Good morning, and welcome to the Liberty Media Corporation's 2023 Q2 Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, August 4th. I would now like to turn the call over to Shane Kleinstein, Vice President of Investor Relations. Please go ahead.

Thank you and good morning. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties including those mentioned in most recent Forms 10-K and 10-Q filed and registration statement on Form S4 followed by Liberty Media and Atlanta Braves Holdings with the SEC on June 8, 2023. These forward-looking statements speak only as of the date of this call and Liberty Media and Atlanta Braves Holdings expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Media 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, SiriusXM and Atlanta Braves Holdings scheduled one through three can be found at the end of the earnings press release issued today, which is 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.

Thank you. Good morning. 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. Also during Q&A, we will be able to answer questions related to Atlanta Braves Holdings, and the Braves management will be available too. Starting with some corporate updates. Atlanta Braves Holdings began trading as a C Corp on July 19th. We believe this Split-Off will better highlight value at the Braves and its real estate. For example, the BATRA [ph], A shares, and the K shares are up 38% since the Split announced last November. We also settled all of the remaining inter-group interests in connection with this Split-Off. Today marks the first day of trading for our new trackers, and we expect more focused equities, more focused equities and increased future flexibility will trade better and be easier for investors to follow. Beginning with Liberty SiriusXM. This simplified tracker consists only of an 83% interest in Siri, cash, and debt. And we continue to reduce debt in the second quarter, retiring the remaining $275 million of our two and one-eighth exchangeables for Siri, and we wish having the 1.8 million new BATRA shares at LSXM exchange for debt retirement in the near term. We reiterate the focus on rationalizing the Siri and LSXM structures in the near term. Looking at SiriusXM itself, it reported strong financial results with an improvement over the first quarter as was expected. We had a sequential improvement in self-pay net ads and we do expect a positive back half in the aggregate in self-pay net ads. Siri has sustained a historically low churn of 1.5% and the business is focused on improved efficiency and cost structure and that will benefit EBITDA in the coming quarters.…

Thank you, Greg, and good morning, everyone. My remarks will focus mainly on the 6.30 [ph] balance sheet figures adjusted for the split-off that was completed July 18th, and the reclassification of our tracking stocks that was completed yesterday. At quarter end and adjusted for the split-off and reclassification, Liberty SiriusXM Group had attributed cash and liquid investments of approximately $331 million, which excludes $51 million of cash held at SiriusXM. There's also $1.1 billion of undrawn margin loan capacity at the parent level related to our SiriusXM margin loan. As of August 3rd, the value of our SiriusXM stock was $16 billion. We have $1.5 billion in principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $11.7 billion, which includes $9.5 billion of debt held directly at SiriusXM. In April, Liberty SiriusXM settled the remaining $275 million of its 2.125% Sirius exchangeables. Due to the net pay down at both SiriusXM and Liberty SiriusXM during the quarter, total attributed Liberty SiriusXM Group debt was down $360 million from $331. This is exclusive of the debt reduction due to the reclassification. The 1.375 basket convertible notes mature in October and $199 million principal remains on these notes. Liberty SiriusXM plans to exchange its 1.8 billion Battery shares with one or more third-party lenders to pay down debt in the near term. Turning to the Formula One group, at quarter end adjusted for the split-off and reclassification, Formula One Group had attributed cash, liquid investments, and monetizable public holdings of $1.4 billion, which includes $1.1 billion of cash at F1. In connection with the reclassification, approximately $100 million of cash, as well as certain private and public assets previously held at Formula One group were attributed to the Liberty Live tracking stock. This…

Let me interrupt you for one sec, Brian. As we turn to the Braves, I think I misspoke too early in the morning here, and said it was at 56 capacity -- 56% capacity. The Braves Stadium is actually at 96% capacity. Sorry, go ahead.

Thank you, Greg, for clarifying that. So looking at the Braves, revenue growth reflects that 96% capacity in the quarter with more regular season home games in the period as well as increased game attendance and growth in related revenues, including ticket and concession revenue. Battery mixed use revenue also grew due to increased rental income from existing and new tenants. Baseball operating costs grew in the second quarter primarily due to increased player payroll, as well as increased payments under MLB's revenue sharing plan and higher variable stadium operating costs due to the increased attendance. At quarter end and adjusted for the split-off, they had attributed cash and liquid investments of $131 million, which excludes $52 million of restricted cash. And Atlanta Braves Holdings had attributed principal amount of debt of $543 million. And with that, I'll turn it over to Stefano to discuss Formula One.

Thanks, Brian, and good morning to everyone. We are already over halfway through the 2023 Formula One season. I would first like to congratulate Red Bull and Max Verstappen on their incredible performance this season, breaking an all-time record on consecutive wins. The title field behind them has produced incredible action for all our fans, and I believe the gas [ph] will continue to close over time for all the teams. In Silverstone, the top six finishers crosses the line within 13 seconds of one another. Hungary had one of the most thrilling qualifying rounds to date, with the top six all within three-tenths of a second. McLaren's performance improvement following recent upgrades has delighted fans with London's second-place podiums at Silverstone and Hungary, and strong drive from Piastri. Our fans are accessing F1 content across multiple media platforms. Global audience averaged 68 million through the first eight races. In growth markets like the U.S., viewership over the same period is up 5% on ESPN, and events like Monaco have grown of 29% compared to last year's U.S. viewership. The sprint series has continued to both generate excitement on the track and drive viewership growth. At Azerbaijan, our first sprint of the season, total weekend viewership across the race and sprint events was up 10% versus 2022. We recognize that sport fans today engage with content across a variety of platforms, including linear, digital, and social. Across our social media channels, F1 reached 64.6 million followers as of Q2, up 29% year-over-year. F1 continues to adapt and expand our content to gather to different platforms and serve all segments of fans. For example, at the Hungarian Grand Prix, we piloted our first ever F1 broadcast for kids in partnership with Sky UK in Germany. In just one day, social media…

Thanks, Stefano and Brian. Our annual investor day will be Thursday, November 9th, in New York. Please save the date. Additional details we'll be provide it soon. We hope to see many of you there. We do appreciate your continued interest in Liberty Media and Atlanta Braves Holdings. And with that, operator, I'd like to open the line for questions.

Thank you. We will now be conducting a question and answer session. [Operator Instructions] Thank you. Our first question comes from Stephen Glagola with Cowen & Company.

Hi. Thanks for the question. Greg, can you help us better understand monetization of the Las Vegas Paddock outside of the Grand Prix in 2024 and beyond? So, what type of events do you plan on holding? Any early indicators on sponsorship interest outside of the Grand Prix? And do you expect this OBIDA contribution match -- to match or exceed the Vegas Grand Prix over time? Thank you.

I will manage expectations first and say I do not expect it will exceed the amount we'll make in the Grand Prix over time. But with that, we have Renee Wilm here who's running our Las Vegas effort. I'll let her comment on some of the things we're thinking about outside the race.

Thanks, Greg. Happy to. So we are just beginning to really scratch the surface on what is available for us on a go-forward basis with the building. We have had a number of inbound requests. Think about Super Bowl parties. Think about something related to racing, maybe karting, high-end supercars. Of course, Las Vegas is the convention center of the world. Lots of interest in our state-of-the-art LED certified, I'm sorry, LEED certified building. Many of our partners in the F1 ecosystem are very interested in working with us throughout the year. So all I could say is a lot more to come over the next few months.

Thanks.

Thank you. And if I could squeeze in one more. How should we interpret what appears to be some recent conflicting comments from the FIA with regards to an early renewal. And then, the Concorde Agreement and then the appetite of new team entrants. And maybe just like more high-level, Greg, do you see any conflicts of interest with your vision of the sport long-term versus what the FIA views? Thank you.

Well, I'll make a comment or two and then I'll let Stefano add. I think there's little daylight between Stefano and my view, which is we have 10 great teams. We're very excited about what they're doing. There is a process to add more teams, but the bar is very high and it's unclear what an 11th team value they would add. And there is a lot of uncertainty among the other teams about an 11th team. The FIA and we have had productive discussions about all this. Do we agree on everything every moment? No. We discuss it and we hopefully work things out. Stefano, what would you add?

I think, Greg, you said it perfectly. I mean, the FIA has started the process as it is in their possibility. We're waiting for the final conclusion. But as always in this discussion, we will find an agreement together, because as you said, the value of the team and the value of the business today is very, very strong. So, that decision, that information will come very, very soon. I would say within the month of September.

All right. Thank you both.

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

Thank you. Good morning. On F1, any -- what's your sense of optimism about potentially signing a concrete agreement with the teams this year, which would be a couple of years early? And Stefano, when you look at the product this year, obviously being dominated by one team, how do you look at that relative to all of the changes you guys have made around driving more parity into the sport? Do you see this as a step backwards or just sort of the natural way the sport evolves unpredictably over time? And then I just had one Braves question for you guys. There's been some teams that have left Diamond and gone on to new business models in different sports. What does that tell you, if anything, about how you think about the Braves opportunity over the next couple of years as this Diamond process plays out? Thanks a lot.

I'll let Stefano take the first two and I'll take a shot at the Diamond question. And obviously, Derek, if you have things to add. But Stefano, why don't you speak first?

Yes, thanks, Greg. I mean, I would say, first of all, I think it's the right moment to celebrate the incredible job that this company is doing with that car. Because if you see the other car and where the odds are in terms of gap, it's just incredible how much is doing an incredible job. But that has been always part of Formula One. And I would say this is part of the game. I'm pretty sure that in the next couple of years the term of technical doubts would be reduce, but if someone is great we need to see the great what is doing. And sometimes I have to say that it is also the need to confirm the legacy of someone, they're doing some particular stuff. And in certain mark maybe the new one you can see that this also who is an incredible legacy, because you know doesn't mean something. If you are able to win so many races, I mean you are really a great leader. So nothing negative in that perspective. If I need to look back I would say, this has something -- this has been always part of FI research. With regard to Concorde agreement, I would say today conversation are really going ahead because the moment of the sport is really great. Of course, we are not in a rush, but I would say that all things are heading to a positive conclusion for this discussion both the team and the FIA.

Thank you.

On the Braves, I'll give my view and Derek please feel free to add. We're blessed to have an incredibly strong territory. 14 million broadband households, a fan base which is very appreciative of a very successful team. And with a reasonable deal on what we are paid by Diamond or Valley, we think we are probably the most profitable than they have. Some of the other ones were less attractive either territories or less attractive fan bases or relatively less attractive revenue versus cost to valley, and it is why in the bankruptcy proceedings they were terminated as an executory contract by Valley. I don't anticipate that will happen for us, because we have for all the reasons I said it above. But I do think if it does happen there will be other alternatives because of the strength of our product and the demand in our territory for that will generate us positive returns. Derek, you want to add anything?

Greg, thanks. You said it very well. I would just comment first of all, we and Valleys [ph] are both adhering to the terms of our agreement as we currently stand. We are being paid in full and we are delivering our rights in full. So we don't see that changing anytime soon. And then just generally I would just tell you large sports content continues to be very desirable. So we take long-term and this is a good position regardless of what happens.

You guys want to comment on the next season today.

No, thank you. Next question.

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

Hi, good morning. Couple for me. On Liberty Live, Greg, some of those private assets that were moved from Formula One, are there any ATBs there? And then just broadly, do you have some liquidity at Liberty Live? Is there any business strategy of buying venues or doing some stuff with Live Nation directly and growing sort of a real estate portfolio anything? Or is it purely to tackle any discount if it that sort of remains? And on Formula One, don't need to want to nitpick particularly, but the team payments, again, seem to be a little lower than our thoughts and some implies like a 1.3 billion. And I know you said in the past that you are conservative. I know there's one less race. Is any tough in the numbers that sort of impact the 2Q estimate?

Okay, Vijay. A lot to unpack there, but thank you. On Liberty Live, look, I think we are looking for -- there is no ATB currently in that business to start. We are looking for businesses in there which we think will be accretive and fit well potentially with the Live Nation strategy. And we'd like to do things which were additive to us and pertains to them in the future. That gives us a wide latitude, but real estate certainly is on the list of things we think could be attractive particularly real estate which is anchored by Live Nation events Our liquidity there is relatively light, so we'll have to be creative about the ways we do that, but we have some ideas. Turning to a Formula One, I noted a couple things. I think in general how we look at the rest of the year, we feel good about where things stand very good. But some of the analysis about how payments were done and where it would flow between the third and fourth quarters, I think in general we looked at analysts has being slightly optimistic on three and slightly pessimistic on four. The nature of the payouts is you rightly noted is conservative. And the timing of how the races fall impacts the payouts. Brian, what would you add?

Yes. I would just say the other thing that there is noise in the second quarter, because of the rephasing and the impact of Imola. So I would just have you look at the first two quarters together and look at that percentage as we said in our remarks. We were at 63%.

Great. Thank you both.

Thank you Vijay.

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

Greg, I had a couple for you on Liberty Sirius. I guess first a question that many investors often ask is, why Liberty hasn't made it Sirius shares available for borrow, so that the market can be more efficient around that spread. So would love to hear if you wouldn't mind share in the rationale behind your decision not to do that? And then the second question is, I understand that the leverage is a sensitivity and a potential merger of Liberty Sirius with SiriusXM. Would it make sense for Liberty Sirius to sell some of its Sirius shares down to get closer to the 80% level, so you kind of stay above the 80, but bring some cash in and then use that to reduce debt of Liberty Sirius. And are there any restrictions or considerations preventing you from doing that or discouraging for doing that? Thank you.

Yes. I will let Ben Oren, if you're on Ben I think you are answer the first one after all into the second first. I think that strategy, we are concerned -- not concerned about the leverage. I think Sirius could support the leverage of the combined businesses to be clear. It might depend on how that was executed in terms of who bought whom. But I think in general, Sirius can support that leverage. I don't like the idea and I think we at Liberty don't like the idea of trying to sell some shares, because we have very low tax basis in those and would be very tax inefficient. And as I said, I think we can support the combination. We are continuing to look at ways to manage our leverage. We do get dividends out of SiriusXM and from time to time they have paid special dividends and in general over the last year plus we've been applying that to reducing leverage. But I don't like the tax inefficient. We have very low basis in those shares. Ben do you want to address the borrow issue?

Yes, sir. While we are very sympathetic to the borrow issue, because it does create a lot of volatility. We have done a lot of work internally and employers on the ability to actually lend out our shares. I think at this time I would probably just summarized to say, there are legal -- there are different tax considerations to how any borrow facility or borrow our shares would have to be structured. That would make it relatively inefficient for a potential user. So for now that coupled with the optics that to the extent that we were going to lend out our shares. What would the borrowers be doing with those shares is probably why we will reluctant and not lend our shares for the time being. But we will continue to look at it and if any of the legal or tax considerations we will be able to never say never.

Thanks to you both.

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

Hi, thank you. On the increased CapEx for Vegas, can you just remind us of what the original projection was for Paddock and maybe expand a bit on the drivers, the increase spend. And then just on the race promo, I'm curious, revenue was up versus last year in Q2. That's the same mix of races minus Imola. Just want to see if you could comment on the drivers there with any one-offs or kind of material steps that we could be aware of? Thanks.

Brian, you want to take the CapEx.

Yes. I would say on the CapEx, we never officially gave a number. We said it at a proximate or slightly higher than the land purchase value.

So we still have not given a firm number. We just told you that we now think it will be larger than the amount that we are spending on the land. Yes, approximating 400 is what we said. Can you repeat the second question just to make sure I followed it?

Yes, sure. And just with the CapEx, if you could expand on just the drivers of the increase, that'd be great. But on the second question, it was on [Indiscernible].

Renee, do you want to comment on the drivers?

Yes, I'm happy to. So we've entered into a couple of challenges as we've uncovered asphalt, cables under the ground that needed to be addressed. There have been wires overhead that have needed to be moved. A lot of this was driven by the requests and, quite honestly, requirements of the local stakeholders as we began this process of preparing the track for actual usage. We've also encountered some additional requests from the local stakeholders, such as the casino properties around enhanced security, around opening and closing the track. So this has led to additional equipment that was needed, as well as just additional actual road work. Of course, with regard to the paddock building, it is being built at lightning speed in an inflationary environment. So as you can imagine there have also been some additional costs along the way in that regard.

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

Sure. It was just on race promo. The press release had noted it was up year-over-year. And I think you had the same number of – sorry, same mix of races, minus Imola. So I just wanted to see if you could comment on the drivers there, if there were any one-offs or material step-ups to be aware of?

No. I mean, it's just regular contractual increases there, offset by the impact of the Imola race going away.

Thank you.

Thank you. Our next question comes from Stephen Laszczyk with Goldman Sachs.

Hi. Great. Thank you. Maybe for Greg and Renee on Las Vegas. I appreciate the focus for year one is just fan experience. But maybe thinking into years two and beyond, are there any opportunities around the GP that have come more into focus over the last six months that you're particularly excited about, but might not be able to fit in time for this November? Just trying to think through the long-term vision and the profitability opportunity around Las Vegas compared to what we might see in year one? Thank you.

Yes, I think we touched on some of this. I think both on the revenue side and the cost side, there will be opportunities both around the GP and outside the GP as we go into year two. We moved with lightning speed, the F1 team, Renee's team, to put this in place. And that's probably led to increased costs. And it's also meant that there are opportunities we had to not capitalize on, whether it be fan festivals, whether it be sporting events, whether it be music events, all of those things that are potentially can grow around the second and beyond GP. So those are all GP related. And I think we already touched on the fact, Renee touched on some of the things outside the GP that people are interested in. But I don't think we have more to talk about today in terms of numbers.

Got it. Thank you.

Thank you. This is our last question, operator.

Thank you. Our last question comes from Marlane Pereiro with Bank of America.

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

Well, I think I touched on this a little earlier. We are, have looked at many perturbations and potential combinations with SiriusXM. All of them would involve in one form or another adding the debt that's in LSXM to the SXM debt, and in some cases taking on incremental debt. So there is no particular target, because we don't know exactly what path it will follow. SiriusXM is a massive cash flow generator. One of the reasons why we're not -- another reason why we're not particularly interested in selling our stock. We're bullish on the prospects of the business and its continued ability to generate that cash. So any combination, though it might have for a short period of time, a relatively high leverage amount or leverage four to five times, we know that that cash flow generating capabilities would allow the combined entity to pay that debt down back to the three and a half target relatively quickly.

Got it. And are there any factors? I mean, I think for the most part, most think a combination would occur and perhaps make sense. But, are there any factors to consider as to why maybe a combination wouldn't happen?

Well, I think you've got a -- you'll have a independent committee at SiriusXM, which will negotiate on behalf of their shareholders and their considerations, and you'll have Liberty representing LSXM. And hopefully there'll be a meeting of the minds. But there's always the potential that there is not an agreement between the two parties.

Got it. I'll leave it there. Thank you.

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

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