Q4 2024 Liberty Media Corp Earnings Call and Business Update
Speaker Change: Greetings and welcome to the Liberty Media Corporation 2024 Year-End Earnings Call.
Speaker Change: At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Shane Clancy, Senior Vice President, Investor Relations. Thank you.
Speaker Change: 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.
Speaker Change: Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Form 1010, followed by Liberty Media with the SEC.
Speaker Change: These forward-looking statements speak only 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 statement contained herein.
Speaker Change: to reflect any change in Liberty Media's expectations with regard thereto, or any change in events, conditions, or circumstances on which any such statement is based.
Speaker Change: On today's call, we will discuss certain non-GAAP financial measures for Liberty Media.
Speaker Change: including adjusted OIDA. The required definition and reconciliation for Liberty Media, Schedule 1, can be found at the end of the earnings press release issued today, which is available on Liberty Media's website.
Speaker Change: Speaking on the call today, we have Liberty's President and CEO, Derek Chang, Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling, Formula One's President and CEO, Stefano Domenicali, and other members of Liberty Management will be available for Q&A. With that, I will turn the call over to Derek.
Derek Chang: Great. Thank you, Shane. Good morning, everyone. It's great to be speaking with all of you today.
Derek Chang: For those of you who don't know, while I officially started as Liberty's CEO 27 days ago, my relationship with Liberty Media goes back to 1997.
when I first met John while working for TCI.
Derek Chang: We've had many points of professional overlap over the years at Direct TV stars and more
Derek Chang: Most recently, I've been fortunate to serve on Liberty's board since 2021.
Derek Chang: As a board member, I am uniquely familiar with the Liberty structure, culture, and mandate which has enabled a seamless and efficient transition to CEO as we've hit the ground running with a busy year ahead. Even as a director, for years we've been asked, what is a long-term Liberty playbook?
Derek Chang: The answer has been consistent. The Liberty Playbook is one of constant evolution, maximum flexibility, and an appreciation for change to drive long-term shareholder value.
That is and will remain true going forward.
Derek Chang: Our team will speak in more detail about the businesses, but I'll make some brief remarks first regarding our near-term priorities for 2025.
Derek Chang: First, we are working towards the close of the DORNA acquisition.
Derek Chang: The MotoGP season kicks off in Thailand on March 2nd, and will be a 22 race calendar compared to 20 races in 2024, featuring a new track in Hungary and a return to the Czech Republic for the first time since 2020.
Derek Chang: We expect an exciting season ahead. MotoGP unveiled a new brand refresh and identity at the end of last season aimed at expanding its cultural relevance beyond racing. We look forward to working with Dorna to take the sport to the next level upon closing.
Speaker Change: The Phase 2 regulatory process is progressing, which is a more in-depth review by the European Commission.
Speaker Change: and not uncommon in major transactions like these. We extended the long-stop date for regulatory clearance to June 30th, 2025, and are working constructively with the regulators towards approval.
Speaker Change: Our second priority is continuing our path towards structural simplification and better highlighting the value of our live nation equity stake.
Speaker Change: And finally, we will continue to drive the momentum at Formula 1.
The sport is coming off a record 20-24.
Speaker Change: With high visibility into an excellent year ahead I've spent a significant amount of time with Stefano and the f1 management team since the start of this year and look forward to supporting Them going forward
Speaker Change: Chase carries involvement and partnership as a Liberty Board member has and will continue to be important
Speaker Change: as we leverage his expertise to continue momentum at F1. I do want to touch specifically on the Las Vegas Grand Prix as this is a key area of focus.
Speaker Change: Please note that we don't provide race-specific economics for any grant pre. Particularly for Vegas, we see material benefit accrue from LBGP to the broader F1 ecosystem.
Cross-sponsorship, hospitality, live entertainment, licensing, and data.
Speaker Change: Vegas has served as a very successful testbed for product expansion and played a key role on F1's growth in the Americas, which is a continued focus.
Speaker Change: The event we held recently at the O2 in London and the upcoming F1 movie are also powerful marketing engines for all of our F1 fans, but particularly for Vegas and the North American fans.
Speaker Change: 2024 stand-alone event, Economics for Vegas, missed internal expectations on revenue and OIBDA.
Speaker Change: The team has moved very quickly however to enact changes that will benefit 2025 and support a financially successful race for F1 continued growth and positive impact for the Las Vegas community
Speaker Change: We now have two years of real data to understand what tickets and products sold well, the demographics of the fan base, and the overall cost structure of the event. As a result, we are making further revisions to the ticket product and pricing strategy, leveraging this data, and as importantly, we are actively managing our cost structure.
Speaker Change: Given the halo effect to F1 we've discussed, we reorganized the structure of LVGP last month to integrate it fully into our London team and maximize those continued benefits.
Speaker Change: This change leverages the strong organization we have in London today across commercial, finance and more. At the same time, we are bolstering certain parts of the local Vegas team.
Speaker Change: This includes bringing the ticketing sales function back in-house and offering a high-touch, on-the-ground presence, which was a key learning from last year.
Speaker Change: We will continue our partnership with Quint and benefit from their expertise in VIP hospitality and F1 experiences.
Finally, we are also bolstering our partnership with local players.
Thank you.
Speaker Change: We believe that continuing to expand the F1 platform in bold and new ways is critical and ultimately leads to both increased and new sources of revenue.
Speaker Change: We want to take these opportunities for long-term benefit, even if there are early bumps in the road. We have a clear handle on near-term priorities for Regus to improve, and we are confident in the value it provides. I look forward to sharing more as we progress.
Speaker Change: With that, I want to thank John, the board, and the Liberty team once again for this opportunity.
Speaker Change: To our analysts and shareholders, I look forward to getting to know you better in the months and years ahead. Now I'll turn it over to Brian for more on our financial results.
Thank you, Derek, and good morning, everyone.
Speaker Change: Just a quick reminder that the merger of SiriusXM with Liberty SiriusXM closed on September 9th. Therefore, the results of SiriusXM holdings are presented as discontinued operations and are consolidated financial statements.
Speaker Change: A year-end Formula One group had attributed cash and liquid investments to $2.6 billion, which includes $1.3 billion of cash at F1 and $78 million of cash at Quint.
Speaker Change: The cash balance as of year-end includes proceeds from the previously mentioned FWONC share issuance, which was completed in August.
Speaker Change: Total Formula 1 group attributed principal amount of debt was $2.9 billion at quarter end, which includes $2.4 billion of debt at F1, leaving $528 million at the corporate level.
Speaker Change: F1's $500 million revolvers on drawn and their leverage at 1231 was 1.3 times.
times.
Speaker Change: As a reminder, all MotoGP transaction-related financing is in place and deal contingent.
Thank you very much.
Turning to the F1 business.
Speaker Change: Just a reminder that it's best analyzed on an annual basis given variability in year-over-year race calendar.
Speaker Change: Total revenue grew 6% in 2024, with growth across all primary revenue streams.
Speaker Change: Revenue growth was primarily driven by the two additional races held and contractual increases across all of our revenue streams.
Speaker Change: As well as the benefit of new sponsors which drove a 10% increase in sponsorship revenue year over year
Speaker Change: As Derek mentioned, the Las Vegas Grand Prix did miss expectations, primarily on ticket sales, offsetting some of the race promotion revenue growth year over year, despite the two additional races.
Speaker Change: We saw strong growth in paddock club revenue at most events in 2024, as well as increases in freight and licensing. This was offset by softness in certain hospitality offerings at the Las Vegas Grand Prix.
Thank you.
Speaker Change: Team payments as a percent of pre-team adjusted OIVDA was 61.5% in 2024, down from 62.6% in 2023.
Speaker Change: We continue to expect incremental leverage to the term of the current Concord Agreement, which runs through the end of the
2025 season.
Speaker Change: Other costs of F1 revenue is broadly flat at 31% of total revenue and SG&A was 8% of total revenue both in line
with historical averages.
Speaker Change: Adjusted EBITDA margin improved nearly 70 basis points year over year. And then looking briefly at corporate and other results in the fourth quarter, revenue was $118 million, which includes quint results, and approximately $13 million of rental income related to the Las Vegas Grand Prix Plaza.
Speaker Change: Approximately half of which is variable and recognized in the fourth quarter in connection with the event.
Speaker Change: Corporate and other adjusted oil bill loss was $2 million and includes Grand Prix Plaza rental income.
Quint results and corporate expenses.
Speaker Change: Quint results in the fourth quarter were primarily driven by F1 experiences across the six races held, including Vegas as well as the NBA Cup.
Thank you.
Looking to 2025, F1 will host 24 races consistently.
Speaker Change: with 2024, and while I'm reticent to encourage quarterly modeling, please note that the race count and composition will be different in each of the four quarters this year compared to 2024.
Speaker Change: In part, this is due to our efforts to increase regionalization of the calendar in support of our Net Zero Pledge by 2030 and for enhanced efficiency in our freight logistics.
Speaker Change: We are in a strong financial position as we head into 2025 the majority of our revenue is under contract including our sponsorship revenue Which has been de-risked by pulling the pipeline forward given the level of announcements made prior to the season
Speaker Change: This also allows our team to focus on future sponsorship pipeline with an emphasis on high value and high quality partners.
Speaker Change: The other revenue streams will predominantly be driven by renewals and escalators this season.
Thank you.
Speaker Change: On Vegas, we are very focused on top and bottom-line improvement relative to 2024 results, and there are clear steps already taken and in process to achieve this.
Speaker Change: Turning to a few cash items, F-1 estimates its cash tax rate in 2025 to be
Speaker Change: Low double-digit percent of adjusted OIVD increasing modestly in future years.
For more information visit www.fema.gov
Speaker Change: Total CapEx incurred at the Formula 1 group in 2024 was $75 million, approximately $73 million of which was incurred at Formula 1 and includes CapEx related to Formula 1.
Speaker Change: technical improvement projects for IT and F1 TV as well as the Las Vegas Grand Prix track and paddock building.
improvements.
Speaker Change: Note that the operating company, CapEx, has historically trended at 1 to 2% of total F1 revenue, excluding one-time Vegas-related CapEx, and we expect this range to be broadly consistent.
2025.
Speaker Change: Turning to the Liberty Lab Group, there's attributed cash of $325 million and $400 million of undrawn marginal loan capacity related to our LabNation marginal loan.
Speaker Change: Please visit the website at www.beadaholique.com to purchase beading supplies and to get design ideas!
Speaker Change: As of February 26, the value of the LiveNation stock held at Liberty Live was $9.9 billion, and we have $1.15 billion in principal.
amount of debt against these holdings.
Thank you very much.
Speaker Change: Celebrity and F1 are in compliance with their debt covenants at quarter end, and with that, I'll turn the call over to Stefano to discuss Formula 1.
Stefano Domenicali: Thanks, Brian. Formula One finished 2024 with solid financial results, excellent racing and in a very strong position heading into 2025. The on-track competition intensified throughout the season and we expect an even closer fight when we begin the new season in Melbourne.
Speaker Change: The strength of our brand and fandom translated to strong financial results in 2024. We continue to benefit from favorable supply and demand dynamics across our revenue streams.
Speaker Change: There is strong demand to be part of the F1 ecosystem, whether in Austin races, airing our content, partnering on sponsorship activation, or enjoying our hospitality products.
Speaker Change: This is met with relatively limited supply across the board. We've seen this benefit commercial agreements, where our teams made incredible progress in 2024, signing a number of agreements that provide clear visibility for near-term financial and momentum beyond.
Speaker Change: As of year-end, F1 had $14.4 billion in future revenue contracted and the multi-years agreements.
Speaker Change: On race promotion, we remain focused on balancing growth and heritage markets, as reflected in the extension of our agreement to race in Shanghai throughout 2030, and the renewals of both Monza and Monaco throughout 2031.
Speaker Change: We also extended the Netherlands for one year and Belgium under a multi-year rotational deal, with the opportunity for another race to fill the alternating year slots.
Speaker Change: We remain in a strong position with demand from potential future race venues across the globe and will assess any potential new calendar addition against strategic requirements for both the business and the sport.
Speaker Change: Turning to media rights, our F1 TV product continues to grow at a healthy rate, with subscribers up 15%.
Speaker Change: The U.S. remains its largest market. Capitalizing on this success, we are launching a new higher-priced premium tier this year to target avid fans.
Speaker Change: It will offer enhanced functionality, including 4K ultra-high definition, multi-view, a virtual pit wall, and the ability to watch across up to six devices.
Thank you.
Speaker Change: Brian touched on some financial inputs for the season. Entering 2025, I am particularly proud of the growth in sponsorship, both in renewal terms and new partnerships that will take effect this year.
Speaker Change: This includes our landmark deal with LDMH as a global partner, Lenovo becoming a global partner after being an official partner since 2022, our renewal with Pirelli, as well as bringing on Amex, Santander and KitKat as official partners.
Speaker Change: More recently, we announced the extension of our partnership with cripple.com through 2030 and OWIN, a global lottery operator, as an official partner.
Speaker Change: Our success in signing this partnership ahead of the season now allows the team to spend 2025 focusing on growing and executing a pipeline of new deals and renewal uplift opportunities for 2026 and beyond.
Speaker Change: While 2025 is clearly a standout year in sponsorship, I am optimistic about the discussion we have in developing including new regional deals, upsells and the potential for movement of our existing sponsors within tiers as the bar has been raised across the board.
Speaker Change: The team is also continuing to innovate on our hospitality products.
Speaker Change: The Vegas race allows us to test different concepts and tariffed hospitality offerings, and we expect variations to be deployed at races this year.
Speaker Change: Michelin star chef Gordon Ramsay was announced as the partner of our most premium hospitality product, F1 Garage. We're also pleased to extend our multi-decade relationship with Doe & Co. for another 10 years of Paddle Club delivery.
Speaker Change: We will continue to work with them on enhancing our Paddle Club offerings. Looking at the Las Vegas Grand Prix, we delivered another outstanding spectacle on track, creating buzz throughout North America and earning the Promoter of the Year award from Autosport.
Speaker Change: Moving into 2025, we are taking an important step in the race evolution and are fully integrating its operation into our F1 team in London.
Speaker Change: This will further maximize the value we believe the Vegas race provides for F1 Brothers' commercial activities.
Speaker Change: In addition to being an excellent lead generator for commercial deals, Vegas has been a successful testbed of innovation that we are now extending elsewhere in Formula 1.
Speaker Change: A few recent examples include expanding our licensed product and merchandise offering, the global partnership with Gordon Ramsey after his involvement in Vegas, and building a new CRM system for all of F1, which will enhance our fund targeting.
Speaker Change: We also know the Vegas race is key to our expansion strategy in the U.S.
Speaker Change: Following the second year of the race, we have a clear vision of the changes needed to improve the race stand-alone economics and maximize the overall value accruing to Formula 1.
Speaker Change: Turning to broader fan engagement, Nielsen published a set of fan data in December 2024 confirming F1 is the most popular annual sporting series globally with over 750 million fans and growing.
Speaker Change: Younger and female fans are growing the fastest, a statistic that few sports can claim.
Speaker Change: In the last 5 years, the under 35 years old and female fan demographics have both increased by over 50%, with steady growth especially in markets like the US and China.
Speaker Change: In 2024, 1.6 billion cumulative TV viewers tuned in for races.
Speaker Change: With the number of unique viewers up 9% year over year, an additional aggregate audience of almost 500 million watches the F1 content on streaming platforms, including 230 million watching YouTube Highlights Reels on the F1 channel.
Speaker Change: We saw TV growth, especially in China, Canada, Australia, Argentina and the Middle East, as we are increasing our global fan base. At the same time, our European stronghold markets, Italy, UK, Germany, were also up year over year.
Speaker Change: Average viewership per race was 66 million on linear platforms, with an additional 20 million estimated on digital platforms, including F1 TV.
Speaker Change: Nielsen is now capturing YouTube audiences in these in the measurement which will be included in our report of viewership numbers beginning 2025.
Speaker Change: This will provide a more comprehensive view on how current funds consume port content and we aim to integrate new sources and platforms over time.
Speaker Change: On social media, Formula One ended the year with 97 million followers across the platforms.
Speaker Change: Up 38% year-over-year, if we look at the comparable social media platforms where all major sports operate. For the fifth consecutive years, F1 has been the fastest-growing global sports league for follower growth.
Speaker Change: We also reached an audience of 4 billion globally through our proactive media activity in 2024, showing the breadth of our reach.
Speaker Change: At races, strong attendance trends continued throughout the season, with 2024 seeing 17 sell-out crowds and 10 new attendance records. Over 6.5 million people attended races in 2024, a new record, growing 9% over 2023.
Four races welcomed crowds of over 400,000.
Speaker Change: The PadoClac also saw record attenders, hosting 58,000 total guests across the season, up 20% on 2023.
Thank you.
Speaker Change: Despite the strength of these metrics, we know that only a fraction of our fan base is able to attend the race. A key focus of our ongoing growth strategy is to reach fans in new, creative ways to maintain their interest, raise awareness and continue the growth momentum.
Speaker Change: This is our F1 Always On strategy, ensuring F1 is present beyond the 24 races calendar. This approach is supported by our experiential licensing initiatives.
Speaker Change: Following successful international venues in Boston and D.C. in 2024, F1 Arcade is planning to open four additional U.S. locations in 2025, including Las Vegas and Denver.
Speaker Change: The F1 exhibition sold almost 600,000 tickets across all venues in 2024, connecting our fans with F1 rich history.
Speaker Change: Buenos Aires will be the fifth city to host the exhibition when it's open on March 22nd and is the first stop of a planned multi-country South American tour. Amsterdam was recently announced as the sixth location set to open in April 2025.
Speaker Change: Leveraging learnings from other licensed activations, Grand Prix Praza in Las Vegas is launching a series of new year-round activities beginning at the end of March. The site will be the North American home of the sport, especially serving our growth U.S. fan base.
Speaker Change: In partnership with Round Room Life, our partner in the F1 exhibition, Grand Prix Plaza will host three unique and immersive experiences, F1 Drive, F1X and F1 Hub, and will also add three new private event spaces available for rent.
Speaker Change: We are building momentum in consumer products and other licensing areas, which we expect will be both economically lucrative and provide new touch points for our diverse fan base.
Speaker Change: Our partnership with LEGO launched with a product range featuring all 10 teams, engaged content across LEGO digital platforms and presence at race weekends, including Fan Zone activations.
Speaker Change: Our partnership with Mattel is launching throughout 2025, with eight F1Ts brought to life across a range of products and present at select races, including Hot Wheels activation and retail opportunities.
Speaker Change: Sustainability initiatives remain a priority and we are on track to be net zero by 2030.
Speaker Change: In 2024, we began our investment in sustainable aviation fuel, and despite our initiative here, we'll have provided an approximately 19% reduction in 2024 relative emissions compared to traditional aviation fuel. We are already well advanced.
Speaker Change: in our plans to expand the Sustainable Aviation Fuel Initiative further in 2025.
Speaker Change: Also, in November, we announced a formal Diversity and Inclusion Charter agreed by all 10 teams, F1 and the FIA. This is an important step and invites collaboration across the ecosystem to produce impactful results.
Speaker Change: Looking ahead to the 2025 season and beyond, we are working to capitalise on our momentum and establish key building blocks for future growth.
Speaker Change: I'm confident our brand awareness will continue growing, especially as we look to the Apple Movie, which will premiere in June, and the impact of our race and high-profile season launch event held at the O2 in London.
Speaker Change: The launch event was the first of its kind, featuring all 10 teams revealing their 2025 liveries, top-tier entertainment and a gathering of the entire 411 community to celebrate our 75th anniversary.
Speaker Change: Over 15,000 fans packed the O2 while over 40 global broadcasters aired the show live.
Speaker Change: F1 digital channels including YouTube drew 7.5 million total live viewers, making it F1's most successful live stream ever. The media buzz was incredible and over 2,000 pieces of global content were published within 24 hours of the event.
Speaker Change: From a sporting perspective, this year we expect an intense fight on the track as teams continue to converge after a very competitive 2024 season.
that other changes are planful.
Speaker Change: with many rookies entering the grid, demonstrated the success of the F2 and F3 support series in preparing drivers for Formula 1.
Speaker Change: We also expect an interesting balance as the teams have to focus both on 2025 performance but also prepare the significant changes required by the new technical regulation taking effect in 2026.
Derek Chang: We look forward to see the cars take to the track this weekend. Avanti tutta! Full speed ahead. And now I will turn the call back over to Derek. Thank you. Bye bye.
Derek Chang: Great. Thank you, Stefano. I think we'd now like to open the call for questions.
Derek Chang: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue.
Derek Chang: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Our first questions come from the line of Ben Swinburne with Morgan Stanley. Please proceed with your questions.
Ben Swinburne: Thanks. I have two questions, one for Derek and one hopefully for Stefano. I know he said bye, but hopefully he's still there. Derek, welcome to the wonderful world of quarterly earnings calls. Nice to talk to you again.
Ben Swinburne: Could you talk a little bit about, you know, sort of the message you have to, you know, Liberty shareholders around kind of strategy? I know you talked a little bit about it in your prepared remarks.
Ben Swinburne: But like what are your strategic priorities for the year and any comment you can share on sort of your philosophy around M&A?
Speaker Change: I think Liberty, obviously, tremendous track record on the M&A front, at the same time, investors really like the kind of pure plays that you have and are continuing to create, so we'd love to hear some thoughts there, and then I have an F1 question for Stephan if he's there.
Sure. Thank you, Ben, good to hear your voice.
Speaker Change: Sorry. Thanks, Ben, and thanks for the warm welcome there. I've touched on some of the points in terms of our near-term priorities.
Speaker Change: Closing DORNA, the structural simplification that we've discussed, and obviously a huge focus right now on F1 and continuing sort of the growth trajectory that that's been on and helping Stefano and his team sort of accomplish that, we've got a lot.
Speaker Change: sort of on our plate. But as you get through the year and we sort of roll forward, I would think that a lot of what we've done in the past would sort of
Speaker Change: reflect on what we might do in the future. We've always been an opportunistic place, and I think as those opportunities present themselves, we will certainly.
hopefully be active and be able to...
Speaker Change: Continue to sort of build on the assets that we have in terms of
Speaker Change: you know, tuck-ins or adjacencies and things like that, but then as we start to look beyond that, you know, where there is sort of opportunities that involve premium IP.
Speaker Change: abilities to monetize and commercialize along the way that we've done with some of the assets like F1, those we would look at pretty seriously. But for now, again, back to sort of the near-term priorities that we've
we've already discussed.
Speaker Change: Stefano, or Ben, do you want to have Stefano, your next question? Yeah.
Speaker Change: Yes, definitely. You guys have a lot going on between, you know, Concord and...
Speaker Change: media rights and everything else, but there's a lot of focus, as you can imagine, on the U.S. media rights right now. There's some press reports that F1 and ESPN have sort of moved on from each other.
Speaker Change: I guess I'm just curious if you could talk a little bit about how you're feeling about the demand for the U.S. broadcast rights for F1 today.
Speaker Change: You know, whether we still should think there's going to be an increase from your current deal. And any thoughts on including or excluding F1 TV in the package that you're bringing to market would be appreciated. Thank you.
Speaker Change: Now, thanks, Ben. As you said, there's lots going on in these months, but that's the life of Formula One. Every day is a new day with a lot of things that are always opportunities. First of all, let me say that, you know, with regard to the ESPN and Formula One,
Speaker Change: Let me say that I can't deny the sort of situation that is negative because first of all, we need to be thankful for what EFDN is providing to us. We are very happy about the quality of the service. We need to always remember that they were first.
Speaker Change: to believe in our project. So therefore, the fact that at the end of the exclusivity period they have not put in place a formal offer, it doesn't mean that the discussions are going ahead. Actually, it's the other way around. So there are still a lot of discussions to try to find the best solution. And of course, now, as we always said, it's the month where other...
Speaker Change: players around the table and we cannot deny the fact that there is a lot of interest around our product. We are fortunate enough to have compelling contents and a growing fan base and a strong demand for different situations from various parties.
As we always said, you know...
Speaker Change: There is a big point related to the fact that from one side we always want to maximize the monetization of our media, but on the other side we need to make sure that also in terms of awareness, in terms of growth of our fan base, we need to try to find the best way in terms of reach.
Speaker Change: to grow and also to offer to them the possibility to give to our broadcaster partner any better commercialization on how they can explore their rights are possible. I can say that the digitalization and also the experience of other broadcasters in Europe and other parts of the world could be an essential part of what could be the discussion we're going to have with them.
Speaker Change: And that's what I would say with regard to the media right. I'm sure that Derek, if you want to say something more on that, before I can touch base on the situation on Convert.
Derek Chang: Thanks Stefano. Yeah, I mean I love talking about media rights, but uh-huh
I would add to that that
Speaker Change: You know, people tend to look at these sorts of discussions somewhat simplistically sometimes and...
Derek Chang: really focus on sort of the race and the race broadcast. But when you think about sort of media rights in today's world.
Derek Chang: You know, the broadcasters, the distribution partners, and the IP holders, I think it's a much more involved relationship than just sort of the event.
Derek Chang: And I think that's to everyone benefit in the ecosystem and how people can use sort of
Derek Chang: RIP, not just through the event but through the other forms of content, through the activations and hospitality even and things like that come into play and I think that we at F1 continue to be very well positioned.
Derek Chang: and with respect to the content often we have, we've invested a lot of money in our own content production, which can also be very helpful to the.
Derek Chang: potential broadcast partners. Ultimately, as everyone knows in this world, things sort of hinge up a little bit on supply and demand, and at the competitive process that, you know, unfolds situations like this, and sort of what the availability is of
you know, other rights around this time frame.
Derek Chang: vis-a-vis sort of which of our potential partners may be looking for IP like ours at this time.
Derek Chang: And so, you know, not to over-complicate the answer, but I think we do believe that there is a robust process that will unfold here. I think...
Derek Chang: You know, to use an F1 analogy, we're early in the race and people are still feeling out the track, per se, but I think also to use an F1 analogy, it's going to be a fast race and we're going to move pretty quickly, hopefully, to come to a conclusion as we get to sort of the end of, or the middle of the year.
Stefano Domenicali: and insulated part of the year. And just to echo one thing that Stefano said, a lot of times, the people on the outside tend to frame these things as, oh,
Stefano Domenicali: ESPN said they didn't want the F1 rights going forward, and it's a very, again, soundbite sort of way to describe a relationship, but it's actually been quite a productive and constructive relationship, and I personally have had a long-term relationship with ESPN.
and F1 has had a great relationship.
Stefano Domenicali: With ESPN and we'll continue to see how these conversations unfold
Thank you.
Speaker Change: Thank you. Our next questions come from the line of David Karnofsky with J.P. Morgan. Please proceed with your questions.
Speaker Change: Thank you and welcome to Derek. On Las Vegas, as you noted, the race missed your budgeting and I get the need to look at this holistically given
David Karnofsky: its impact of sponsorship and other rights, but I wanted to see if you could dig in a bit on the path here in 2025 and the next few years.
Speaker Change: specifically growing revenue and kind of also managing the cost base to get the event back towards some of those original standalone targets you had laid out if that's still the goal.
Stephanie, do you want to start?
Speaker Change: We do believe that, as we always said, this is an incredible Grand Prix on which we need to keep working and make sure that it will stay, as we believe, at the top of the range. Because the benefit of this Grand Prix, as we said, provides a broader financial benefit to the whole ecosystem of Formula One.
Speaker Change: of Vegas, LBGP, together with London, will help to boost the synergy that we can use by knowing the system and the experience that all the other Grand Prix are, let's say, investor government giving to us. We don't have to forget that we were having, as Derek was mentioning in his speech at the beginning, any data relevant for that community. And now we are taking that in the way to build the system in order to formalize the right packages,
Speaker Change: On the other side, we have always said since the beginning that we know that when there is a new approach going ahead, the first year is a learning curve that will take the right time to make the right strategic decision because, as we said, this is an incredible event that will continue to be one of the most important events in the future.
That's what I could say on that perspective.
Speaker Change: Yeah, I'd like to just add that if you step back for a second, I think that LVGP has been a huge success to put on an event like that.
Speaker Change: In the short amount of time that our team here in Denver and London were able to do that over the last couple of years, it's been pretty impressive and I think we've talked at length about sort of the benefit.
Speaker Change: To the f1a ecosystem as a whole whether it's it's the media the sponsorship
Speaker Change: fandom growing here in the U.S., all that sort of stuff has been hugely impacted by
Speaker Change: what we've been able to accomplish in Las Vegas. I think we all here, we're disappointed by sort of the...
Speaker Change: some of the financial metrics in the early going here, but those in my mind are all sort of durable and fixable, and as both Steph and I have already alluded to, we're already
Speaker Change: Sort of working on those plans and feel comfortable that we will see nice improvement there over the course of the year Thank you
Speaker Change: Okay. And then, Stephan, I was interested to get your expanded VNG and Cadillac and the decision to admit them as an 11th team. We had the perception of some resistance to this in the past.
Speaker Change: So, I was interested to understand better any change in your thinking and what this can add to the sport, especially in the U.S., and can you just refresh us on how the entry fee works to the teams and what role F1 has, if any, there?
Speaker Change: No, thanks for that. It's important to clarify that position. We always said that Cadillac...
Speaker Change: is giving and will give an incredible boost to the ecosystem of FOMO1.
Speaker Change: We were referring to other situations that were handled before, but now the picture is totally different. Therefore, I think that Cadillac is preparing the entry in terms of preparing the season because it would not be an easy situation for them to be in such a high-tech and evolved sporting platform.
Speaker Change: into the sport. Now, there is the formality that is related to the process that it's almost ready together with the FIA. There has to be an update and whenever this will be ready, it should be not too long, there will be a sort of an update.
Speaker Change: formalize what basically is already happening, so they will be ready to fight.
Speaker Change: against or together with the other teams for next year and that is the evolution that as you know GM has taken as
Speaker Change: as a fact that they want to be a real constructor or a manufacturer that will invest in our sport because they do believe in the technological platform that the F1 can provide to their system. So, I'm very, very happy that now this is on board, moving forward, and I'm looking forward to see them on the track together with the other teams to fight for a great championship.
Thank you.
Speaker Change: Thank you. Our next questions come from the line of Gunmarrow with Evercore ISI. Please proceed with your questions.
Speaker Change: Good morning, and thanks for taking the questions too if I could first on sponsorship I know 2025 will already already be very robust given the partnerships that you've already inked
Speaker Change: And it doesn't seem like the team has stopped either with the recent all-win deal and bringing on Tag Heuer as a title partner for Monaco.
Speaker Change: I guess looking ahead, do you see even more opportunities as you look to the balance of this year? Or are you largely set for 2025 based on the pipeline? And given the tenor of your conversations, is there anything you can share about how sponsorship could look like in 2026 as well? And then I have a follow up on GM Cadillac.
Speaker Change: Yeah, thank you Ben. I mean, as we said, we are very robust with regard to the pipeline 2025 because basically in terms of achievement, the entry of the robust partnership that we have announced has been, I would say, impressive.
Speaker Change: Impressive with regard to the quality of the brand and of course not only about the quality but the investment they are bringing to us.
Speaker Change: What for me is relevant is that this new partnership has brought in, and will bring in, a new way of activating the partnership.
Speaker Change: It's not only visibility, it's not only awareness, it's all that is behind that. Now everyone is working together to make sure that this platform will offer to their leads in terms of business development what we can offer to them. So that is an important assessment that we have done together and we will see already with FACTS.
Speaker Change: With regard to the other possibility, what we lived, and we don't have to forget where we were just a couple of years ago.
Speaker Change: We have moved, not only in terms of quantity, but also in terms of quality of partnership, that for us was the need now to restructure the category in order to make sure there was the possibility to develop regional deals or to uplift, as we did, from official to global partners.
Speaker Change: And, of course, there are different possibilities to maximize this through the digitalization that can be applied to our presentation of a product on TV and not only on TV, on the track. And on top of that, of course, the time engagement that we are bringing with new partners.
Speaker Change: It's pushing us to move and this is the reason why, for example, once more, Vegas was important to create different opportunities with the hospitality packages and the hospitality and experience that we are offering to our fans.
Speaker Change: I would say the pipeline already for the next year is very strong, and that's what we need to do. Work together, and if we work well, the activation program that we are activating with them...
Speaker Change: FACTS is showing that our strategy is right, otherwise it wouldn't be in such a good position. I do believe that this position will keep going like that even in the future.
Speaker Change: That's very helpful. Thank you so much. And then maybe if I could just follow up on the GM-Cadillac discussion. You know, there have been some questions on what this could mean to the Concord Agreement discussions, and ultimately, you know, what it does to the splits in economics that the teams are pushing for. I know that there's not much you can share on the Concord right now, but how should we think about the financial impact of welcoming GM-Cadillac to the grid, and is the hope that the long-term top-line opportunity through sponsorship and maybe meteorites
Speaker Change: would offset any margin pressure, or is it just wrong to even assume that there would be margin degradation? Thank you.
Speaker Change: No, thanks Amin. With regard to the first question, there's no impact at all with the current discussion of the concord agreement.
Speaker Change: As you know, Concord is done by two major elements. One is the financial one that is related to the commercialization.
Speaker Change: and the marketing side of it. That discussion between us and the teams, and we are in a good position on that.
Speaker Change: The other topic or the other part of it is the governance that of course we need to work together with the FIA and the teams and on that we are working in order to respect the data as you know. There is no time pressure on that because we are all working as partners and we want to find the best solution for the sport.
Speaker Change: This is something that we're going to do, even with one more team together into the future because Cadillac will be part of it and will have a voice, as the others, into the future.
Speaker Change: Then with regard to the fact that Cadillac will bring a new U.S. branch, I think that we can bring opportunities, and I'm totally positive because the sport is growing in such a magnitude that everyone will exploit the best out of it, and I'm sure that the Cadillac GM group will benefit from being part of this group.
Speaker Change: Can I just add, and thanks Stefano, that in my early days here I have had the opportunity to meet with some of the team.
games.
Speaker Change: certainly over the last month or so, and look I don't think, I think the relationship between
Speaker Change: between Formula One and the teams has never been stronger. I've heard a lot of good, positive affirmation of that in terms of what Liberty has done since we acquired F1, and I think people really...
Speaker Change: are excited about the future and sort of growing the overall pie.
Speaker Change: in terms of the economics of what the sport can deliver. I think very specifically on the Concord Agreement and our splits with the teams. Stefano already remarked on the fact that hopefully we get the Concord Agreement done soon.
Speaker Change: At this point, you know, the entry of an 11th team has not really impacted sort of that discussion per se, and if you think about it, it doesn't impact the splits between us and the team, it certainly is an 11th team in terms of
Speaker Change: the allocations amongst the teams themselves, but again, I think with the entry of a group like GM, the hope and the thought here is that we continue to...
Speaker Change: grow the overall pie for Formula 1 and the Formula 1 ecosystem.
Thank you both, very helpful.
Speaker Change: Thank you. Our next questions come from the line of Jeffrey Volodech with the Pivotal Research Group. Please proceed with your questions.
Good morning. First of all, congrats, Eric.
assertion.
Speaker Change: I had a couple related to Formula One, I guess a follow-up on the Concorde Agreement. So should we expect that's going to be pretty similar to the current deal, or can you make changes that really help move this forward? And I guess, Stefano, on the 2026 powertrains, you talked to the team as they developed that. Are there any major surprises, positive or negative, that you're seeing?
Next slide.
Bye.
Thanks, Jeffrey, I'm in.
Speaker Change: I didn't get the second question properly, to be honest. The first, related to Colbert, I think that it's worth to say without, you know, saying anything that we cannot say so far, is the basic fundamentals are quite similar to the actual structure. That is definitely the way that we are working on and the way we are progressing with that.
Speaker Change: The second one, I heard something related to the 2026 cars. Jeffrey, if you can repeat, because the line was not great. Sorry for that.
Jeffrey Volodech: Yeah, no worries. Hopefully you can hear me now. I was just wondering if there were any major surprises on the development of those 26 powertrains that you've heard from the team?
either positive or negative.
Jeffrey Volodech: Yeah, I know. Thank you. Now I understand. Thank you very much. I think that, as always, when there is a change of regulation...
Jeffrey Volodech: with regard to the technological development we put at the center the sustainable fuel is something that will give the future boost
Speaker Change: of a different thinking of a technological implication of the future in Formula 1. That's what I'm pretty convinced about. We need to keep at the centre the show, the fact that the drivers need to be at the centre of the stage and the technological choices for the future need to be relevant for that. We need to keep that clearly because it is relevant to say that our fund base is shifting in terms of interest
Jeffrey Volodech: balance between the so-called traditional fans versus the new fans and that's the focus that we want to keep together.
All right, thank you.
Jeffrey Volodech: Thank you. Our next questions come from the line of Brian Kraft with Deutsche Bank. Please proceed with your questions.
Speaker Change: Hey, Brian, are you able to check if you're self-muted, please?
Speaker Change: Our next questions come from the line of Stephen Lazacek with Goldman Sachs. Please proceed with your questions.
Speaker Change: Hey guys, thanks for taking the questions. Two if I could. First on the meteorites opportunity internationally for Stefano and Derek, if he wants to jump in on this one. I'm curious if there's anything you've learned so far through your U.S. meteorites negotiation that has made you more or less optimistic on the demand backdrop for meteorites for F1 more globally.
Speaker Change: Thanks, Stephen. I mean, from my side, I see that as a great opportunity to exploit the maximum doubt of it.
Speaker Change: I'm not really worried about that because I do believe that we have a growing fund base and we need to make sure we find the right product and the right partner in order to engage with them. That's really crucial. One thing that we need to remember is that this part of the equation is our F1TB product because it's something that is relevant, it's really an incredible tool of engagement, and
Speaker Change: And this is something that we want to keep that inside the discussion, whoever will be the partner of the future, because we believe of the value, we are truly believer of the value of this platform.
Speaker Change: I would say that the, I'm not so sure the U.S. rights is necessarily correlated to what we learned through this experience is necessarily correlated to, you know, other markets per se because each of them have their own individual characteristics both in terms of
Speaker Change: demand as well as sort of players in the market. I would say that one thing that has obviously transpired over the last several years, as some of the large streaming platforms have gotten engaged in sports.
Speaker Change: It's sort of a demand on their part for sort of...
worldwide rights, for lack of a better term.
Speaker Change: And hopefully that will certainly drive some of the demand as we look around the globe. If you see one of the big selling points of the Netflix sort of taking on the NFL Christmas games was that they delivered those globes.
Speaker Change: So, you know, this is clearly an evolving space that we'll keep an eye on.
Speaker Change: Got it. Thanks for that. And then a second question just on Vegas for Brian. I appreciate you're not commenting on race-specific economics, but I was just curious if there's anything you can give us on the magnitude of the decline year-over-year in revenue and profit at the race just given the focus at the moment by the market. That could maybe give us confidence that some of the underperformance in the quarter was isolated to Vegas specifically.
Speaker Change: maybe not more broadly throughout the F1 core business. Thank you.
Speaker Change: Yeah, thanks. We can't comment on the specifics, but the majority of the miss that you guys are calculating based on the team payment was Vegas related.
Got it. That's helpful. Thank you both.
Speaker Change: Thank you. Our next questions come from the line of Brian Kraft with Deutsche Bank. Please proceed with your questions.
Hi, can you hear me now?
Yeah
Derek Chang: Okay. Great. Well, thanks for letting me back in. Welcome, Derek, and congratulations.
Speaker Change: I had two questions. So first, on the heels of several high-profile race promotion renewals, how did the results of those renewals line up with your expectations that race promotion is increasingly becoming a revenue growth opportunity?
Speaker Change: And then the second one is, I know you don't want to give guidance, but could you just talk broadly about the media rights revenue outlook in 2025 relative to 2024? It seems like growth in that line should accelerate this year. Would appreciate any color there. Thank you.
Speaker Change: Thanks, Brian. I mean, great promotion. As you know, we have a...
Speaker Change: Let's see, we have taken the decision to be strong and long-term agreement with the place where we do believe is relevant to state.
Speaker Change: focus and working together because there is a possibility to increase even other revenue stream through this relationship. The other thing is, of course, every promoter is innovating, is investing.
Speaker Change: I remember very well when I had my first earnings calls, there were a lot of doubts that this revenue stream would be able to grow because there was a lot of thinking that that was not possible. Actually, we proved the other way around. I do believe that due to the positive tension of the market because a lot of countries want to host the Grand Prix and everyone wants to basically show that they are committed to long term, there is the possibility to keep growing this revenue stream.
Speaker Change: This is our focus. Of course, what is good is that everyone now has the focus on the fans who attend the race.
Speaker Change: So, everyone has to improve the different segmentation that the fans require in terms of GA, in terms of medium hospitality, in higher-profile hospitality, working on the marginality of course, working on the experience of the fans together with the promoters. So in that respect, I do believe the expectations, even if we are not given any kind of guidelines on that, are in the direction of being very strong even in the future.
Speaker Change: With regard to the media rights, if I may say, Derek, I would say on that, if you have a good package.
Speaker Change: If you have a good sport, if you have a good fan base, the media should keep growing in that respect. I do believe that what is important for the future is to see how the fans want to capture the content we are producing.
Speaker Change: And it will be not only the so-called traditional meteorite, but there are other platforms that will have a big effect.
Speaker Change: on not only growing that, but also growing the different possibility of engaging with the fans. And this is for me, in our opinion, very, very peculiar to the fact that this is relevant to the growth in that landscape.
Speaker Change: Yeah, and I just add, Brian, specifically on 25 versus 24 for media rights, you're largely going to be seeing, you know, just regular uplifts and standard renewals. We would expect continued growth in F1 TV and we're launching our new premium F1 TV product too. So those will be the primary drivers in 25.
Speaker Change: It's kind of similar in strength as last year from a growth perspective, or would you expect any acceleration this year, Brian?
Bye.
I'll leave it at what we've answered already, Brian.
All right. Thanks to you both.
Speaker Change: Thank you. Our next question has come from the line of Stephen Cahill with Wells Fargo. Please proceed with your question.
Speaker Change: Thank you for taking the question. So first, just on media rights and with the expansion of premium F1 TV, can you just help us conceptualize how that product fits into the discussions that you have with some of the larger streaming companies? I guess the expectation is that those streaming companies probably don't want to see a competing streaming product in market, even if it's your own. So how do you manage those dynamics as you look to maximize the value of what you can get for rights?
Speaker Change: And then just one on Concord and maybe Concord Dynamics. I think the last Concord had a big overhang from what was going on with the pandemic and maybe the team's expectation or need to limit some of their downside risk. You've grown the sport a lot since then. The teams have also added a lot to their calendar, both with media and with races. So how do you think team dynamics are this time? What do you think their expectations are?
Speaker Change: feelings about your ability to kind of hold team payments flat and would be willing to accept that.
Speaker Change: Thanks, Stephen. With regard to the value of the premium F1 TV or Pro, what we are doing in terms of different propositions.
Speaker Change: As we said, we believe that this has to be considered an added value. And we found a solution. I'll give you one example. In a collaboration with Viaplay in the Dutch market, we were able to find a solution that has integrated that in the package.
Speaker Change: So I do believe that we are flexible to understand what will be the need of our future broadcasters, knowing that has a value because it's an incredible package. And the extended and the different packs that we are offering allows all our fans to be connected with our world. And I do believe this is relevant also.
Speaker Change: and this element has to be considered in our negotiation with future partners. Concord, I mean, the team dynamics, I would say everyone recognizes huge growth all over the business.
Speaker Change: I mean, it is not only related to the fact that there is a lot of interest on eventually buying teams because they see the potential value of them, you see from the numbers and the quality of partners that are connected to each team.
Speaker Change: That means everyone recognizes the huge job we are doing together.
Speaker Change: The dynamics are very constructive. It's part of the game that everyone wants to try to squeeze or maximize what they can bring home, that's part of the game. But I would say the credibility that we have found, that we have now together, has allowed us to find the right balance.
Speaker Change: So, happy to progress with this kind of relation because that's the key point of a future and very stable growth of the business together. We see everyone as a stakeholder of the business, the FIA, the teams and all the partners that they have and all our partners.
Great. Thank you.
Thank you.
Speaker Change: Well, just on the Concord, you know, one aspect that you were asking about, we wouldn't expect to see degradation. We feel good with our relationship with the team.
Speaker Change: So, we would expect, at a minimum, we'd be in a similar place on the next agreement to where we finish out 2025.
Speaker Change: Thank you, our last questions will come from the line of Barton Crockett with Rosenblatt. Please proceed with your questions.
Speaker Change: Okay, thanks for taking the questions, um, you know, I was interested in terms of the broadcast rights There's been a lot of focus, you know on the u.s. As a solitary market, but you know, there's rights that seem to be You know potentially up for renewal across the Americas, you know, maybe even elsewhere Japan
Speaker Change: Are we at a place now where it could be more interesting, perhaps, to get closer with some of the global streamers to negotiate large regional packages, not exactly global, but large kind of regions that go just beyond the U.S.?
Sorry if you could discuss that.
Speaker Change: David, do you want to go, or I can go? Yeah, no, no, I can just take this one and we can wrap up since this is the last question. But I think that the...
Speaker Change: I think, again, what we've said, and I don't mean to keep repeating it, but it's an evolving situation in terms of what the media rights landscape looks like globally, what the different players out there want and want to try to achieve with their own platforms, I think.
Speaker Change: Clearly, the large streamers have consistently said that they want global rights to everything.
Speaker Change: that may or may not, you know, be possible. And on a regional basis...
Speaker Change: It sort of depends on how you define these various regions, but I do think that if some of these players are strong across a region, then clearly there could be benefit, and I think we do have some regional benefits.
Speaker Change: deals in play, we've got, I know we've got some deals with the zone and various countries.
Speaker Change: For instance, obviously Sky, we've got across multiple countries in Europe.
Speaker Change: It really depends on what their strength is and what their aspirations are in some of these markets, because if the sum of all of those is greater than us going out individually, then we would have to look at that.
and pursue those opportunities seriously.
Speaker Change: I think with that, I appreciate everyone's time today. I appreciate everyone listening in, and all the warm welcomes. And I look forward to seeing more of everyone on future earnings calls. And thank you again.
Speaker Change: Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
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