sirius XM stock held by <unk>.
<unk> was $11 5 billion in the value of the live nation stock was $4 7 billion.
We have $2 7 billion in principal amount of debt against these holdings or $2 4 billion pro forma for the additional pay down that occurred after the quarter.
Total Liberty Siriusxm group attributed principal amount of debt at $13 billion, which includes $9 six directly at the serious level.
In March Liberty, Sirius XM group issued 575 million aggregate principal amount of $3 75 L. S. MA convertible notes due 2028.
Net proceeds of this offering to repurchase $591 million.
The principal amount of the one 375 cash convertible notes.
$112 million of the $2 25 series exchangeable debentures in.
In addition to the proceeds raised from the new convertible Alex XM used cash on hand, including $39 million from the proportional net settlement of the bond hedge and warrant and cash received from a formula one group to retire $3 1 million.
One a intergroup interest shares underlying the corresponding portion of the convertible repurchase.
Subsequent to quarter end Liberty Siriusxm settled the remaining.
2125 serious tangibles for $275 million at the April put call date.
There is approximately $199 million remaining on the one 375 cash convertible notes, which mature in October .
All remaining intergroup interest are expected to be settled and extinguished in connection with the spin off in.
Additional information regarding the intergroup interest is available in our press release.
Well as the S. Four that was filed with the SEC.
Formula One group had attributed cash liquid investments and monetize public holdings of $1 8 billion at quarter end, which includes $1 billion of cash at the Formula one level.
Formula One group purchased the $129 million of exchange traded funds in the first quarter, which we expect to attribute to the Liberty life group tracking stock in connection with the announced reclassification of the trackers.
Total Formula One group attributed principal amount of debt was $3 billion, which includes $2 4 billion at that F. One, leaving 538 million at the corporate level.
F. One $500 million revolver is undrawn and their leverage ratio at quarter end to two.
<unk>, which will trigger a 25 basis point reduction in the margin on the term loan b debt.
Looking quickly at the half one operating business given quarterly variability, we remind you to look at this business on a full year basis.
But that being said, let's take a quick look at the quarter.
Our race count in the first quarter was consistent year over year with two races primary revenue grew with increases across race promotion media rights and sponsorship.
The other half one revenue decreased in the first quarter, primarily due to easing of freight cost inflation versus the prior year, which was partially offset by growth and paddock club attendance.
On the cost side, our team payments grew in the first quarter due to the pro rata recognition of increased payments for the year.
Reminder, that other cost of revenue <unk> revenue and SG&A are best viewed as a percent of total revenue other costs are up on revenue benefited from the easing of the freight inflation.
This was largely offset by increased hospitality costs, and higher commission and partner servicing cost paid to related to the growth in the primary F. One revenue streams on.
On SG&A in the first quarter included $6 million of cost from the from the Las Vegas Grand Prix.
Looking at Vegas, nearly all of <unk> revenue and costs will be recognized in the fourth quarter. When the rates takes place just a reminder on that.
Paddock club building is progressing on schedule in the first quarter, we incurred approximately $53 million of corporate level capital expenditures related to Las Vegas.
We will not be providing a forward looking allocation between the up one opco and the formula one corporate capex.
The GP will pay rent and other fees out of F. One opco to formula one corporate for use of the building during the rice periods, which will show up in our financial statements as at revenue as revenue at the corporate level in the fourth quarter, but will eliminate in consolidation.
Finally at the breakthrough at the quarter end, they had attributed cash and liquid investments of $215 million, which excludes $30 million of restricted cash.
Radio group had attributed principal amount of debt of $542 million.
Liberty and our consolidated subsidiaries are in compliance with our debt covenants at quarter end.
That I will turn it over to Stefano to discuss Formula one.
Thanks, Brian Good morning from Miami, we are thrilled to be back for our second Miami Grand Prix.
The excitement in the city is as vibrant as year one.
This year event feature on the extended power.
Now located inside the Dolphins stadium, and our greatest Paddock club and a fully with surface track. We are four races into our record 22 race calendar.
Red Bull has dominated the rates to date. It is still very early in the season and the races have been packed with excitement and drama.
I'll also I'll also fans have as much to cheer about with Aston Martin recent performance.
So first place finish in Saudi Arabia, Mark is hundred podium, making him one of only six drivers in F. When these 32 claimed these feet.
The Australian Grand Prix, featuring three Red flags, adding even more complexity to tie strategy and ended with only 12 of 20 drivers crossing the finish line.
The newsprint Puma was unanimously approved by the teams F. One and F E. The vessels, but we all believe that the new formats is the right one for our fans and the sport and increased the level of intensity and action across the weekend. Starting this season. This is sprint events all three days of the weekend will be.
Packed with own track excitement. This how does this please shoot out is a shorter qualifying session to determine the sprint grid later that day. This makes it the screen Standalone event with no bearing on the Grand Prix, allowing drivers to find more aggressively without fear to race of the implications.
<unk> engaging with our clients across platforms global audience has exceeded 70 million viewers for the first two races of the season with significant increases in key markets across Europe , and North America in the U S. The southern IBM, Bruce one $5 2 million viewers, marking ESPN and cables most viewed grand pre owned.
Across our digital channels F. One reached $62 9 million social media followers as of Q1 up 31% year over year.
That's one dot com website, and Epsilon apps and launched additional content, including the new what is F. One section dedicated to new funds with videos and begin this guide to the sport.
Crowds continue to flock to our races globally. The vast majority of events are sold out for the 2020 season Marine set these new record with net.
Nearly 100000 fans over the weekend Melbourne topping last year's record as the largest weekend sporting event in the recent Australian history, we welcomed 440 fantasm fans over the course of the weekend.
From 420 thousands of prior year. This also marks a new record the censoring for wanting to almost total race weekend the tenders.
Turning to recent updates on our commercial agreements on the race promotion, we extended our Austrian Grand Prix.
Through 2027, following last year's sold out crowd of 303000. This year event will mark our 10th anniversary since FY <unk> so to speak.
We also announced the extension of the Azerbaijan Gran Prix through 2026.
Media rights, we entered into a multiyear extension of our partnership with ESPN to broadcast F. One channel in Latin America, and the Caribbean ESPN will provide live coverage of over half of the races with a full season available on the streaming service staff plus Espns continued to develop.
Dedicated content across web and social platforms, allowing us to expand our global reach and attract and increasingly diversified base.
Our proven access product continued to see solid subscriber growth this season.
Sponsorship, we made the liquid moel unofficial partner our enhanced agreement includes the tuck signage.
Racism visual branding 15 basis, demonstrating the opportunity for digital AD insertion within the broadcast fee. We first welcome League Memorial as regional sponsor in 2019 grew our relationship to efficient portion in 2020 and now official party in 2023, we continue to demonstrate growing value to our partners.
We were thrilled to announce permanent plaza as an official partner following our successful support and entertainment collaboration with Us as.
Our new multiyear agreement with featured the popular seniors are fan zone on flip side display and in digital placements. This week, we announced Puma as the official provider of Epsilon supporting the appeal and a new multi year partnership and we extended our agreement with MSC cruises as global partners throughout 2026.
As part of the extension MSC will bring a unique aspect that is you guys periods, our sponsorship pipeline remains strong.
So as to survival.
For its fifth season in February added casual and new plans alike continue to be drawn to the Cds. The latest season didn't disappoint on April 14th we celebrate the topping out of our Las Vegas lumpy path of building by placing a symbolic concrete barrier on top of the structure. We are very pleased.
With our progress the efficiency of this project is a function of the incredible collaboration between the Las Vegas Grumpy team, our the length of design and construction crew and local officials.
We thank them all for their support.
<unk> 1000 feet long.
Hundreds of feet wide and police told us told with a rooftop deck. It will be the largest baidu building on the race calendar and will host the largest public cloud on the roof. We have a 28000 square foot LCD screen in the shape of our <unk> that provides unparalleled branding opportunities when you fly over.
Las Vegas, you will note that the F. One has established a permanent home in the U S. We can monetize the LCD screen and display third party brand into the future use the business itself as advanced <unk> capabilities.
Capabilities temporary walls between <unk> <unk> and additional features and ensured us ample flexibility to convert the entire space for a broad range all year round the users.
It's really around the activation or under development and we hope to have more to share in the coming months I encourage you to visit the Las Vegas Grand Prix website for the time lapse video of the extraordinary construction progress.
Our truckload surpluses of Las Vega growth began last month and the second phase is scheduled for July was complete these trucks surface can last six to 10 years.
The team also recently announced the addition to dysfunction lineup versus.
They'll tell US Vegas was named an event part and we will have entitlement to the East Harman Fund zone.
<unk> International was name of presenting Barton and will build a grandstand in front of them at ash on the strip.
March we announced an event partnership with switch the technology infrastructure company, who will supply <unk> with its sustainable goals and establish <unk>.
Conscious practice for the race weekend mobile.
Finally, touching on our broader sustainability inclusion effort.
European Union recently recognize the role that sustainable fuel needs to play as part of the automotive solution alongside the two vehicles.
<unk> 35.
This is cement the future of sustainable fuels following F. One extensive work with policymakers.
We're up to and Thats three cars are running 55% sustainable fuels. This is curt.
That's one cost are running 10% sustainable fuels and we are on track to introduce 100% advanced sustainable fuels in 2026.
The F. One academy, our new Ultimate series began a seasoning, Austria last weekend following two testing session in Barcelona and protocols for us.
Installation to monthly you'll see it from Premier racing on winning two of the three races on opening weekend, we just 0.3 seconds separating her and the second place finisher in the third.
Those rates.
The seasonal will have seven race weekends with the final race alongside us in Austin in October I am pleased to say that in 2024 season will have OLED <unk> Academy races joined F. One weekend <unk>.
The creation of US one Academy is an important step forward towards increasing opportunity for female participation in motorsports.
As part of a journey and we hope it will be <unk> for young female drivers aspiring to reach professional motorsport will now have the F. One academy to aim for I believe we are creating the best possible structure to find and nurture female talent, including those already in the Cds and those.
Yet to come through from the grassroots level, we are looking forward to the season.
Yesterday, <unk> partner with custom events from worst to journals to host our first Epsilon like Slitting summit, we brought together trailblazer from the worlds of sports Entertainment and business to discuss how they can make a significant impact on the future of technology performance diversity and sustainability.
Owning their own business by the cross interesting culture, we welcomed familiar faces from the effluent grid and management alongside Markese figures include the Maria Sharapova literally months.
Jay Leno was our hostess business executives traveled from across the country, including Jerry Bruckheimer, Jocose Maverick Carter Saba Harden and Bruce Magnus, We hope to continue to leverage that farm brands to drive innovation and commercial success for the sporting and entertainment World. It is an exciting time for <unk>.
On the track and in the commercial operation our unusual early season spring break didn't have a mandatory shutdown like summer break meaning these were hard at work with Duke has a great I believe competition will intensify as the season progresses Miami closed out the first double headed to the season before we had to Europe .
For the first triple Heather that has plenty of action to come of antitumor full speed ahead.
And now ill turn the call back over to Greg. Thank you Joe.
Thank you Stefano and thank you Brian .
To our listening audience. We appreciate your continued support of and interest in Liberty media.
We hope you will all turn into see the Miami Grand Prix This weekend and the start of our Brave series against the Orioles Tonight.
With that operator, I'd like to open the line for questions.
Thank you the floor is now open for questions. If you would like to ask a question. Please press star one on your telephone keypad at this time.
Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star keys. Once again Thats star one for questions. The first question is coming from David Karnofsky of Jpmorgan. Please go ahead.
Thanks.
I was just on the new sprint format.
I'm interested to know what the response has been from your partners on the promotion side.
How are they thinking about the potential lift to their own ticket sales.
And then what's the process you have to determine what <unk>.
Get that format and is that something that you can build into your contracts.
Well, thanks, David of course.
Deep does seem to in accordance with the teams and with the FAA because.
As you know our idea is to make sure that doing the leasing we kept that he's always X number track actually the results of the first one of this year has been very encouraging.
And every one of our partners for multiple media partners. It also team are very positive about that of course that is something that we want to take as we let some go to see at the end of summer is there is something that we can learn to do even something better but in the gel until the first we recap of the spring improvement there.
Great and it seems that there's always when you want to do something different in a very standardized ecosystem. The reaction of the let's say the traditional fans is the one that needs to be.
Weighted for longer term, but nobody with the new fabs that we have seen a very very positive reaction promoter was pushing for that and I would say video thing is that we do want to grow in a situation where in the future with that at all.
The races with discipline focus we want to keep.
Limited number of maybe walk through the calendar number.
Right.
Especially with regard to the competition that we can give them supporting value with choke season and of course commercial opportunities with these things, but I think that's the right way to go and if I may summarize and other things that they think is important I see a big trend today able to support not to be.
Let's say not to see consistent with your regulations that were just following the work the Batesville date I just fully what the NBA.
So that means that the older professional sport needs to listen to the request to the new input that the past promoters and partners Alaska.
We have more excitement around the gates, so positive and looking forward to keep working on these projects.
Okay, and then you've called <unk> TV in your releases for a few quarters now just wanted to see if you could update us on product where do you see it in terms of the growth trajectory and then just for Brian .
To the extent someone buys an annual plan at the start of the season is that all booked in the first quarter with the partner cost or is that proportional to the races.
So if I may the first part of it the <unk> is really working very well, we know that we are not providing any.
Numbers on that but what I can tell you in terms of quality income will need.
And in terms of attention is also an opportunity to select new markets, where there is not really a strong.
Broadcast a provider and we're doing that with certain countries and the effect is really good we have a new plan also to update some of the content that we want to keep to our offense.
Adds up to a couple of years of their high investment now we are paying back what has been a great decision taken a couple of years ago.
Brian you want to progress we got a question.
Yes, David on your second question, it's proportional over the season.
Great. Thank you.
Thank you. The next question is coming from Bryan Kraft with Deutsche Bank. Please go ahead.
Hi, Good morning, Greg I wanted to ask you how should we think about the capital needs of the Liberty live tracker, both initially and over time, particularly as the business side of Liberty live evolves and begin to invest in owning and operating venues I assume thats still part of the plan I mean, it seems like it's capital intensive so just wanted to.
Understand how you might go about funding those endeavors. Thank you.
Thanks, Brian for the question.
As we've outlined we expect to capitalize.
Liberty live with a decent amount.
Out of cash, but candidly to the degree we go out and do something large there will have to find other sources of capital.
The other source of cash capital.
So I don't think.
It will be a massive generator of cash as you would expect looking what's in there and the asset base there but.
But we have some ideas that involve leveraging liberty live itself not reliant as much on other trackers if thats your for you Brian .
Yes that wasn't answered the question. Thank you.
That's right my regret that subject a little bit.
Well a lot of people are asking about it so I think it's.
Two.
To match up that right upfront.
Right upfront.
If I could ask you also maybe related on the.
F. One side I mean, it seems like what you're doing in Vegas is really exciting.
Do you see other opportunities to invest in <unk> business by taking on the promoter role in other.
Markets and investing in facilities to drive longer term growth.
Look I think Vegas was unique in.
And the opportunity and also the geography in a bunch of other factors, which made it the place where we should be the promoter first.
We'll try not to have too much hubris and assume that we need to prove we can be a good promoter first.
I don't look at a lot of other places where it's obvious.
<unk> mentioned in the past that I do think in some cases some of our.
Partners in the promoter space are not necessarily as capital rich as formula one and so there may be opportunities for us to participate alongside them.
Maybe not a full co promotion role, but to take elements of.
The chain of value being created and further it for both of our benefits. So we'll certainly look at that and talk to partners to the degree that's available.
And if demand doesn't come up right.
It's qualitative effect is that.
With these investments we are pushing also.
The quality of the promoters that are already very fruitful for I think four one so now the game is to have a unique event.
Working very very well of course commercially viable, but I would say that that's a good fact.
Stephen to the system and uplifts in the quantitative approach of evergreen quick.
Okay. Thanks, Greg Thanks, Stephen I appreciate it.
Thank you. The next question is coming from Vijay <unk> of Evercore. Please go ahead.
Hi, Good morning, I have a couple on formula one.
Greg the $112 million of team payments in the quarter.
Little less than I think $1 3 billion for the year.
Can you just sort of talk about how <unk> payments.
Payments are being communicated to the team given the fact that you have something different.
Different with the Vegas rates that it has not been a contractual.
And is that something we should look at as a proxy and what you had sort of thinking on the full year EBITDA number.
And second obviously the free cash flow was.
Very very strong formula one's Florida, and I'm, assuming that has to do with <unk>.
<unk>.
Well I think one way to on any.
Way you can help us think about what some of the underlying free cash flow is exact excluding the ticket sales if possible.
So I'll comment on the first and second and if Brian you want to add anything.
The free cash flow when I am done that would be great.
Looking at the team payments I think if you look at our history.
We try to manage that conservatively.
Particularly in the first quarter of the year.
And as you rightly note, probably even more conservatively this year given.
We've added some volatility of the payroll are out rather to the potential in.
Hi, <unk>.
Vegas, we think its positive volatility, it's going to be a great event, but it is unknown it is not as well.
Experienced some of the other events that we have so I think you should look at that as a conservative proxy for how we expect the year will go.
Lastly, we want to do is have teams.
Overspending in anticipation of monies that don't show up towards the end of the year.
On the free cash flow you rightly note.
Because of the wave one and two sales.
A lot of cash has been brought to us deferred collection, but it has generated that free cash flow line.
So it is probably overstated the true impact of the operating business for Q1, but we do expect to recognize that as free cash flow as the year progresses I don't know, Brian if you want to comment on can comment a little on a more normalized level without providing vijay too much clarity because gosh knows we wanted to do some real work.
Yes.
To help the efforts I guess I would say if you look at our tracking stock schedule as you can see the deferred revenue.
As of March 31, 2023, and you can go back and look at the you look at our first quarter from last year, you can see the deferred revenue related to formula one.
At 2022.
Roughly a $130 million give or take and you could think of that largely.
Being related to Vegas, although there are other puts and takes.
Thanks, I may add one comment.
Sorry, Brian .
No go ahead Doug.
I'm pleased that.
Sorry, I just want to add two comments that I think is important to consider as you remember at the end of the day.
It is important to remember the teams. The teams are benefiting from what we are doing so far I mean invest in Vegas for them.
And the incredible opportunity undoubtedly also for them to decide.
And in that we'll get our proposition even stronger as an ecosystem for rollout. So I think that is really something that Scott was mentioning we have a potential approach that gives you the magnitude of what we need to do and need to deliberate and discuss that would be very very important for all of us.
Thanks P J.
Thank you.
Thank you. The next question is coming from Peter Zaffino of Wolfe Research. Please go ahead.
Okay.
Hey, good morning, and thanks.
On the Concorde agreement, Greg I Wonder if Greg wants to final I wondered if you could comment on how you'd like investors to think about the timing of that.
Renegotiation and then a second question, Greg If you would talk about live nation.
Your view of both the risks posed by the Doj investigation, and then separately the bare case that the business ought to slow down a lot in 2024. After this post pandemic surge of supply. Thank you.
Look we have several years left to run on the Concord agreement, but.
I think there is a consensus.
Among the teams and the FIA and ourselves that.
Now it might be a good time to try and strike while the iron is hot and renew.
<unk> the Concord agreement there is certainly no obligation to do that and there is certainly no risk if that doesn't get done as you may recall, we went right to the end and historically.
In many cases the teams have operated without a concrete agreement they basically done a handshake and then completed the deal post.
The period when the Concord, New Calgary was supposed to start our hope is at this time, we'll be able to change that dynamic.
Because of the way that chase and Stefano of change the dynamic with the teams in particular I hope we have a more positive relationship and everybody sees the benefit of going early and providing certainty for all involved definitely what would you add nothing because I think that you synthesize perfectly the situations and I think that.
It will be a restricted stock.
On live nation.
Yes.
I would not say if the Doj investigation, you could always say that but look we've had a doj consent decree and monitor now for several years and it was renewed.
And there is a hotline that anybody can report what they perceive as violations of that consent decree and the Doj has the monitor who is investigating continuously perceived.
Or alleged violations of the consent decree there.
There obviously is another track which is.
Our legislative potential and we've talked about some of those I mentioned the.
A couple of bills that are being considered.
Sure those skills will get done but in the main we view those bills is positive and.
And frankly, I think anything that moves forward and the negative speculation about the regulatory side is positive because we do not perceive it nearly as big a risk is the market proceeds to be.
On the dot on the business itself.
Hard to project, what the consumer will do and you can imagine recession scenarios and alike, but we see none of that we see strong demand.
And we see it going forward with upcoming tours and our expectations as I noted our the business is going to continue to grow.
Thanks, a lot Greg.
Thank you Peter.
Thank you. The next question is coming from Stephen Lanza tick of Goldman Sachs. Please go ahead.
Great. Good morning, maybe one on Epsilon sponsorship for Stefano I. It seems like you are finding a fair amount of success in stepping up some sponsors into more comprehensive packages Paramount plus MSC.
Look what Molly this past quarter I was wondering if you could maybe talk about.
Yes. This is more.
<unk> much opportunity you think there is as you look out across your sponsorship portfolio step more sponsors up and if theres any constraints, especially with there being 10 global partners already that could limit us.
Well thanks, Tim for the question I think thats it.
We always need to look behind that you understand what we're doing today.
Talking about <unk>.
I appreciate the thoughts on just two years ago now we have a head into 10 official partner plus.
Incredible group of both sexes.
Part of that part.
Hello.
That's our our main goal is to for sure to connect with the potential business partners.
I think that I can pull to develop pieces together, but in any case, we don't get to Overcrowd. Our group in order to also what they need and it's up to us to prepare for them different packages with different countries with different experiences with different opportunities. This is what we are doing and the fact that we are so strong in this moment that the pipe.
Your line is seen very solid growth for the future is giving us the <unk> to work on the digital landscape.
To have different proposition different markets for example.
One opportunity that we have to date or including other categories that are adding to that to come back and forward. So I would say now the real thing is not to work on deals.
That anymore, but making sure that each of them received is like 40% the answer to that question and the other thing that I think is really rather than that gifts in another way. The fact that we really see this.
On the sustainability.
Because no one will invest today in the business that is not credible on this landscape. Therefore that this is another state where they seem to fall off is to make sure that our goals with this sustainability led company.
Has been achieved so let's see a constructive push so we are working together.
It will be stronger.
So all that together.
Great. Thanks for that and then maybe one for Greg could you just update us on the way Youre thinking about capital allocation at Formula One now that you have to trigger on your term loan. This quarter should we expect this to give you some more flexibility from this point going forward to ramp leverage back to more historical levels.
Well, thank you Steven I think.
Look we are pleased to have triggered the reduction.
Honestly, that's a nice benefit but it has not been whats driving our thinking about capital allocation.
We are looking for and believe we will find attractive opportunities.
For our cash and or generate cash flow generation I've talked about some of those in the past, including the Vegas effort, which I think is going to generate a good return.
Flurry businesses around which are centered.
Synergistic in and around our existing business and the potential for return of capital versus share repurchase as I would as I noted, we effectively did that this quarter for just over 3 million shares for the intergroup interest settlements. So I expect you'll see us look at all of the alternatives above.
Again, it was nice to click off a 25 bps reduction, but that wasn't what drove our thinking it's really the strength of the business, which is generating the capital.
Great. Thanks, Greg.
Yeah.
Thank you. The next question is coming from David Joyce of Seaport Research Partners. Please go ahead.
Thank you a couple of questions first on Formula one what's the current view of Formula One the league.
And the F. One teams related to potential additional work teams.
What are the gating factors from here.
And then secondly, if you could provide any update on your views.
What's happening with the regional sports network as it pertains to.
Atlanta, Atlanta Braves. Thanks.
I'll, let Stefan I'll handle the first part and I'll handle the second question. Thank you, Greg I mean with regard to the situation of new team potentially entering or interesting for no as I always said that someone that is quite vocal some of it are quite solid.
As you May know, David there is a process in place.
When activated by the regulators to see to collect the interest of other partners to be part of what the first step will be.
<unk> finished I think within the middle of May and then there will be at the analysis done properly checking the technical feasibility.
Sure.
You're going to have the discussions to see if any kind of potential to enter.
Fit into the equation of creating multi sport and that's something that we're going to take the decision.
Todd we did at the end of the year. That's the plan, but of course that is once again showing the growth of four one.
Just a couple of years ago.
It was very small.
Actually almost none today the value of the franchise is very high. So we have the duty to put the business in making that decision and this is something we're going to do within the end of this year.
And regarding the <unk>.
Look obviously, it's a difficult situation given diamonds.
Filling.
That having been said we continue to receive payments from.
Our sports style contract.
That is not true for some other <unk> out there with my understanding is three or four if not received payments from diamond.
And that I think reflects the fundamental strength of the territory, we have and the strength of our interest in the Braves such that our understanding is we have a profitable or a sense. So it's unlikely.
That diamond will view us as an executor, we contract, which they wish to reject.
Even if they were to rejected which again don't expect I think there are other alternatives we could talk.
Construct in the marketplace that would enable us to get paid and have our products shown to our fans, which is really the most important thing.
And.
We are certainly prepared if we have to go out and exercise those alternatives.
Great, Thanks, Greg and Stefano.
Thank you. The next question is coming from Matthew Harrigan of Benchmark Company. Please go ahead.
Thank you.
A lot of news amongst other merit the absolute homerun acquisition.
Mexico, and Colombia I think.
<unk> said that in Asia were like 50% of NOI growth in the quarter year over year. I mean do you see there are many other targets out there to expand internationally is music business.
It's just unbelievable way globalized given the cross market appeal hard this is.
Michael talked about yesterday. Thank you.
Thank you Matthew.
Youre right it is a.
Great deal and it's nice that.
Our 100 <unk> business, who is also our partner in the Formula one.
Mexico City growth rate, it's been acting so successfully.
There are other targets out there.
Probably not as many with the scale of a setup that we could get done.
Cause a potential regulatory issues, but live nation has a long history of successfully adding primarily promoters.
Into the fold usually at some point, but partnership agreement, where the management stays involved but we take some ownership interest as well and I expect you'll continue to see that either in venues war.
Promoter relationships, where we continue to take advantage of the strength of our business and our ability to try and offer both fans and artists the global product.
And the more we can fill in our global footprint to better for both of them.
Thanks, Greg.
Operator, I think we're done and to our listening audience again. Thank you for your interest in Liberty media companies.
We look forward to.
Speaking with you next quarter, if not sooner.
And have a great weekend.
Ladies and gentlemen. This concludes today's event you may disconnect. Your lines of August the webcast at this time and enjoy the rest of your day.
[music].
Okay.
[music].