Welcome to the Liberty Media 2022 Year-end Conference Call. [Operator Instructions] As a reminder, this conference will be recorded today, March 1. I would now like to turn the call over to Shane Kleinstein, Vice President, Investor Relations. Please go ahead.

Thank you. 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 Liberty Media's most recent Form 10-K filed with the SEC. These forward-looking statements speak only as of the date of this call and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Media's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 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 scheduled 1 through 3 can be found at the end of the earnings press release issued today, which is available on Liberty's website. Now I'd like to introduce Greg Maffei, Liberty President and CEO.

Thank you, Shane, and good morning to all of you. Today speaking on the call, we will also have Formula One's President and CEO, Stefano Domenicali and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling. First, let me start with an update on the split off of the Braves and the creation of Liberty Live tracker. We filed the amended S-4 and we still expect completion in the second quarter. Let me turn to Liberty SiriusXM. We expect we will have a simplified structure following the recapitalization of LSXM and the creation of Liberty Live tracker, and we are focused on rationalizing this structure in the near term. Looking at SiriusXM, the underlying asset, reported strong fourth quarter results with record high ARPU and EBITDA and record low churn. Management did give more cautious forward-looking commentary given multiple headwinds we're experiencing here in the early part of 2023. The top of the funnel in terms of new subscribers is still pressured as the SAAR has dropped from about $17 million in 2019 to something like $13.5 million last year. The ad market remains soft, especially in the first half of 2023, and we are seeing moderating marketing spend ahead of the fourth quarter app revamp. Plus we've had some cash impacts. We expect peak satellite CapEx in 2023, and we are now a taxpayer, something which previously we had not been. We do expect these incremental satellite CapEx will moderate in 2024 with nearly no incremental satellite CapEx by 2027 by the end of the year. We are also stepping up some tech investments for long-term success. We are building improvements around commerce and identity to reduce friction, and the new app will have more personalization as it has within 360L. We do expect these negative trends in the…

Thank you, Greg, and good morning, everybody. At quarter end, Liberty SiriusXM Group had attributed cash and liquid investments of approximately $305 million, which excludes $57 million of cash held at SiriusXM. There's also a $1.3 billion of undrawn margin loan capacity at the parent level related to our SiriusXM and Live Nation margin loans. As of February 28, the value of our SiriusXM stock held at Liberty SiriusXM Group was $14.1 billion, and the value of the Live Nation interest was $5 billion. We have $2.8 billion in principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $13.1 billion which includes $9.5 billion of debt that's down at the SiriusXM level. Formula One Group had attributed cash, liquid investments and monetizable public holdings of $1.8 billion at quarter end, which includes $752 million of cash at Formula One. Total Formula One Group attributed principal amount of debt was $3 billion, and this includes $2.4 billion of debt down at the Formula 1 level, leaving $565 million at the corporate level. During the quarter, F1 refinanced its term loan and revolver at attractive rates and an extended maturity. F1 repaid $477 million of its term loan B in connection with this refinancing, using cash on hand. And at year-end, Formula One's $500 million revolver is undrawn. Formula One's leverage at the end of the year was 2.7x. On the F1 operating business, given quarterly variability in the year-over-year race calendar, a reminder that this business is best analyzed on an annual basis. Total revenue grew 20% in 2022 with growth across all primary revenue streams. Other F1 revenue grew 63% or $180 million with approximately $110 million of the revenue growth coming from hospitality and experiences and approximately $55 million coming from…

Thanks, Brian. 2022 was a fantastic season on track, commercially with our partners and financially in our results. Max Verstappen 15 wins broke records with the most wins in a single season. The Red Bull team won their first constructors championship since 2013. And the [indiscernible] competition battle down to the last race with Alpine and McLaren both fighting for fourth place. The feedback from the drivers made it clear. The new regulation meant that cars could race more closely, and we saw some great results on the truck. This action during the season fueled our growing fan engagement. 2022 show record attendance of Grand Prix events. We welcomed more than 5.7 million fans to race weekend, up 36% compared to 2019. Demand is continuing in 2023 with sellout crowd expected at a number of races this season. Formal One was once again the fastest-growing major sports league on the planet in 2022 in terms of social media followers. We have 60.6 million total followers, up 23% from 2021 and saw significant growth in markets like the U.S. where social followers were up 42% versus 2021 to 4.5 million. Additionally, across f1.com and the F1 app, unique users were up 11% versus 2021 to 125 million. On viewership cumulative TV audiences for the 2022 season was 1.54 billion, and average viewership raise was 70 million. U.S. viewership was up 36% compared to 2021 with an average of 1.2 million viewers tuning in on race days. Looking at some other markets. Italy viewership grew 22%. Australia was up to 20% and Germany viewership grew 9%. With our newer younger demographic, the digital share of F1 video minutes consumed grew from 16% in 2021 to 24% in 2022. As an endorsement of F1 growing global popularity, technological relevance and sustainability efforts, Ford…

Thank you, Stefano, and thank you, Brian. And to our listening audience, we appreciate your continued support of and interest in Liberty Media. And with that, operator, I'd like to open the line for questions.

[Operator Instructions] Our first question comes from Vijay Jayant with Evercore.

Greg, with the Braves, hot spin about to get done and the recapitalization, the reattribution of Liberty Live. And you sort of talked about the rationalizing the structure of Liberty Sirius, I think. Can you sort of talk about the prospect of doing a hot spin of Liberty Sirius post the reattribution? Is there any limitations on that? When you did Liberty entertainment many years ago, even before you talked about a combination with DIRECTV, you did a hot spin and then -- all the time. Is that something that's something potentially possible structurally and from a tax efficiency perspective? And then for Stefano, you have, I think, 10 global sponsors. Is that -- you talked about a lot more opportunities in different verticals. Is there more opportunity to have more global sponsors? Or are we sort of tapped out at that? And if I could, 1 final, it looks like the logistic costs that is sort of paid by the teams, but the team sort of elevated. And I'm trying to understand is some of the inflation impact of that being passed on to the teams. Is that something we should expect to continue? Or was that sort of a one-off factor?

Okay. I'll start, Vijay. That was so long ago. [indiscernible] questions I almost got lost, but thank you. So look, we have lots of things we could do, including a spin of [ Sirius ]. But I think there are probably discussions to be had with the SiriusXM independent Board members about the best structure moving forward if we were to do something. But all elements are on the table. All options are on the table. And as we said, we look -- we're looking at those with renewed vigor, and we believe we're much better to execute on any of those post the Liberty Live reattribution and the brave spin.

Yes. Thanks, Vijay, for the question. I'll start for the second. This logistic cost is true last year it was a combined factor that we had to pay for that and included the team. But I would say the first signal that we see already this year is going in the right direction of these logistics cost to be reduced. And in that respect, there is also the other element that we are trying to be even more efficient in order to make sure that the things are done in the proper way. And this is very, very important to share that. And on the other side, with regard to the partners, of course, we want to keep the exclusivity as a main value and we don't want to put on the other side, the final number of that. It's importable -- it's important that we give the right value to the global partner but also to the other verticals that are coming into the equation because we never had such a strong pipeline. So it's up to us really to make sure that everyone is the right visibility and value for what is the investor related with us.

Our next question is from Ben Swinburne with Morgan Stanley.

Two Formula 1 question. I guess, first for Greg or Stefano, whoever wants to take it or certainly both. It's pretty clear, and I think Stefano made this point last year that the value of the teams has significantly increased, especially from where you bought the business years ago. But I don't know if I have a clear idea of sort of how that benefits F1, the company and ultimately, shareholders. I think it does, but I'd love to get your perspective. And in particular, given the award of asking the first conquered agreement question for 2026. But does this allow or enable or support your ability to sort of continue on this path of operating leverage into the new agreement because of the amount of value creation at the team level. So that's, I guess, the maybe more interesting question. And then I'm going to try, I know, Brian, you guys don't like to give guidance, but I just wanted to take another -- take a stab at the G&A commentary because we're getting a lot of questions on that this morning, $80 million OpCo in Q4. Is there a way for us to think about how sort of recurring that level of G&A is as you move into '23. I know you mentioned marketing. And I guess when you guys talk about a top 5 economic race for Vegas, are you including these incremental G&A costs that are happening outside of the quarter? That's it.

So Stefano, I'm happy to take a cut and then -- or let you lead the other way. One of the things we are -- to credit Chase and credit Stefano, so it's easier for me to go first to let and give them the credit. One of the things that we at Formula One and with Liberty's help they have been trying to do is build a mentality that I'll credit the NFL for, which is 1 league that we benefit when everybody benefits. And yes, the teams compete very hard on Sunday, but on Monday, we need to think about growing the entire ecosystem. And it was critical that we have healthy teams so that we could have a healthy league. And it was critical that they had a prospect of making money even the teams towards the back of the grid so that we could have a prospect of also making money. And they've seen radical increases in their value. We've seen pretty good increases in our value, but we are here to play the long game. And doesn't mean we won't have disagreements with the teams about how much of the pie is ours and how much the pie is theirs. But trying to build the mentality that as you gain, we gain and vice versa and that we're playing the long game here is really part of our goal. And so I think we will have a strength in hand in the next conquered agreement, not a whipped but a hand saying, hey, look, we're here to grow the value and you're going to be benefit from it, and we want to see your team value grow dramatically. Stefano, please correct me.

No, I totally Greg, if I may add just 2 considerations. Something financially means also the strength of the entire system to invest with also the strategy to engage more with fans and partners that will have a direct effect to the growth and the strength of the business itself. And we don't have to forget that not many years ago, the teams were suffering and we, as F1, were there, to support them financially. And this is something that we don't have to forget. That's why we really believe that the more value we give to the team, the more value will go back to the system and to the entire business.

And Ben, on the SG&A piece, I'll talk about it from the full year basis first. But you've seen an increase, obviously related to the Las Vegas Grand Prix that's $19 million. That was elevated in the fourth quarter because we had our launch event and marketing activities around initial ticket sales. We also talked about the LTIP moving from stock compensation expense to a more like a personnel expense, that's in there now. You won't see that increase, so it's in the base. And then there's other onetime items in there. There's higher legal and professional fees associated with a couple of different matters in an ERP implementation and a few other onetime items that are affecting SG&A. So on your question about whether SG&A is included in our statement on top 5 race, it most definitely is.

Next question is from Barton Crockett with Rosenblat Securities.

To switch gears to sports teams and -- just wanted your kind of views, Greg, on what's behind the kind of vibrant activity we're seeing right now in acquisitions of sports teams in many sports at premium prices. I'm thinking of the talk around Manchester United, Milwaukee Bucks, Phoenix Sons, maybe Washington Commander, certainly Denver Broncos. There seems to be a lot of prices coming in that are way above what were kind of the values that these teams are carried at and things like Forbes or [ Sporteco ]. And I'm just wondering if you have any thoughts about why and if this could be applicable to baseball in your view? And is there any potential for this to be disrupted by all of the noise around local TV rights and the risk that carries to an important revenue stream.

A couple of thoughts. I mean I don't have any probably unique thoughts on the value of sports teams. You've seen a lot of commentary about these are trophy assets. There's a limited number. They've been good source of value that increasing global popularity only means that they have more interest globally and more potential investor interest globally. I think those are all true isolating which of those factors hard for me to say. I think that's certainly going to be true of the Atlanta Braves is true of them as a -- on their trading value, the longest continuously operating franchise in the United States. Story and history of winning a storied history of economic success, hard to think of a more perfect franchise in many ways. Obviously, there are changes coming in the ecosystem. I feel pretty good about those changes for a bunch of reasons. I do think you will see net revenue declines across all of baseball with the decline of the RSNs. There -- I think that's in the short term, at least, that's almost inevitable as some of these contracts are done. And there may be operations, which prevent that, but it seems more likely than not. But about our relative position, I feel very good. Having the largest cable household or a broadband household territory having a very large dedicated fan base, having a relatively modest RSN fee given the scale of those, that territory all anecdotal evidence, we know suggests that we have the most profitable RSN for the RSN owner and distributors. So there's plenty of confidence that there are reasons why they would want to stay engaged. And there are a lot of other broadcast outlets, which would want to be involved with the Braves given the strength of all the things I started with. So the disruption is certainly there, the potential, but I feel very good about our -- of how we're positioned. And frankly, the financial health of the Braves gives me more confidence in that, too.

Our next question comes from Stephen Laszczyk with Goldman Sachs.

Maybe for Greg on F1. I think you said that roughly 1/3 of the fan started following F1 over the last few years, and that certainly makes sense with looking at the attendance increases. But maybe looking ahead, could you talk a little bit more about your confidence in converting the fans that have come into this sport, maybe because of Drive to Survive or social media over the last few years into lifelong fans in the sport. And maybe more broadly, what do you see is the next most important levers to driving fan growth from here?

Well, I'll comment, but I also want Stefano to add. Look, we are very focused on sustaining the growth and interest in F1 in many, many ways. That's with new innovations on the track, ensuring more competitive racing with new innovations on -- around the weekend like the Sprint races. Lots of ways to grow fan interest on the track. Lots of ways to grow fan interest in some of the things we do off the track and exposing the drivers. Drive to Survive was obviously a key part, but not the only one. I think we're helping and the teams are helping create what will be a very exciting movie next year with Brad Pitt and the directors of TopGun: Maverick and producers of TopGun: Maverick, all of which we think will be another thing to sustain growth. The Las Vegas race is going to be a massive noise maker for our sport. And it'll open up our sport to many people who previously were not aware. While there are 16 and 17 year olds who are crazed and get up every Sunday morning to watch, there are many people who really do not follow Formula One. It will be hard to miss Formula One after Las Vegas. It will be loud, and we will get a lot of attention. So we're not only thinking about things which are current, but we're thinking about things for the long term to try and sustain that interest, convert that interest into long-term fans. And I think we have a lot on the plate and many more in front of us that we're working on to do that. Stefano, what would you add, please?

Yes. I would say that Greg -- the main sporting pillar for sure covered. We talked about raising on the sporting side, on the technical side, on the financial side, these are elements of which we really are focused because we have shown in the short term that we've find the ideas to improve the respect of the race in itself. But if we have to add another dimension related to the fact that we are an entertainment platform that is growing, we are working on a new form of fan engagement with different social content, with a new way of connecting with media, but also we don't have to forget one thing that I would say is getting more and more relevant. The way that we are doing our sport in a context where we are talking about very important values when we are talking about the diversity in our project, when we are talking about our social responsibility, when we are talking about our ideas to develop on the sustainability side of it, I think that all these new elements of discussion are elements that are tracking new people, new fans of Formula One. And also, we have the opportunity to talk about these things with a different voice. And the tone of voice, of course, is different depending on who we want to engage with. But we are a platform of connectivity. So broader connectivity means that all the elements that are able to attract interest has to be discussed and operated in the way that hopefully we have shown to be very serious.

And then just 1 more quick one. Brian mentioned that prepayments came down as a percentage of pre-team share adjusted EBITDA or OIBDA in 2023. We know those are variable. I was wondering if you'd be willing to speak to at what point we started to see some of that operating leverage come through in 2022? And maybe what investors could expect to see on this front in 2023.

Yes. So as you rightly point out, team payments were a source of margin expansion in 2022. That was offset by the freight compression that we've talked about. Higher hospitality costs, although we still have very attractive margins in the Paddock Club. But as we've talked about before, with the '21 concord agreement as our profitability grows, we have increased leverage on those team payment counts. And as we pointed out before, there's some onetime items in SG&A. So we would expect some...

Our next question is from Peter Supino with Wolfe Research.

Pleasure to be on Liberty call. A question on F1 operating expenses, in particular, I wondered if you would discuss puts and takes for OpEx as we move beyond 2023, given that 2023 OpEx includes some onetime costs for the O&O event in Vegas. And then the second question is on your global popularity. It's obviously on the rise, and we all agree that the U.S. is going to see a wonderful benefit from Vegas. And as that happens, I wonder as you look at other professional sports leagues in the way they leverage their brands, what best practices outside of the core events are you looking at that you think you might be able to replicate at F1?

So I'll take the OpEx 1 first. But as we pointed out, freight margins have been one of the biggest pressures on our other cost of revenue. And we basically absorbed that in 2022. So you wouldn't expect to see that continue in -- as we go forward. And hopefully, you'd see some leverage there. Hospitality costs, as we just said, there's good margins. So Vegas will play in. We haven't given the OpEx number. We've just given the revenue number and overall profitability, but you'll see OpEx increase associated with Vegas, as you would expect. But yes, we would expect leverage as we move forward. Stefano, I'll let you handle the second.

Yes. Can you hear me, Peter?

Yes. Thanks, Stefano.

Okay. Sorry. I was losing the line. No, I think that the global popularity as you said, is growing, and this is a fact. And I would say what we are bringing home is the fact that all the other sport league business are really interested in understanding how our growth was so fast and dramatic. And -- but of course, we are quite humble in that approach because we want to learn from everyone around the world, what we can capture in order to increase let's say, our way of growing. I think that is one key that is very important is the way that we engage with our drivers with the fans. And they are really the voice, the authentic voice of the business we are in. We feel that sharing with them the responsibility of that fan engagement is giving us an incredible attraction because then that attractive approach will turn into business, if you think about gaming. If you think about the fact of the drive, then the fans wants to attend to the race. If you see that fans wants to follow, the count on our social media. So I think this is really one of the key elements that is quite unique. And I think on that, we will work even hard to make sure that this voice is even stronger.

Next question.

Our last question is from Jason Bazinet with Citi.

I just had a quick question on Formula One. Can you just -- if Vegas is as successful as you expect it will be, can you just talk about gaining factors or constraints that are ahead of you in terms of expanding that into other cities?

I'll take a cut, and I'll let Stefano add. Vegas is unique for many reasons. One, the economic opportunity is large. We're not -- we're operating in a country that -- which Liberty is reasonably familiar. It's pretty close to us. The ability to go negotiate and make something happen on a street circuit rather than an own circuit, made it easier in many ways, there wasn't a promoter, natural promoter. It was a role that was good for us to fill in and it was good for us to test some of the theories we had about promotion. So it was a unique opportunity and great -- it's a great test lab. Could there be other cities. I think there are many countries where it's obvious we would be less effective as a promoter than the U.S. There may be some where we could operate reasonably effectively or maybe have some form of co-promotion and that could be interesting. But I do not -- I think Vegas is relatively unique in terms of being the kind of place where we would go all out and do what we have done and what we are doing here in 2023 in Vegas. Stefano, what might you add?

Yes. I couldn't agree more. I think that is absolutely, totally right. And we don't have to forget that in such a short time, we moved in a new dimension that has been the promoter in a way that no one was thinking before possible. So first step for us is to make sure that we need to make sure that Vegas is right first at the first attempt. So total focus on that. And then, of course, I'm sure that this will -- an incredible push for all the promoter to see what is really -- what can be done better. So I think that already by doing that will be an incredible push for everyone to push for a better qualitative result for -- from everyone. We have a huge demand around the world to host Grand Prix, not only in the U.S. but also in Paris. So this could be experience that can be used to better organize Grand Prix in the future. But so far, let's make sure that we are totally focused on making Vegas super special there.

So operator, I think we are done. So to our listening audience, thank you for your interest in and for our support for Liberty Media. We hope to speak with you next quarter, if not sooner. And I think operator, we can end the line there.

Thank you. This concludes today's conference. We thank you for your time. You may now disconnect your lines.