Welcome to the Liberty Media Corporation's 2023 Q1 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, May 05. I would now like to turn the conference 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 Liberty Media's most recent Forms 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 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 one through three 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 turn the call over to Greg Maffei, Liberty's President and CEO.

Thank you, Shane, and good morning. Today speaking 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. I'm going to first update you on the split up of the Braves and the creation of the new Liberty Live Tracker. We filed the amended S-4 and are pleased with the speed of the SEC review. We believe we are nearing the end of that SEC process and we are still targeting completion before the end of the second quarter. Turning first to Liberty SiriusXM. We continued our efforts to delever and simplify the balance sheet there. We raised $575 million of 3.75% LSXMA converts and we used the proceeds to repurchase $703 million principal amount of LSXMA debt including $591 million of the 1.375% basket convert and $112 million of the two – 2.125% Siri exchangeables. We also repaid the remaining balance of those in April. That was a reduction in gross debt just over $400 million year-to-date, including the April activity. The reclassification of the LSXMA tracker without the Live stake will simplify our structure further and we continue to be focused on rationalizing Siri and LSXM's structures in the near-term. Let me look at SiriusXM itself. As expected, they had a challenging first quarter due to the SAAR and ad market trends. We expect this is the low point of the year on net pay – net self-pay net ads, due to the lower Q4 trial starts, the seasonal Q1 higher churn and the pullback in marketing as we will way to rollout our new app. Advertising did perform better than expectations and podcasting continues to be a bright spot. We saw solid progress in rolling out 360L, our revolutionary new product enhancement, which leverages…

Thanks, Greg, and good morning, everyone. At quarter end, Liberty SiriusXM Group had attributed cash and liquid investments of approximately $377 million, which excludes $53 million of cash held directly at SiriusXM. There’s also $1.5 billion of undrawn margin loan capacity at the parent level related to our SiriusXM and Live Nation margin loans. As of May 4, the value of our SiriusXM stock held by LSXM was $11.5 billion, and the value of the Live Nation stock was $4.7 billion. We have $2.7 billion in principal amount of debt against these holdings or $2.4 billion pro forma for the additional pay down that occurred after the quarter. Total Liberty SiriusXM Group attributed principal amount of debt is $13 billion, which includes $9.6 billion directly at the Sirius level. In March, Liberty SiriusXM Group issued $575 million aggregate principal amount of 3.75% LSXMA convertible notes due 2028. We used the net proceeds of this offering to repurchase $591 million principal amount of the 1.375% cash convertible notes and $112 million of the 2.125% senior exchangeable debentures. In addition to the proceeds raised from the new convertible, LSXM used cash on hand, including $39 million from the proportional net settlement of the bond hedge and warrant and cash received from Formula One Group to retire $3.1 million FWONA intergroup interest shares underlying the corresponding portion of the convertible repurchase. Subsequent to quarter end, Liberty SiriusXM settled the remaining 2.125% senior exchangeables for $275 million at the April-foot call date. There’s approximately $199 million remaining on the 1.375% cash convertible notes, which mature in October. All remaining intergroup interest are expected to be settled and extinguished in connection with the Braves spin-off and additional information regarding the intergroup interest is available in our press release and as well as the S-4 that…

Thanks, Brian. Good morning from Miami. We are thrilled to be back for our second Miami Grand Prix, where the excitement in the city is as vibrant as year one. This year event feature on expanded Paddock now located inside the Dolphins Stadium and upgraded Paddock Club and a fully resurfaced track. We have four races into our record 2023 race calendar. While Red Bull has dominated the race to date, it is still very early in the season and the races have been packed with excitement and drama. Alonso fans have unmatched cheer about with Aston Martin recent performance. Alonso first place finishes in Saudi Arabia, marked his 100 podium, making him one of only six drivers in F1 history to claim these feet. The Australian Grand Prix featured three red flags adding even more complexity to this strategy and ended with only 12 of 20 drivers crossing the finish line. The new sprint format was unanimous approved by the teams F1 and FIA advance of Baku. We all believe that the new format is the right one for our fans and the sport and increase the level of intensity and action across the weekend. Starting the season at the six sprint events, all three days of the weekend will be packed with on track excitement. The Saturday Sprint Shootout is a shorter qualifying session to determine the sprint grid later that day. This makes the sprint standard on event with no bearing on the Grand Prix, allowing drivers to find more aggressively without fear to raise of the implication. Formula One is engaging with our fans across platform. Global audiences exceed 70 million viewers for the first two races of the season with significant increases in key markets across Europe and North America. In the U.S., the Saudi…

Thank you, Stefano, and thank you Brian. And to our listening audience, we appreciate your continued support of and interest in Liberty Media, we hope you will all turn in to see the Miami Grand Prix this weekend and the start of our Braves series against the Orioles tonight. And with that operator, I'd like to open the line for questions.

Thank you. The floor is now open for questions. [Operator Instructions] The first question is coming from David Karnovsky of J.P. Morgan. Please go ahead.

Thanks. Stefano, just on the new sprint format I'm interested to know what the response has been from your partners on the promotion side. How are they thinking about the potential lift to their own ticket sales? And then what's the process you have to determine what GPs get that format? And is that something you can build into your contracts?

Well, thanks, Dave. Of course, we did that thing in accordance with the teams and with the FIA because as you know, our idea is to make sure that during the racing weekend there is always action on the track. Actually, the result of the first one of this year has been very encouraging and every one of our partners, promoter, media partners and also team are very positive about that. Of course, there is something that we want to take as a lesson learned to see at the end of summer if there is something that we can learn to do some – even something better. But in a general term, the first weekend of the sprint format has been great. And I think that as always we wanted to do something different in a very standardized ecosystem, the reaction of the, let's say, the traditional fans is the one that needs to be awaited for longer term. But normally with the new fans, we've seen a very, very positive reaction. Promoter was pushing for that. And I would say the real thing is that we don't want to go in a situation where in the future we're going to have all the races with the sprint format. We want to keep a limited number of bit, maybe one third of the calendar number, and create something special with regard to the competition that we can give sporting value with trophies and of course commercial opportunity to these things. But I think that's the right way to go. And if I may summarize another thing that I think is important, I see a big trend today in Motor Sport not to be stable, let's say not to stay consistent with your regulation. We are just following what the base will be, I just following what the NBA has done. So that means that all the professional sport needs to listen to the request and to the new input that the fans, promoters, and partners are asking to have more excitement around the game. So positive and looking forward to keep working on this project.

Okay. And then you've called out F1 TV in your releases for a few quarters now. Just wanted to see if you could update us on the product where you see it in terms of the growth trajectory. And then just for Brian, just to the extent someone buys an annual plan at the start of the season. Is that all booked in the first quarter with the partner cost? Or is that proportional of the races? Thanks.

So if I may the first part of it, F1 TV is really working very well. You know that we are not providing any numbers on that. But what I can tell you in terms of quality, in term of products and in term of attention is also an opportunity to select new market where there is not really a strong broadcaster provider. And we are doing that with certain countries and the effect is regular. We have a new plan also to update some of the content that we want to give to our fans. And as I said, after a couple of years of very high investment, now we are paying back what has been a great decision taken couple of years ago. Brian, do you want to progress with the other question?

Yes, David, on your second question, it's proportional over the season.

Great, thank you.

Thank you. The next question is coming from Bryan Kraft of Deutsche Bank. Please go ahead.

Hi, good morning. Greg, I wanted to ask you how should we think about the capital needs of the Liberty Live Tracker, both initially and over time, particularly as the business side of Liberty Live evolves and begins to invest in owning and operating venues. I assume that's still part of the plan and it seems like it's capital intensive. So just wanted to understand how you might go about funding those endeavors. Thank you.

Thanks, Bryan, for the question. As we've outlined, we expect to capitalize Liberty Live with a decent amount of cash, but candidly to the degree we go out and do something large there. We'll have to find other sources of capital – other sources of cash capital. So I don't think it will be a massive generator of cash as you would expect looking what's in the asset base there. But we have some ideas that involve leveraging Liberty Live itself, not reliance as much on other trackers if that's your fear, Bryan?

Yes, that was the nature of the question. Thank you.

You might have read that subtext a little bit.

Well, a lot of people are asking about it, so, I think it's good to…

You get to asking straight upfront.

You get to asking straight up front.

If I could ask you also may be related on the F1 side. I mean, it seems like what you’re doing in Vegas is really exciting. Do you see other opportunities to invest in F1’s business by taking on the promoter role and other markets and investing in facilities to drive that longer-term growth?

Look, I think Vegas was unique and the opportunity and also the geography and a bunch of other factors, which made it the place where we should be the promoter first. We’ll try not to have too much hubris and assume that we need to prove we can be a good promoter first. I don’t look at a lot of other places where it’s as obvious. I have mentioned in the past that I do think, in some cases, some of our partners in the promoter space are not necessarily as capital rich as Formula One. And so there may be opportunities for us to participate alongside them. maybe not a full co-promotion role but to take elements of the chain of value being created and further for both of our benefits. So we’ll certainly look at that and talk to partners to the degree that’s available.

And if you may add another comment at a direct qualitative effect is that with this investment, we are pushing also after the quality of the promoters that are already very important for us in Formula One. So now the game is to have unique events that are working very, very well, of course, commercially viable, but I would say that direct effect as given to the system not lifting the quality approach of every grand prix.

Yes. Thanks, Greg. Thanks, Stefano. Appreciated.

Thank you. The next question is coming from Vijay Jayant of Evercore. Please go ahead.

Hi good morning I have a couple on Formula One. So Greg, the $112 million of team payments in the quarter implies a little less than, I think, $1.3 billion for the year. Can you sort of talk about how team payments have been communicated to the team given the fact that this year you have something sort of different with the Vegas rates that is not sort of contractual? And is that something we should look at as a proxy and what you’re sort of thinking on the full year EBITDA number? And second, obviously, the free cash flow was very, very strong at Formula One supporter and assuming that had to do with ticket sales for I think Wave 1 and Wave 2 on Vegas. Any way you can help us think about what sort of the underlying free cash flow excluding the ticket sales, if possible?

So I’ll comment on the first and second. And if Brian, you want to add anything on the free cash flow when I’m done, that would be great. Looking at the team payments, I think if you look at our history, we try to manage that conservatively. Particularly in the first quarter of the year. And as you rightly know, probably even more conservatively this year given we’ve added some volatility of the payroll rather to the potential in – by having Vegas. We think it’s positive volatility. It’s going to be a great event. But it is unknown. It is not as well experience and some of the other events that we have. So, I think you should look at that as a conservative proxy for how we expect the year will go. The last thing we want to do is have teams overspending in anticipation of money that don’t show up towards the end of the year. The free cash flow, you rightly note, because of the Wave 1 and Wave 2 sales, a lot of cash has been broadcast. It’s deferred collection, but it’s generated in that free cash flow line. So it has probably overstated the true impact of the operating business for Q1, but we do expect to recognize that as free cash flow as the year progresses. I don’t know, Brian, if you want to comment or can comment a little more on a more normalized level without providing Vijay too much clarity because gosh, we wanted to do some real work.

Yes. I mean to help the efforts, I guess, I would say, if you look at our tracking stock schedules, you can see the deferred revenue as of March 31, 2023, and you can go back and look at the you look at our first quarter from last year, you can see the deferred revenue related to Formula One at 2022. It’s up roughly $130 million, give or take, and you could think of that largely being related to Vegas, although there are other puts and takes.

If I may add one comment…

Go ahead Stefano, please add.

So Vijay, I just want to add two comments that I think it’s important to consider a number that at the end of the day, it’s important to remember that the teams are benefiting for what we are doing so far. I mean investing in Vegas for them is an incredible opportunity and directly also for them to develop their business. And indirectly, it will get our proposition even stronger as an ecosystem in Formula One. So, I think that is really something that as I was mentioning, we have a prudential approach that gives you the magnitude of what we need to do and need to deliver a dispose will be very, very important for all of us.

Thanks, Vijay.

Thank you.

Thank you. The next question is coming from Peter Supino of Wolfe Research. Please go ahead.

Hey good morning and thanks. On the Concorde Agreement, Greg, I wondered – Greg or Stefano, I wondered if you could comment on how you’d like investors to think about the timing of that renegotiation? And then the second question, Greg, if you would talk about Live Nation, your view of both the risks posed by the DOJ investigation? And then separately, the bear case that the business ought to slow down a lot in 2024 after this post pandemic surge of supply? Thank you.

Look, we have several years left to run on the Concorde agreement. But I think there’s a consensus among the teams and the FIA and ourselves that now might be a good time to try and strike while the iron is hot and renew and extend the Concorde agreement. There’s certainly no obligation to do that and there’s certainly no risk if that doesn’t get done. As you may recall, we went right to the end and historically in many cases, the teams have operated without a Concorde agreement. They’ve basically done a handshake and then completed the deal post, the period when the Concorde – new Concorde agreement was supposed to start. Our hope is that this time we’ll be able to change that dynamic in part because of the way that Chase and Stefano have changed the dynamic with the teams in particular. I hope we have a more positive relationship and everybody sees the benefit of going early and providing certainty for all involved. Stefano, what would you add?

Nothing because I think that you sympathize perfectly the situation. And I think that will be our strategies now.

On Live Nation, I would not say it’s a DOJ investigation, you could always say that, but look, we’ve had a DOJ consent decree and monitor now for several years and it was renewed. And there is a hotline that anybody can report what they perceive as violations of that consent decree. And the DOJ has a monitor who is investigating continuously perceived or alleged violations of the consent decree. There obviously is another track, which is legislative potential and we’ve talked about some of those I mentioned the couple of bills that are being considered. I’m not sure those bills will get done, but in the main, we view those bills as positive. And frankly, I think anything that moves forward and ends the negative speculation about the regulatory side is positive because we do not perceive it nearly as big a risk as the market perceives it to be. On the business itself, hard to project what the consumer will do when you can imagine recession scenarios and the like. But we see none of that. We see strong demands and we see it going forward with upcoming tours and our expectations, as I noted, are the business is going to continue to grow.

Thanks a lot, Greg.

Thank you, Peter.

Thank you. The next question is coming from Stephen Laszczyk of Goldman Sachs. Please go ahead.

Great. Good morning. Maybe one on F1 sponsorship for Stefano. It seems like you’re finding a fair amount of success in stepping up some sponsors into more comprehensive packages. I know you had Paramount+ MSC [indiscernible] this past quarter. I was wondering if you could maybe talk about is this more how much opportunity you think there is as you look at across your sponsorship portfolio to step more sponsors up and if there’s any constraints, especially with there being 10 global partners already that could limit us?

.: So I would say now the real thing is not to work only on the already more, but making sure that each of them receive the right qualitative answer to their question. And the other thing that I think is really relevant like this in another way, the fact that we receive this on the sustainability platform because no one will invest today in a business that is not credible on this landscape. Therefore, that is another push that we receive from our partners to make sure that our goals with sustainability [indiscernible] has been achieved. So it’s – let’s say a constructive push that we are working together in order to be stronger and stronger together.

Great. Thanks for that. And then maybe one for Greg. Could you just update us on the way you’re thinking about capital allocation at Formula One now that you hit the trigger on your term loan this quarter? Should we expect this to give you some more flexibility from this point going forward to ramp leverage back to more historical levels? Thank you.

Well, thank you Stephen. I think, look, we’re pleased to have triggered the reduction. Honestly, that’s a nice benefit, but it has not been what’s driving our thinking about capital allocation. We are looking for and believe we will find attractive opportunities for our cash and our generate cash flow generation. I’ve talked about some of those in the past, including the Vegas effort, which I think is going to generate a good return ancillary businesses around which are synergistic and around our existing business and the potential for return of capital versus share repurchase. As I noted, we effectively did that this quarter for just over 3 million shares to the intergroup interest settlement. So, I expect you’ll see us look at all of the alternatives above. And again, it was nice to click off the 25 bps reduction, but that wasn’t what drove our thinking. It’s really the strength of the business, which is generating the capital..

Okay, thanks Greg.

Thank you. The next question is coming from David Joyce of Seaport Research Partners. Please go ahead.

Thank you. Couple questions, first on Formula One, what’s the current view of Formula One, the league and FIA and the F1 teams related to potential addition of work teams, what are the gating factors from here? And then secondly, if you could provide any update on your views of what’s happening with the regional sports network as it pertains to Atlanta Braves? Thanks.

I’ll let Stefano handle the first part, and I’ll hand the second question.

Thank you, Greg. I mean with regard to the situation of a new team potentially entering or interesting for one. No, as we said, there are someone that is quite vocal. Some others are quite silent. As you may know, David, there is a process in place that has been activated by the regulator to see and to collect the interest of other partners to be part of one. The first time will be finished, I think, within the middle of May. And then there will be the analysis done properly, checking the technical visibility, the financial feasibility and that we’re going to have the discussion to see if any kind of potential enter will fit into the equation of creating more value to the sport. And that’s something that we’re going to take the decision at the right time within the end of this year. That’s the plan. But of course, that is once again showing the growth of Formula One. I mean, just a couple of years ago, the [indiscernible] team was very small, actually, almost none. Today, the value of the franchise is very high. So we have the duty to protect the business and making the right decision. And this is something we’re going to do within the end of this year.

And regarding RSNs look, obviously, it’s a difficult situation given Diamond’s filing. That having been said, we continue to receive payments from our Sports Star contract. That is not true for some other RSNs out there, but my understanding is three or four have not received payments from Diamond. And that, I think reflects the fundamental strength of the territory we have and the interest in the Braves such that our understanding is we have a profitable RSN. So it’s unlikely that Diamond will view us as an executory contract which they wish to reject even if they were to reject it, which again, don’t expect, I think there are other alternatives we could construct in the marketplace that would enable us to get paid and have our products shown to our fans, which is really the most important thing. And we’re certainly prepared if we have to go out and exercise those alternatives.

Great. Thanks Greg and Stefano.

Thank you. The next question is coming from Matthew Harrigan of Benchmark Company. Please go ahead.

Thank you. Live Nation among its other merit absolute home run acquisition for OCESA, just Mexico and Colombia. I think they said that and Asia were like 50% of AOI growth in the quarter year-over-year. I mean do you see there are many other targets out there to expand internationally as the music business is just now underlay globalized given the cross-market appeal of artists as Michael Tino [ph] talked about yesterday? Thank you.

Thank you, Matthew. You’re right, OCESA is a great deal, and it’s nice that Alejandro Soberon’s business, who is also our partner in the Formula One Mexico City, Grand Prix is being acting so successfully. There are other targets out there, probably not as many with the scale of OCESA that we could get done because of potential regulatory issues. But Live Nation has a long history of successfully adding primarily promoters into the fold usually in some point of a partnership agreement where the management stays involved, but we take some ownership interest as well. And I expect you’ll continue to see that either in venues or promoter relationships where we continue to take advantage of the strength of our business and our ability to try and offer both fans and artists to global product. And the more we can fill in our global footprint to better for both of them.

Thanks, Greg.

Operator, I think we’re done. And to our listening audience. Again, thank you for your interest in the Liberty Media Companies. We look forward to speaking with you next quarter, if not sooner. And have a great weekend.

Ladies and gentlemen, this concludes today’s event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.