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.

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, SiriusXM and Atlanta Braves Holdings Schedules 1 through 3 can be found at the end of the earnings press releases 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.

Thanks, Clare, 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've set the shareholder meeting date for 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 each 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, but 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 three-year subscription with a new vehicle purchase at certain automakers, free 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. Looking at streaming, Sirius is launching new features and updates every…

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 close, 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, 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 1.3 times. 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…

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 seven different winners from four teams. The gaps between teams are getting closer both in qualifying and races. In Emilia, Max beat Lando by only seven-tenths of a second, following Lando's incredible win in Miami. In Monaco, we saw Charles Leclerc take his first home victory. In Canada, the gap between the top four in qualifying was one-tenth of a second and we have seen Mercedes return to the top step of the podium with George winning in Austria and Lewis setting his record ninth victory at Silverstone. Hungary saw another excellent race ending in Piastri's first F1 win with the McLaren 1 and 2 and Hamilton rounding out the podium. In Spa, 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 thrilling final lap battles against Lewis, but was disqualified after the race because the car did not meet the required weight, meaning Lewis took his second victory of the season, with Oscar Piastri second and Charles Leclerc third. By many measure, 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 racing offers 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 Grand Prix seeing…

Thanks, Stefano and Brian. 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 Instructions] Our first question comes from Bryan Kraft with Deutsche Bank. Please proceed with your question.

Hi, good morning. I wanted to ask what Formula 1 and its promoters are seeing in the coincident and leading indicators for F1 demand in terms of ticket sales, pricing, percentage sell-out, on-site spending or whatever metrics you look at. Has there been any moderation at all on the strength of demand? And maybe specifically if you could comment on what you're seeing since the Vegas tickets went on sale in late March? Thank you.

Stefano, why don't you start and then I'll ask Rene to comment on Vegas.

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 had in front of us and there is still a very, very, very high interest. We are, of course, monitoring the situation on the events side because we know that in other area there is a sort of drop of that request. But this is something that we don't see at all in our championship.

Encouraging to hear. Thank you.

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 sales 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 one 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 six months earlier than this year's on sale for year two. And there is just -- you cannot minimize just the excitement around the early demand that you see for a year one event. So, focusing directly onto year two, what we have done a little differently this year and a couple of our partners mentioned this earlier this week during their own earnings calls 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-one event and we wanted to maintain the excitement and the momentum. But what we're seeing here is that leading three 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 an uptick in.

Thank you very much, Renee.

Thank you, Bryan. Next question, please.

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

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 as 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.

Stefano, why don't I let Brian talk about the about the mix and then let you comment on the Concorde agreement.

Okay.

Yes. So, on the promoter mix, as we noted in our prepared remarks, you had Australia and Azerbaijan fall out, you had China, Austria, Japan and Emilia come back into the quarter for 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 -- in Q3, we'll 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 full-year basis when available.

The second question on Concorde agreement. I would say, as we said the other time, I mean, it's all good because we have the right terms, the right relation with the team. And as you know, the Concorde is divided into three main pillars. One is financial, one is commercial, and one is related to governance. 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 relation with the teams, with the FIA and with all the other stakeholders 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 term of division of the revenues between the team and the commercial right holder, but it's all great now.

Thanks, Stefano.

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

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, is 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 can take years to play out and limit the equity, if there's any thought that you would share on potentially exploring something like that? And then I don't know if you or Stefano want to take this, but what prevented the Andretti from joining F1? And obviously, there's just some DOJ noise there, I guess, keeping on theme, which I'm imagining you're probably not too worried about, but just curious if that's something that might be revisited in the future, if you think team expansion is something that makes sense for the sport and any comment would be interesting and helpful. Thanks.

Okay. I'll 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 interests or the interest of consumers is what the DOJ really wants if they actually understood what was wrong with the market. The fact is the market is 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'll go forward. The plan at least as far as I understand is to go forward with the businesses we have. And the continued businesses what we believe will continue to operate very well through the base -- through 2024 and into 2025. Looking at Andretti, as you saw this morning, we announced that there is a DOJ investigation. We intend to fully cooperate with that investigation, including any related request for information. We believe our determination -- F1's determination was in compliance with all applicable U.S. antitrust laws and we've detailed the rationale for our decision vis-a-vis Andretti 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're certainly open to new entrants making applications and potentially being approved if those requirements are met.

Thanks, Greg.

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

A 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.

Maybe Renee is in a good position to take that.

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 1 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 under the Concorde agreement. So, keeping -- really do keeping those business relationships on kind of a third-party basis. With regard to LVGP, we have directly integrated them and we've outsourced our sales team to Quint. They are running our sales and ticketing program, obviously, in partnership with myself and with Emily Prazer. And then their results will be consolidated up through Liberty Media with commission-based arrangement being paid to Formula 1, which commission-based payments then goes into the prize 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'll refer to Brian on the accounting question.

Yes. 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 1 and then reselling them. But at the price that they're buying them from Formula 1.

I appreciate it. Thank you very much.

Next question, please.

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

Thanks. So, Greg, you've been now saying a few times that you're 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's obviously been some press reports that LVMH is going to be a new partner. So, 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 in hospitality with rooms and everything, do they buy tickets from you directly and then do it or is it some other form of arrangement? Thanks.

Thanks, Vijay. So, I'll comment a little bit on sponsorship and let Stefano add anything he wishes. Look, I think very excited about the sponsorship pipeline, excited about what Emily Prazer and her team, Johnny are doing there. We've 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 the sponsorship world. So, obviously, I can't comment on any rumored or unannounced deals, but I feel very good about the pipeline, 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?

I couldn't agree more, Greg. I think that the numbers is proving the interest that is there in our business. And I think that now if you look-back just four years ago, we had only four -- global four and now we're 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, it's -- we are in a very, very strong situation. I believe, as I said, we have an incredible opportunity for our partners to create partnership between also themselves. So, it's a B2B relation that is having a multiplier effect and this is really what is important for our business to develop in the future. So, nothing to add, but as I said, just stay tuned because everything is looking forward -- looking very good for our future.

Yes. And I think Stefano hit on some great points. I'll just add. It's not only the quality of the partners and what they're willing to pay, they're willing to pay because they are getting value out of it and they're finding ways to activate on -- at races, on the grid, 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?

I think that's an excellent point, Greg. Just 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're 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 their -- I'm sure there are some comp arrangements for the big spenders who come to town for gambling. And then they'll come to us later in the year as they need more inventory. So, year one, we -- I'd day, they bought a lot of tickets very early on, again, to address that early demand that everyone saw 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 and back-to-school, back from vacation and looking at their fall calendars.

Great. Thanks so much.

Thank you. Next question.

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

Hi, thank you. Greg, as you noted, really tight performance in the constructor standings, 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 a temporary period of one team dominance. What confidence do you have that the rules you have put in place or 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 and next year. Interested to know if you see any prospect for a multi-country deal and whether there'd be any benefit financially or otherwise for that type of structure? Thank you.

I'll comment on the regs briefly, but I think Stefano could actually be -- articulate 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're trying to hit on multiple levels. I think people were doubtful about what these regs, how the regs would play out when we induced them last time. And by many measures, as we noted earlier, we've never had more competitive racing. Our hope is that the 2026 regs 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're designed to create more parity and more exciting racing and should over time. Stefano, what might you add?

I would say that this dilemma at the end of each cycle of regulation is there. And the things that F1 together with the FIA has always 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 drivers 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 have the duty to anticipate the things that are relevant in terms of technology to keep at the center of our platform is so important. That's why two years ago, we had -- we took the decision of putting at 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 -- I -- it's part of the game, teams are working already plan out for '26 because the regulation will be very, very different. But I'm sure that the ones that are very skeptical about what normally we try to anticipate, we will think differently as soon as we see the action on track. And as Greg was correctly saying before, I remember very clearly people without the experience thinking that the regulation that we are now in would have to slow down cash by more than six, 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…

Thank you.

Thank you. Next question, please.

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

Hi, thanks for taking the questions. Two. The first one, hopefully is quick. On the race promotion revenue discussion with Formula 1, you guys I think have 24 races this year, I think 22 last year. Normally, I would assume that there's 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 1. On the Braves, switching gears a little bit, I was curious, you've 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, does it -- what does that say about the value of the TV promotion?

So, I'll comment on the first one and I'll let, Derek, if you'd 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?

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

Did you guys try to do any type of additional streaming push to offset that? And if not, why not?

Well, the streaming rights are held at the league level right now, so those don't belong necessarily to Diamond. There's 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're prepared to evaluate all the different options including streaming.

Thank you.

Our last question comes from Stephen Laszcyzk with Goldman Sachs. Please proceed with your question.

Hi, great. Thank you. Two on Formula 1. You called out the strong demand for race promotion and the commitments you're seeing for improved hospitality from promoters. Maybe a longer-term question here, but I'm 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 Club 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's anything more you'd be willing to add on how the dynamic works and perhaps what that can mean for the pace of operating leverage on team payments the rest of this year? Thank you.

Stefano, do you want to take the Paddock Club issue and I will let Brian to add?

Yes. Thank you, Stephen. I mean, we have a quality problem to take on now for sure. That is the fact that we in almost all the events, we are sold out. And when we're 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're offering. There is the need, of course, to take a rate by rate situation to see what we can do with the promoters in terms of capacity, in terms of possible extension. And this is something that we are discussing. There are advanced situation, for example, with 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 wants to have it.

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 to the end of the year, but it's fairly de minimis. But definitely focus on the year-to-date number, not the quarter.

Great. Thank you for that.

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.

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