Please standby. Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation’s 2022 Q2 Earnings Call. During the presentation all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded August 5th. I would now like to turn the conference over to Courtnee Chun, Chief Portfolio Officer. Please go ahead.

Thank you. Before we begin, we'd like to remind everyone this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in Liberty Media's most recent Forms 10-K and 10-Q or Liberty Media Acquisitions most recent Form 10-K and 10-Q filed with the SEC. These forward-looking statements speak only as of the date of this call and Liberty Media and Liberty Media Acquisition 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 Liberty Media Acquisitions expectations with regard there to or any change in events, conditions or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures for Liberty Media and SiriusXM, including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media and SiriusXM schedules one and two can be found at the end of the earnings press release issued today, which is available on Liberty Media's website. Now I'd like to turn the call over to Greg Maffei, Liberty’s President and CEO. Greg.

Sorry was on mute. Good morning. Today on the call besides myself we will also have Formula One’s President and CEO, Stefano Domenicali and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling. So let's begin with Liberty’s SiriusXM where we received a $70 million regular dividend from Sirius in the second quarter which was tax free. We also repurchased $93 million across the LSXMA and LSXMK shares from May to July and a look through price on Siri of $2.88 per share. We do understand the discount has widened and it is frustrating. And while the decline of LSXM is in line with the overall market, further widening of the discount has been very disappointing. We still believe repurchases are attractive means to capture that discount but it's becoming clear they are not enough to collapse on their own. We are focused on this. While not a fulsome list, potential actions we might consider include reducing data LSXM to enable a combination and a not overly levered Siri LSXM, steps to better illuminate the value of our live stake, and other potential actions. I would remind you with Liberty Media and some of our various fun entities [ph] we have a long history of corporate action to capture discount and these include structuring the GCI acquisition in such a way it was a mid-lane ATB, the Direct TV RMT and subsequent sale to AT&T, and the subsequent -- the separation of Liberty Expedia and subsequent merger with Expedia. In summary we have options and actions we have taken, we have a history of doing so. So let me turn to Siri itself which I believe is handling the market challenges well and maintaining their financial guidance despite a reduced sub guidance due to a weak SAR, which has been…

Thanks, Greg and good morning, everyone. At quarter end, Liberty SiriusXM Group had attributed cash, liquid investments, and liquid public debt and equity securities of approximately $368 million, which excludes $126 million of cash held directly at SiriusXM. There's also $1.3 billion of undrawn margin loan capacity at the parent level related to our SiriusXM and Live Nation margin loans. As of August 4th, the value of our SiriusXM stock held at Liberty SiriusXM Group was $21.5 billion, and the value of the Live Nation stock was $6.8 billion. We have $2.8 billion in principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $13.7 billion, which includes $10 billion of debt at SiriusXM. Formula One Group had attributed cash, liquid investments, and monetizable public holdings of $1.1 billion at quarter end, which excludes $935 million of cash held directly at Formula One. Total Formula One Group attributed principal amount of debt was $3.2 billion, which includes the $2.9 billion of debt at Formula One, leaving $306 million at the corporate level. During the quarter, we repurchased $146 million face value of 1% FWONK cash convertible notes due in 2023 for approximately $240 million, effectively retiring 3.95 million underlying FWONK shares at an average price of $59.88. F1’s $500 million revolver is undrawn and Formula One leverage at the end of the quarter was 3 times. As we discussed last quarter, under the current Concorde Agreement team payments now take the form of an entirely variable price fund, which is calculated with reference to a measure of F1's adjusted EBIT rather than the adjusted EBITDA measure used in previous agreements. Such that the calculation now takes into account CAPEX incurred by including depreciation cost. There is an immaterial difference today between Formula One's…

Thanks, Brian. For the last earning calls, we were in Miami for the inaugural Miami Grand Prix. It was an incredible weekend as Formula One was welcomed to the city with open arms. The celebrities came out in full force and much of the coverage and helped in the establishment of Formula One in the U.S. It was wonderful to see so many of you in person. We are now over halfway through the 2022 race season, and we have seen unpredictable outcomes and a lot of wheel to wheel racing, especially in the mid field. It is a testament to the new regulation that everything [indiscernible] this season. Carlos Sainz secured his first F1 career race win at Silverstone and Lewis Hamilton marked his 300th race start with a second place finish and first double podium of the season for Mercedes in France. Max Verstappen currently leads the Driver’s Championship over Charles Leclerc of Ferrari has shown incredible speed and the battle between these two is intense. We have seen the fight between McLaren and Alpine, and it is great to see it has beginning to move forward, cornering [indiscernible] championship. And as we said, Mercedes continues to fight back with Lewis and George [indiscernible]. This action on the track has drawn in the fence will set out crowds at our events with 420,000 --; 400,000 at Silverstone; 300,000 in Austria, 300,000 in Hungary, and 338,000 for Canada. And Paddock Club has experienced record sales. We're coming over 35,000 people across nine events this year, including record-breaking attendance of Silverstone where we have 7,500 guests. The TV audiences is also tuning in with the average audience program through France [ph], up to 9% versus 2001 season average. We continue to see tremendous growth on all platforms. We were thrilled…

Thank you, Brian and Stefano. Our Annual Investor Day will be Thursday, November 17th in New York. Please save the date. Additional details will be provided soon. We hope to see many of you there. We appreciate your continued support of and interest in Liberty Media. And with that, operator, I'd like to open the line for questions.

Thank you. [Operator Instructions]. We'll turn first to Ben Swinburne with Morgan Stanley.

Thank you. Good morning. Greg, a couple of things on the structural side I want to ask you about, you mentioned separating Live Nation. I think you mentioned in that context with Siri. Maybe just talk about sort of the pros and cons...

Ben, just to be crisp, I said, highlight the value. I didn't say separate, but go ahead.

Okay, highlight the value. Okay, yes. I guess my question was sort of how do you highlight the value. And I'll let you answer that as you see fit. And then I wanted to -- we get the question quite a bit, I'm sure you do too about a hard spin of the Braves. I was curious if you could just comment on kind of the puts and takes and pros and cons to that thought process? And then I wanted to ask you and Stefano whoever wants to take it on Vegas, what do you guys do in second half of this year in terms of both staffing up and on the CAPEX side with the track and the Paddock Club, any way to help frame sort of the investment size here as we look into the back half of the year as you get ready for next year's race? Thanks.

So we -- I'll try and answer the structural questions and then touch on Vegas and others as well. So on the structural side, look, we're not here to announce anything today. You'll know when we do. And the advantages of our structure have been with the trackers have allowed us to have flexibility to move assets around, have allowed us to have flexibility to align things in the most attractive way, to manage our taxes in the most efficient manner. There are reasons to want to keep things together until we have ATV flexibility around all of them. That's just more optionality. As far as how we might highlight value, there are ways from spinning to creating another tracker to other kinds of actions we can take. We haven’t obviously decided any of those that we'd be announcing today. The history of Liberty is as we've tended to, over time, take this business to where we thought we could add value, keep them internally and then at some point spin them out. We thought that they would be more attractive as independent entities for the long term, not just in the short term. And we'll monitor all that for all of our entities. So obviously, I've given you as much of a non-answer as I can, Ben, but that's just with our history. But I think you should look at our history and say, we have taken corporate actions to spin things off, and I went through a few of them and the subsequent disposition of those companies. On Vegas, it's a little hard to forecast the CAPEX because we are still putting together the program that we will undertake there. And I mentioned our goal is to have a facility which is not only magnificent for the race, but has the opportunity to be an ongoing activation, have ongoing activations and events at that facility even when the race is not underway. I think you should be thinking we can well manage this within the capital we have. It's not going to drain us in any way, and it's not going to forestall us from doing other actions, including potentially investments around the SPAC repurchases, debt management, and the like. I don't know if Brian or Renee or Stefano want to add anything on the Vegas question.

No, totally good, Greg.

If I can, Greg, just to add on the fact that, of course, the CAPEX builds and the tight program is there, with just almost six months -- 16 months ago. But it's important that we are working very hard in driving the engagement and get the new city excited by Formula One. So we're going to come back to the detail with all the plans that we have in order to make sure that we want to bring F1 to life with a motion passion that is really important to increase the level of engagement that we expect from Vegas City.

Thanks everybody.

Thanks.

We'll take our next question from Bryan Kraft with Deutsche Bank.

Thank you, good morning. I guess Greg, I also had a structural question. I guess in eliminating or narrowing the NAV discount at LSXM, it sounds like you alluded to an RMT spin merge. I guess, another option that you have would be to distribute SiriusXM shares to Liberty shareholders. The former though would basically make the combined company though still a Liberty company with the Liberty Board and Management and the Liberty -- the ability for Liberty Management and Board to make strategic investments and acquisitions. The latter would sort of be an exit from that as a management team. So I guess, are both of those on the table or do you really want to kind of still control Sirius and be able to use it strategically? And then I also want to ask a question on Formula One costs. How should we think about the higher SG&A level this quarter in the context of future quarters, it seems as though there may have been some temporary impacts in there from legal and advisory fees, I guess, is that the right way to think about it or is that meaningful or is there kind of a reset in the SG&A run rate going forward and maybe that has to do with something with Vegas? Thanks.

So on the first point, I think, Bryan there's a wide range all the way from distribution of shares, which would probably not -- would be -- unless you can figure out some way to get compensated for our controlled position, probably not optimal. There are things that are halfway in the middle, like as you may remember, with Lemidia where we did where we spun our DIRECTV shares, but we still had in the form of the B shares having influence to hard spins that are just fully away or even subsequent spin mergers like the GCI example or like effectively what we did in Expedia. So there's -- I don't think there's anything off the table based on either what we might do there or our history. I think there's a full range of opportunities, and we'll try and do the one that we think maximizes long-term value. On the side of expenses, I'll let others comment as well, but we'll know we did have some increased expenses, increased investment to start up the round in Vegas, including some issues there. So as far as the longer term, I think we're not at an elevated level, but I'll let others add their views.

Yes. This is Brian. I'd say we had some higher personnel and other costs to support the large increase in revenues and higher activities that we had in 2022 versus the prior year. There were some minor onetime professional fees that we wouldn't expect to repeat and, I would say, pretty minor Vegas expenses at this point in time.

Okay, thank you very much.

We'll turn next to Vijay Jayant with Evercore.

Well thanks. On Formula One, obviously Greg, the equity is like because there's a contractual nature of the business. But obviously, there are numerous macro headwinds with inflation, higher rates. Obviously, you gave some color on the impact of FOREX. And with the escalators [ph], can you help us really think about what the variability of outcomes are given all those sort of pressures out there, given your contractual nature of the business, is sort of the budget and expectations pretty much in line with what you sort of expected at the beginning of the year kind of thing for what the performance could be at Formula One's operation?

So I think a couple of things. I think you're right to note, Vijay, the highly contracted nature of the business and which manages downside. Obviously, there's FX downside and there's cost potential downside. But in general, we've seen demand that's been able to outstrip those. And while we made budget conservatively with contingencies is our nature, we've been able to outperform those contingencies even in light of the cost structures. So I remain -- I believe the demand that we have and the strength of the business on top of the contracted nature will allow us to power through most of that. But obviously, we can't foresee every inflationary impact. But in general, I think we've been able to work through those and the FX. I don't know if Brian, Stefano or anyone else wanted to add?

Nothing to add there, Greg.

And if I could follow up, obviously, on the -- maybe a little early on the race calendar for next year, but there's a bunch of European races that come sort of under contract. It looks like France, Belgium, Monaco, and obviously, you have a couple of new races next year Qatar coming back and Shanghai coming back. Can you just talk about what the sort of race outlook can be next year, obviously you are going to have more than 22 races and are we going to get more sort of higher dollar value races versus some that are not as lucrative?

I'll let Brian or Stefano.

If I may, Greg or Stefano, please?

Okay. Thank you, Wendling [ph]. As I've stated before, we will come back to the early October due to the process of course, having the clearance from the world multiple council of our calendar. Of course, there are discussions to make sure that the calendar is robust, it is following also the fact that we would like to keep the right flow in terms of efficiency around the world, considering the needs of a calendar to be spread out from March to November, all around the world. Of course, the effect that you were seeing before on the choice between the Europe and then out of European races has an effect on the revenue side. But I would say the main point is to have an excited calendar, the demand is very, very high, and it's our responsibility to put in place a calendar that is available to our stakeholders but also valuable to respond to the request that we are all around the world. So we cannot spot anything more than what we are saying because we are, of course, finalizing all the details but we, for sure, expect to have, I would say, capital raises more than this year, but less than 25%. That's for sure.

Thanks so much guys.

Next up is David Karnovsky with J.P. Morgan.

Hi, thank you. First off, we've seen in the press the possibility of some auto OEMs entering F1 either on the manufacturer or engine side. And a question we sometimes get is what's the potential benefit to Formula One, either from a commercial standpoint or to the product itself, so I wanted to put that question to you? And then separately, with other F1 revenue, I know there's a lot of noise in there because of the freight cost. But wondering if you could speak to the performance outside of the pass through revenues, in particular areas like Paddock Club or licensing, and maybe how that looks relative to the pre-pandemic period? Thanks.

Okay. Thank you. I mean with regards to the two new OEM coming in, as you can imagine, it's not for us to say anything that will be, let's say, we shouldn't say. It's true that we are adding contract without the manufacturer. And hopefully, we have the information soon. I think that in terms of what is the benefit, the beneficial credibility, the benefit is showing that our strategy of the future will help the manufacturer to have another route that will allow them not to be only fully electric in the offer to the mobility side, but also using the expertise that only follow on through the technology. That we have -- can help them in order to find new way of being present in the market with average engine with sustainable fuel that will be able to be much more effective in our opinion, all around the world if we want to achieve the goal of carbon neutrality. And on the other hand, from the sporting point of view, the more manufacturer we have, the more structure in terms of having manufactured with other teams will enable the sporting side to have, I would say, more things that could be seen even in the more independent into the sport. So I think that will be terrific news. Let's see how the situation will evolve. But no matter it will be the decision that the OEMs will provide to the market, hopefully very soon. We strongly believe that our technological platform for the future, if that is the right one in terms of redundancy. And this is something that time will prove that.

And if I can just add I think -- if I could just add on. As Stefano just said, obviously, and Stefano touched on this, it's a great validation to have these OEMs want to enter or reportedly want to enter. If they were, they're both the ones discussed or both enormous engines of innovation and enormous engines of promotion and all of those have only seem to be good for our sport. [Multiple Speakers]

No, no, I was just trying to briefly touch base on the second question. We see and this is what we have already seen for this year, incredible numbers with regard to Paddock Club, with regard to new license that will be seen as an effect on our balance sheet. And we see already an incredible number of orders despite the calendar has not been announced already in terms of reservation for the races that would be in any case definitely in the calendar next year. So great, great attention that means the attention on our platform is very huge today.

Yes. And just to add to that, David. In the other F1 category, 98% of what we're seeing on the increase is all coming from Paddock Club and freight, as we talked about in our prepared remarks, where we didn't have races last year, and we weren't traveling as much. So big increases there. But within primary revenue, we're seeing increases across the board, as Stefano just mentioned. So licensing to your point and F1 TV as well as the main three categories, promotion, sponsorship media rights.

If you look at some of these things like Paddock Club, yes, just to add to Brian. I mean if you look at some of these things like Paddock Club, we've never seen more demand. And we've not only seen demand, we've been able to, in some cases, promoters are able to increase the size of the Paddock Club areas and still manage it at a higher number and higher prices. So a lot of positives there.

Thank you.

Barton Crockett with Rosenblatt Securities has our next question.

Hi, thanks for taking the questions. Greg, the discount at Liberty Sirius versus Sirius is so much larger than the discount you would see at Liberty Broadband and Charter. Why do you think that is, why is there such a disconnect, does that inform in any way what some of the solutions might be for that?

Barton, it's a great question. I think you could argue a little more complexity, you could argue investor fatigue, you could argue the relative scale and size of the two entities compared to the broadband entity. Hard to attribute any certainty to any of those, but those are probably all factors that -- still that we're not going to act on it in some way, where is it broadband, maybe it's more crisp where the future is going. All of those are potential factors. I think as you said -- as we've said before, and I said earlier on this call, we're going to take advantage of that through the discount. And at some point, we're going to take an action, and we're looking at those actions to do -- to tighten that discount. But in the interim, we're going to buy that stock and take advantage of it and drive our NAV relative to the underlying NAV up. I don't know if anybody else on the team, Ben or somebody else wanted to add something, but I think it's hard to be determinative about which of these factors is driving the difference.

Okay. And if I could ask one other kind of separate question. I'm just interested in your perspective on streaming at this point as pertains to kind of baseball. We have the direct-to-consumer launches at Nesson [ph] and at Diamond Sports. The Braves are not participating at this point. There's been some roll-up of rights at some of the big platform players like Apple. And do you think that this is the time to move in and restructure the streaming rights for baseball or do you think it's not right yet, you don't know what to do yet?

Well, I think baseball has a more complicated situation because of the regional sports network situation than other sports, in particular, the cleanest comparisons or the completeness is football. And certainly, my understanding is that MLB would love to find a structure where they could deliver more national rights, which is really not available or difficult today on some kinds of games. The streaming interest has been high from people like Apple, which is a good sign. And obviously, the RSN weakness is going to create an opportunity, whether that happens this year or next I do think there will be some change in that given where Diamond appears to be headed. Looking just at the Braves, we're blessed, as we've said before, with a lot of demand and good audience in our territory. We're also blessed with the largest broadband household territory among baseball teams. So we remain optimistic about our relative position on any kind of streaming deal, and we feel good that we have a product which people want in a big territory and probably what some people estimate may be the most profitable RSN, where we're getting paid pretty well, but the RSN owner is also making money. So that seems to create some opportunity where there will be somebody who wants to something interesting in our space. But stay tuned.

Yeah, thank you.

We'll now move to David Joyce with Barclays.

Thank you. I guess some more clarifications on the structural opportunities. Greg, I think you mentioned in response to Brent's question, something about the reasons to keep things together until you have full ATV flexibility. Maybe I misheard or misunderstood, but you thought that everything was -- I was just wondering if what restrictions there are still?

No, I think we are -- if I could just interrupt, David. I said that's one of the factors we'd love to have as much flexibility on ATVs as possible as many. So that's a factor. That's not the only reason, I think I mentioned to keep the Corpus together or to keep things as I mentioned, some of the other reasons around ability to move assets, tax advantage, tax flexibility, etcetera. Sorry, go ahead. I just wanted to set before you set the question, I wanted to make clear that's not…

No, that's fine. No, that's fine. That clarification was part of my question. And then the other aspect is, are there any other further guiding factors on the separation of the equities such as do you need to prioritize getting something done with Almac to spec or is that completely a separate path?

Yes, I don't -- I can't -- I don't know only on the top of my head, but I'll just note the one you called out. I don't think anything we're going to do around Almac is likely to be impacted by structural changes because it's generally getting funded by the excess cash and any incremental will be funded by the further excess cash. So I don't think that's the driver.

Okay, appreciate it. Thank you.

Next up is Jason Bazinet with Citi.

Hi, I just had a high-level question. You guys over the years have done such a good job improving the financials of the Braves and Formula One, I was just being curious, as you sort of look at the landscape, would you describe both of those as sort of one-off rare exceptions, unique opportunities, or do you think you're sort of building a competency that might be applicable to other potential assets experiences?

Yes, I don't know. I don't know if we have a -- I'd like to think that credit to the teams at both the Braves and Formula One for what they've done with those assets. I think they've taken attractive businesses and only made them better. And I credit that. So if we deserve any credits for finding the right management teams and backing them and doing the great work that they've done, I'm not sure we can take much beyond that.

Okay, thank you.

Now we'll move to Matthew Harrigan with Benchmark.

Oh, thank you. Firstly, getting more specific on the Synfuels Ventures. There's a report in the European media that Porsche has something down in Chile that they're testing that's basically carbon capture synthetic methanol. And the story also alluded to Saudi Aramco building plants in Saudi Arabia and Spain. I guess you probably wouldn't be that specific, but have you nailed down a path on the technology, are you looking at a lot of different things, and what sort of capital commitment just vaguely would go into having that sort of plant because this sounds a little more real as well as aspirational at this point? And then secondly, on the venture that Ticketmaster did with Snapchat and now with TikTok, is that something that you really see pushing the event demand as well as people for pencil just to get out outside the house right now and now I had one super quick follow-up, if you don't mind?

Stefano, do you want to take the synthetic fuel question?

Yes, yes. Thank you, Greg. Thank you, Matthew. I think that all these technologies capital capture and other things that are related to the path of technology is related to the transition in this sector that we live. And the beauty of what I believe we are doing with tremendous effectiveness is the fact that we are just pushing the system towards the future in the right way. So all the commitment that we have taken on our side to go to zero carbon fuel in such a short term is because we do believe that's the right way to go. And the good news is that on the other side, the investment on our side is not relevant because we don't own any CAPEX in that respect. So we are just the enabler to all the stakeholders of our business to push for the future. And this is something we do believe is our way to go. And we don't have to forget one other important element of the equation that we are not talking about the only about the manufacturers that are part of our teams. But with our system, we have promoters. We have a lot of people that have to invest a lot because when we are talking about big events, we are talking places where the needs of energy for hosting a Grand Prix where there are more than 400,000 people needs to have a path of evolution of this technology. And this is also where we are pushing the system to improve it to in this direction. So I think we should be very, very proud of this idea of pushing forward this technology to our leadership on that respect.

Matthew, on the second point, I'm not sure exactly what you're referring to. Maybe you could help -- repeat the question, sorry.

[Multiple Speakers] to comment on the operating companies. But they did arrangement with Snapchat a number of months ago to push basically Ticketmaster pushing tickets on Snapchat. And just a couple of days ago, they announced something really similar with TikTok, is that something that you really see as being a nice impetus for demand on the ticketing side or do you think it's just before surveys, you have they COVID and they just want to get outside the house?

Well, I think it's part of Live Nation strategy to be ubiquitous as possible in making buying tickets as simple as possible. And the technologies that they built to distribute their ticket buying capabilities are a unique advantage, I think, compared to most in the industry. And they want to be where buyers are. And if buyers are on TikTok, which they increasingly are and looking for music and contemplates which would they originate. It's a logical place for them to be. And the same thing, I think, about SNAP, which has obviously had music aspirations as well. So I think it's an important element of continuing to grow the strategy, but I'm not sure it's uniquely different than anything else we've done. It's just a continuation.

And then lastly, if you don't mind, do you have a secular view on sports teams valuations going up even higher that makes you want to wait further with the grades in terms of doing something?

I think it's facts and circumstances will dictate. Obviously, these have been trophy assets that people have wanted to buy the best of. We've certainly looked at purchasing in a lot of cases, other sports assets and have been surprised at some of the prices. Nonetheless, they continue to move upwards. And I think for the right kind of trophy assets, the valuations are going to continue to rise.

Thanks, Greg.

Thank you.

And with that, we'll conclude today's question-and-answer session. I'll now turn the conference back over to the speakers for the closing remarks.

No, I just want to say thank you to all our listening audience for your questions and your attention. And you -- appreciate your interest in Liberty Media. Hope to see you next quarter, if not sooner. And again, at our November meeting for many of you. Have a great rest of your summer. Thank you.

Thank you. Bye-bye.

With that, we'll conclude today's conference. Thank you, everyone for your participation. You may now disconnect.