The Liberty SiriusXM Group (NASDAQ:LSXMK) Q2 2024 Earnings Call Transcript

The Liberty SiriusXM Group (NASDAQ:LSXMK) Q2 2024 Earnings Call Transcript August 8, 2024

Operator: Welcome to Liberty Media Corporation 2024 Second Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference will be recorded today, August 8. I would now like to turn the call over to Clare Adams, Senior Manager, Investor Relations. Please go ahead.

Clare Adams: 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 the most recent Forms 10-K and 10-Q filed by Liberty Media and Atlanta Braves Holdings with the SEC. 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 thereto or any change in events, conditions or circumstances on which any such statement is based.

On today’s call, we will discuss certain non-GAAP financial measures for Liberty Media, SiriusXM and Atlanta Braves Holdings, including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media to SiriusXM and Atlanta Braves Holdings Schedules 1 through 3, can be found at the end of the earnings press release issued today, which are available 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.

Gregory Maffei: Thanks, Claire, and good morning to all. Today, speaking on the call, we will also have Formula One’s President and CEO, Stefano Domenicali, Liberty’s Chief Accounting and Principal Financial Officer, Brian Wendling. And also during Q&A, we will answer questions related to Atlanta Braves Holdings and Braves management will be available to answer them as well. So beginning with Liberty SiriusXM. The transaction is progressing towards close. We’ve received SEC and FCC approvals. We set the shareholder meeting date for August – excuse me, August 23 and we expect to close on September 9. You may note, the adjusted merger exchange ratio has been reset to reduce the shares of new Sirius by 90%. We expect the new Sirius share price will be higher at close because of that, and we expect enhanced trading dynamics, including increased potential for index inclusion.

I look forward to remaining Chairman and a meaningful shareholder. Turning now to SiriusXM itself. The company maintains its strong financial position. Self-pay net adds improved sequentially and year-over-year, driven primarily by a reduction in voluntary churn. EBITDA was flat versus the prior year to plus 8% versus the first quarter. We expect solid margin and cash generation through the balance of 2024. 2024 is also going to be a peak CapEx year, and we expect to return to free cash flow growth in the coming years. We believe SiriusXM is attractive on a free cash flow multiple basis. Sirius continues to pursue growth opportunities, beginning in the car with a new 3-year subscription with a new vehicle purchase at certain automakers, pre access, the first free ad-supported platform which aims to increase trials and win-back listeners, and 360L is continuing to drive improved share of listening in the car.

Q&A Session

Looking at streaming, Sirius is launching new features and updates every month. And we’ve seen early improvements in multi-day listening. We’ve also seen increased engagement in the trial period versus the first quarter and finally, by presuming smart unique content. The Smartest podcast is kicking off this partnership in August with an exclusive subscriber event featuring Howard Stern, Jelly Roll and many more. Turning to Formula One Group. Despite early questions, this is turning out to be one of the most competitive seasons certainly in the start back to 2012. Across the first 14 races, we’ve seen 7 different race winners and 8 drivers have been on the podium. This is – we’re on track to have the closest constructor championship across the top four since 2012 as well.

The difference in time from front to back up grid at this point in the season is the closest also since the start of the current qualifying system in 2010. Looking at the 2020 driver market continues to provide interesting excitement with Carlos Sainz going to Williams, has announcing Okon joining as a current and current Ferrari Reserve [indiscernible] as well. Berman is showcasing the pipeline of support series talent that is delivering to Formula One. And the biggest open question remains what will Mercedes do with its open sea? Looking now at the financial results for F1. We had a great first half. Year-to-date revenue was up 29% and OIBDA is plus 35%, partially driven by three additional races in the period this year. We announced LVCVA as an official partner.

They’re going to activate across 25 races in 2024 and 10 in 2025, and we continue to successfully scale partners brought in through LVGP. We remain excited about our sponsorship pipeline. Let me turn briefly to MotoGP. The transaction is progressing well. Regulatory filings are progressing on track. We’ve received foreign investment control clearance in both jurisdictions needed, Italy and Spain, and we recently received merger clearance in Brazil and Australia. We continue to expect the transaction to close by year-end. At MotoGP, the racing has been awesome. [indiscernible] quickly closed the gap with [indiscernible] Martin, but Martin just took the lead back in Silverstone. We are seeing a very competitive title fight now separated by only 3 points.

And at MotoGP, 12 writers across 18 have been on the podium this season. The tenant is up across our races with a new all-time attendance record set in [indiscernible] and Germany was a 253,000 was up 8% off an already record 2023 attendance numbers. Similar to F1, rider movements are fueling excitement. We’ve also seen interesting movements in the instructors championship. Instructors category rather with PRIMA switching from Ducati to Yamaha next season. The summer break ended last weekend in Silverstone, we’re excited for more action in the second half. Turning briefly to Quint. Some of the second quarter highlights. We had the 150th Kentucky Derby, which was an enormous success. The largest single event executed in Quint history serving over 12,000 customers per day.

F1 experiences has seen meaningful growth across eight races this year, and we’ve completed inaugural activations for several new partnerships, including the WNBA All-star game and the men’s and women’s U.S. opens for the USGA. Turning to Live Nation. We saw another record quarter with no signs of slowdown. 2024 is a year of AOI amphitheaters and arenas in the second quarter, despite stadium activity being lower, concert tenants was up 5%. AOI was up 21% with record concert segment profitability, and this was one of the top five quarters in history for ticket sales. Revenue from on-site spending is also up double digits year-to-date and cancellation rates for North America are tracking lower than last year. The ticketing and artist pipeline continues to expand globally.

New artists have increased 20% by 130% year-to-date and 2/3 of all total new enterprise tickets are from international. Turning briefly Venue Nation, we’re continuing to see the enhancements made generate incremental revenue. Major festivals average per fan spend is up double digits year-to-date. The amphitheater average per fan spend is also expected to grow by $2 per fan and Live Nation plans to open 14 major global venues across 2024 and 2025. Turning to the Braves. We’ve had strong performance from key players this season through last weekend. Pasona led the National League with 86 RBIs since April 12, sales had a 2.64% ERA and free it a 2.71 ERA, which ranked second and third, respectively, in the National League ahead of the trade deadline, the Braves announced the return of Jorge Soler to fill a key position in the outfield and right-handed picture with Jackson.

Both players were on the 2021 World Series winning team. Fan demand remained strong per cap up in ticketing and concessions year-over-year. There are 18,000 on the season ticket waitlist and we’ve seen a 90% renewal to date on season tickets for 2025. Several of the master planning projects completed earlier this year are already adding value and enhancing the fan experience. The new 60-foot 6-inch Jim bean bar concessions are up double digits versus 2023 concessions in the same location. Recently, they’ve announced further upgrades ahead of the 2025 season, including a new seating product, the bullpen, which includes access to exclusive lounge underneath seats and extension of the Coors Light Chophouse seating area. Also, [indiscernible] recently unveiled the logo to kick off the 2025 All-Star game.

The Braves are thrilled to host the All-Star game, [indiscernible] incredible opportunity to showcase the truest and the battery sections. Now I’ll turn it over to Brian for more on our financial results.

Brian Wendling: Thank you, Greg, and good morning, everyone. At quarter end, Liberty SiriusXM Group had attributed cash of $88 million, excluding $100 million of cash held at SiriusXM. During the quarter, Liberty SiriusXM paid down $35 million under the margin loan using cash on hand. There’s $1.1 billion of undrawn margin loan capacity as of quarter end. As of August 7, the value of our SiriusXM stock was $10 billion, and we have $1.2 billion in principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $10.9 billion, which includes $9.1 billion of debt at SiriusXM. As Greg mentioned, the transaction with SiriusXM is expected to close on September 9. In connection with the transaction closed, the 3.75% Liberty SiriusXM convertible notes and the 2.75% Sirius exchangeable notes will be assumed by New Sirius and the margin loan will be retired.

Following transaction close, holders of the 2.75% exchangeable notes will have the right to require new Sirius to repurchase the notes and we would expect a substantial majority of holders will exercise this right. Turning to the Formula One Group, at quarter end, the Formula One Group had attributed cash, liquid investments and monetizable public holdings of $1.5 billion which includes $1.2 billion of cash at F1 and $58 million of cash at Quint. Total Formula One Group attributed principal amount of debt was $2.9 billion, which includes $2.4 billion of debt at F1, leaving $530 million at the corporate level. F1’s $500 million revolver is undrawn and their leverage at quarter end is 1.3x. MotoGP transaction is progressing well. We have syndicated all bridge financing commitments and reduced the total commitment from $2 billion to $1.65 billion.

Note that the $1.65 billion commitment is expected to be replaced with a combination of cash and debt financing at the F1-OPCO level. We also entered into commitments for $150 million incremental Term Loan A at Formula 1 conditioned on the transaction close. And we obtained commitments from banks to provide Dorna with a new EUR 150 million term loan A and an upsized EUR 100 million revolver to be entered into after and subject to transaction closed and to be used by Dorna for general corporate purposes. Looking at the F1 business, I will again remind you that the business is best analyzed on an annual basis given variability in year-over-year rate calendar. With that said, I’ll make a few brief remarks on the quarterly results but would very much encourage you to focus on the year-to-date results.

During the quarter, F1 recognized a higher proportion of season-based income with 8 out of 24 races occurring during the period compared to 6 out of 22 in the prior year period. Media rights and sponsorship revenue also increased due to contractual increase in fees and revenue from new agreements. Growth in F1 TV continues to benefit media right’s revenue. Race promotion revenue was relatively flat given the mix of races with Australia and Azerbaijan, dropping out of Q2 compared to last year with Japan, China, Amala and Austria being added in the current period. Other revenue increased primarily due to higher hospitality and freight revenue, driven by the additional races. Adjusted OIBDA grew in the quarter as revenue growth more than offset increased costs due to higher pro rata recognition of team payments and the expectation of increased team payments for the full year over 2023 as well as increased cost due to the additional races held and cost supporting revenue growth.

Team payments are best viewed on a year-to-date basis and represented 61.9% of pre-team OIBDA for the first half of the year compared to 62.6% in the prior year. I would note Q2 and Q3 tend to have the highest percentage payout ratios based on the greater mix of European races in these quarters. Other cost of F1 revenue and SG&A are best viewed as a percent of total revenue for the year. Again, looking at it on a year-to-date basis, the adjusted OIBDA margin improved from 24.6% through Q2 ‘23 to 25.8% through Q2 ‘24. Looking briefly at corporate and other results in the second quarter. Corporate and other revenue was $141 million, which includes Quint results and approximately $6 million of rental income related to the Las Vegas Grand Prix Plaza.

Corporate and other adjusted OIBDA was $5 million in the second quarter and Quint results Grand Prix Plaza rental income offset by corporate expenses. Quint results in the second quarter were primarily driven by the Kentucky Derby and F1 experiences across the 8 races held. Reminder that, the Quint’s business is seasonal with the largest and most profitable events taking place in Q2 and Q4. We expect corporate and other adjusted OIBDA will benefit from the rental income and the Quint results for the full year. At the Liberty Live Group, there’s attributed cash of $406 million and the $400 million of undrawn margin loan capacity related to our Live Nation market. As of August 7, the value of the Live Nation stock, our Live Nation stock was $6.3 billion, and we have $1.2 billion in principal amount of debt against these holdings.

Liberty and our consolidated subsidiaries are in compliance with their debt covenants at quarter end. Turning briefly to the Atlanta Braves Holdings. Revenue grew in the second quarter despite three fewer home games compared to the last year. Baseball event revenue growth was driven by new sponsorship agreements as well as contractual increases on season tickets and existing sponsorship contracts. Broadcasting revenue grew as there were more total games between home and away played in the second quarter. Baseball operating costs increased in the second quarter, primarily due to higher player payroll, increased payments under MLB’s revenue sharing plan and higher minor lead team and player expenses. The battery continues to perform very well with revenue up 11% and adjusted OIBDA up 13% in the second quarter.

Looking at the capital improvement projects around the ballpark. Reminder that the Braves are spending approximately $15 million related to the projects completed ahead of the 2024 season across the back half of 2023 and early ‘24. The Braves recently announced additional improvement projects to open ahead of the ‘25 season, primarily related to new seating options and expect to spend approximately $20 million on these projects across the back half of ‘24 and early ‘25. These are all high returning projects that will generate incremental revenue for the Braves in the 2025 season. At the battery, the Truist headquarters is progressing ahead of schedule, and we’d expect to hand that building over to Truist in September. Now I’ll turn it over to Stefano to discuss Formula One.

Stefano Domenicali: Thanks, Brian. The 2024 season is delivering incredible racing and action for our fans at home and our sold-out events. F1 continues to prove there is an incredible competition on track. Through 14 races this season, we have had 7 different winners from 4 teams. The gaps between teams are getting closer, both in qualifying and races. In Imola, Max beaten Lando by only 0.7/10 of a second, for the win Lando’s incredible win in Miami. In Monaco, we saw Charles Leclerc take his first home victory. In Canada, the cap between the top 4 in qualifying was 0.1/10 of a second. And we have seen Mercedes return to the top step of the podium with George winning Austria and Louis sitting in his record 9 victories. Hungary saw another excellent race ending in [indiscernible] first F1 win with McLaren 1 and 2 and Hamilton rounding out the podium.

In spar, we had an incredible race with very tight gaps throughout and the race led by being swapped multiple times. George Russell crossed the finish line first after a train final lap outs against Louis, but was disqualified after the race because the car did not meet the required weight. I mean, Louis took his second victory of the season with [indiscernible]. By many measures, we have never had more competitive racing. I expect that the remainder of 2024 season will continue to deliver great racing for our fans. And as we look forward, the increasingly close race in office very exciting prospect for 2025. The incredible competition on track is leading to even higher engagement as our diverse fan basis continues to grow. We have welcomed over 3.7 million attendees through the first 14 races of this season with the Canadian rare seen record tens of 350,000 and [indiscernible] its incredible 2023 record attendance of 480,000.

We continue to see sold-out events, and there is strong demand for the racers still to come these. On TV, we have seen particularly strong numbers in key growth markets, including Australia, U.S., China, Canada, South Africa and the Middle East. Looking at the recent races, the Canadian Grand Prix was the most live race ever in Canada. The British Grand Prix was impressively the most viewed live European races over on Sky UK and earned the largest overall weekend audience for the F1 in the UK since 2016. Looking at the U.S., five races this season have achieved record live viewership for their respective events, the Chinese, Miami, Monaco, Canadian and British Grand Prix. The Miami Grand Prix viewership peaked at 3.6 million in ABC and the 80 million to 49 demographics average 1.3 million, and the spring raises average 946,000 viewership on ESPN, the largest on the channel since we introduced the Sprint format in 2021.

Our digital and social platform also continued to see very strong performance. We saw a 32% increase in social media followers compared to 2023, driven by the success of the new channel, fresh and WhatsApp and accelerated growth on Instagram. We also have higher engagement with 4.1 billion video views and 880 million interaction on Instagram year-to-date. F1 TV continues to perform well. Total subscribers are up 11% year-over-year. And in the U.S. market, subscribers are up 16% year-over-year. As previously mentioned, we implemented F1 TV price increases for the first time across markets early this year, which have been well received with the limited upticks in churn. F1 TV continues to be an important and growing product. We also continue to see great results from our podcast decision.

Total listens to all episodes of the F1 podcast, including beyond the grid, F1 Nation and F1 Explained, since launch in 2018 surpassed 125 million this quarter. The F1 Explain podcast is engaged in new and more diverse audience with 40% of the listeners in the U.S. market. A few weeks ago, we announced the 2025 sprint calendar with races to take place at six events. China, Miami, Belgium, Austria, Brazil and Qatar. The Sprint continues to be a big success with a higher TV audience for the Friday Sprint qualifying and Saturday Sprint race compared to traditional practice session. The events also bring extra track action for our fans attending events, providing additional values for promoters. 80% of the fans survey after the Chinese drumbeat said that they preferred the newsprint format and we look forward to maintaining the momentum in 2025.

The F1 academy season is also off to a strong start with the first three races completed in Saudi, Miami and Spain, and the next race is up. Abbi Pulling is leading the Sirius with – and recently become the first woman to win a British F4 races. American drivers flowing Chamber took first in Race 2 in Barcelona with a dominant victory of Pulling F1 Academy is growing engagement and attracting new fans. In the last 12 months, F1 Academy social media followers have increased by 3x with a diverse follower base. 57% of the F1 academy followers on Instagram are female, 57% are under 25 old and 83% are under 35 years old. Online coverage of F1 Academy across new sites and social reached almost 700 million Internet users. The Miami Grand Prix alone generated 14.7 million video views and 4 million interaction on social media with 2 million live viewers on broadcast TV.

F1 Academy has also been engaging fans of 10 in F1 events around [indiscernible]. Given the successful inside the F1 races we can, many of the promoter hosting F1 academy events this year are lining up to the host again in 2025, and we have received interest from several other markets. Turning to commercial updates. On race promotion, there continues to be significant demand from potential new race hosts. We now currently intend to go above 24 race in a season as our duty is to ensure the right strategic balance for the long-term future of the sport. The added benefit of this demand with limited risk slot creates increased incentives for promoters to innovate and improve the experience addressed across the calendar. More promoters are committing to investments in their races.

For example, Hungary has committed to significant refurbishment, including a new pit building from 2026. We have also seen example of great entertainment from promoters, including the Barcelona fan event, Thursday, concerting Silversand of course, we look forward to returning to Las Vegas after an incredible show in 2023. We announced the 2025 calendar match earlier this year, which gives the teams and promoters more time to prepare and market their events. We now continue to focus on optimizing the calendar for 2026 and beyond. Our media likes. We have some key renewal to address for 2026, including our deals across the Americas, U.S., Canada, LATAM, Brazil and Mexico as well as across most of Asia, including Japan. The continued growth of our diverse fan base around the world, including the U.S. and demand from broadcasters means we are confident in the future of our media deals.

We also continue to be excited about the amount of content that F1 has to offer. Across race weekend, we have many events and lots of data provided by numerous cameras around the tracking cars. We can offer our broadcast partners and the fans [indiscernible] incredible access and insight into the weekend through all this content. Alongside this, we are very pleased to once again deliver the F1 Kids program in this season for some events. The feedback from 2023 was impressive, and F1 Kids is providing to be a brilliant way to engage children in Formula One in a way that’s accessible and fun for them. F1 Kids is available through broadcaster around the world via a live dedicated international feed of the Grand Prix. The fee to feature three geographics, child-friendly team radio transmission, technical explanation and a bespoke package of colorful graphics and animation, including the Cartoon Driver abates and upgraded car delivery design.

The production return in Saudi followed by Moroccan Silverstone and will also be available for Dutch, Singapore, Sao Paulo and Abu Dhabi Grand Prix later this season. Looking at the sponsorship, we are confident in the pipeline with exciting conversation underway. We continue to have opportunities in categories such as financial services, consumer electronics, telco and betting. We have also more closely integrated the sponsorship licensing hospitality and marketing teams in a comprehensive strategy to optimize to grow the growth of our fandom and commercial opportunities. We are also continued strong progress on fund engagement opportunities outside as we can. In partnership with Apple and Warner Brothers, we were delighted to recently confirm that the much anticipated movie titled F1 staring Brad Pitt directed by Joseph Kucinski and produced by Jerry Bruckheimer will be released on the 25th of June 2025.

We were excited to release the movie teaser during the build up of the British Grand Prix. The team is unique in that. It is being filmed authentically during the aberration we can, and it will be a great opportunity for our sport to reach new fans and engage audiences. The sixth season of dry to survive after reaching the top 10 on Netflix in over 40 markets has seen global audience of 100 million viewers in the first 5 months since release. Across all season to date, the cumulative audience for the seaters is close to 800 million. F1 arcade continues to perform well with high numbers of booking during both races and non-race weeks. The new Boston location has seen 50,000 guests in the first 2 months since launch. All three F1 RK venues hosted a ticketed watch party during the three Silverstone race.

And all venue sold out with the London venues welcome almost 600 guests. The ongoing success of the project means that in addition to the tenors in London, Birmingham Boston, F1 arcade is planning to open new venues in Washington D.C. in late 2024 and Las Vegas in 2025 with more to come. Following successful runs in Madrid and Vienna, the F1 exhibition has continued its successful role show in Toronto, which has been extended to mid-September, and we opened in London later this month showcasing the incredible history of the sport in the UK. Even through the London show is not yet open, 60,000 tickets are already been sold. These are a great example of bringing fans and future fans into our support through different routes with the mix of F1, entertainment and hospitality.

Our ESG program remains an important focus for the business. Earlier this year, we published our first impact report showing the progress we are making on our net-zero 2030 commitment as well as our diversity and inclusivity initiatives, both within our business and wide sport. Key partner of our plans would be to move the fully sustainable through 2026, which we believe could provide huge benefit as an innovative solution to decarbonize existing and future costs for both the F1 ecosystem and the broader automotive industry. This has been a very important reason behind for now we join this sport in 2026. We continue to work closely with the teams, the FAA, partners and promoters to deliver on our commitment, as highlighted by recent events.

The Silverstone event was powerful – was powered by renewable energy, including over 2,000 solar panels and have increased the recycling event. Following success in Oslo last year, there have been further trials of a low-carbon energy system deployed to support activity across the tattle, replay and broadcast compound that has been shown to reduce related emissions by 90%. Trial this year has taken place in Austria and Hungary, with the third scheduled for Monte. On diversity and inclusion, we were delighted to recently confirm that as a part of our program to provide education opportunities who are represented care groups, 20 engineering students in the UK and Italy will become the latest recipient of the Formula One engineering scholarship over 2024 and ‘25.

121, the scholarship program addressed some of the key barriers to higher education for underrepresented students, including financial burden and access. By ‘25, 50 students will have entered the program. As I mentioned earlier, F1 Academy continues to go from strength to strength and is critical to go to our goal of developing and preparing young female drivers to progress to higher levels of competition. Eight female drivers, including five F1 academy drivers, raising around six of the F4 British championship, which was the highest ever level of female participation in the championship. We also have our talented driver Sophia Flörsch, raising FIA Formula 3 for Van Amersfoort of racing. This shows the huge importance of the FIA and F3, FIA F2 pyramid run by [indiscernible] that continues to develop and nurture young talent to reach the very top of our sport.

Creating the right structure for these talented female drivers and ensuring we have the right system in place to nurture talent at a young age is incredibly important. That is why we continue to be excited about our rational program, discovery or drive to encourage and nurture females as young as 8 at to try to go-karting. We remain focused on the long-term goal and building a sustainable increase in female participation in motorsport. It has been a fantastic season so far with more to come after the summer break. The interest and demand for our sport continues to be huge and I’m confident in our future. Avanti Tutta, full speed ahead. And now I will turn the call back over to Greg. Thank you. [Foreign Language]

Gregory Maffei: Thanks, Stefano and Ryan. Our annual Investor Day will be Thursday, November 14 in New York City. Please note, we’ve moved to a new location. We’ll look forward to seeing you at the Jazz at Lincoln Center, save the date. Additional details will be provided soon. We hope to see many of you there. And with that, operator, let’s open the line for questions.

Operator: Thank you. [Operator Instructions] Our first client comes from Bryan Kraft with Deutsche Bank. Please proceed with your question.

Bryan Kraft: Hi, good morning. I wanted to ask what Formula One and its promoters are seeing in the coincident and leading indicators for F1 demand in terms of ticket sales, pricing, percentage sellout on-site spending or whatever metrics you look at. Has there been any moderation at all in the strength of demand? And maybe specifically, if you could comment on what you’re seeing since the Vegas ticket spun on sale in late March? Thank you.

Gregory Maffei: Stefan, why don’t you start? And now I’ll ask Renee to comment on Vegas.

Stefano Domenicali: Yes. Thank you, Greg. Thank you, Bryan. I mean for what we can see, as we have already announced, we don’t see any kind of significant backdrop of any interest. I mean we have sold out even in the events we have in front of us, and there is still a very, very, very high interest. We are, of course, monger the situation on the events side because we know that in other areas, there is a sort of drop of that request. But this is something that we don’t see at all in our championship.

Bryan Kraft: Encouraging to hear. Thank you.

Stefano Domenicali: And maybe just to focus a little bit on the Vegas portion of the question. I would say that what we’re seeing in terms of ticket sale trends is consistent with what you would expect for a year two event. Also U.S. is a last-minute market and Las Vegas is even more of a last-minute market. Year 1 is not necessarily the best comparison for a couple of reasons. First off, there was a longer sales cycle. We went on sale during our launch event, which was 6 months earlier than this year’s on sale for year 2. And there is just – you cannot minimize just the excitement around the early demand that you see for a year 1 event. So focusing directly on to year 2, what we have done a little differently this year, and a couple of our partners mentioned this earlier speak during their own earnings call is really focus our marketing on the upcoming period.

What we did last year was really market throughout the year. Again, it was a year 1 event, and we wanted to maintain the excitement and the momentum. But what we’re seeing here is that leading 3 months up to an event, you’re getting the most demand. So we’re putting our dry powder into the marketing spend that’s upcoming, and we’re really excited about the demand that we’re starting to see and expect to continue to see enough ticket.

Bryan Kraft: Great. Thank you very much.

Gregory Maffei: Thank you, Bryan. Next question, please.

Operator: Our next question comes from Peter Supino with Wolfe Research. Please proceed with your question.

Peter Supino: Hi, good morning. I wanted to ask about promotion revenue at F1. It was relatively flat year-over-year despite the two additional races. And you cited event mix is the reason I just wondered if you could give any more color on event mix specifically and how we should be thinking about those dynamics into 2024. And then I wanted to ask about the Concorde Agreement and wondered if you have any fresh thoughts on that process? Thank you.

Gregory Maffei: Brian talk about the mix and then let you comment on the Concorde Agreement.

Brian Wendling: Okay. So on the promoter mix, as we noted in our prepared remarks, you had Australia and Azerbaijan fallout. You had China, Austria, Japan, and Imola come back into the quarter four 2024. Obviously, each race has a different fee. So when we say promoter mix, you’re looking at different fees for each race which has an impact there. As you look at the remainder of the year, you have pretty comparable quarters as you look forward, Japan in Q3, we will have one less race with Japan basically falling out, but Azerbaijan coming back in and then Q4 looks pretty similar. So again, we would just highlight that you look at the business on a year-to-date or a full year basis when available.

Stefano Domenicali: The second question was on Concorde agreement. I would say, as we said the other time, I mean it’s all good because we have the right time, the right relationship with the team. And as you know, the Concorde is divided the three main pillars. One is financial, one is commercial and one is related to the governors. Everything is progressing very, very well. As you know, we are not in a rush to complete the long form, but everything is running smoothly as expected. And this is really great because the relationship with the teams, with the FIA and with all the reversal is very good in this moment. So working and progressing in the right way. And of course, we are focusing to try to maximize the benefit to have the maximum joint commercial activities with all the teams and making sure that what we’re going to sign up will be the right in terms of division of the revenues between the team and the commercial right holders. But this all grades now.

Peter Supino: Thanks, Stefano.

Operator: Our next question comes from Ben Swinburne with Morgan Stanley. Please proceed with your question.

Ben Swinburne: Thanks. Good morning, everyone. I guess two questions probably for Greg. Live Nation continues to perform really well from a business perspective with the stock obviously limited given the DOJ overhang. Just curious from your perspective, if there’s any appetite from Liberty’s point of view to think about a breakup of the company kind of proactively, obviously, that’s not the desired outcome from the lawsuit. But to the extent these things going to take years to play out, and limit the equity if there’s any thought that you would share on potentially exploit something like that? And then I don’t know if you or Stefano want to take this, but what prevented Andrey from joining F1? And obviously, there’s some DOJ noise there, << And then I don’t know if you want or Stefano want to take this, but what prevented Andrey [ph] from joining F1?

And obviously, there is some DOJ noise there, I guess keeping on team, which I am imagining you are probably not too worried about, but just curious if that’s something that might be revisited in the future, or you think team expansion is something that makes sense for the sport and any comment would be interesting and helpful. Thanks.

Gregory Maffei: I will take a cut. So, first on Live Nation, I think the business, as you heard and you noted, continues to operate very well. I think that the company operates fully within the law, has had a monitor in place for 14 years. And so any actions have been well known for a long time, and we believe the charge of the DOJ are without merit, particularly the idea that somehow breaking it up with lower ticket prices. So, I don’t think that remedy, which we don’t think is in our interest or the interest of consumers is what the DOJ really wants if they actually understood what was wrong with the market. The fact is, is the market driven by excess demand compared to supply, that drives prices. So, I don’t think a breakup is in the interest of Live Nation today or in the interest of the consumer.

And we will go forward planned at least as far as I understand, is to go forward with the businesses we have and the continued business is what we believe will continue to operate very well through the base through 2021 and to 2025. Looking at Andrey, as you saw this morning, we announced that there is a DOJ investigation. We intend to fully cooperate with that investigation, including any related requests for information. We believe our determination, F1 determination was in compliance with all applicable U.S. antitrust laws, and we have detailed the rationale for our decision vis-à-vis Andrey in prior statements. We are certainly not against the idea that any expansion is wrong. There is a methodology for expansion that requires approval of the FIA and the F1 and both groups have to meet, find the criteria met and we are certainly open to new entrants making applications and potentially being approved if those requirements are met.

Ben Swinburne: Thanks Greg.

Operator: Our next question comes from David Joyce with Seaport Research Partners. Please proceed with your question.

David Joyce: Question on Quint, if you could please help us understand how the relationship worked before you acquired it in terms of would they buy tickets from you on a wholesale basis as part of their wholesale hospitality packages. But now that it’s inside, what are the impacts on revenue expenses and EBITDA in terms of any eliminations from your activities specifically at F1 events? Thanks.

Gregory Maffei: Maybe Renee is in a good position to take that.

Renee Wilm: Thanks Greg. Thanks for the question on Quint. So, I would say prior to the acquisition, Quint was obviously a third-party vendor. They would acquire inventory directly from the promoters, particularly around secondary hospitality offerings. And then the relationship back to Formula One would be essentially that of a profit share arrangement. They did also provide some reseller capabilities with regard to Paddock Club for the teams as well as for F1 directly. Now that Quint is a subsidiary of Liberty Media, we have looked to integrate those businesses in a more – in a closer manner, but while also still being cautious around leakage and the Concorde Agreement, so keeping – really do keeping those business relationships on a kind of a third-party basis.

With regard to LVGP-8, we have directly integrated them, and we have outsourced our sales team to Quint, they are running our sales and ticketing program, obviously, in partnership with myself and with Emily Fraser. And then their results will be consolidated up through Liberty Media with commission-based arrangement being paid to Formula One, which commission-based payment then goes into the price fund. Going forward, we are also going to be looking for new ways to really prove out the thesis around the acquisition and enable Quint to be a closer partner to all the promoters and to F1, but that is all in process still. I will refer to Brian on the accounting question.

Brian Wendling: You can see on Page 3, the eliminations for the quarter that primarily represents the eliminations between Quint and Formula One. You also have the lease payment across from LVGP up to Liberty Corporate in there as well. But that largely represents Quint buying tickets from Formula One and then reselling them at the price that they are buying them from Formula One.

David Joyce: Appreciate it. Thank you very much.

Gregory Maffei: Next question please.

Operator: Our next question comes from Vijay Jayant with Evercore ISI. Please proceed with your question.

Vijay Jayant: Thanks. So, Greg, you have been now saying a few times that you are really excited about the sponsorship business. Obviously, that’s probably the most opaque for us on the other side. Anything you could share on what it is and how meaningful is it going to be? There has obviously been some press reports that LVMH is going to be a new partner. Anything on that would be really helpful. And then just also for Renee on the Vegas race, just for clarity, your hotel partners that you sort of curate high-end hospitality rooms and everything. Do they buy tickets from you directly and then do it, or is it some other form of arrangement? Thanks.

Gregory Maffei: Thanks Vijay. So, I will comment a little bit on sponsorship and let Stefano add anything he wishes. Look, I think I am very excited about the sponsorship pipeline. Excited about what Emily Fraser and her team, Johnny are doing there. We have seen continued interest from blue chip clients who want to be involved at prices which are more attractive for us than historical levels and filling out categories that we previously had not had an entry in, in the sponsorship world. So, obviously, I can’t comment on any rumored or unannounced deals, but I feel very good about the pipeline. We feel very good about where we both are on those new entrants and on renewals at attractive prices from some of our existing players. Stefano, anything you want to add?

Stefano Domenicali: I couldn’t agree more, Greg. I think that the numbers is proving the interest that is in our business. And I think that now if you look back just 4 years ago, we had only global port and now we are heading to 10. And there is a big interest now. But the real point is to keep the quality of our partners with the right price level that we want to engage together. So, we are in a very, very strong situation. I believe as I have said, we have an incredible opportunity for our partners to create partnership with also themselves. So, it’s a B2B relation that is having a multiply effect, and this is really what is important for our business to develop for in the future. So, nothing to add, but as I have said, just stay tuned because everything is looking forward – looking very good for our future.

Gregory Maffei: Yes. And I think Stefano will hit on some great points. I will just add. It’s not only the quality of the partners and what they are willing to pay, it’s they are willing to pay because they are getting value out of it and they are finding ways to activate on at races on the grade on the – around events in ways that are more meaningful for them and for us. So, all of those are very positive. Renee, what would you add?

Renee Wilm: I think that’s an excellent point, Greg. To pick up on the sponsorship piece for a second, we really use the LVGP as the test bed for how we can bring these marquee sponsors more deeply into the activations on track and in the fan zones. And I think one of the most important impacts of the Vegas race beyond the financial side is just the increase in interest in the pipeline, including with some of these marquee companies with whom we are speaking. So, a lot of excitement around the sponsorship portion. And then, Vijay, to answer your question, we do sell tickets to our hotel partners, which they then package into their own deals for their customers or obviously, there – I am sure there are some comp arrangements for the big spenders who come to town for gambling.

And then they will come to us later in the year as they need more inventory. So, year one, we said, they bought a lot of tickets very early on, again, to address that early demand that everyone is for year one. And now this year, we are working closely with them to, again, do the marketing push and start filling those hotel rooms. Now, that people are back from school – back to school, back from vacation and looking at their full calendars.

Vijay Jayant: Great. Thanks so much.

Operator: Our next question comes from David Karnovsky with JPMorgan. Please proceed with your question.

David Karnovsky: Hey. Thank you. Greg, as you noted, really tight performance in the constructor standing, which is great to see. You do have new car and regs coming in 2026. And historically, that kind of change has been associated with temporary period of one team dominance. What confidence do you have that the rules you have put in place and will put into place can prevent that kind of outcome? And then Stefano, as you noted, I think nearly all of your Americas deals are expiring this year or next year. Interested to know if you see any prospects for a multi-country deal and whether there would be any benefit financially or otherwise for that type of structure. Thank you.

Gregory Maffei: I will comment on the regs briefly, but I think Stefano could actually be particular on them as well. We think the regs are designed to create more exciting racing while also meeting many other goals around issues like sustainability and things that help our OEM partners drive innovation. So, we are trying to hit on multiple levels. I think people were doubtful about what these regs – how the regs would play out when we introduced them last time. And by many measures, as we noted earlier, we have never had more competitive racing. Our hope is that the 2026 rates will do the same. But as you rightly note, somebody may figure out a way to get a jump and take an early lead, but we think they are designed to create more parity and more exciting racing and should over time. Stefano, what might you add.

Stefano Domenicali: I would say that at the end of each cycle of regulation is there. And the things that F1 together with the FIA though, we have done, I totally believe so has been to anticipate the need of that change. And we, of course keep at the center, the fact that we want to have a very good competition on track, give the possibility to driver to express themselves and making sure that with the budget cap combination and limitation development, teams can catch up quicker to keep the gaps between the teams smaller. And – but on the other side, we had a duty to anticipate the things that are relevant in terms of technology to keep at the center of our platform so important. That’s why 2 years ago, we had – we took the decision of putting on the center, the new power unit with sustainable fuel.

There was the need to put that at the center because then in terms of technological challenges, this would appear at that moment to be the most important one. So, I do believe that it’s part of the game. Teams are working already stand out for ‘26 because the regulation will be very, very different. But I am sure that the ones that are very skeptical about what normal we would try to anticipate, will think differently. I assume that we will see the action on track. And as Greg was correctly saying before, I remember very clearly people without experience thinking that the regulation that we are now in would slow down cars by more than six seconds, seven seconds and not having this kind of situation. So, I think that we are doing the right thing.

And as always in life, you need to be brave to try to anticipate the thing the right way, and that’s what we did. On the second one, I think is related to U.S. First of all, let me say that we are very happy with the ESPN, what he did for our sport and what they are doing since the beginning of our journey together. And we see now a bigger interest for sure. We see some other sports are trying to divide the package in a different way. But of course, that’s a personal opinion. We are going to take that subject in the due course in the next couple of months. I do believe that in the U.S., we are still in a place where the awareness is very, very important. So, what I can say from a customer point of view, if you are not really on the spot on the sport, creating multiple offers is creating more confusion, let me put in this way.

So, therefore, I would say we need to make sure that the incredible demand that we have from different partners will be taken in the right way at the appropriate time. But for sure, yes, Mark, will represent for us a big opportunity for the next years.

David Karnovsky: Thank you.

Gregory Maffei: Next question please.

Operator: Our next question is from Barton Crockett with Rosenblatt Securities. Please proceed with your question.

Barton Crockett: Hi. Thanks for taking my questions. Two, the first one, hopefully, is quick. On the race promotion revenue discussion with Formula One, you guys, I think you have 24 races this year, I think 22 last year. Normally, I would assume that there is growth in promotion revenue per race. But given what we can see from the mix and what you think this year, is there any reason to think differently about that for 2024, so that’s on Formula One. On the Braves, switching gears a little bit, I was curious, you have been off of Comcast for most of the season because of their dispute with Diamond. Has that had any meaningful impact on the business in terms of fan interest or sales of anything or not? And if not, what does that say about the value of the TV promotion?

Gregory Maffei: So, I will comment on the first one, and I will let Derek if you would like to take the second. I think, Barton, your assumption that we get increases generally in race promotion fees is correct. Derek, do you want to take on the Braves impact of Diamond.

Derek Schiller: Sure. Thanks Greg. Yes, obviously, we are off for three months, and you never like to see carriage disputes. We are thankful that the carriage dispute is resolved. What I can tell you is there is really no material impact on our business. We have certainly seen a reduction during that period of time in ratings that is somewhat commensurate with the reduction in the carriage. Now, that that’s back, we would expect that those ratings to also go up. So, we are glad that it’s done and glad that they got that all resolved.

Barton Crockett: Did you guys try to do any type of additional streaming push to offset that, and if not, why not?

Derek Schiller: Well, the streaming rights are held at the league level right now. So, those don’t belong necessarily to Diamond, there is a provision inside of the agreement that’s rather complicated as it relates to the streaming. Of course, in the future, should all these rights come back to us, I think we are prepared to evaluate all the different options, including streaming.

Barton Crockett: Thank you.

Operator: Our last question comes from Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Stephen Laszczyk: Hey. Great. Thank you. Two on Formula One, you called out the strong demand for race promotion on the commitments you are seeing for improved hospitality from promoters. Maybe a longer term question here, but I am curious how you would encourage us to think about the financial opportunity from improved hospitality over the next few years. Any goals perhaps on the Paddock capacity side of the equation? And then just quickly on team payments for Brian. You called out some of the seasonal aspects around the payout this year. Curious if there is anything more you would be willing to add on how the dynamic works and perhaps what that can mean for the pace of operating leverage on the team payments for the rest of this year? Thank you.

Gregory Maffei: Stefano, do you want to take the Paddock Club issue? And then Brian can…

Stefano Domenicali: Yes. Okay. Yes. Thank you, Stephen. I mean we have a quality problem to take on now for sure, but it is the fact that we, in almost all the events, we are sold out. And when we are talking about hospitality, what we were very good to do it is to try to maximize the different packages. Now, the point is, if you want to add places with the right space and the right quality for the service that we are offering, there is the need, of course, to take race by race situation to see what we can do with the promoter in terms of capacity, in terms of possible extension and this is something that we are discussing. There are advanced situations, for example, with the Australian promoters and with some others because for us, of course, it is a matter of experience.

So, we cannot run the risk of overcrowding the hospitality area because the demand is very high. So, now we are seeing, we are watching, as I said, with everyone, what we can do in terms of having the possibility to expand this area to offer the right service for the ones that want to add it.

Brian Wendling: Yes. Stephen, on the team payments part, I would point you to the year-to-date results there. So, we are at 61.9%. On a U.S. GAAP basis, pre-team, team payments as a percent of pre-team share OIBDA compared to 62.6% last year. We would expect some very minimal leverage as you go throughout the year and look at the end of the year, but it’s fairly de minimis. But definitely focus on the year-to-date number, not the quarter.

Stephen Laszczyk: Okay. Thank you for that.

Gregory Maffei: Operator, I believe that was our last question. Thank you to our listening audience for your interest in Liberty Media and the Atlanta Braves Holdings. We look forward to speaking with you next quarter, if not sooner.

Operator: This concludes today’s conference. You may disconnect your lines at this time and we thank you for your participation.