Q2 2023 Liberty Media Corp Earnings Call

Good morning, and welcome to the Liberty Media 2023, Q2 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 will be recorded on August four I would now like to turn the call over to Shane claims team.

Vice President 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 our most recent Form 10-K, and 10-Q and registration statement on form S. Four filed by Liberty media.

And Atlanta Braves holdings with the SEC on June eight 2023.

These forward looking statements speak only as of the date of this call and Liberty Media and Atlanta Braves Holdings expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained herein to reflect any change in liberty media or Atlanta Braves holdings expectations with regard there to or any change in events conditions or circumstances.

It's on which any such statement is based on today's call. We will discuss certain non-GAAP financial measures for Liberty media, Siriusxm, and Atlanta Braves holdings, including adjusted OIBDA and adjusted EBITDA, the required definitions and reconciliations for Liberty media Siriusxm in Atlanta Braves Holdings schedules one through three can be found at the end of the earnings press release issued today, which is available.

One on Liberty Media, and Atlanta Braves Holdings website, now I'd like to turn the call over to Greg Maffei, Liberty's President and CEO .

Thank you good morning.

Today speaking on the call. We will also have formula one's president and CEO Stefano Dominik Kelly left.

Liberty's, Chief accounting and principal financial Officer, Brian Wendling.

Also during Q&A, we will be able to answer questions related to Atlanta Braves holdings, and embrace management will be available too.

Starting with some corporate updates Atlanta Braves Holdings began trading as a C Corp. On July 19th we believe the split off will better highlight value at the Braves and its real estate for example, the batter ishares in the case shares were up 38% since the split announced last November .

We also settled all of the remaining intergroup interest in connection with this split off.

Today marks the first day of trading for our new trackers, and we expect more focused actually these more focused equities and increase future flexibility will trade better and be easier for investors to follow.

Guinea with Liberty Sirius XM.

This simplified tracker consists only of an 83% interest in CRE cash and debt.

And we continue to reduce debt in the second quarter retiring the remaining $275 million of our two and one eight exchangeable for CRE and.

Having the $1 8 million new batter shares at <unk> exchange for debt retirement in the near term.

We reiterate the focus on rationalizing the CRE and <unk> structures in the near term.

Looking at Sirius XM itself it reported strong financial resorts with an improvement over the first quarter as was expected we had a sequential improvement in self pay net adds and we do expect a positive back half in the aggregate in self pay net adds.

Sirius sustained a historically low churn of one 5%.

And the business is focused on improved efficiency and cost structure and that will benefit EBITDA in the coming quarters.

During their announcement CRE increased its full year free cash flow guidance by $50 million up to 115 billion.

During the quarter, we experienced.

Continued progress on lowering the streaming cost per customer acquisition and it was down 20% over the prior year.

Data shows that this app is a great accelerant for in car conversion as well and we are making progress on our next generation Sx and mobile App, which will launch this fall series.

Sirius is maintaining its focus on enhancing its in car position.

I had no EV manufacturers, which are a growth area.

The area of new success for us as demonstrated by our agreement with Volvo.

Turning to Formula One group at the corporate level I'd remind you that the assets consist of F. One ownership and the motorsport related assets, we have including the Vegas property.

During the quarter, we effectively repurchased $1 1 million tswana shares in settling the intergroup interest that were previously held at S. R. L. S X M for $67 50 a share.

F. One itself the number of fans engaging with F. One content across the platforms is bigger than ever ever Stefan I will give you more stats in a moment, but to name a few we continue have sellouts at almost all races. The sprint weekends are driving year over year growth in viewership for example, the spa total audience.

Ross race sprint shoot up and qualifying was up versus the Belgian D. G. P last year.

I would note, we've seen particularly solid growth in the U S b.

Viewership on ESPN.

Is up season to date versus the 2022 average viewership with strong F. One TV performance as well.

The 2023 season has already seen three of the four largest live audiences in F. One history on U S T V's, including Miami, Monaco, and the Canadian G. P's, all but two of our races have averaged more than 1.001 billion viewers huge numbers for the U S market.

On the financial side, OIBDA was up slightly quarter over quarter. Despite one less race due to improved operating leverage on teen payments and freight.

And now turning to L. B G. P excitement for the race grows as demonstrated by momentum across social platforms. For example, L. B G. P had over 11 million social impressions and over 1 million engagements in July .

The Las Vegas team is pulling together and event unprecedented complexity and scale.

It will be the largest in our argument would be the most premiums sporting event of 2023, and it's a view that's a testament to our Super Bowl aspiration for all our Grand Prix events.

I am pleased to say preparations are running on schedule.

Despite inflationary cost pressures, we expect no change in revenue and profitability assumptions that we laid out previously.

We are increasing Capex capex estimates for the past building a track work and Brian will go into that in more detail in a moment.

We remain confident in the return profile of this incredible project, which will support the incremental capital investment that we're making.

I would note. We've also been already receiving inbounds with attractive economics for use of the paddock building within the next year.

And we look forward to sharing those commercial plans once they are finalized we.

We expect to learn a lot from our inaugural race and look forward to racing Las Vegas for many years to come.

Turning now to Liberty Lie group.

Live nation experienced the strongest second quarter ever and they're confident in continued growth into the balance of the year in 2020 for revenue for the quarter was up 27% and a Y was up 23% over the prior year.

Growth was driven by international Man, a real opportunity for life International fans were up 46% and more artists are torn globally.

And lastly on the international front, our assess acquisition in Mexico is outperforming expectations.

Overall attendance and per fan profitability were both up double digits for the quarter overall at live nation.

Turning now to the Braves.

Now a separate company.

Public company, but business as usual is continuing and Braves country.

We've seen continued momentum in fan demand, having sold 56% of our ticket capacity season to date tied for M obese best.

We've made it to 40 sellouts already the fastest we've ever hit this milestone in a season of truest and concession revenue was up season to date, despite shorter game types.

We announced the Jersey patch sponsorship with quickly.

A multiyear deal and.

And most importantly on field the Braves lead the N at least in the entire MLP.

A franchise record eight players where in the all star game, including our entire Enfield.

All eight of these players are locked up through 2023, and most even longer excuse me 2025 with most even longer.

The battery is also seeing continued growth adjusted OIBDA for the mixed use development was up 18% in the first six months versus the prior year.

And with that I will turn it over to Brian for more on our financial results. Thank you, Greg and good morning, everyone.

My remarks will focus mainly on the 630 balance sheet figures adjusted for the split off that was completed in July 18th and the reclassification of our tracking stocks that was completed yesterday.

At quarter end and adjusted for the split off and reclassification Liberty Sirius XM group had attributed cash and liquid investments of approximately $331 million, which excludes $51 million of cash held at Siriusxm was also $1 1 billion of Undrawn margin loan capacity at the parent level related to our Sirius XM margin loan.

As of August 3rd the value of our Sirius XM stock was $16 billion, we have $1 5 billion in principal amount of debt against these holdings total Liberty Siriusxm group attributed principal amount of debt is $11 7 billion, which includes $9 5 billion of debt held directly at Sirius XM.

In April the Liberty Sirius XM settled the remaining $275 million of its 212, 5% CRE exchangeable due.

Due to the net paydown at both Sirius XM and Liberty Sirius XM during the quarter total attributed Liberty Siriusxm group debt was down $360 million from $3 31.

This is exclusive of the debt reduction due to the reclassification.

The $1 375 basket convertible notes mature in October and $199 million principle remains on these notes.

Liberty Sirius XM plans to exchange its $1 8 billion batter shares with one or more third party lenders to pay down debt in the near term.

Turning to the Formula One group at quarter end adjusted for the split off and reclassification Formula One group had attributed cash liquid investments and monetize what public holdings of $1 4 billion, which includes $1 1 billion of cash it up one.

In connection with the reclassification of approximately $100 million of cash as well as certain private and public assets previously held at Formula One group were attributed to the Liberty lot of tracking stock.

This includes $33 million of ETF and public assets that were liquidated prior to the reclassification and made up a portion of the 100 million of cash that was contributed over.

Total Formula One group attributed principal amount of debt was $3 billion, which includes $2 4 billion of debt at up one leaving $536 million at the corporate level.

F. One $500 million revolver is undrawn and their leverage at quarter end was 2.2 times and as we mentioned last quarter. The margin on everyone's term loan b permanently stepped down to 3% from three to five effective at the beginning of May.

They have one business is best analyzed on an annual basis, given variability in the year over year race calendar, but I'll make a couple of brief remarks on their quarterly results.

During the quarter F. One recognized a lower proportion of season based income due to six out of 22 races occurring during the period compared to seven out of 22 that occurred in the prior year period.

One also recognized proportionately less team payments given one less race, which was partially offset by expected increases in payments for the full year compared to 2022.

Our team payments are best viewed on a year to date basis and represented 63% of pre team EBITDA in the first half of the year.

Formula one generated modest OIBDA growth in the quarter. Despite one less race held and incremental investments in growth initiatives that were not in the prior year period like the Vegas race and F. One academy as well as costs associated with the canceled MLR race.

Given MLR was canceled on the Wednesday of race week. The majority of the race related cost with regard to planning logistics and setup had already been incurred.

On a full year basis, we estimate the impact to adjusted OIBDA from the cancellation of envelope.

Is modest at less than $20 million.

A reminder, that other cost of F. One revenue and SG&A are best viewed as a percent of total revenue other cost step one revenue in the quarter was 24% of total revenue consistent with our historical average.

Note that the L. P GP related revenues and other cost of sales will largely be incurred in the fourth quarter when the race occurs.

But for the quarter on SG&A, we had $7 million of costs associated with L. B G P.

Vegas as Greg already noted Theres, no change to our revenue and profit expectations for the race in year one.

Our paddock building is now not 85% complete we expect capex related to the Vegas rates, including both the paddock building structure and track related capex to be close to $400 million.

Of which approximately $155 million was incurred in the first half of the year the.

The majority of the Capex spend will be incurred at the corporate level related to the paddock building Atlanta building, both sit within F. One or flan separate from Formula one.

Track related Capex has and will be incurred at the F. One opco level.

Our team has managed this project on a compressed timeline and in and in an inflationary environment much of our cost increase is attributed to track related expenses incurred to be responsive to the concerns of the local community such as minutes minimizing disruption to businesses along the strip.

We have also invested in security enhancements and expenses incurred to ensure the quality of the fan experience with infrastructure changes to improve sidelines.

We are working closely with our local Vegas partners and the speed and efficiency with which we have completed this project is a testament to these relationships. We are excited about our investment in Las Vegas, and the associated opportunities for both the Grand Prix and year round activities of the faculty.

At the Liberty Life group adjusted for the reclassification. There is attributed cash liquid investments and monetize both public holdings of $204 million, which includes the ETF assets contributed from Formula One group in connection with the reclassification of the Formula. One group also have contributed private assets with a fair value of approximately 380 million.

Measured at the time of artifice S. Four filing we do not anticipate providing ongoing updates to the value of these private assets.

Additional disclosure on the composition of these assets can be found in the asset was posted to our website.

There's $400 million of Undrawn margin loan capacity at Liberty Live group related to our live nation March alone and as of yesterday the value of our live nation stock held at Liberty Live was 6 billion we have nine.

$920 million of principal amount of debt against these holdings.

Liberty and our consolidated subsidiaries are in compliance with our debt covenants at quarter end.

Looking quickly at the Braves interrupt you for one SEC Brian .

As we turn to the brands I think I Miss spoke to.

Too early in the morning here instead of was it 56 capacity of 56% capacity. The Braves Stadium is actually at 96% capacity sorry go ahead.

Greg for clarifying that so looking at the Braves revenue growth reflects that 96% capacity in the quarter with more regular season home games in the period as well as increased game attendance growth and related revenues, including ticket and concession revenue a battery mixed use revenue also grew due to increased rental income from existing and new.

Tenants.

Baseball operating costs grew in the second quarter, primarily due to increased player payroll as well as increased payments under Mlps revenue sharing plan and higher variable stadium operating costs due to the increased attendance at.

At quarter end and adjusted for the split off they had attributed cash and liquid investments of 131 million, which excludes $52 million of restricted cash and Atlanta Braves holdings had attributed principal amount of debt of $543 million and with that I'll turn it over to Stefano to discuss formula one.

Thanks, Brian and good morning to everyone.

We are already over halfway through the 2033 foot in one season.

The first like to congratulate Red Bull and Maximus tapping on their incredible performance. This season, breaking all time record unconcerned with the wins they tightened field behind them is producing credible action for oil with fans and I believe the gas will continue to close over time for all the teams in.

In silver some of the top six finishers crosses the line within 13 second on of one another hungry had one of the most waiting 45 routes to date with the top six all within three tenths of a cycle Mclarens performance improvements following the recent upgrades at the lights of plans with Landus cycling.

<unk> poses a superstar and hungry and strong drive from yesterday.

Our fans have access and therefore constant across multiple media platforms global audience averaged 68 million through the first eight races in growth market like the U S. Viewership over the same period is up 5% on ESPN and events like Monaca throne of 29% compared to last year U S.

The sprint shooters have continued to both generate excitement on the track and drive viewership growth.

By John our first Greenfield the season total weekend viewership, we're close to these subsequent events was up 10% versus 2022.

We recognize that sports fans today engaged with content across a variety of platforms, including leaner digital and social.

I'll start with the social media channels F. One reached $64 6 million followers as of Q2 up 29% year over year, everyone continues to adapt and expand our counter to gather to different platforms and serve old segmental fabs.

For example, I don't get it on Grand Prix, we piloted our first ever F. On broadcast for kids in partnership with Sky U K in Germany in just one day, social media coverage or the announcement of the kit Kat and the presentations of drivers avatars reaches more than 45 million users with 93 million impression and huge the positive sense.

F. One celebrity presence continues to be a large role of four patents for example, if one social posts featuring Shakira.

These Grand Prix generated over 15 million impressions and over 2 million engagement I've seen them in the for the Apple TV movie began the pasta Silverstone with breath beaten damson idrees lending up at the back of the grid generated two point immediate engagement and over 7000 comments the social gone when you.

So no then these all fatality teammates help the community after the floods in plain sight generated almost 15 million social impressions.

If one is considering the how to advance our approach to audience measurement as consumer behaviors evolve to better capture of a why the viewership and engagement for the future our discussion with commercial partners successfully focus on these broader engagement metrics.

<unk> continued to improve the quality of them, please events and invest in enhancing the overall client experience. We have seen the results of these pools with continuous sellouts races. Many other increases capacity.

The Canadian and see with some run pretty both set new attendance records with cross off of $3 45000, and boy down 2000, respectively.

Silver some attendance was up 20% compared to last year in part due to cultivate them funding speed us across the entire race weekend, including like telling me nervous covenants on Thursday evening before the on track activity. This time, we will continue to work with our promoters on these imports.

The success of their events is beneficial to the entire F. One ecosystem.

Third our growing ways to engage with F. One outside of race weekends.

That's one of the key licensees announced further expansion plans, we new sites opening in Birmingham in the UK. This December .

In Boston in May 2020 for football a flagship London location grew 16% in Q2 compared to the prior quarter with an average of over 7000 visits per week in June .

Yeah, I launched the F 123 video game in its first week the game ranking number two and number three in UK games, and Globus team sales chart, respectively, and finally and flood related post because I think increasingly providing other content to engage our fans.

A new form of why podcast launched in May.

It reached number one in the U S and UK support Postal's channel, performing particularly well among newer final cohort with 35% of its audience in the U S and 30% of these organs female tool.

Tuning the IL two is an update on our commercial agreements.

I'll race promotion, we recently announced the total essential novel Ocean Grand Prix throughout 2013.

Hungary also extended through 2032 with commitments made by the promoters to invest significantly in their physical infrastructure, including a new building and make it asked them by 2026.

We announced a record breaking 24 races championship calendar for 2024 with a return of the race in China for the first time since 2019.

If one is further progressing on journey towards greater of a generalization of the kolenda, where possible, including back to back races in Japan, and China as well as Abu Dhabi and Qatar. This improves the efficiency of our operations and reduce out of necessity legacy in our travel, particularly from a freight perspective.

On media right, we entered into a multi year agreement with the Tencent two stream F. One event across each digital platform.

This complements our existing companies in China on the CCTV. Additionally, we continue to grow our F. One C V pro and XL subscribers with particular strength in the U S market.

Our sponsorship Heineken extended their global partnership in a new multi year deal as put anybody on now they will also be the official title Boston, that's other form of online consumer Las Vegas accompany that.

One brands continues to generate interest and sponsorship opportunities, including leveraging our sustainability strategy in and the new inventory like Las Vegas.

We are focused on delivering incremental value to all with existing sponsors and further developing our strong pipeline of new commercial partners. We have just over three months away from the inaugural Las Vegas Grumpily unless biggest lump we will provide an unparalleled guest experience combine the thrill of whom are racing with premium alive and stuff.

Statements musical acts World class culinary offering them more.

We continue to grow our final offering with new partnership ensuring all partner venues meet the quality standards. Our final expands and deserve. Most recently we were excited to announce additionally cost vitale tickets fitness included the Heineken House club Assai and celebrities as well as our partnership with <unk>.

Some grand vacation to host a plan, they're on track hospitality suites musical.

Musical acts, including J building major Lazer, Mark Robson with the headlines with the T Mobile zone at this stage with many of high profile music N V. J Act still to be announced the beverage Brown linked with death was named as official event Barton and will provide fans with a most sustainable tenant with a single use.

Through their beverage offerings.

For one our Liberty I've made a long term commitment to rise in Las Vegas, and have invested meaningful capital to make things happen. The team led by Renee will has been an incredible partnership with the local community all of whom we stand to benefit from the tremendous economic value. We believe for one would break the Las Vegas team work with third.

It bothers and gathering market these data and estimated economic impacts to Las Vegas in the year one of the race with the over one 2 billion. This is an additional two meaningful community efforts focus on the puts in a security water conservation and access to education in Southern Nevada, We are proud of.

The work our team is doing and I'm confident that Las Vegas Grand Prix will await the global Sporting community. This November .

Finally F. One continues to progress our sustainability and diversity and inclusion efforts F. One Academy began its inaugural season in the North Sea and Apple and he's now through six of seven basis. The season finale would take place in Austin alongside the F. One race weekend with Martha Garcia, leading the championship last week, we announced that.

All 10 Formula one teams will have F. One academy drivers and leave it as for the 2024 season. These demonstrate the depth of support across the airport community for the important so that's one academy grassroots initiatives.

And the next generation of young women erases tends to provide tremendous benefits for the entire F. One ecosystem.

And one has also progressed initiatives this season in the environmental sustainability in Austria, we piloted that in the energy efficient power system that delivered a 90% reduction in carbon emissions throw them operating the power the pit lane and that's why I'm broadcast area. Additionally, a new fleet, albeit fueled trucks operated by DHL all delivery now.

Our broadcast production technical and other equipment for the European events. After 2023 season, which we expect will reduce our road freight emission by a minimum of 60% compared to traditional fuel vehicles. The formula two and Formula three cows are successfully running a 55% advanced sustainable.

It was the season and we remain on track to introduce 100% of advanced sustainable field to form a one in 2026.

We are also encouraged by the increased awareness and openness of governments to include advanced sustainable fuels in the policy road maps to net zero something F. One will continue to be at the forefront of pushing.

We look forward to an exciting rest of the season and of course, a well deserved summer break for our teams the seasonal wood, assuming Netherlands later this month before going to monitor the gaps are getting increasingly closer within the back of the grid. We have three months of Brinci. This to come in Austin, Qatar and Brazil our.

Our business is in a position of incredible strength, both financially and commercially and I look forward to updating you on our progress of antidote.

Full speed ahead, and now I will turn the call back over to Greg. Thank you Bye bye.

Thanks, Stefano and Brian .

Our annual Investor Day will be Thursday November 19 in New York, Please save the date.

Additional details we provided soon we hope to see many of you. There. We do appreciate your continued interest in Liberty media, and Atlanta Braves holdings, and with that operator, I'd like to open the line for questions.

Yeah.

Thank you we will now be conducting a question and answer session. If you would.

Like to ask a question. Please press star one on your telephone keypad, a 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 your handset before pressing the star keys. Please hold while we poll for.

Questions.

Yeah.

Yeah.

Thank you.

Our first question comes from Steven <unk> with Cowen and company.

Hi, Thanks for the question.

Greg can you help us better understand monetization of the Las Vegas pilot outside of the Grand Prix in 2024 and beyond so what type of events do you plan on holding money early indicators on sponsorship interest outside of the Grand Prix and do you expect this OIBDA contribution match, you know to match or exceed the Vegas Grand Prix over time. Thank you.

I will manage expectations first and say I do not expect to well over it will exceed the amount, we're making the grand Prix over time, but with that we have Renee welcome here, who is running our Las Vegas effort I'll, let her comment on some of the things we're thinking about outside the race.

Thanks, Greg happy too. So we are just beginning to really scratched the surface on what is available for us on a go forward basis with the building. We have had a number of inbound requests to think about Super Bowl parties and think about something related to raising maybe carding high and Supercars of course, Las Vegas is the convention center of the world lots of interest in our <unk>.

The art Leds certified LEED certified building many of our partners in the half one ecosystem are very interested in working with us throughout the year. So all I can say is a lot more to come over the next few months.

Thanks.

Thank you and if I could squeeze in one more how should we interpret what appears to be some recent conflicting comments from the F. I E are you.

With regards to an early renewal and then you know the Concord agreement and then the appetite of new team insurance and maybe it's just like more high level. Greg do you see any conflicts of interest with your vision of the sport long term versus what the F I abuse.

Thank you well I'll I'll make a comment or two and then I'll, let Stefano AD I think theres little daylight between Stefan My view, which is.

We have 10, great teams, we're very excited about what they're doing.

Where we are if there is a process to add more teams, but the bar is very high and it's unclear what an <unk> value. They would add and there was a lot of uncertainty among the other teams about an 11th team.

The FIA and we have had productive discussions about all of this.

Do we agree on everything every moment no we discuss it and we hopefully work things out Stefan or what would you add.

I think Greg you said the perfectly I mean.

But as we thought.

Proteins.

Is there a possibility what are waiting for the final conclusion, but as always in this discussion we will find the agreement together because as you said the value of the team and the value that this is very very strong. So a bad decision that information will come very very soon that I would say it wouldn't be months in September .

Alright, Thank you both.

Thank you. Our next question comes from Ben Swinburne with Morgan Stanley .

Thank you good morning.

On F. One.

What's your sense of optimism about potentially signing a concrete agreement with the teams this year, which would be a couple of years early.

And it's definitely when you look at the product this year honestly being dominated by one team.

How do you look at that relative to all of the changes you guys have made around driving more parity into the sports do you see this as a step backwards or just sort of the natural way the sport evolves you know unpredictably overtime.

And then I just had one Braves question for you guys. There's been some teams that has left diamond and gone on to new business models and different sports.

What does that tell you if anything about how you think about the Braves opportunity over the next couple of years as this diamond process plays out. Thanks, a lot I'll, let Stefan I will take the first two and and I'll take a shot at the dime.

Diamond question, and obviously, Derek if you have things to add but Stefan why don't you speak first.

Yeah. Thanks, Greg I mean, I would say first of all I think it's the right moment to celebrate the incredible job that this happened was duly called because you can see the other car and the web Zalviso and the gap is just incredible all matches.

Political job, but that has been Oh support for why you know I would say that this is part of the game I'm pretty sure that the internet.

Couple of years it because.

They can book, that's what it was but if someone is great, but we need to see the great what he's doing and sometimes that's a state that is also the need to come from the legacy office, although somewhat spectacular stops and in in certain markets, mainly the new one you can say and you can see that these also let me tell you bill that gets it because you know.

It doesn't it's something you know if we're able to win so many reasons I mean, they are really a gatekeeper so nothing negatively in that respect that.

And you can look back I would say is that something like this has been always parts of Epsilon history.

With regard to cope with the agreement I would say today compensation are really going ahead, because the momentum sports. There's really great of course, we are not in a rush, but I would say that Oh things are heading into a positive conclusion for this discussion both with the team they'll be up again.

Thank you on the Braves I'll I'll I'll give my view and Derek please feel free to add.

Were black.

Have an incredibly strong territory.

14 million broadband households.

A fan base, which is very appreciative of a very successful team and with a reasonable deal on what we are paid by diamond.

Or a bali.

<unk>.

We think we are probably the most profitable Orissa and they have some of the other ones were less attractive either territories or less attractive fan basis or relatively less attractive revenue versus cost to Bali and niche y and the bankruptcy proceedings. They were terminated as executors contracts by valley.

I don't anticipate that will be that what happened for us because we have for all the reasons I cited above but I do think if it does happen there will be other alternatives because of the strength of our product and the demand in our territory for that.

That will generate positive returns Derek do you want to add anything.

Great. Thanks, you said it very well I would just comment first of all we and valleys or both are adhering to the terms of our agreement as we currently stand.

We are being paid in full and we are delivering our rice in pool. So we don't see that changing anytime soon and then just generally I would just tell you live sports content continues to be very desirable. So we think long term. This is a.

A good position regardless of what happens.

You guys want to comment on that that season to date.

Good day.

No. Thank you.

Next question.

Thank you. Our next question comes from Vijay Jayant with Evercore.

Hi, Good morning, a couple for me.

On Liberty lie Greg.

Private assets that moved from Formula one are there any etb's that and then just broadly is that you know you have some liquidity at Liberty life is that any business strategy of buying.

Buying venues.

Doing some stuff with live nation directly and growing set of our real estate portfolio anything or is it purely to tackle any discount isn't that sort of remains and in on a formula one yeah don't need to want to nitpick.

But you know the team payments again seem to be a little lower than I would have thought and sort of implies like a $1 3 billion and I know you said in the past that you are conservative, but I know there was the one less waste is there any top in the numbers that sort of impact that's an estimate.

Okay P J a lot to unpack there, but thank you on on Liberty Live look I think we are looking for.

There there is no ATB currently in that business.

To start we are looking for businesses in there, which we think will be accretive and fit well potentially with the live nation strategy.

And we'd like to do things, which are additive to us and potentially to them in the future.

That gives us a wide latitude, but real estate certainly is on the list of things, we think could be attractive, particularly real estate, which is anchored by live nation events.

You know we are liquidity there is relatively light. So we will have to be creative about the ways, we do that but we have some ideas.

Turning to Formula one I'd note a couple of things.

I think in general.

How we look at the rest of the year, we feel good about where things stand very good but some of the analysis about how payments were done and where it would flow between the third and fourth quarters I think in general we looked at our analysts as being slightly optimistic on three and slightly pessimistic on Ford.

The nature of the payouts as you rightly noted is it's conservative.

And the timing of how the races fall impacts the payouts, Brian what would you add.

I'd just say the other the other thing that there is noise in the second quarter because of the re phasing and the impact of MLR. So I would just have you look at the first two quarters together and look at that percentage as we said in our.

In our remarks, we're at 63%.

Great. Thank you both.

P J.

Thank you. Our next question comes from Bryan Kraft with Deutsche Bank.

Hey, Greg I had a couple for you on Liberty Sirius I guess first a question that many investors often ask is why Liberty Hasnt made at Sirius shares available for borrow so that the market can be more efficient around that spread so would love to hear if you wouldn't mind sharing the rationale behind.

On your decision not to do that.

And then the second question is I understand that the leverage is the sensitivity in the central merger of Liberty Sirius with Sirius XM would it make sense for Liberty Sirius to sell some of its series shares down to get closer to the 80% level. So you kind of stay above the 80, but bring some cash and then use that to reduce debt at liberty Sirius and are there any.

Strict ns or considerations are preventing you from doing that or discourage you from doing that thank you.

Yeah, I will let Ben Oren, if you're on Ben I think you are answered the first one after I'll answer the second first.

The.

I think that strategy you know, we are concerned or not concerned about the leverage I think Syria could support the leverages the combined businesses to be clear it might depend on how that was executed in terms of who bought home, but I think in general. So we can support that leverage I don't like the idea and I think.

We at Liberty don't like the idea of trying to sell some shares because we have a very low tax basis in those it would be very tax efficient and as I said I think we can support the combination we are continuing to look at ways to manage our leverage we do get dividends out of Sirius XM and from time to time, they have paid special dividends in general over the.

<unk> your plus we've been applying that to reducing leverage.

But I don't like the tax inefficient, we have very low basis in those shares.

Ben do you want to address the borrow issue.

Yeah sure, while we're very sympathetic to the borrowers sure because it does create a lot of volatility.

We've done a lot of work internally and with lawyers on the ability to actually lend out our shares I think at this time, Oh, probably just summarize to say there are legal or definitely tax considerations to how any bottle sold in your borrow if our shares.

They have to be structured.

That would make it.

Relatively inefficient or currently.

You know potential user so for now you know that coupled with the optics that you know.

To the extent that we were going to lend out our shares what would good borrowers are doing with those shares Hmm, it's probably why we will reluctantly not lend or chairs for the time being but we'll continue to look at it and if any of the legal or tax considerations.

Hum.

Never say never.

Jonathan Thanks to you both I appreciate it.

Okay.

Hum.

Thank you. Our next question comes from David Karnofsky with J P. Morgan.

Alright, thank you.

The increased Capex for Vegas can you just remind us what the.

Original projection was for Patrick and maybe expand a bit on the drivers of the increase then and then just on rates promo and I'm curious.

Revenue was up versus last year in Q2, that's what the same mix of races minus Ebola just wanted to see if you could comment on the drivers there were there any one offs or kind of material step ups.

We should be aware of thanks.

Brian do you want to take the Capex, Yeah, I would I would say on the Capex. We never officially gave a number we said it approximated or was slightly higher.

Then the the land.

<unk> value.

So we still have not giving a firm number. We just told you that we now think it will be larger than the amount that we're spending on the land.

Approximating 400 is what we said.

Can you repeat the second question is just to make sure I followed it.

Yeah, sure and just with the Capex, if you could expand on the drivers of the increase that'd be great, but on the second question.

Great.

Do you want to comment on the drivers, yes, I'm happy to sell them.

We've entered into a couple of challenges as we've uncovered asphalt cables into the ground that needed to be addressed there've been wires overhead that it needed to be moved a lot of this is driven by their request.

Quite honestly requirements of the local stakeholders as we began the process of preparing the track they actually use it.

We've also encountered some additional requests from the local stakeholders such as the casino properties around enhanced security around opening and closing the track. So this is led to additional equipment that was needed as well as just additional actual roadwork.

Of course with regard to hepatic building is being built at lightning speed them in an inflationary environment. So as you can imagine there've also been some additional costs along the way in that regard.

Great. Thanks, Renee and to your second question about timing and revenue recognition, maybe you can repeat it please.

Sure. It was just kind of raise promo. The press release had noted it was up year over year and did you get the same number I'm, sorry, you're saying mix of races minus Muller.

Wanted to see if you could comment on the drivers. There are there are any one offs or are not material step ups to be aware of.

No I mean, it's just it's just regular contractual increases they're offset by the impact of the MLR rates going away.

Thank you.

Yeah.

Thank you. Our next question comes from Stephen laws that ski with Goldman Sachs.

Hi, great. Thank you maybe for Gregg and Renee I'm most of it yes I appreciate the focus for year, one as fan experience, maybe thinking into years, two and beyond are there any opportunities around the GP that had come more into focus over the last six months that you're particularly excited about.

It might not be able to fit in time for a finished November I'm, just trying to think through the long term vision and the profitability opportunity around let's say, yes, compared to what we might see in year one.

Yeah, I think we touched on some of this I think both on the revenue side and the cost side, there will be opportunities both around the G T and outside the G. P. As we go into year two.

We moved with lightning speed the F. One team when as team to put this in place and that's probably led to increased costs and it's also meant that there are opportunities we had to not capitalize on whether it would be.

Fan festivals, whether it'd be a sporting events.

Whether it be music events all of those things that are potentially can grow around the second and.

And beyond our G. P. So those are all G. P real items that I think we already touched on the fact Rene touched on some of the things outside the G. P that people are interested in but I don't think we have more to talk about today in terms of numbers.

Yeah.

Got it. Thank you. Thank you. This is our last question operator.

Thank you our last question comes from our Lane career with Bank of America.

Yeah.

Hi, Thank you for taking my question just quickly on Sirius Liberty Siriusxm is there sort of a target or you know an amount of debt you're looking to get down over the next year.

Well I think I'd touch on this a little earlier we are.

You know I've looked at many proto basins and potential combinations with Sirius XM all of them would involve in one form or another adding the deaths at L. S X M to the Sx and that and in some cases, taking on incremental debt. So there. There is no particular target because we don't know exactly what path that will follow.

Sirius XM is a massive cash flow generator.

One of the reasons why we're not another reason why we're not particularly interested in selling our stock we're bullish on the prospects for the business and its continued ability to generate that cash so any combination, though it might have for a short period of time, a relatively high leverage.

Mount or leverage four to five times.

We know that that cash flow generating capabilities would allow.

The combined entity to pay that debt down back to the three and a half target relatively quickly.

Got it and are there any factors I mean, I think you know for the most part it most I think a combination would occur and you know perhaps makes sense, but you know are there any factors to consider as to why maybe a combination wouldn't happen.

Well I think you've got a.

You'll have a.

Independent Committee at Sirius.

Sirius XM, which will negotiate on behalf of their shareholders and their considerations and you'll have liberty representing L. S axiom and hopefully there'll be a meeting of the minds, but there's always the potential that that there is not an agreement between the two parties.

Got it I'll leave it there thank you.

Very much to our questioners. Thank you very much for all of you on the line for your interest in Liberty Media and we look forward to speaking with you again next quarter, if not sooner and I think we're done operator. Thank you.

The conference has now concluded. Thank you for attending today's conference call. You may disconnect. Your lines at this time.

Okay.

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