Liberty Media Corp Investor Meeting

Nov 16, 2017 AM CET
FWONA - Liberty Media Corp
Liberty Media Corp Investor Meeting
Nov 16, 2017 / 06:00PM GMT 

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Corporate Participants
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   *  Charles Carey
      Formula One Group - CEO
   *  Courtnee Alice Chun
      Liberty Media Corporation - SVP of IR
   *  Derek Schiller
      The Atlanta Braves - President of Business
   *  Gregory B. Maffei
      Liberty Media Corporation - President, CEO & Director
   *  James E. Meyer
      Sirius XM Radio Inc. - CEO and Director
   *  John C. Malone
      Liberty Media Corporation - Chairman of the Board
   *  Mark David Carleton
      Liberty Media Corporation - CFO
   *  Michael Rapino
      Live Nation Entertainment, Inc. - CEO, President and Director
   *  Mike Plant
      The Atlanta Braves - President of Development

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Conference Call Participants
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   *  Barton Evans Crockett
      B. Riley & Co., LLC, Research Division - Analyst
   *  Jason B Bazinet
      Citigroup Inc, Research Division - MD and U.S. Cable and Satellite Analyst
   *  Robert Ball

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Presentation
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 Courtnee Alice Chun,  Liberty Media Corporation - SVP of IR   [1]
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 Thank you for joining us today. I'm Courtnee Chun and I handle Investor Relations for Liberty. So thanks, we have record attendance today. And I'm trying to fit everybody in. If you guys have a empty seat next to you, could you raise your hand? I just want to see how many we have. All right. So we've got a bunch down here, so if we can bring a few more people and that would be awesome, please. And so we hope that you got to experience the experience downstairs. This year, we had -- we welcomed F1, and they were generous enough to bring a car so thank you, Chase, for that. This year, we also have, if you're interested in social media, we have a hashtag, Rich Greenfield and for Greg Maffei, thank you for all you've been doing so far today. We appreciate that. The hall downstairs will close at 2:00 and so overflow will be in the Live Nation lounge and the TripAdvisor room. The slides will be posted after we do the necessary filings, so please be a bit patient with us, it will be sometime next week. Then they'll be up there, and then you can call and ask for questions.

 I do want to thank my team that helped put this together. It's a lot of work. We really enjoy it and hope you guys do too, so Mindy, Shane and Kelsey, thank you very much.

 So now without further ado, if you were here in the morning, we're glad you stayed. And if you just got here, then you're in for a treat.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [2]
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 I have no clue what we're going to do next here. Don't worry. All right. Well, thank you for joining us some of you, again, after the morning's presentations. I'm here to talk a little bit about Liberty Media and -- where we've been, where we're going and what we hope to achieve.

 So 2017 was definitely life in the fast lane. Last year, we recapitalized in the 3 stocks, and this year, we executed on one of them and closed on the transaction with Formula One, which we'd agreed to just about a little more than a year ago. What have we done since the last meeting? SIRI closed on its investment in Pandora and Automatic Labs. The former is really to help test our participation in the free market, an enormous opportunity, we think, and we tick in a relatively low-risk way with our investment in Pandora to figure it out. And with Automatic, we continue to push our efforts in the connected vehicle or we have a really interesting position. Not sure yet how we're going to monetize it, but it's strategic and interesting.

 At F1, we completed the transaction, as I said, and Chase took on and became not only Chairman, which he was originally, but now also CEO, and we added 9 senior team members and really built up beneath them whole departments like marketing and research and sponsorship which really did not exist. We also helped set the finances of the company on a strategic path, with the share distribution and recapitalization we did and moved towards our eventual goal of only 5 to 6x leverage rather than the 7-plus we inherited.

 The Braves completed SunTrust, a huge success, on-time and on-budget. And that's accelerated our revenue and our development opportunities.

 We've had a pretty good run over the long term at Liberty Media, compounding at about 27% over the 10 years since we began the process of really busting up health and looking at different alternatives.

 Our strategies have worked, both in the short term and the long term. Of course, it is somewhat of a problem. If you can't track the basis of all these stocks, there are many charities which are willing to take the stocks, and we've been -- we think we've been a beneficiary to charities across the nation because of it.

 We had an effective deal structure at Formula One, really a win-win deal because we satisfied the needs of the sellers who both wished to monetize and get some of the upside as we brought a new management team in and satisfied our own desires and abilities given how much capital we had and what we wanted to do in terms of keeping control.

 As I said a minute ago, we've really cleaned up the capital structure and set it going forward, adding long-term shareholders who are believers in the business and really removing the overhang. So the financial path is well set, and as you'll hear from Chase, we think the path going forward to grow the business, to build a more equitable and attractive business in a better -- most importantly, a better experience for fans is well under way.

 We do know there is a discount at Liberty SiriusXM. If any want to tell us about it, thank you. People ask us what are we interested in, and I would love to say we have a grand theme. We do have some ideas about things that are less attractive and more attractive. You've heard some of them this morning with where we think perhaps content is going and where the opportunity is created by the cable pipe. But one of the things we absolutely believe in is what I call the power of live. In a world where there are more devices and more competition for your time than ever -- video games, social media, the list goes on and on, live continues to have success. And I'm going to talk a little bit about that. And we have an amazing portfolio of Live with F1, Live Nation; even SiriusXM, Live is an enormous part of it; and the Braves, of course.

 So let's look at why does live work. Well, in that world of clutter, there are 2 ways to think about it. Can you get people's time, and can you get a share of their wallet, both at the consumer level at the corporate level? And I'm going to walk through some of that. We think that live events are one of the few places that allows you to cut through that clutter, as I mentioned, and capture both mind share and wallet share.

 So let's take a look for a moment at some of the places where people go and what they love to do. And what you find is that consumers of all ages choose to spend their time with live, whether it's concerts or sporting events, and we participate in all of them. And that's really a great setup, we think, for all sorts of our businesses, including, effectively, SiriusXM. Now you may not sit there and think oh, that's live. But think about the live audio to have Howard Stern, real time talking, to have sporting events real time and even to have the live events which Sirius is increasingly using to promote itself. For example, the concert we recently had 2 weeks ago with the Grand Ole Opry with the Eagles played a concert just for our listeners and guests. What -- how we're able to promote that, how we're able to make that part of the differentiation of SiriusXM. Arguably, music is a commodity. You can get music in millions of places, but you can't get the uniqueness of the curation, the live commentary and the live events that help them fit and promote SiriusXM.

 Now if you think about where people spend their time, it is still the case that television has an enormous amount of time. Over 4 hours for the average adult. Obviously, there are lots of things that are rising up and causing changing tastes, as we've noted all through the day, but TV remains quite popular. And the biggest consumer of time within that TV is live events, and the biggest type of those live events is sports content.

 Guess what? We have some sports content. And particularly, globally, that sports content in the F1 is one of the largest global audiences around, 400 million viewers, and we think the opportunity to increase that number dramatically as we build even more drama, excitement and thrills into the F1 scene.

 And when you look forward and look at the growth of things like mobile and other devices, what you find is even as these choices abound and consumers consume content on more platforms, sports demand grows. Sports fans are more likely to be multitasking. See that guy in the upper right, he pretty much looks like most of the audience, likely to be multitasking. I saw you out there with that phone, don't worry. At F1, we're very much focused on taking advantage of this, and you could look at some of the stats in the bottom there. F1 is really increasingly focused on retaining its digital rights, and we plan to launch a live, non-live OTT product next season. We've also relaxed our social media rules earlier this year and doubled our Instagram usage. All of that creates the power the digital devices adds to the power of our sports content. So as I said, more digital platforms creates a proliferation of choices. One of the things it does is it allows you to spend more time with audio. And as a side note, many of our businesses have begun to take advantage of that. For example, SiriusXM and Pandora are both leveraging mobile and other platforms. SiriusXM is investing and efficiently taking control outside of the car. Pandora is in the top 3 mobile apps by minutes used, an enormous opportunity to monetize at this time spent, especially in the ad-supported market, as we've noted. It's worthwhile noting, even LeBron James likes free Pandora.

 So we believe that between F1, the Braves, SiriusXM, Live Nation, we have their time. People spend enormous amounts of time when they go to an F1 event. People spend enormous amounts of time on baseball, and there is a huge proliferation of content with 162 games. We showed the demand and the excitement that people have around concerts and wanting to attend, and the growth of audio content and our ability to capture time both at Pandora and SiriusXM is very powerful.

 So conclusion, in our minds, we have the time. We hope you agree. And we're in the right side of the trend that as that time grows, we will be able to stay above the clutter and actually grow our share.

 So what about the money? This slide has a few takeaways in our mind. First, how crazy that the millennials want to spend $4 at least in a pumpkin spice latte and flat whites from Bluestone Lane. I bet a few of you bought that on the way here. And buying clothes they admit they don't even need. But 2 categories have over 50% willingness to spend across age cohorts that are both experiential. Eating at trendy restaurants and going to live events. It's not that we don't like trendy restaurants, but they don't scale that well as a business, and we think live events do. It's -- and it's also not just getting into the event. It's increasingly maximizing your spend once you're at the event. The Braves and Live Nation are doing increasingly well at doing this, and we think there is a lot of opportunities, not only for them to continue to do that but particularly for F1 to increase the shoulder programming in the events and the range of spending at those events.

 Interesting that live events also dominate the corporate wallet. Sponsorship dollars continue to grow, and 70% of North American spending goes to sports, though it is certainly worth mentioning that Live Nation has over 1,000 sponsorship partners and that is one of the fastest and most profitable growing parts of their business as well. I note that the Braves in 2017, with our new stadium, had the highest corporate sponsorship revenue in team history, and we only expect that to grow. And frankly, with F1 with 6 global partners and 2 official suppliers, sponsorship opportunities are abundant. Major League Baseball, a domestic-only league, had something like 75 sponsors. So we think there is plenty of room for us to grow. There are big categories like tech, oil and gas, hospitality, financial services, all of which are yet to be filled at Formula One, and we're quite excited about that sponsorship opportunity.

 So how do we stack up? Well, we think the Liberty Companies look pretty good, both in terms of their scale, their economic models, their competitive positioning, their -- the governance that we have at those companies, the secular trends and where they're going in terms of time spent. So their timeshares are all good, but in addition, their wallet shares are good or have opportunity in our minds. They share key attributes of these companies, as I said, scale, strong and economic models and lots of other positive things. As we look across our companies, we're excited about all of them, both in timeshare and the wallet share. Above all, we think the power of live is real, and it's an opportunity Liberty Media continues to pursue and will do more of. So with that, I'm going to turn it over to Mark Carleton, our CFO.

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 Mark David Carleton,  Liberty Media Corporation - CFO   [3]
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 Thank you, Greg. Good afternoon. Let's start with a little cleanup. We continue to get questions about the Formula One share count, surprisingly, so I thought we'd actually just put it out here in the slide so everyone could have a look at it. Almost 231 million shares outstanding, 1.2 million that are issuable on the exchangeable notes, about 27 million of exchangeable notes that are still out there, so take your notes and make sure you've got your models right. That's where we're at on the shares.

 Let's talk about debt a little bit at Formula One. We've got around $3.3 billion at the Formula One level. Greg talked a little bit about the $500 million line of credit that is untapped and available there at F1. Our leverage levels are around 6.3x, but heading down to the range and again, we're targeting from 5 to 6x in terms of indebtedness on that range.

 At the corporate level, we've got about $2.3 billion, including the 1 3/8% convertible notes. Now these notes were issued back in 2013, and they're satisfied through a basket of securities, that includes FWON, LSXMA and BATR. I just wanted to point out that there really isn't a compensatory mechanism back to Formula One to the extent that those shares trade up over that basket. They don't today, but to the extent they do. But we're pretty confident that Formula One has got the liquidity and the flexibility to be able to handle it. So we think we're in good shape on the debt overall and getting us down to our target range here in the near term.

 Let's look at the cost of the debt, something we're pretty proud of since we've taken over here, and the treasury guys and Chase's people have done a really good job. Over the course of the last 10 months, we've been able to knock about $90 million a year in interest off and added duration of 2-plus years, almost 2.5 years. So pretty good series of work there. And I think we like the debt levels and we like the efficiency that we're driving right now.

 Now we wouldn't be Liberty if we didn't talk about taxes. And for Formula One, we have some new tax legislation on tap. There are proposals that interest expense deductions would be limited to 30% of U.K. EBITDA. We expect these laws to pass, likely to be retroactive back to April. We believe there will be carryforwards for some of these limited deductions, but we're not sure quite yet how that future use may be limited, how far you can carry it forward, how much of it you can deploy. So for our own internal planning and modeling purposes, we've been estimating that the future U.K. taxes at basically a low double-digit percentage of U.K. EBITDA. And what we're using for that is adjusted OIBDA that we report routinely, less stock comp as kind of a proxy for U.K. EBITDA to do the tax projections that are out there. So some changes in the tax world. We understand them. We're certainly looking at them, and history shows we're pretty good at doing our best to minimize our effective tax rate and avoiding taxes as effectively and legally as we can.

 A couple of comments on purchase accounting. Our acquisition in 2017 did not result in a basis step-up for tax purposes. Therefore, all the amortization and depreciation you see is not deductible in the U.K. or the U.S. So make sure your models are close on that. We don't expect to ever -- well, currently, to have to pay any U.S. taxes on income repatriation. If we bring it back, we're not planning on repatriating any of the earnings yet, but certainly right now, we think we can do that without any tax leakage.

 And then lastly, on the operating front. We've had some questions on some different numbers that we published in some of our presentations and some of our registration statements. What we've done here is put together a little summary of the historical results and the quarterly results in our U.S. GAAP filings. These historical results are in International Financial Reporting Standards, IFRS. We have reclassified those historical results for this presentation to match up with the quarterly disclosures that we've done in accordance with U.S. GAAP. So the line items are at least the same. There are not very many differences between international GAAP and U.S. GAAP, primarily in stock comp accounting and a couple other areas, but not huge differences as we see on that. But we wanted to make sure that there was some consistency between the presentation and what you guys have seen in some of the presentations and then some of the SEC filings.

 A couple other points. Team payments, we recognize those team payments pro rata with the number of races. We do not record them quarterly. So we take the team payments for the year, and we divide them by the number of races, then we record those as each race occurs. And lastly, substantially, all of the depreciation and amortization is purchase accounting-related, and we've talked about the tax treatment of that.

 So I hope this provides some additional clarity in some of the F1 numbers. I know things have been a little complicated, but we appreciate your continued interest. Thanks.

 (presentation)

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 James E. Meyer,  Sirius XM Radio Inc. - CEO and Director   [4]
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 Good afternoon. I must admit Greg and Mark brought this idea to us earlier and auditioned at SiriusXM, but we turned him down. And in the good old American way, if you can't make it on talent, just buy your way in. So we see where it went. So we sit here today, this is my fifth year speaking at here. I'm proud to say, this year, we crossed 32 million subscribers. As importantly, 75% of every new car built in this country today comes equipped with SiriusXM, as importantly, now in that big used car market, which most of you know is more than twice as big as the new car market -- now about over 1/3 of all those vehicles also come equipped with factory SiriusXM.

 Obviously, what are we all about, and it's a thing I try to remind our employees every single day. And that is why we have -- need technology and all kinds of other things. What really matters is our value proposition. And at the heart of our value proposition is clearly our content. This has been a really exciting year for us. A few examples of that is the Garth Brooks channel, I can't tell you how popular that is. Many may not know Garth Brooks has sold more records than almost anybody else in music history. In May, we added the Beatles channel, an exclusive deal on SiriusXM, with a band that I have to tell you has had great reception with our customers. And an example in the fall, we just added Ricky Gervais. I guarantee you, he will bring the right level of controversy and comedy to a show. And speaking of controversy, I think most of you know, Steve Bannon does shows for us -- there you go. We have -- we believe in having every side, and polarizing is good.

 As you look at our third quarter, I'm particularly proud of this. I've been coming to this for 5 years, and all of you heard me like a broken record saying, I really truly believe we can run this business at 40% plus EBITDA margins. You'll note, in the third quarter, we ran at 39.9% EBITDA margin, that's a remarkable accomplishment and a real, I think, testament to how strong our business model is. You see good growth on every single line item in the third quarter.

 As you look at where we're going, first and foremost, it starts with subscriber growth. We, as I said earlier, crossed 32 million. We expect to add about 1.4 million subscribers this year and end at about 32.7 million subscribers, which I think makes us certainly one of the largest, if not largest, on subscriber count businesses in the entertainment business.

 We're scaling quickly in revenue. We expect to finish this year at $5.4 billion. That's about 8% growth, which I think is pretty good for how we're growing in off of a base. As all of you know, as you get into the bigger and bigger $5 billion, $6 billion, the percents get harder and harder.

 Really, really proud of this. EBITDA margin this year will approach $2.1 billion. I think I've used this joke every year. I was here when that number had brackets around it. So it's a real testament to what we believed we could do and now paying off for our investors and shareholders. And as I said, you can see steady improvement to an EBITDA margin. And obviously, in the third quarter, 39.9%, I'm more comfortable than ever now saying we could run this business at 40% plus EBITDA margin for a long time.

 And where does it go? Probably, the -- maybe the most impressive part of our model, almost all of it drops the free cash flow. And this year, we expect to generate almost $1.55 billion free cash flow. We'll talk in a moment how we're using that cash. But I feel really, really comfortable about the long term -- mid-term and long-term prospects for strong cash growth from our company.

 So where does it start? Well, it starts first and foremost after our value proposition or our content is our primary method of distribution is through the automobile, and it starts with new cars. As all of you know, there is about -- there will be about 17 million new cars sold in this country this year. It's a great country, I have to tell you. And we'll be in 75% of those cars. Some people ask me why not 100? For instance, in the luxury brands, we are in the 100%, but there is still a tier of cars that the auto guys sell without -- they are stripped down and they don't include certain features. And then we try to avoid fleets and some other things where our conversion is low. So I think you're going to see our conversion stay in that mid -- maybe it will creep up a little 70-ish percent, but it's really, really a strong way to grow. There is not a car company that manufactures, that sells cars in America that doesn't incorporate our technology.

 What does that mean? Well, one of the things that's really unique about our model, everybody complains about how slow the car -- the automobile product development cycle is. It is long, okay? The good news for us is we get to see way out where we are. I'll give you an example. I was with one of the major car companies, not last week, but the week before and we literally have signed off where we are in the 2022 model year -- calendar year 2021. So we have a really good view of where our penetration rate is going in new cars. Obviously, we don't know what the economy will do or what that ultimately might have on the consumer's attitude to buy. But we know where our placement is. If you assume that, that range will stay relatively flat or may grow and may then dip and then grow back, as it's done for the past 20 years, this gives you a view of where we are. And by the middle of next decade, our technology will be built into more than 185 million cars. That is really, really powerful. And let me show you why.

 When we started this business, I can tell you we only focused on the dark blue, which is new cars. And here's a profound statement, "It can't be a used car until it's been a new car." And so strong execution in the new car business is crucial, but what is so neat about our business model is, in the U.S. this year, there'll be 17 million new cars sold, there'll be 40 million used cars sold, 40 million. Inevitably, that 75% if you go out long enough in time in that 185 million, the 75%, in the dark blue ends up having to be the 75% in the light blue. This is a trial engine that is ours for the taking. This year we'll do over 22 million trials. Those are real -- these aren't dot-com trials. These are real trials. These are 22 million people who bought a car and gave us a brand-new opportunity to try to get them to experience SiriusXM and convert them. And it's the heart of our model. We've done very well in the used car business. We're growing it. Our penetration rate, as I said, would be over 75%. As impressively. In the new car business, every manufacturer reports to us every day who buys cars, every day. In the used car business, nobody does that. We've now built a reporting network of over 30,000 certified independent and car dealers who report to us now every day, here are the cars that came in on trade this morning and here are the names and the contact information for the cars that went out today and that were sold. And it's that engine that drives those trial models. I'm really proud of what we've built. We started that with 0 and built it to 30,000, and you're going to see that number continue to grow. Obviously, a big part of our future, if you're an investor in this company, is constantly asking us how well are we capitalizing on this emerging used car opportunity. And right now, I'm proud to tell you, we're doing pretty well.

 So before we sift through this slide, I thought it would be interesting to give you a little glimpse of the future of what we'll look like in new cars. With that, if we could play the video for quick minute, please?

 (presentation)

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 James E. Meyer,  Sirius XM Radio Inc. - CEO and Director   [5]
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 So the product you're seeing there is a product we call 360L. Why is this important? The actual screen size that you saw will be the user interface for how you get SiriusXM's -- how you get it -- the user experience in the vehicle and what's shown in the dashboard now for many, many, many years to come. Why is it important? First and foremost, it takes satellite and streaming and blends it together seamlessly. So that when you're listening to our service, you simply don't care where the signal's coming from. Whether it's coming from the phone in your pocket, the embedded modem in the car or through our satellite or terrestrial network, you simply don't care. You only care you're getting the best entertainment. It improves the product in many, many, many ways. Frankly, with 360L and I said this last year, then people wrote, that Meyer said it future-proofs our business, that's not what I said. What I said is, this technology will make sure that technology is never the reason why we can't be a leader in the audio entertainment business. I'm really excited about this. The big news here is while we've been showing this for a while, this rolls out in the first vehicle. I can't tell you which one. It rolls out in the first vehicle very, very early in the first quarter, and it will be showing with our OEM partners at the Detroit Auto Show in January. So you'll actually see it live in a vehicle for the first time that's being sold to consumers. Big, big step for us.

 At the same time, and I've stood here before and said also, again I don't care how you listen to SiriusXM. I only care that you listen and pay. And it's a key part of that first -- sometimes I forget part 2. We've invested heavily, heavily in our apps and our streaming applications. And 2018 is the year I expect to start paying this off. But I don't know how many of you have seen the Alexa Echo ads. If you haven't seen them, you're not watching television, okay? They -- especially, if you watch any sporting events, nothing makes me happier than in one of those key ads for them to feature SiriusXM for over 1/3 of that ad. And that's just a good -- we only introduced Sirius being able to play on Echo about 3 months ago, and I just can't believe how many subscribers I hear from now that are moving their in-home experience through Echo to listen to SiriusXM. And I can tell you, it's the same thing as the car. If you make it easy enough to use and the compelling is -- the content is compelling, they will come. And so, as Greg said in his comments, we're aiming at the car, and we're aiming at mobile now pretty heavily.

 When we put the 2 companies together, it's hard to believe almost 10 years ago, 9 years ago, we were able to combine all the easy things. We had 2 accounting departments. Now we have one. We put all the programming together. We put all of the ad sales together, all of those things. What we could never put together are the 2 networks. And the reason being if we ever stopped on one network and went to the auto companies, the auto companies would say, "Well, then I'm going to stop deploying it when you finish the transition, come back and I'll put it in." I think that probably wouldn't have never happened if we had stopped. And so we kept both networks running. But we've had a very methodical well-thought out plan to move our subscribers, eventually into one of the constellations. We have 2, XM and Sirius. And we are moving now very, very rapidly to -- very, very soon, there won't be any new cars built that have technology that actually comes from the Sirius spectrum. We also now have built a chipset that we call a dual-band wideband chip that look seamlessly at both constellations. We'll begin deploying those towards the beginning of the next decade. And by a combination of those, by the middle of the next decade, I know it's a long way away, but you have to decide now, we will free up a very, very valuable piece of spectrum. And I think a lot of analysts and our investors, some of them don't understand potentially what that value has. Now what will we do with it? I don't know. We're working really, really hard. My gut tells me perhaps there may be something in the self-driving autonomous vehicle area, where that spectrum could become very important. We could use it to offer video channels, we could use it to offer hundreds and hundreds of new audio channels. My point to you is, this will happen, and we're transitioning towards it and it has real value.

 Last year, I talked about our core business, and I said that a very important part that we would invest in is the connected vehicle business. And here, what I literally mean is making the vehicle connected so that we can enable other services to that vehicle other than entertainment. And we're off to a great start. We've got that business. We acquired a company called Agero about 3 years ago. Today, in virtually almost any other vehicle, whether it's Honda, Toyota, Lexus or an Acura. If you push that help button, that's actually us, that's actually SiriusXM through a white label that we provide to the manufacturer. And we're growing that business quickly. What we realized is that, and I'll say it again to hear, we see car plans from everybody we see them far out. I'll repeat, there will be very few vehicles built in 2020 that do not have embedded modems. So when I say very few, it could be single-digit. So the other way around, I believe somewhere between 80% and 90% of the new cars built in 2020 will be connected through an embedded modem, which gives us a whole lot of choices on how to do a whole variety of things for entertainment, infotainment and then these various services. What's left behind, however, is there's 240 million cars in this country, they can only change 17 million at a time. There's about 160 million vehicles that will never have connectivity. Our purchase of Automatic Labs, which is a small technology company in San Francisco, was all about buying technology for how we can get into those vehicles and provide connectivity going backwards to those vehicles.

 As Greg said in his comments, I think he summed it well. Stay tuned here, I think we could have exciting news here in 2018.

 Pandora. I get asked more about Pandora than we do our own core business, which surprises me a little bit. Obviously, I told you last year that radio is a $25 billion business in the U.S. We're 20% player in that. We're over 20% with Sirius at $5.4 billion of revenue. The other 80%, 90% of that is free. And we intend to figure out, is there a way for us to play in a big way, profitable way in that free business? And so a choice to start that. (inaudible) is for our investment in Pandora, as you all know, we own about a little slight less than 20% of it. Greg, myself and David Frear, our CFO, sit on the board -- we've been to approximately one board meeting so far. So we're only getting our feet really wet on what's going on here. But I have to tell you, this is something we're going to stay very focused on over the next 12 to 18 months as we look at what is the potential here and where can this company go with the proper investment level.

 Best-in-class capital return. Maybe the chart I'm most proud of on this page -- on this presentation. First and foremost, 92% rise in our stock since 2013. That beats any stock index out there. So we believe we're performing better than the overall market in a big way. As importantly, we've returned just less $9.5 billion of capital to our shareholders. That $9.5 billion is a combination of buybacks, a special dividend and now a ongoing quarterly dividend, which we also just increased at the end of the third quarter as well. And we continue to have a still rather large authorization to continue purchasing share from our board, and we think buying our stock today is a good investment, and our board obviously does.

 When I was in graduate school, there's not a lot I remember, but I had this old grumpy professor, and I thought he was kind of crazy at the time. But what he always said to me is, "Don't ever forget, business models matter." And I can stand up here and talk to you how well we're executing at SiriusXM, but the real strength of SiriusXM is not execution. The real strength is, we have a strong business model, unbeatable content with ease of use, leverageable fixed costs, the next subscriber we get will be our most profitable; high variable margins and strong cash conversion, a vehicle base that's going to grow from 185 million -- grow to 185 million over the next 8 years; technology that we're investing in that, I believe, we'll surely have a strong place in the car; and available spectrum that will double by the mid -- by the middle of next decade, which gives us a lot of opportunities. Thank you very much.

 (Break)

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 Charles Carey,  Formula One Group - CEO   [6]
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 Good afternoon. Great to be with you here today.

 It's obviously early days for us at Formula One, not early days for the sport. Formula One was actually launched in 1950, the first champion being an Italian. Giuseppe Farina, who drove an Alfa Romeo and actually beat one of -- beat that year, Juan Fangio, who is one of our great champions. Obviously, the sport's evolved a lot since then. This past year, 2017, we had 10 teams, 20 cars competing around the world. We drove -- we had races, 20 races in 20 countries on 5 continents this season that started in late March in Australia, and we'll finish Thanksgiving weekend in Abu Dhabi. An enormous global audience that really is spread around the world, not equally but certainly widely spread. And a sport that truly distinguishes itself from really any other sport out there. It's a sport that combines the drama of sporting competition with state-of-the-art technology, and a sport that truly creates a spectacle on the track that is second to none.

 When we bought -- I mean we signed the deal a little over a year ago, we didn't actually take control of the business until earlier this year. But when we acquired Formula One, there are really a handful of reasons that drove the interest in this sport. First, a view that unique global content, and we clearly defined that in a world where a lot of people talk about it, we are a sport, probably, it's really only the -- once every 4 year sports like the World Cup and Olympics that really travel around the world in the way we do. A sport with unique content that we think will appreciate in value at a time when a lot of forms of content are fragmenting or getting commoditized. And as you have this sort of really structural change in the world with the digital platforms coming in and bigger and bigger players, with content being at the core of what's going to drive them forward, we think it's this unique type content that will be increasingly important and increasingly valuable.

 I think second, it was an opportunity to really -- a unique opportunity to own a sport, not a team, not [choose only] one of the guys at the table, but to have a sport where we could control the moving parts and control and determine how we grow the sport.

 Third, it was a sport that we've truly believed had been undermanaged and underinvested in, particularly in the last 5 to 10 years. It was a sport that while it has great following and great passionate fans, a sport that in many ways has been underdelivering to those fans, and a sport that has sort of been living on its past in terms of its business initiatives. So I think a sport that we think is really ideally poised to be really taken to achieve its true potential. And a sport that has a very attractive financial profile; long-term contracts that give stability to the top line; costs that are tied to revenue, that give -- again, give likewise stability to the profits of the business; minimal capital expenditures; and a very high cash conversion.

 Now before we took over earlier this year, I guess, in some ways, I'd describe it as almost an organizational startup than a business turnaround. There wasn't much of an organization there. We talked in the past about really the lack of one. So probably the first thing we did in the beginning of this year and through this year was build our organization that can take the sport forward. We hired Sean Bratches, who had a career building ESPN for a number of decades, to oversee the commercial operations, the breadth of what you see there. And on the sporting side, Ross Brawn, who had a long career running Formula One teams and I think brings an expertise and respect that is probably unrivaled in the sport to oversee how do we make the sport everything it can be on the track. We retained Sacha Woodward-Hill and Duncan Llowarch on the corporate side, taking advantage of really their expertise and historical knowledge of the business. They've also been invaluable in dealing with some of the booby traps that Bernie left for us.

 So where do we go from here? Look, it really starts with making this sport great for fans. I mean, that's what sports are all about. We don't race for the teams or for others. We race to create something great for fans and then take advantage of how we engage those fans. And to really make the sport what it should be for fans, it starts with the race on the track. Today, again, I think we're proud of the sport, but it doesn't have the competition it should have. It doesn't have the action. It shed too often. Our cars are spread out around the track. You don't have a drama who's going to fit -- who's going to win at the end. We need to address that, and we have an array of initiatives under way to address that. We need to make this sport easier to follow, particularly to bring new fans in. The rules have gotten overly complicated. The tracks are tough to follow, how the rules apply to the tracks. And probably second to none, you go back to technology, we need to build the shock and awe. I mean, this is a sport that, again, is competition on the one hand. But it is -- it's sound, it's power, it's speed, it's something that just shocks your senses. And we need -- sticks with you and really makes the experience in engaging with this sport so unique and so important. So we need to do everything we can to continue to build to take advantage of that shock and awe.

 Second then, we need to build around that event. It is a sport that -- it's always been identified with sort of glamour and mystique. We're in destination cities. I mean the places we travel to. We're in Singapore. We're in Shanghai. We're in Milan. We're in Barcelona. We're in Mexico City. We're in Montreal. We're in great places, and we don't want mystique and glamour to mean exclusivity. We want it to be open to all and engaging to all but have a very special feel to it. Again, I've used repeatedly the Super Bowl, which I think sort of represents something of really high class and quality but really engages everybody who attends it. And so we need to be able to find that mix, capture that mix in order to do that. We need to make this more than a race. We need to make it at the track, a multiday experience of food, exhibitions, entertainment. Because you go out to a track, you don't go out for a 2- or 3-hour race. A lot of people go out for 3, 8-hour days. So we need to have the breadth of things that engage them in every which way and then go beyond the track and engage the city. When we're in a city like Milan or Barcelona or Shanghai, we should own the city. When you're in that city, you should know you're in a city that's hosting Formula One that week. And to make it all happen, we need to engage our breadth of partners and give them opportunities. Because our sponsors under us, they want to engage fans. And so if we do more, they'll do more, and it becomes additive, it becomes a multiplier effect of building that for all of us.

 And then the live experience has always going to be the pinnacle. It's got to be the experience that sort of stands out first and for most. We've got to equally make sure fans around the world can engage with the sport. I mean we have 350 million unique viewers for this sport. And to do that, we need to make the drive -- market the drivers, the brand, the sport itself that are so special. I mean these drivers are heroes. They're doing something that is beyond most people's wildest imaginations when you see what they're doing on those cars. We need to take advantage of all the platforms that are out there to connect with those fans. In the past, this wasn't a sport or an organization that believed in digital platforms, and digital is driving the world today. So we need to engage all of those and use those to enable fans to get as close to it as possible.

 It's a sport with a wonderful history, as I said upfront, 67 years old, great heroes, great stars that sort of are still sort of cherished in the countries they come from. We need to take advantage of that. It's a great asset for us. We can employ it at the (inaudible) live. We can employ that platforms around. But we shouldn't let it be an encumbrance to us, so we need to be able to grow. I mean, at FOX, when we took the NFL, we had a slogan: Same Game, New Attitude. And I think that's sort of what we have to embody here. It's how do we take what makes the sport great to bring a freshness and an energy and a perspective to it.

 And then we need to expand the franchise. I mean, this is a brand that sort of can connect with people in so many ways, so whether it's merchandising or e-sports or other vehicles, new ways and broader ways to connect fans and make -- and spread this sport and bring in fans to take advantage and experience really what is so special about the sport.

 So those are really the core things to sort of engage the fan, make the sport great. Obviously, once you make it great, we got to make it a great business. So what do we do to make it a great business for us? The business, everything it can be for us and our partners. And really, there are a handful of things that are going to drive it: traditional revenue pillars, new opportunities both from a market perspective and a geographic perspective and address the core business model we operate in.

 Talk about the core revenue pillars. The historic revenue pillars that have driven this business, and they're really the 3 you see here: promotion, broadcast and sponsorship.

 Promotion, which is really what we -- our engagement with the event promoter in each location. There -- to drive that forward -- and that's probably the one -- in some ways, so it's probably the most mature of the 3 we have, although I think there will be a lot of opportunities for us to really add a dimension to this. I mean, first, again, if you make the events bigger, you're going to give people more things to do, more ways to engage and more ways to spend money, and likewise, with our partners there. So as we broaden the event, broaden the experience at the track, broaden what's going on in the city, I think we have a chance to sort of increase the value of these events to our promoters. I think we also need to do a better job of making clear what is the value that we bring to a city, to a country both in terms of promotional value -- I mean we're a platform for most of these cities, and they'll like -- they say it right upfront. We're a platform to expose them to the world and engage the world. So it's a promotional platform and an economic platform that takes advantage of the people that come in from around the world to take part and experience what's going on at a race. Enormous value that we create for those locations. They understand it. But we haven't in the past done a good job of really presenting what is that value and how important it is to them. So this year, we've been putting together our capability to really make that clear and make that case.

 And then we have an opportunity clearly to enhance our race calendar. I mean our first priority is to make sure we've got great races. And today, to be realistic, we have races -- we have some great races, but we have races that either as a fan experience or as a business proposition to us aren't delivering what they should be delivering. So we've got enhanced -- we've got an opportunity to evolve the race calendar. We've got locations around the world that have interest in engaging us that have come to us. This is not us going to them. They have come to us. We do have outreach as well that want to host a race. So we're in a enviable place in sort of we can pick and choose our partners. And the opportunity to evolve that calendar in a way that both has the right races and the right number of races. We have a contractual right to go to 25 races. Next year, we'll be at 21. But it is something that is important, and we need to make sure we take advantage of that.

 On the broadcast side, again, an evolving world. It used to be much simpler. You had a couple of channels. You bid them against each other and sold the rights. Today, you're navigating obviously a much more multidimensional world of over-the-air television, pay television and the array of digital platforms that are competing for content. In many ways, they can be complementary, but clearly, there are also conflicts between them. We have different objectives we're looking to achieve here: the objective of reach, the objective of money and the objective of growth. And what we try to do is sort of to be able to engage all of them to the extent possible because we'd like to capture the right mix of each of those. Probably, they vary to some degree, how we prioritize it. And clearly, in each country, the tradeoffs are going to be different. I mean the broadcast event business is driven by competition. The more competition we have, the better value and the more flexibility we get. Competition is -- to some degree today, I'd say it's a mixed bag, it's okay. But clearly, for us, I think the most exciting part is competition is clearly changing. As I said upfront, you've got digital players. We're meeting with them on a regular basis now that want to be bigger and bigger players, more mainstream players and again unique event, content like ours is at the sweet spot of where they want to go. So I think the potential and, of course, sort of really a structural change in the competition for content like ours, I think is particularly exciting for us. And we do look forward to taking advantage of that. And then we, at the same time, need to make sure that we continue to make our product has an innovation or an energy that excites and engages fans that had freshness to it. I think we do a professional job today, but I think it's too much of what we do. It's probably not that different than it was 10 years ago. So whether that's graphics or sounds or camera angles, what have you, we're actually -- have David Hill, who really built Fox Sports, in as an adviser to help us as we go into next year, how do we launch the innovations and enhancements to the programming package we have on the air to really bring something fresh out to the marketplace.

 And sponsorships. Clearly, a very much an underexploited area for us. Quite simply, we didn't have the breadth of sponsors we should have. I mean, compared to any of our peers, we're woefully behind. So the opportunities here are multifold, sort of engaged sponsors in category. Some of them which are obvious for us, yet we don't have sponsor, so broaden it out, broaden our capabilities whether that's regionalization or virtual signage.

 Engage sponsors in a much more multidimensional ways. Engage -- let them engage with their fans and customers in ways that are more than just signage on a track. I mean, in many ways, what we've sold in the past is a one-note sale of -- put signs on the track, count how many minutes those signs showed up on TV, and that was the proposition. In today's world, sponsors want different things and different opportunities. And again, all these emerging platforms give us more opportunities whether it's live or digital platforms, ways to engage and create really unique opportunities for our sponsors as we go forward.

 At the same time, the -- we need to take advantage of the extensions of our franchise that we haven't really capitalized in the past. Hospitality is something that we had built, but again, it's too one-dimensional. In the sports world today, at these events, it is increasingly important to take advantage of your best fans and the fans that are willing to spend in some ways whatever you ask them for the right experience. We don't have the breadth of offerings and the quality of offerings across the board to really maximize that. So we've got to do a much better job of taking advantage of the hospitality opportunity for us. We've started again to engage with the promoters to create more structural opportunities for us to build on this.

 Merchandising and licensing. We've got one of the great brands, franchises in the world. There are opportunities from us, from a to z, to go out and take advantage of that with various partners.

 Unique events. We want to make this a 12-month sport or a 12-month event that will compete for 12 months, but there are opportunities for us to use these cars in an array of ways, use these drivers in a way, use these teams that in an array of ways to create things that people want to engage with. I mean one of my favorite stories was Budapest right after the race in Sochi earlier this year. They just brought 2 cars, drove them through as part of an event in downtown Budapest that had 250,000 people lining up to see the cars go through the street. These are -- this is a sport that does capture people's imagination, and we've got to create the right vehicle beyond our 20, 21, whatever it is, number, of races.

 Clearly digital. In a world -- digitals can drive the world. As I said before, we weren't doing much in the digital environment until this year. It wasn't something they believed in, in the past. It's sort of a -- certainly, it probably started because it was easy just a light -- to light up social, and you see the growth we've had socially there in this year. But there are an array of opportunities, and they'll continue to grow. That list is just going to grow. It's more -- digital players create more vehicles.

 Over-the-top, tremendously important, really a product targeted to our hardest hardcore fans. We have a sport rich in data, rich in information, and we want to be able to -- but nobody can access today. We have fans out there that truly would pay a significant amount to be able to really be an insider on what's going on in the sport, both on the track and around the sport as it goes forward. We plan to launch the over-the-top product for next season. Clearly, it will be something we build over time but a tremendously important initiative. eSports we have next week in Abu Dhabi. Our inaugural eSports championship, greatly received. Semi-finals were fabulous in London, a tremendous reception. And again, I think an area we can continue to build. And the others, whether it's gaming, content creation, we're negotiating with an array of players to create sort of the hard knocks-type product and other content experiences around the live race with a broad mix of players.

 We need to build new markets. I mean, obviously talked about building lines of business. Can't do so at the expense of the foundation. Our foundation is Western Europe. We need to make sure the foundation is strong. But there are unique markets realistically, specifically 2, U.S. and China, 2 biggest markets in the world, we don't scratch the surface in today. It's all upside for us. We'll build it differently in the U.S. I think we know more about how we want to build that. China, I think more dependent on having a partner that can help us strategically -- strategic partner help us grow the business there, but again, a very important partnership.

 And I think as important as anything, we sort of transform the business model. To start, we want to change the culture. We want to make this more of a partnership. In the past, it was a sport sort of every man for himself, a little bit of who could lie, cheat and steal the other guy. It sort of made the business 1 plus 1 is 1.5. We want to create more of a shared -- competition on the track, but a shared vision of where we think and want this sport to go and bring everybody along with it. Obviously, the big differences, we got to find the right compromises. But I think we can make 1 plus 1 is 3.

 Certainly, within that, the teams are uniquely important, and we have teams today that spend the better part of $0.5 billion per year to put the sport on -- put a car on the track or 2 cars on the track. It doesn't deliver any value for the fans. It's done to compete with the other guys. We are pursuing initiatives on costs, engine, aerodynamics, others, that will have unique opportunity to both improve the competition and make the economics much better. We want this to be a profitable business for the teams. We obviously want to get our share of that improved profitability. I think it makes it healthier for the teams, and certainly, it makes it more attractive to new teams coming in.

 It's early days for us -- 2017 and '18. In our many ways, foundation building, fixing some of the issues we inherited from the past that I think we're comfortable we're on top of. We want to bring to this a much different mind-set. In the past, this was of a very short-term focused deal a day. We've said repeatedly to grow the business, it needs to have a long-term perspective. And that's really our focus. And our -- the sort of stake in the ground we're looking at is 2020. Obviously, at 2020, we'll still have initiatives there early days, growing in the U.S., growing in China, over-the-top, we'll still be going, there'll be more visibility. But we really think by 2020, we can take the sport, and whether it's on a fans' perspective or a business perspective, really transform it, take it to another level and really have the sport on track to being everything it can and should be as well as a truly unique spectacle in the world.

 So thank you very much.

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 Michael Rapino,  Live Nation Entertainment, Inc. - CEO, President and Director   [7]
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 Thank you.

 Last night at dinner, John walked by. We grabbed him at the table, and he spit out that Live Nation had a great business model, had scale that's hard to replicate and had management credibility. And that was going to -- the core why the valuation was defendable. So as John does better than us, I'll spend 16 slides trying to say that. I would have rather had John say it on CNBC, but I realize I should have said that we were going to buy Charter, and then I might have got Greg or John to mention us on CNBC this morning. But anyways, we are up here convincing you why power of live. Wow. Wouldn't have thought that was a theme from Greg a few years ago. So we are glad that we are leading the way on live.

 So as you -- I think I've been here as long as Jim, 5, 6 years. I don't know how many years we've been presenting. I'm always proud that we have consistently delivered what we said we were going to deliver. This is a business, Live Nation, that's over 12 years, we have consistently grown the business as well as outperformed the S&P. And all 4 -- all 3 of our core businesses in 2017 will continue to have a record year as we head into the last quarter, and all of that is going to translate in 2017 at record top, bottom and cash flow for 2017.

 So as we repeat the broken record of a consistent financial business, I'm going to take you through what is our core business and how we're going to continue to grow it. You've seen this before, the famous flywheel. We talked about we're going to put almost 30,000 shows on in 2017. That flywheel of let's call it content, is what we believe we can continue to scale. And as we scale that flywheel, we are leveraging into new business lines of high margin. Three core businesses that we've been able to kind of devise off of that flywheel. We think we have more in the future that we can leverage off of that great content, but now we'll take you through the 3 businesses that are driving off of that content.

 Concerts. Greg talked about the power of live, the only really non-duplicatable art out there. Slightly different than sports, and sports has a whole bunch of great advantages. One of the great thing about live is you actually can't watch it on YouTube and get that same experience. So you can go to a U2 show for 2 hours, but you will not have a large-scale audience watching it on YouTube getting that same magical experience. So historically, that was kind of a limitation on how do you expand this product. Nowadays, though, when brands and others are looking for that magical 2 hours, the concert experience is actually the only 2-hour physical live experience that - you'll have to go to a U2 show to get those goosebumps. You can't watch it at home. So we can export some moments, but it truly is a non-duplicatable 2-hour experience.

 And the category in the industry in general had great consistent growth. Over the long term, it's continually grown. We believe that live will have a continual long-term wind on our back as the industry continues to expand. We think it's going to expand because of both supply and demand. On the supply side, the pie is getting better -- bigger. There are more artists on the road today than there were before. More artists are traveling, touring. Why? Because economically, it's how they're making their -- the living, also it's how they're most connected with their brands. So we think that old question we used to get on, who's going to be the next Rolling Stones? Who's going to be the U2? That isn't a question of relevance anymore. We've long proven out every year, the Taylor Swifts, the Ed Sheerans, there's a new artist every year filling the stadium. Because if you're a young artist today, you know you got to get on the road to make a living and connect with your brand. So we think there'll continue to be a long global supply of artists to fill the pipe. More importantly, there's a new global demand for that business. This is, again, an industry where today, emerging markets from Colombia to Thailand, a 19-year-old today knows that Taylor Swift has a tour announced. There are no more gatekeepers that have to tell her that over time. She heard on Facebook the minute Taylor Swift announced, "I'm touring in 2018." Those fans instantly registered online, and overnight, you have a global business that is driving this business. So you have more young customers, generation millennials, waking up saying, "I want to go to a concert. It's my top choice for entertainment," and it's translating to more dollars.

 So as we look at the -- move from the industry secular strength through Live Nation. So how are we going to make sure that we're going to convince you that we can still keep growing this business with those great tailwinds? Well, first and foremost, as big as Live Nation is, I'm proud of what we built. We're still, on a global scale, have lots of room to continue our consolidation. It's still a highly fragmented business. When you look at South America, where we have basically 0%. You look at Asia, where we're just starting. You look at Eastern Europe. Some of the emerging markets, India and China, where we have 0 market share of any substance. So we think we have years left of continuing to consolidate and scale our business. We're really proud of the right side because it shows we can consistently execute. In the last 5 years, we've grown 30 million new fans that come to our shows. Actually, more than 50% of that is actually organic. So between organic, bolt-on acquisitions, we have been able to supercharge our core business. We think we're headed for 125 million fans as we continue.

 The second way we're going to keep driving our business is there's a huge pricing opportunity, thanks to the Internet and the transparency of StubHubs and others, artists know now they're leaving $3.5 billion on the table. And now they're looking to say, "How do I bring that back into my side of the ledger." So every day, every year, we're sitting with artists. They may not be ready to go from the $200 ticket to the full $700. But now when you talk to an artist this year they're going to tour -- it was $200 last tour. You can get them to $250, $260, et cetera. So as we've shown over the last 3 years, we're going to continue to be able to drive pricing year after year, capture more of that $3 billion. In the last 2 years, we've captured $200 million, and it's really just started to get going from the artists' perspective. So lots of opportunity, continue pricing our product better. We have lots of opportunity to actually still sell more tickets. The press loves to talk about a U2 or a Taylor Swift demand, but the reality is 85% of our shows don't sell out. We have over 20 million unsold tickets which are all, as you know, high margin as you sell one extra ticket. So every year, if we just continue to sell 200 tickets more to every event we have, we're dropping real AOI high margin to the bottom line.

 How are we doing that? We've shown over the last few years, we have the best marketing digital data team in the world. This is a business that no longer puts billboards, and TV spots up to talk about a Billy Joel show. We're finding data. We're looking at past purchasing. We're looking at like-by-like algorithms. We're sending you propositions on the Internet through the e-mail and then through Snap, through social media, through Rihanna's social channels. So we're really able to target high conversion at a much better acquisition cost. We've been able to continually convert, and we think that'll continue.

 And the last place that we're going to keep driving all of that high-margin business is on site. They're really thirsty still for a better experience. I said it last year, Disneyland, all those great analogies we used. We think the concert business was the last business to get good at taking care of you on site. For many years, we just got you in the venue, overcharged, gave you a warm beer and a cold pretzel and told you to sit down and get out, right? That was the proposition. You love the artist enough, you put up with our crappy security guard and the bad service. A huge opportunity then, right? So we've seen it. We've been able to elevate, whether it's the VIP expedience, the lawn experience. These are wailers that are coming to our shows hungry. For those 2 or 3 times a year they come to take advantage of that opportunity and be the hero with their son or their date or their college buddies at the Guns N' Roses show. So we've got a whole host of products and ways we're going to continue to extract more on site. We think this is going to grow year-after-year.

 So that's the power of our concert, our core business on how we're going to keep monetizing those 85 million fans and those 29,000 shows. And then this is all talking about the power of live in our sponsorship division. This is where we do have what we think is something very unique that we're selling. Greg, I think, did a great job of kind of setting up the experience part. We like to distinguish there's actually a real difference between a live concert and a live sporting event, just in live event/live concerts to a generation Z or millennial is religion. This isn't going to a Dodger game. This is the most important passion that a young millennial has. When you ask them -- and we've just grabbed 4 facts, there's 30 more behind this. You ask any Gen Z or millennial where do they want to spend their entertainment dollars, their discretionary dollars. Concerts are going to be #1, 2 or 3 depending on the country or the exact demo. But it is their #1 passion. It's where they go to escape. It's where they go to meet people. Festivals are a huge extension of why they're so popular now because that's 72 hours of magic that, that 22-year-old gets to have. So we think we're selling magic in a bottle. Those 2 hours are so important. And why we've seen this great surge on the advertising side is because brands are having that challenge now, is how do I connect in this new digital world? As we say, they know how to put some ads on Snapchat, and they're trying to figure out the digital world. All of a sudden, the physical world is really attractive to them. So when we can talk to them about our customer base, they get excited. And why we have over 1,000 brands now sponsoring and being part of our platform is we have scale. But it isn't just beer and the kind of traditional concert brands you thought of. Every brand that we talk to that wants to talk to a millennial, generation Z knows that our avenue is a place to touch them, whether it's the fashion that they need to wear to get to the concert, the travel to and fro, the hotel they stay at, the cosmetics that they use. You can connect, and our data will show all of these brands we have the most attractive customer and we know where they're going to be on a Thursday at 7:00 and how to touch them.

 And then when you look at not just the power of live in general but the power of why brands want to be there, then you get to say, and by the way, and this is the first time I presented this chart where we've actually passed the MLB as the largest league in the planet. So we get to sit down with that brand and say, and we have all of that magic in a bottle at scale. So how do you want to talk to? Who do you want to talk to? And of our 40 countries of our total demos, how can we help your brand come to life? And this is the chart that continually shows customers and brands that our scale is where we can deliver the best music on site CPM.

 And we've been delivering year after year double-digit growth on this. We believe we have a huge-still addressable pie in front of us. As big as we are, we're still small in the overall pie. We think there's still $3 billion being spent on entertainment. So we're not even trying to get the sports dollars or the TV dollars. We don't even have to get that far. We just got to sit down with brands and convince them that they're already spending on music in some sense that we can do a better job spending it in our platform. So instead of spending it on maybe on a Spotify ad or maybe you spend it on a local rodeo country festival, it's all fragmented right now. We can sit down with that brand and say, "Let us present the real opportunity on how you should spend. If you want to talk to a customer, we can deliver you scale." We think that'll continue to be the reason we continue to grow.

 And our products are just getting better and better. What do our brands want to know? They want to know, great, Rapino, you got 85 million customers. I know it's sexy. I know they're at Lollapalooza. What they want to know, though, is, do you have depth of engagement with them. Do you have great data around them? Do you know who they are? Do you know how I can touch them? Do you have products that can really make a difference and help me convert? And we've been demonstrating year-after-year that our data is the #1 database in the world, combined with our on-site products, has been the way we've been continually delivering increased brand participation. We think, again, lots of room to move here.

 And our third global leader is Ticketmaster. I did sit here 5 years ago, I guess, and showed you a green screen. Rich, I remember, probably tweeted about that. And people back then said, "Oh, why are you spending money on software?" So I actually had to show you a green screen to convince you why it makes sense. But we are more than proud that 5 years later, we are not talking about our technology deficiency at Ticketmaster anymore. We have world-class, best-in-class software for our venues. So service-as-a-software, that platform called TMOne that we've delivered to over 12,000 clients is best-in-class. But more importantly, what we did in the last 5 years other than rebooting the team and the focus is we started to evolve the model. We built a platform that is more flexible, it's open, it's API-driven, and it meets the needs of today's clients. So we won't get displaced by any software or any company that says they're more flexible or they're open. We've been able to deliver all of those. Thus the NFL, our recent resigning was a big statement around that, where we're able to provide a new flexible platform for the NFL. It lets them accommodate some of their new partners that they want to bring into the party as well as deliver a digital ticket on the end. So our software, the team of engineers that have redesigned this has delivered also the business. You look at the tickets processed, renewal rate on clients, well over 100%. So we think we have now the best software UX business in terms of delivering for 12,000 clients, and that won't be the reason we lose business.

 The second piece of our business we knew to fix over the last 5 years was the marketplace. So now, instead of tying the close platform together that you had to have my software and I had to only sell on TM.com, we had to provide, again, flexibility on the marketplace. So the biggest thing we did on our marketplace as we rebuilt it was open it up. When you go to Ticketmaster today, you're going to find all the events. They're not just Ticketmaster events. Because to a customer on a Saturday morning, they don't know whether I ticket Barclays or MSG, they just want a Beyonce ticket. We've been able to solve that. And the reason our site traffic, our app installs have continued to grow is because we have more inventory on that site now than we've ever had, and that's been driving most of our ongoing traffic by adding all of those third parties.

 And I think the second thing we're really proud about not a lot of companies have been able to do is we shifted this business to mobile and grew it. So we were able to deliver the app, more inventory, better purchase flow, higher conversion. And all of that is delivered in the increased business.

 So as we continue to build the best platform, continue to be the best place to buy the ticket, one of the real underlines of this business that is exciting to us because of our core concert business is as much talk as ticketing gets about sports, the concert business is where all the growth is. So Ticketmaster's real strength on our core business model is helping us sell concert tickets. And you look at the core business and where the growth of Ticketmaster has been, it's been on the concert side. Now for 38 of the 40 years Ticketmaster was alive, its DNA focus was on sports venues. And the venue -- and the concert was the afterthought. The last 2 years, we've spent a lot of resources, built -- launched a new division called Artist Master that wakes up building products for the artist. Because the artist of tomorrow is going to want more control, more data and more involvement on how the ticket is sold to their customer. And we got to be ahead of that curve. So we launched this division in the last 2 years, started to put some real products together on what does the artist need to help deliver its business, what distribution options does it need. So again, when we're talking to an artist, when they say they've got a promotion on SiriusXM, great, we can white label an API over to SiriusXM. And while you're listening to Guns N' Roses on SiriusXM, you can press that buy button, and we're going to help you deliver that ticket on our platform: Spotify, Apple, YouTube just announced this week. So we're going to make sure we can help you go where you need to be to sell your ticket as long as we're powering it. Most important is we got a whole new set of analytical geniuses working with tours every day, saying how to price it better dynamically, what should you price it on.

 And then most important this last year, I think which is the breakout product, is our Verified Fan. If you would had said to me 5 years ago that Taylor Swift and Bruce Springsteen and others would be bragging about this product from Ticketmaster called Verified Fan, it would have been a dream. But Verified Fan, again, because we're talking about what does the artist want, our philosophy with the artist is really simple. First, let us help you price the house better. So don't give all of the arbitrage away to the scalper on the on-sale. Because no matter what we do, if we keep leaving $600 available to a scalper, it doesn't matter what technology we all use, that's too big of a money grab for others to get. So first, our job with the artist is let us help you price it better, price the front more, price the back less, so we can sell it through, but grab some of that secondary business that suits your brand image. So first, price it better. And then second, let us help you lock it down. So if you're Taylor Swift, and you've decided that you absolutely have a certain price point that you want to charge, then let us make sure we're developing top technology that can deliver that $125 ticket to your fan, and they have a legitimate chance to buy the $125 ticket, not to a scalper who sells it to your fan for $400.

 Now Verified Fan has been greatly -- has had great this press year. We've got a whole host of artists that have used it. We're making great inroads to being able to say we've reduced the amount of scalping, the amount of fans that have registered for these tours and then deliver a code and a direct ticket to them is staggering in terms of what used to happen. I mean you look at -- if we don't use Verified Fan on an on-sale, 98% of my traffic is a bought/scalper from somewhere else taking that ticket. When you're using Verified Fan, you can see the results.

 So we'll keep investing in Verified Fan. We like what we're doing with Taylor Swift on this idea that you can boost yourself in line. We might not have the mechanics perfect, but this idea that there's more transparency, I'm a fan, I want to get a ticket, I've registered with you, I know where I stand in the line, and there are ways I can move up the line is a whole new movement on how we start delivering that ticket to that fan. And this is why every artist in the industry is jumping on this idea of let us do this with Ticketmaster because it's the right way to deliver our ticket at our price. And we think this is one of the revolutionary products, is redefining Ticketmaster's relationship with the artist.

 And the final piece of Ticketmaster's delivery is going to be the elimination of the barcode. Again, this is a revolutionary idea that we're going to get rid of a barcode. And the reason there's $8 billion in secondary business right now is because it's a barcode business. As long as you can replicate a barcode on a PDF, we have no control, and the content will be never be able to figure out how to get control of the pricing. So airlines -- everyone else got rid of barcodes a long time ago. We got to get rid of the barcode. The minute the barcode is your ticket, is your phone, you walk and you scan it, you send it to your 3 friends, whole bunch of good things happen for content, whether it's Atlanta Braves or whether it's Beyonce. We now know who 4 of those people are versus the 1 person that bought the ticket. And quite honestly right now, we don't even know who is showing up at our venue. You look at our -- the way of the system, the barcode sells it to a scalper. He sells it to 3 people, and 4 show up at the venue. So now you have a whole new level of security. We're going to know everyone that's in the venue. We're going to be able to talk to that person when they walk in the venue. Do you want to upgrade your seat? Do you want a drink? We'll have real dialogue. We have data, security. And then obviously, the content, meaning the sports team and the artists can set some rules and limits around how we distribute that ticket and transfer it. So we think of this as a revolution. It's what we did with the NFL. I think it was the reason that the NFL chose Live Nation. It's the future of how content will want to deliver their ticket so they can deliver more control.

 So with these 3 global leaders, we think we have a lot of runway left. We showed you last year our path to $1 billion. We're on our way there in 2017. And we think through the next few years, we'll get to that mission. Thank you.

 (Break)

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 Derek Schiller,  The Atlanta Braves - President of Business   [8]
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 All right, good afternoon. I'd like to thank that Greg and John saved the best for last. So here we are, we do have a little competition with the Michael (inaudible). Actually, we're clients of his as well, clients of Ticketmaster and Jared and those guys. I'm Derek Schiller, I'm President of business. I am joined here with Mike Plant, President of Development, there's a reason why we have 2 people here. And we are going to get to that. If you stay until the end, I'm going to give the exact secret as to how to value our business because I think there's been a lot of questions about that and I'm going to tell you exactly how to get after that.

 So this past year has been a remarkable, remarkable year for us and when we were here last, we were talking about the building of a new ballpark, the building of a new venue that's called now SunTrust Park. We started that initiative about 4 years ago and it's amazing to think that in just about 33 months, we built a 41,000-seat state-of-the-art world-class ballpark. We were open April 14, 2017. We were on time and we were on budget, things that you definitely want to hear in this business. So SunTrust Park had a remarkable and very successful inaugural season. We obviously opened, as I said, April 14. We had the highest revenue for a single game in the history of our franchise if you add up all of everything from tickets to the concessions and merchandise, it was a remarkable achievement on that front. And if you take the entirety of our business, we're up over 50% of our overall revenues in just one year. Now just that shows you the power of what a new venue can do in this business, and it's driven certainly by increases in ticket sales. We also had increases in our television ratings. We have more people watching our games, 50% more year-over-year. And then, we had all those residual things where people come to the game they spend more on merchandise and concessions and what have you.

 The experience if you haven't been to SunTrust Park it is a phenomenal one. One of the things we're proud of is it's a very intimate baseball-focused ballpark as I mentioned 41,000 seats but there is something there for everybody. We've also designed a fan experience that goes directly outside the ballpark, Mike is going to talk more about that. It's called the Battery Atlanta, but that expands and intensifies and lengthens that stay and also the opportunity for engagement. We worked with actually Live Nation and promoted to shows, 2 sold-out shows at SunTrust Park. We opened with Billy Joel but then also had Metallica. You needed your earplugs for that Metallica concert but it was phenomenal. The ballpark has a lot for everybody. It has a number of different experiential elements. We have a zip line at SunTrust Park and we do that because 55% of our fans are fans that bring their kids with them to the game. It's really important that we know that but we also know that 41,000 people don't come to the game as one just homogenous group all looking for the exact same thing, they're looking for things that differentiate their experience. They're looking for ways to engage whether be the chophouse or great ways to have a fresh beer. We have a working microbrew on site. And then, one of the things that got a lot of media attention was traffic and traffic was a nonissue for us, in fact, it went from at Turner Field the #1 most cited issue to now being the #1 most positive issue with parking distributed 360 degrees around the ballpark and a lot of variety for that. I mentioned ticket sales. It's worth getting into that just a little bit. So ticket sales went from about 2 million to about 2.5 million, growth of 500,000 tickets, obviously, lots of revenue growth achieved as a result of that.

 One of the ways that our business is also modeled is that, generally speaking, Major League Baseball teams look for about half of their ticket sales coming from season tickets and the other half coming from the combination of whether it'd be single-game tickets group sales, et cetera. We were successful in doing that. But maybe most importantly out of the season tickets, we had huge growth in that high-revenue category of premium tickets, those tickets that have a club, an amenity associated with them and we went from about 400 premium tickets to almost 4,000, with now multiyear contracts, recurring revenues as a result of that. And then, also growth in things like suite revenue. It was mentioned earlier, but we had just a terrific success with our corporate revenue this year with over 130 corporate sponsors. We had growth near 90% year-over-year and we are already doing very well if you look at us compared to other Major League Baseball teams. One of the things that I'll note, is that the brands that we've got some of which are listed here at the bottom, I think they show a confidence in SunTrust Park and a confidence in our brand. That's at the end of the day what these guys are trying to do when they're out there. They're trying to associate themselves with a powerful brand to make their business work harder.

 We also have about 90% of that contracted revenue already coming back for 2018, so there's huge upside. And the final thing I'll say about corporate sponsorships is that we have this ability now to not only sell the ballpark but also to sell the Battery Atlanta. So as an example, the venue that we worked on with Live Nation called the Coca-Cola Roxy, well we sold the sponsorship to that, the naming rights, to Coca-Cola, we also sell all the integrated packages that go into our common areas and things like that. So it's a way for us to be able to drive all of that engagement and create more cross-platform selling.

 On-field obviously, what we are about is a 25-man roster and what happens on the field, that's our product. We are it -- I would call it, late stages of our rebuilding, that's been ongoing for the past 3 years and so while our on-field success wasn't necessarily what we want it to be, at the end of the day, we are trying to win the World Series, it is something that you can see advanced growth on and we've got a lot of positives there. Guys like Ender Inciarte, Freddie Freeman, those types of players that are coming back and doing exceptionally well. We also renewed our coach, Brian Snitker, our manager and then recently or actually earlier this week, we hired a new General Manager, Alex Anthopoulos, who came to us from the Dodgers and before that he was a GM at Toronto Blue Jays. We're confident that we're going to be able to take the next step and grow this team, and we're also confident that we can take advantage of what's been done over the past 3 years, notably, building our farm system, that lifeblood for baseball teams to be in the #1 farm system in baseball for the past 2 years. And those guys will soon matriculate to the Major League level and create, obviously, on-field success like we want.

 So now I'm going to turn it over to Mike who's going to talk to you about the development.

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 Mike Plant,  The Atlanta Braves - President of Development   [9]
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 So last guy gets shafted on the time because the thing is already yellow up here. So I'm going to go really quick but a year ago when we were here, we had an active construction site, 8 different general contractors all in a fury building 2.5 million square feet as Derek said, we've accomplished that in 30 months. This gives you a feel for the development that we own, we operate, we manage, we drive it and we control what happens on that. Not only the ballpark of SunTrust but also this entire development. You can see just about everything is complete, almost everything is leased up, and we'll get into some specifics. And essentially by the end of this year when the hotel opens, Comcast is moving in, every one of these vertical stacks is cash flow positive for the real estate that we invested in.

 The retail partners, I mean, there's no question the retail space has been challenging around the country. We've been able to compete in that space very actively. We've shifted our strategy into an experiential type of an experience that ties in obviously well with SunTrust Park and we're doing extremely well we got 70% leased. We leased the last 25%, 30% by the end of the second quarter of next year. This again is already cash flow positive, and you can see what the restaurants per square foot are doing which is among the highest of anywhere in Atlanta.

 The lineup we have, this is just a few of them but we have 5 James Beard award-winning chefs nowhere in the Southeast in that type of a concentrated area does that happen, and that was kind of an interest that these guys had. Yard House, for example, just one of those of our 20 restaurants. It's one of the top 5 performing restaurants of Yard House in the country right now already.

 Residential far exceeded our expectations. We're getting some tremendous rents. They over our pro forma and original projections, we're well over 300 leased residential properties. Just the last 125 of those came online in the last 4 weeks actually, and so the interest in the millennials and the more mature adults like the destination that we've created has been really tremendous and that we are really pleased with it.

 And then, we've mentioned before, if we didn't, our partnership with Live Nation, we'll do their plug again it's been tremendous. It's a 15-year partnership. We had 29 concerts we've already put on in the Roxy. The Roxy Theatre will do upwards of 50 we think will certainly exceed that next year it's become very quickly one of the premier entertainment venues in the city of Atlanta.

 And then, more to come. This week Comcast starts moving in 1,000 new employees into the 260,000 square foot Comcast office building, it's one of their innovation labs in the Southeast. We'll be the benefactor of a lot of the new technology that they'll continue to develop. We have spaces that is also in one of our other buildings. We are 100% leased essentially in office. We got a lot of interest in some of the additional real estate that we have for Phase 2 of our project and then, on the 3rd of January we opened the first 4-star hotel in Cobb County and one the only 4-star hotels in that part of the city of Atlanta. And as you can see from the numbers we're already over performing the original projections and pro forma and we haven't even opened yet.

 And then, just our capital spend to give you a little bit of a feel for what obviously, we have spent $398 million total spend on the Battery at this point in time. We also have spent -- our portion of the entire Battery is $364 million, $188 million of that was equity and the other $176 million is debt. But again, we are already performing cash flow positive on everything that's open hotel and Comcast, obviously, will be opened in the next couple of weeks. So extremely pleased with the results of our development. The vision we had has far exceeded our expectations obviously, and we have more great things to come and controlling this in creating this new legacy destination in Atlanta. So I'm going to turn this back to Derek real quick

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 Derek Schiller,  The Atlanta Braves - President of Business   [10]
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 I promised that I was going to give you the secret to the valuation of our business because over the past, I don't know, less than 24 hours we have been getting -- Mike has been getting a lot of commentary about, how do you value this thing? It's a sports team. We don't understand it and we don't know how to model it and all these guys have all this different formulas and metrics that are relatively easy to follow. The simple fact is right, we're now 2 businesses. We are obviously, the basis of the baseball business, which you're starting to get to know. We're also this real estate asset and this real estate asset what did Mike say, cash flow positive? We're getting cash flow positive already so we're over performing on a pro forma. But if we just look at say, Forbes, who took a look at the valuations of MLB franchises, it does that every year. Last year, we were at $1.5 billion was according to Forbes. I don't know, they modeled something, perhaps maybe better than some people in this room. I don't know, but they also did so with a factor of revenues of 2016 revenues which were $250 million thereabouts. This year, we are $380 million, and last I checked when we were looking at the stock price earlier, we added up to less than $1.5 billion, so something's not jibing, right. Now if you look at just the most recent purchase, the Marlins, they sold for $1.2 billion. That was 25% over what the Forbes estimate was so if you start to apply some of those principles just basically, I would argue that our stock is extremely undervalued. Thank you very much.

==============================
Questions and Answers
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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [1]
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 So it's been a long day, it's almost over for you. What can we answer that you didn't get inundated with? How about you in the front.

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Unidentified Participant   [2]
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 Given the global reach that you can get in some of these Internet music platforms now and frankly, historically bad unit economics due to the high content costs, does it make sense to at some level like vertically integrate by owning either like a publisher or probably not a recording studio, but -- or is it...

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Unidentified Company Representative   [3]
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 For music.

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Unidentified Participant   [4]
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 Yes. So for instance, if you were say a Pandora buying one of the publishers or something like that.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [5]
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 Jim, do you want to comment first?

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 James E. Meyer,  Sirius XM Radio Inc. - CEO and Director   [6]
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 Yes. I think for us, to talk about being in the publishing business is probably difficult because at SiriusXM, at least, or I can tell you at Pandora I know feels the same, we would -- we really are looking for exclusive content that we can drive and if you want to be successful in the -- at least in my opinion, if you want to be successful in those businesses you described, you want to license to everybody, so I don't really see that on our road map. I think a fair question is as platforms get bigger and bigger that involve music, you could ask yourself do you belong in the label business, and that's a question we have really never answered. It's one that sits in the background. So Mr. [league 2] Michael Rapino, I heart live, are you going to -- do you want to buy a record company, a publisher, do you want to...

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 Michael Rapino,  Live Nation Entertainment, Inc. - CEO, President and Director   [7]
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 No. We wouldn't. I think the publishing wouldn't do anything for our live journey. The label business even there's 3 of them right, they got great catalogs. They're going trade it for a pretty high multiple. In life, I don't think any one of those 3 are going to ever be sold cheaply but regardless of what the future digital dimes they get from distribution, that back catalogue is going to give them real scale for a long time. So if Warner or any one of those were for sale at a great multiple, Greg and I would jump on it. But don't think...

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [8]
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 But just want to make clear. Lucian are you listening? We're not trying to compete with you. Go ahead next question. John?

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Unidentified Participant   [9]
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 (inaudible) given you talked a lot about simplification today, how do you think about the Formula One structure given that it has Live Nation, which actually has, now we know the number of shares so Formula One, of course, has a larger market cap. You also own stock in Braves plus other companies. So how do you -- where do you see that structure going?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [10]
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 I promise I did not use the word simplification once today, John, I swear. That's not Liberty. You know us. Look I think you could make a good case and you've seen some of the case we tried to make today that there is synergy value in Live -- with Live Nation potentially with things and they are doing more between Live Nation and SiriusXM or Live Nation and Pandora. But there also is potentially synergy value between Live Nation and some of the others. You heard some of the brave partnership ideas some of the ideas about what we might do to take lessons on how to make events better, make them more complete, Chase has talked about making Formula One a -- each one of the 20 or 21 a Super Bowl weekend. Increasingly that includes concerts as a potentially part of the experience. So I think you make a case that there are more synergies and more things we can do with these pieces together and there really is value across the various franchise we have. How about here in the front?

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Unidentified Participant   [11]
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 So with regard to the presence of an American Formula One team that's based in America and the substantial impact this could have on the sport are you able to comment on your plans to provide a path for American teams to enter the sport that is essentially impossible at this time?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [12]
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 I think and I'll give a quick answer and let Chase, who probably can be far more articulate, nothing would be better to have an American team, an American driver, at an American venue win that will be pretty compelling for a lot of interest reasons. So the things to make it easier for American OEMs to play, American teams to play, American drivers to get experience are all good things.

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 Charles Carey,  Formula One Group - CEO   [13]
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 Yes, no I'd second that. I mean it will be great for us to have just like it will be great to have a China team the same thing. I think we can't obviously just put one in place. We actually have Haas. It's an American team, so we have an American team. But I think that most important thing can do is make the business model for owning a team much better. I mean today when I talk to some of the entities that you'd like to have in the sport or think about being in the sport they'll end up saying today it either costs too much or if we're more disciplined than what we spend, we're competing in the back of the pack if those are the 2 choices that is in that attractive and I think that's why we're pursuing cost and engine initiatives that we'll still have differences in the cars so they're still -- each car is unique but competition is more balanced and the economics are more predictable, and I think if we can create that business model it will benefit our existing teams. But I think it will make it much more interesting to an array of potential new entrants.

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [14]
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 Let's go for one over here. Barton, we did you in the first. How about behind you, gentlemen with the beard?

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Unidentified Participant   [15]
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 A couple of questions. First in the Live Nation presentation, you mentioned additional businesses that you could add to the flywheel there. Just wanted to know what those businesses might be...

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [16]
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 We'll get you the names and the ticker numbers, okay? We'll have Michael, Michael you want to comment on what would be attractive to add to...

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 Michael Rapino,  Live Nation Entertainment, Inc. - CEO, President and Director   [17]
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 No, not really, not to Brandon. Rich will tweet it too fast. No, I mean, listen we're not being coy -- we've talked for the last few years. We think we've got a great scale and great -- although we talked 3 businesses there's many businesses within there that we're pursuing, venue management, et cetera. So we think there is great opportunity as -- when you're driving 29,000 concerts a year in 40 countries we're going to keep finding new ways to spin businesses off that.

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Unidentified Participant   [18]
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 And then, outside opportunities in terms of live, do you think there are other live or live-oriented businesses out there besides the ongoing rollup at Live Nation that could be interesting to you to add on, I don't know, other teams at WWE, stuff like that?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [19]
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 No I think -- that's a great question and I think trying to think about things that are -- if they're not technology proof, you are on the right side of the technology trends and you have less risk of disruption. We mentioned why we like live events. You've heard a lot of the reasons why, we think that these live events is well positioned but there are other ones we are talking to now. Whether they will be successful or not, we'll see. But I think that's a great space in a fertile field and we might even be able to get some cross-promotion and synergy across them.

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 Robert Ball,    [20]
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 I am not an analyst, I am an asset holder. My name is Robert Ball. I'm the CIO of $13 a billion pension fund here in New York and I wanted to know if either of you were aware of letters that have come to Mr. Rutledge from large...

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [21]
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 You talk to me about that at the break, so you and I covered that. So you don't need to make your point thank you. He's talking about disagreements between Charter and some union members, and we talked about that in the break. So you already -- I answered the best of my ability, you're trying to project here for your own edification. That's okay. Let's go to the next question. Mr. Bazinet?

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 Jason B Bazinet,  Citigroup Inc, Research Division - MD and U.S. Cable and Satellite Analyst   [22]
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 As a team, you guys have been so prescient in terms of using your capital to buy businesses that aren't going to get disrupted like Live Nation or Formula One. Probably the most profound thing that seems to be going on in the market today that I see is institutional investors are all very long in the FANG stocks. They're shorting all the companies that are going to get FANG-ed and the derivative is that they are looking for consumer discretionary stocks that are not going to get FANG-ed. And so my question is, as you sort of look at the landscape and do all your valuation work which you're so good at, do you see opportunities that are still out there for the live event opportunities or things that aren't going to get FANG-ed that are still compelling? Or do you think that the valuations have essentially become too extreme because the buy-side has embraced your vision may be a bit too much in terms of the multiples?

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [23]
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 I'd say the generalization right now because there's been so much money chasing everything out there, but pretty much everything is fully valued so you got to find something that's either an unusual distress situation or you got to find something that has very large synergies with something you already have or something you can put together. I think it's a generalization. So right now, I think the M&A is a synergy world for the most part. It won't always be that way. And we're fortunate that virtually every large entity we have is very largely free cash flow generative. So we have a lot of financial flexibility if something comes along that would be synergistic or they would be distressed. And the distressed world is not very large right now but there are some. So I think you can sort of look in that category or you can look at horizontal transactions where there would be a lot of synergy.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [24]
------------------------------
 I tend to agree. Barton?

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 Barton Evans Crockett,  B. Riley & Co., LLC, Research Division - Analyst   [25]
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 I was curious about the terrestrial radio business, which I know you've addressed in previous years here. But a lot has changed. I mean you've got into Pandora, there's been some turbulence there at the outset. There's a lot of terrestrial radio companies that are flirting with bankruptcy potentially. There could be a lot of assets out there. With the passage of time, how would you describe your interest in that terrestrial radio business at this point?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [26]
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 So we've talked about in the past how the streaming business in the U.S. might be I don't know to under $5 billion certainly if you put aside Siri. And the terrestrial market is even including Pandora is probably $15 billion so you look at that pool and say that's interesting. You rightly know that all of the big players are in some level of either just financial -- just had financial distress just got spun out some combination of leverage, they're all -- none of them is exactly roaring. We have taken a dip of our toe collectively Siri and through our ownership in Siri, Liberty into the free space with Pandora. And certainly, we are watching the terrestrial space. We'll see. I think we like to learn a little more about the free space and how we can compete through Pandora probably before we do something but it's certainly, there's big pool of capital. I don't know what you might add, Jim.

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [27]
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 I completely agree with that. It is one the issues of course, unique and exclusive content in all of the entertainment industry. If you can find something that is unique and exclusive and has a big audience appeal you can move a lot of the dials. So the problem with most of these music businesses, it's a commodity and it's very available everywhere. And it's hard to differentiate it. That's why Sirius has been so successful by blending music content with a bunch of exclusive or quasi-exclusive nonmusic content.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [28]
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 Certainly exclusive in that window, yes?

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [29]
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 Right. I don't know about a lot of people but I have a very, very hard time driving a car that doesn't have Sirius in it, and it's not for the music.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [30]
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 James.

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Unidentified Participant   [31]
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 Levered equity growth has been key factor of Liberty companies and the cable companies more broadly historically. Do you see the potential changes of the tax with lower corporate tax rates affecting the appeal of a levered strategy?

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [32]
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 Well, I don't. If interest rates were substantially higher and you were banging into these tax-deductible ratios, it would be an issue, but when you're -- if you're out there borrowing long money at sub 4% and you're still buying incremental cash flow at 8 to 10x post synergy, that's a big free cash flow generator folks, and the real issue is the sustainability of those cash flow streams. In the old days, I used to model the cable business very much like you would real estate. It was kind of -- it was low return on invested capital, slow growth but organic growth and you needed leverage to get any kind of decent return on equity. And I don't think that world has changed. Now, you're going to see lower marginal tax rates maybe and you're going to see caps on leverage. I mean, just rule of thumb if you levered 6x with 5% money, you're at the 30% cap. That's more leverage than most enterprises would feel comfortable with on a long-term basis unless they have a lot of growth. So I don't really think it affects the model that much. I think there may be some problems in the current draft with respect to the treatment of the interest cap relative to international liabilities and how you treat the use of interest expense in order to shift earnings around, which may change some behavior. I don't believe that we have much if any of that exposure in our enterprises but those people who have aggressively used intercompany notes at very high interest rates between parent and subsidiary in order to shift earnings offshore, those are the kind of issues that I think the tax reform is trying to get at. Whether they are successful -- how that ends up, I'm not sure but it really would not affect us in any material way.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [33]
------------------------------
 (inaudible)

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Unidentified Participant   [34]
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 Over the years, there's been a lot of spin-offs and split-offs. And I'm just wondering if you guys have a way to kind of keep some more permanent capital and go out and redeploy and do some more deals?

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Unidentified Company Representative   [35]
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 It's a constant tug. We have because theoretically one of the advantages with our structure is permanent capital. But then, of course, to avoid corporate-level tax it's effectively turned out we've had to spin things or split them in such a way that had to set them up for separate buckets at the minimum which means you can't move capital across freely the entities we have influence on our control. And look at the power of Berkshire Hathaway that has the ability to move the old business school, what's a star, what's a cow, you spend the money from one to the other. We haven't had that ability. On the other hand, we've had flexibility in trying to avoid the corporate-level tax or get the fullest valuation for the separate entities. And so there is that tension, we worry about enough scale. So some of them are eliminating corporate level tax, I'm not sure what -- corporate level capital gains tax, I'm not really sure how we would get around the problem. We do talk about this quite frequently, actually.

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [36]
------------------------------
 Well it's always a trade-off and timing is usually the issue. I mean we all agree that at some point, we're going to have to change the structure and realize and eliminate discounts that are inherent and improve focus. I grew up in the business world in a very much troubled and overlevered environment, and the concept of watertight bulkheads isolated exposure don't put all your eggs in one basket is still pretty deep in my memory and so if we have 13 different public corporate entities for the pack and very few of them have any cross liability, that is, Greg has to suffer with a lot of my historic instincts. I think it's the reality of that, but it has a benefit but it also has its limitations. And we tried to keep the enterprise large enough and flexible enough that it has the ability to take advantage of opportunity. And Formula One is a great example of creative finance, and one of the benefits of having a crazy structure is you can go out and buy somebody essentially who would love to do an IPO but can't figure out how to do it, and you can provide them with a sponsored IPO through a tracking stock structure and leverage off of what you already got without diluting it. It's a very interesting structure and keep in mind, I'm not going to give you guys a lecture on tracking stocks, they're wonderful. They work well for me but they're transitional.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [37]
------------------------------
 Yes. I mean, unfortunately, we're not able to convince everybody that they ought to take our nonvoting tracking stock. It did work out pretty well for CBC and their investment group, and maybe we'll be able to...

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [38]
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 But just keep one thing in mind, when you are as a company which we have been over many years, net very redemptive, okay, having your stock trade at the highest possible value at every minute is not necessarily an interest of long-term shareholders or investors.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [39]
------------------------------
 I tell Courtnee sometimes I wish we didn't have an Investor Relations department because we could buy back a lot more stock cheaper. She doesn't think that's is nearly as funny as I do. Next question.

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Unidentified Participant   [40]
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 At what prices would you consider traditional media to be trading distressed levels and levels that would be interesting for your company?

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [41]
------------------------------
 What's our -- what kind of IRR that we want to feel comfortable we can generate on invested capital, north of 20%.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [42]
------------------------------
 But a real problem is a lot of these are not going to work well in the public markets. If they have declining terminal values, slowing growth that's just a tough public company model. The market is paying for largely for growth. It's pretty rare that may be a good private model where you throw off the cash flows but it's a tough public market.

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [43]
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 That's a good off balance sheet joint venture with the private equity firm.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [44]
------------------------------
 I mean, no, It's a tough public model to have declining cash flows, I mean it may be great, it may be a great overall economic proposition depending what you paid up front but it's a tough public model. Yes. In the front.

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Unidentified Participant   [45]
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 I was just curious about on a follow-up a little bit on that last question. A lot of the traditional media players who have sports content are viewed as better protected for a lot of this live experience that you talked about. What's your view on if the FANGs of the world start bidding for sports rights? Do you think that the sports contracts have terminal multiples? Or are those simply only as valuable until CBS is outbid by Facebook or Google for NFL rights, or how do you think about that?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [46]
------------------------------
 I'm not trying to follow, who's -- you're saying the contracts themselves have rights...

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Unidentified Participant   [47]
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 Do the contracts that content providers have, do they have is the value only until the contract -- may perhaps, their content is isn't as valuable as people think.

------------------------------
 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [48]
------------------------------
 Let me put it in context right? I mean basically historically, sports rights because of competition in the U.S. amongst distributors, have had more extractive value than the value that would be attributed to them by their consumers. So it's a tax. Now, if there's a new distribution scheme that essentially has to sell to the consumer at a fair value without it being a tax in effect, that would be a very interesting outcome and be very good for the consumer. But right now, the big table bundle hasn't -- a substantial percentage of that wholesale cost is a de facto tax because of the nature or competition and the nature of affiliation agreements that the guys who license those sports rights have over the distribution industry. I mean, that's just -- so if you envision that structure melting, right. I mean, this is why Disney gets so many questions about ESPN because their affiliate fee per eyeball is off the charts expensive. And so is it on most regional sports, operations but you have to assume that, unless competition amongst distributors suddenly narrows, it will continue to be an extractable tax. So in my view, the guys, and with the social networks, if they buy the sports rights away from the existing distribution, they better have some other monetization scheme or valuation metric. In some of the situations, you can ramp the locomotive, in other words, when -- was it Twitter goes out and Twitter buys a couple of games.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [49]
------------------------------
 Amazon's done them too.

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [50]
------------------------------
 If they get enough boost as a marketing expense, then, they can monetize what they paid for those sports rights as essentially a share shift or marketing expense. But on a sustainable basis, it's going to be very interesting to see if a direct consumer model for expensive sports is viable relative to the current revenue streams. Chase used to do that for us at DIRECTV. He may have some opinions on this.

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 Charles Carey,  Formula One Group - CEO   [51]
------------------------------
 No. I think the real. . .

------------------------------
 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [52]
------------------------------
 How many hundreds of millions do we lose on Sunday football as a marketing expense, Chase?

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 Charles Carey,  Formula One Group - CEO   [53]
------------------------------
 No. I mean there's no question. And I mean you did it because you had a benefit to your broader business. And I guess in some way, look at Amazon and what they're spending on video today, they're charging it up, just to get more Amazon Prime customer. So when you get these big entities that are driving much bigger agendas, they can afford to pay I mean like it's ESPN when it went outside the country, they said we can't bid for sports rights because all we do is make you pay on the network. And that didn't work because they were competing with people that are going to drive a much bigger business around the value of that unique content.

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [54]
------------------------------
 Yes. So you know it has a lot of power in a competitive environment to extract from the competitors because it does represent a share shift, and that's capitalism.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [55]
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 In the back, 1 and 2 so we'll take both. Keep the mic nearby.

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Unidentified Analyst   [56]
------------------------------
 Just following up on the rationale that you just presented, sir. If sports rights are taxed and they're not monetizable about today in any economical way by the current distributors if the new distributors were coming along and are paying up even more for these sports rights, if they don't have the ability to monetize this in a better way so it continues to become a tax, eventually when the distribution consolidates and it's going in that direction those sports rights are going to go down in value because then rationality will come back to the monetization of the sports rights. So either the new platforms are able to monetize these assets better, and hence, the price of Formula One and other sports rights and live events that you own are continuing to go up because the monetization is more efficient or this is all a bubble and these sports rights will collapse.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [57]
------------------------------
 But I think we talked a little about this morning. I mean if Netflix has 100 million subs they can spread those cost more broadly they can bid more for content. If Facebook has 2 billion dailies or 1.5 billion dailies and they can spread it across those 2.5 billion dailies. And they get a marketing power out of it. Or Amazon has another model for compensation which is not just the content but this was noted here they are giving -- they spending $4.5 billion and basically giving you the content because they want you to become a Prime subscriber and do other things, those monetization schemes are totally different than what has been the traditional monetization schemes that's been going on a long time. And I would note, I think in general the number of platforms is increasing, right. You got new guys entering who are bidding who didn't previously bid. That's certainly one of our hopes at Formula One that they all show up and bid a ton.

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [58]
------------------------------
 But it's not clear that the consumers would pay the wholesale prices if they were just allocated that -- from these rights from these sports rights. So yes, a bigger distribution base can afford to spend money from a marketing perspective. The question really does it add value proportionate and to inform yourself, take a look at the Dodgers deal that Time Warner cable bought in L.A. and what happened.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [59]
------------------------------
 Which is unfortunately now our deal at Charter.

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 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [60]
------------------------------
 Right. It's our deal but there was a huge write-off that came ahead of us.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [61]
------------------------------
 John -- and John unfortunately as you know, that's an accounting write-off. We're still paying the Dodgers $265 million a year. Something ridiculous anyway. The contract was -- this long-term contract was way overvalued, right, to what Dodgers agreed -- sorry what was agreed to be paid to the Dodgers. So at the time of the purchase, there was an accounting adjustment but it's a book adjustment.

------------------------------
 John C. Malone,  Liberty Media Corporation - Chairman of the Board   [62]
------------------------------
 But going back on Greg's theme earlier, live events, where you're not really competing with the best of anything that's been done for the last 50 years and recorded, have real power. And they have urgency and they're important to advertises, and they're important to consumers. And so value tends to go there, and to the degree in a competitive environment you can share shift or if Jeffrey buys the NFL and he gets them another 10 million Prime customers, it was cheap, right? Because he has a whole different monetization mechanism. Right now the question is. I tell you, let me tell you a quick little story. When Ted Turner got in trouble years ago, he bought with Mike Milken himself, he bought Kirk Kerkorian's MGM business, and he paid more than he could afford. And he had to raise some money in the industry to help him out and that's how come we have Sunday Night Football. Because in order to create a revenue stream to bail Ted out, we had to launch a new channel. Well, what's the one thing that the distributors couldn't say no to, NFL, so we actually licensed 8 NFL Sunday night games. They created Sunday Night Football for us. We launched the channel called TNT. The affiliate fee was $0.50 a month. In those days we had 60 million customers, right? So $30 million a month was created for Turner plus advertising and the cost was the licenses for 8 NFL games for 2 years. When ESPN outbid us for those games 2 years later, we were thrilled. We didn't lose any customers and our cost structure dropped precipitously. So that's all I'm saying. It's a ramp of locomotive game. It's a ramp of marketing ploy. If you can actually share shift and the capital value of a customer is not 1 month's revenue, it's lifetime revenue plus the ads that come with it, so you could go out. In the old days, we would go out and license something like Jaws with exclusive distribution and yet the industry gained 1 million customers that were worth in those days, $600 apiece, you created $600 million and you might have paid $5 million to license Jaws for one showing. So yes, I mean, as something that can pulse or share shift or has a marketing expense, these things are very powerful. If you have to sustain them, it's very dangerous particularly because the sports guys are smart enough to not give you a really long-term contract at fixed low rates. So after you've built your business for 3 years, then they want to renegotiate and they'll take, they'll squeeze all the upside out of it. And that's basically sports on television and that's why it's so valuable to own the sport as opposed to license it. Because if you build a whole global empire on licensing Formula One video rights, guess how ugly that renegotiation would be when that contract expired.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [63]
------------------------------
 Well, I think we've reached to our appointed time, and on that note, what could be better to finish. I want to thank you all, all of our presenters and all of our guests who came. Appreciate your continued interest in the Liberty companies and I hope you join us again next year.




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