Q1 2018 Liberty Media Corp and Liberty Tripadvisor Holdings Inc Earnings Call

May 09, 2018 PM UTC 查看原文
FWONA - Liberty Media Corp
Q1 2018 Liberty Media Corp and Liberty Tripadvisor Holdings Inc Earnings Call
May 09, 2018 / 03:00PM GMT 

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Corporate Participants
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   *  Charles Carey
      Formula One Group - CEO
   *  Courtnee Alice Chun
      Liberty Media Corporation - IR
   *  Gregory B. Maffei
      Liberty Media Corporation - President, CEO & Director
   *  Mark David Carleton
      Liberty Media Corporation - CFO

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Conference Call Participants
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   *  Brandon A Ross
      BTIG, LLC, Research Division - Associate Analyst
   *  Bryan D. Kraft
      Deutsche Bank AG, Research Division - Senior Analyst
   *  David Karnovsky
      JP Morgan Chase & Co, Research Division - Analyst
   *  Jason B Bazinet
      Citigroup Inc, Research Division - MD and U.S. Cable and Satellite Analyst
   *  John Philip Tinker
      G. Research, LLC - Senior Research Analyst
   *  Vijay A. Jayant
      Evercore ISI, Research Division - Senior MD, Head of Media & Cable, Satellite & Telecom Services & Fundamental Research Analyst
   *  Zachary Alan Silver
      B. Riley FBR, Inc., Research Division - Associate

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Presentation
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Operator   [1]
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 Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation 2018 Q1 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded, May 9. I would now like to turn the conference over to Courtnee Chun, Senior Vice President of Investor Relations. Please go ahead.

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 Courtnee Alice Chun,  Liberty Media Corporation - IR   [2]
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 Thank you. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995, including statements about business strategies, market potential, new service and product launches, discussions involving iHeartCommunication, plans for the Battery Atlanta, matters relating to Formula One, including future financial performance, expenses, brand expansion, including internationally; the launch of F1 TV Pro and other digital initiatives, new races, experience improvement, merchandising and sponsorship, promotion and television; and other matters that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, possible changes in market acceptance of new products or services, the ability of our businesses to attract and retain customers, competitive issues, regulatory issues and the availability of capital on terms acceptable to Liberty Media.

 These forward-looking statements speak only as of the date of this call, and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 On today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA of Liberty Media and adjusted EBITDA of SiriusXM. The required definitions and reconciliations, Schedules 1 through 3, can be found at the end of the earnings press release issued today, which is available on our website.

 This call also may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Liberty TripAdvisor Holdings. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These forward-looking statements speak only as of the date of this call, and Liberty TripAdvisor Holdings expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in TripAdvisor Holdings' expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 Now I'd like to introduce Greg Maffei, Liberty's President and CEO.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [3]
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 Thank you, Courtnee. Good morning to all of you. Today, speaking on the call, we will also have Liberty CFO, Mark Carleton; and Formula One's Chairman and CEO, Chase Carey. We and other members of the management team will be available to answer questions at the end of our prepared remarks. Also, we'll be available to answer questions on Liberty TripAdvisor.

 Starting with Liberty SiriusXM. During the quarter, we initiated our repurchases of Liberty SiriusXM stock fueled by last quarter's exchangeable debt offering. And we bought back 100 million of shares as of April 30. We effectively bought the SiriusXM at a [luxury] price of $4.36 a share, which we consider pretty darn attractive. At iHeart, we own today about $660 million of bonds, and we remain interested in the company at the right price.

 Turning to SiriusXM itself. I'd note that they had very strong first quarter results, beating consensus pretty much across the board. Revenue was up 6% to $1.4 billion. Self-pay net add subscribers were up 1.56 million, and our ownership as of April 23 stood at 70.6%. It didn't increase that much during the quarter as share repurchases at SiriusXM, as they describe, were somewhat slowed due to the rising stock price. A high-quality problem.

 Looking at the Formula One group. We're off to an exciting start to the 2018 season. Through 4 races, we've had 3 different drivers from 3 different winning teams -- from 3 different teams win races. We can just see more overtaking and more drama on the track. We are continuing our discussions, as Chase will just outline further, with the teams on changes to the sport to build further excitement in the years ahead. The planned launch of our OTT product will be this weekend at the Barcelona Grand Prix, and we've recently outlined plans for a hot Miami street race in October of 2019.

 Live Nation had another outstanding quarter. Revenue was up 19%, all divisions: concerts, sponsorship, ticketing, were delivering double-digit incoming and AOI growth. Mobile ticket sales notably now account for almost 40% of all ticket sales, and conversion rates improved by over 20%. After the quarter's end, we announced the acquisition of a controlling interest in Rock in Rio, the second-highest grossing festival globally in 2017.

 And the Atlanta Braves. We had an impressive on-field performance with a 20 and 14 record as of last night's game. And we remain in first place in the NL East. Notably, the team is #1 in the National League in batting average, runs scored, hits, slugging percentage and on-base percentage. We also have the 3 youngest players in baseball, all are having major impact, Ozzie Albies, Ron Acuna, and Mike Soroka. Ron Acuna becomes the youngest player to home run for the Braves since Andruw Jones in 1997.

 (inaudible) attendance at games is up over 5% versus last year, and the Battery development continues to perform and draw fans and businesses. We recently announced plans for the sale of our residential development.

 Over at Liberty TripAdvisor. Trip killed it. Great quarter. Continuing on with the company's strategy of providing travel value to over the 400 million unique visitors we have each month. We have been reducing our reliance on the competitive hotel segment, increasing our native ads and growing our exciting experiences and restaurant businesses. Consolidated revenue was up 2%, adjusted EBITDA was up 10%. The hotel segment results showed a combination of auction stability, product enhancements and optimized paid marketing. Notably, revenue per mobile hotel shopper was up over 20%. We also continue to experience very impressive growth in the non-hotel segment driven by experiences and restaurants. We're very much focused in those areas on growing our supply of offerings. These solid Q1 trends extended into Q2, and we now expect to deliver year-over-year consolidated adjusted EBITDA growth in 2018.

 With that, I'll turn it over to Mark Carleton for more on our financial results.

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 Mark David Carleton,  Liberty Media Corporation - CFO   [4]
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 Thank you, Greg. On the financial side, at quarter end, Liberty SiriusXM Group had attributed cash and liquid investments of $579 million, excluding $79 million of cash held at SiriusXM. The value of the SiriusXM common stock held at Liberty SiriusXM as of May 8 was $21 million, and we have just short of $1.15 billion in debt against these holdings, including our new exchangeable debentures. We increased our borrowing capacity under the SiriusXM margin loan. For future investing and general corporate purposes, it was at $1 billion. We took it up to $1.35 billion but no additional amounts were drawn.

 Formula One Group had attributed cash and liquid investments of $130 million, excluding $140 million of cash at F1. Formula One Group holds public market securities with a market value of approximately $3.7 billion as of May 8, including the intergroup interest in the Braves Group with $2.3 billion of attributed debt, excluding the debt at F1. Braves Group had attributed cash and liquid investments of $114 million. At quarter-end, Liberty SiriusXM Group had an attributed principal amount of debt of $8 billion, which includes $6.9 billion of debt at SiriusXM. Formula One Group had an attributed principal amount of debt of $5.4 billion, which includes $3.1 billion of debt at F1, and the Braves Group had an attributed principal amount of debt of $603 million. F1's total net debt to covenant OIBDA ratio, as defined in their credit facility, was approximately 6.8x as of March 31, which is down from 7.1x as of year-end. Our maximum allowable leverage ratio is 8.7x. We set a target of around 5 to 6x OIBDA, and those leverage ratios are for the Formula One business, not the Formula One Group. Chase will talk a little bit more about what's going on at Formula One in a minute. In the press release, we've included some Formula One Q1 pro forma financial information. As we talked about previously, these numbers could vary quarterly and that can impact the comparability from year to year. This happened in the first quarter of '18 due to the total number of races this year and our proportional recognition of revenue over the course of the year as well as F2 revenue and cost. Ideally, it's best to look at the business on an annual basis where you can. Additionally, this year, we adopted the new revenue recognition accounting standard related to certain of our contracts. We expect the adoption of the standard will be neutral to our results on an annual basis.

 And with that, I'll turn it over to Mr. Chase Carey.

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 Charles Carey,  Formula One Group - CEO   [5]
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 All right. Thank you, Mark. We're 4 races into our '21 race 2018 season. And as Greg noted, it has been an exciting start to the year on the track with 3 different drivers and 3 different teams winning races. We head to Barcelona this weekend to begin the European part of our schedule with 9 European events as well as our Montréal event between now and early September. It's also been a busy start to the year for our overall business as we continue to move forward on a wide range of key initiatives to build the long-term value of Formula One. On the Motor Sports side of our business, we have advanced discussions with the teams on the long-term structure of the sport. The key areas of focus include the cost of running a team, revenue distribution, the next-generation engine, the aerodynamics of the car and simplification of rules and regulations. Our goal is to put in place a structure that makes the sport more exciting and compelling for fans and a healthier business for those in Formula One as well as potential new entrants.

 On the commercial side of our business, we're moving forward with a wide range of initiatives on the digital front. This week, we will launch our inaugural live Grand Prix over-the-top product called F1 TV Pro. This product is a work in progress, and we will continue to add features like Formula 2, Formula 3, expanded data and archives. We're very excited to move forward with this important new dimension to our business. We also continue to improve our online products. This summer, as part of our efforts to connect with fans, we'll relaunch the F1 app, called F1 Access. We will launch a new responsive web platform and build new ways to monetize that engagement. Social media also continues to grow as part of our fan engagement with growth across all our major platforms. For example, on Facebook, we added more followers to date in 2018 than the NBA or NFL. We're also building new digital experiences through initiatives like our recently announced agreements with Netflix and Twitter that will increase ways fans connect to our sport while building new revenue streams for us. While digital is clearly a critical area of growth, we're also addressing renewals of traditional TV agreements and working with existing broadcasters to enhance our relationship. This season, we also upgraded our core broadcast production with new graphics, sound capabilities, camera angles and more to bring a fresh energy and excitement to our TV experience.

 On the promoter front, we're firming up our race calendar for 2019 and working on some exciting potential additions to the calendar in the next few years in iconic destination cities that would capture the world's imagination. We continue to build the spectacle around our event with an expanded number of fan festivals in city centers and an increase in the breadth and quality of activities for fans in our fans zones at the tracks. We hosted our first fan festival this year in Shanghai last month, with rave reviews.

 The Paddock Club has a fresh and exciting new energy, and we're working hard to expand the breadth of hospitality offerings while building a capability to more effectively market these offerings to host country businesses. New consumer offers, like F1 Experiences, our high-end package offering for fans, is also really beginning to hit its stride. In the sponsorship area, we've successfully completed expanded renewals with a number of key sponsors in the last few months and are actively engaged with a wide range of new sponsors as we move forward in growing our sponsorship portfolio to its true potential. We're providing sponsors new and exciting ways to activate and engage fans and using tools like regionalization and virtual signage to increase our ability to monetize and tailor offers for sponsors.

 We're also expanding the sponsorship inventory in areas such as eSports, fan festivals and digital. And we were pleased that Heineken sponsored our first fan festival this year in Shanghai.

 We're also moving forward in building our businesses in the U.S. and China, the world's 2 biggest markets, where it is expected to be all upside for us.

 In China, we completed new agreements with CCTV and Tencent in the last couple of months to greatly expand our reach, and we're in active discussions with strategic partners in China to enable us to drive our overall business forward. In the U.S., as Greg noted, we announced last week that we're discussions in Miami to bring a race to the heart of that city next year and our new agreement with ESPN as well as expanded digital initiatives are providing momentum to our growth opportunity in the U.S. These markets will take time to reach their potential but we continue to be incredibly excited about the future in both.

 The list of initiatives goes on. We completed an agreement with Fanatics, and we'll launch a great new consumer merchandising experience for fans in Barcelona. Our eSports competition launched its second season this spring with participation well up from last year, and we now have 9 of our 10 teams participating. We're headed towards a final later in the year in an arena in London.

 The hot laps product at our tracks is adding great new dimensions to our high-end fan experience and is proving to be both a fan and commercial success. Our PlayON fantasy agreement has launched another leg to our ever-increasing range of fan engagement experiences.

 In addition to our operating initiatives, we also continue to address our balance sheet and cash flows. For example, in the quarter, we paid down $200 million in debt and decreased the margin over LIBOR to 2.5% from 3%. It's early days for us overall, and we're still largely building the foundation for the future. Nonetheless, we're excited as ever about our momentum and believe we're on track to achieve our long-term goals.

 With that, I'll turn it back to the folks in Denver.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [6]
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 So thank you, Chase, and I want to thank everyone for joining us. We -- I think, with that, operator, we're ready to open up for questions.

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Questions and Answers
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Operator   [1]
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 (Operator Instructions) Our first call will come from Bryan Kraft with Deutsche Bank.

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 Bryan D. Kraft,  Deutsche Bank AG, Research Division - Senior Analyst   [2]
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 I have a question on broadcast revenue. In the earnings release, you attributed a decline in broadcast revenue to having one more race in 2018 versus 2017. In order for the per race revenue to be down year-over-year, that would mean, I think, total 2018 broadcast revenue growth is going to be less than 5%. I guess, I just wanted to see if that conclusion is correct or if there's some other cause of the broadcast revenue decline that maybe wasn't mentioned in the press release.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [3]
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 Chase, you want to take that or do you want us to try?

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 Charles Carey,  Formula One Group - CEO   [4]
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 I guess it's a little bit in the weeds on the percentages. So I'm not sure, the math, I mean, it is a 21 versus 20 dynamic that factors into what gets recognized. But I guess if the math works out the way the math works, I don't -- I think, essentially, broadcast revenue is recognized largely across races. We have one more race this year. So it was 1 20th last year, it's 1 21st this year. I think the math works out to what the math works out to.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [5]
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 I guess I'd also note these contracts are lumpy. So we're all -- we do have some increases coming. Some of them take a while to kick in.

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 Bryan D. Kraft,  Deutsche Bank AG, Research Division - Senior Analyst   [6]
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 Is that -- I mean, Greg and Chase, a follow-up there. I mean, are you saying that over the course of the season, some of the renewals in 2018 will kick in and therefore, we're not necessarily seeing a full per-race run rate in the first quarter?

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 Charles Carey,  Formula One Group - CEO   [7]
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 No. The lumpiness would be more annual than -- we mostly renew -- contracts are renewed for the start of a season. So I think the lumpiness is more -- when are the annuals -- and annual -- as you're trying to extrapolate annual increases, the lumpiness comes more from when are contracts being renewed year-to-year, not within a year.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [8]
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 Right. But as you know, Bryan, we're not here to give guidance on that. Thank you.

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Operator   [9]
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 Our next question will come from Vijay Jayant with Evercore.

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 Vijay A. Jayant,  Evercore ISI, Research Division - Senior MD, Head of Media & Cable, Satellite & Telecom Services & Fundamental Research Analyst   [10]
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 So Chase, obviously, you're going through these negotiations for the 2021 season. Can you just help us understand, I mean, with all these various facets to these agreements, will they all come out together? Or will they be at the World Motor Sports counsel, when we'll know on the specification versus team economics and the like? Just trying to understand when will we have more sort of clarity on that. And if you could help us on how TV viewership for Formula One was through 1Q given the new season, that will be really helpful.

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 Charles Carey,  Formula One Group - CEO   [11]
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 Sure. Yes. I mean, in terms of the timing of these -- of the discussions with the teams, I guess, in general, we'd like to do it sooner rather than later. I'm not going to give a deadline. Some aspects of it actually really won't have an effect until 2021. It doesn't mean we won't -- I think we -- for planning purposes, for everybody's sake, I think we'd look to obviously get it done much earlier. There are aspects of it that realistically have to be resolved much earlier. I guess, outside the engine, the new engine as being one, in particular, just the lead time or the R&D and the work on developing an engine really means that sort of needs to be on a course midyear. These things are somewhat interrelated, though. Clearly, not all completely interrelated but I think we have this as a priority. Our goal is to move forward as quickly as possible. We're engaged with all the teams, both as a group and individually, because it's difficult if you have too many in a room sometimes, the conversations get circular. But I think we're actually making good progress on it. And certainly, we plan to try and address things as quickly as possible but it may not have everything addressed in one big -- with one big bow wrapped around it because, as I said, there are things that probably have longer lead times than others. Though I think, for the sake of planning and looking to the future, we'd look to get things resolved in the short term, not the long term. TV viewership in the first 4 races is down a touch or mid -- down mid-single digits. It's really driven -- the down is driven by 2 factors, really 2 countries: Italy, where we've moved platforms from probably being more free to a bit more -- to more pay. So that's probably had the biggest impact. And Brazil is a country that -- without Felipe Massa racing, so he was our Brazilian driver, has an impact on viewership there. As for the majority of our countries of -- country, I mean to say take the top 20 countries, the majority of those are up but the impact in those 2 markets are now -- brings it sort of down mid-single digits.

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Operator   [12]
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 Our next question will come from David Karnovsky with JPMorgan.

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 David Karnovsky,  JP Morgan Chase & Co, Research Division - Analyst   [13]
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 Just a follow-up to that last question. Chase, can you just talk about what type of response you received from any fan research you've done or just also your sponsor partners to the refreshed TV product that you've put out?

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 Charles Carey,  Formula One Group - CEO   [14]
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 It's actually been great. I mean, we have -- I mean, you're never going to get 100%. People get used to things they've had for years. And so I think we recognize there will always be a degree of a mixed bag. But overall, the response to the wide range -- I was just reading an article an hour ago on the graphics packages. And some researchers came back really positive on that, sort of -- particularly, I guess, it was on the newest feature where we've put some data on top of the halo. But the general reaction to things I was talking about, whether it's the graphics, the sound, the camera angles, the reaction to the season in general has been, for us, really encouraging. I think we feel good about the reception and the response we're getting from fans in most of the research that we're doing.

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 David Karnovsky,  JP Morgan Chase & Co, Research Division - Analyst   [15]
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 Okay. And then just regarding the potential Miami Grand Prix. Given you'd be working with a new race promoter, is there anything different about this partnership that you tried to structure relative to some of your legacy deals?

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 Charles Carey,  Formula One Group - CEO   [16]
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 Look, every deal is unique, and this deal is not done. I mean, realistically, we're not -- this isn't a done deal yet. We obviously have some steps to go through but each deal is unique. And I think we knew going into the U.S. market, which is sort of more like a developed market, they're going to have -- you're going to have unique aspects to it but that'd be true for other agreements we have in other places. I mean, everybody assumes these deals sort of are a 1-note song. And realistically, there are always a lot of moving parts around sponsorships and hospitality and other components that go into it, different economics on a street race versus a track. So they're unique but not -- it actually is a structure that we think is one that gives us a really exciting race both as a fan proposition and a business proposition. We think this really could go -- we believe it's going to happen. And we hope it's going to happen. We think this race could clearly be a real signature race for us on the schedule.

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Operator   [17]
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 We'll now move to Barton Crockett with B. Riley FBR.

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 Zachary Alan Silver,  B. Riley FBR, Inc., Research Division - Associate   [18]
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 This is Zack Silver on for Barton. I have one for Chase and one for Greg. For Chase. On F1, parsing through some of Ferrari's commentary, it seems like you guys are making some good progress on negotiations with them. Can you just give us a little bit more color on what you're seeing, what you're agreeing with the teams and kind of what is still a roadblock? And then for Greg, if you could provide us with an update on your discussions for acquiring a 40% stake in iHeart. Is that something you're still exploring or is it off the table for now? And then if you could provide any update on the rationale for that investment, and if you have any new learnings, that would be great.

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 Charles Carey,  Formula One Group - CEO   [19]
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 I guess, in the discussions, I don't want to say too much. I mean, I guess, we've -- I've said, in general, in the past, I think these types of discussions, negotiations, what you want to call it, are best held in private and discussed -- done in private, not done in public and explain when you get through it. I think the sport, over the recent years, has been underserved by trying to negotiate too often in public and posture things in public. So I don't want to get into the weeds. I guess, what I would say is, realistically, I think we have broad-based agreement on the basic -- I think everybody agrees with sort of the basic goals and the basic structures. I think the discussions therefore become more of the compromises than the specifics as you go through it as opposed to broad philosophical direction. So I think we -- I think there is agreement on the philosophical direction that we're putting forth. But clearly, there are differing views as you get into the specifics that are involved in any one of those components.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [20]
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 On iHeart, I think process is evolving as they go through their Chapter 11 proceedings. Creditors are gaining an understanding of what they're proposing to buy. I think, at some point, they're going to reengage with us. And if the price is attractive, as I said, we would be interested. And the rationale for that is, there are both -- I think some opportunities around radio and still having terrestrial radio, better synergistics, some of the assets that we have, including Sirius and Sirius' investment in Pandora. I think, there are both synergies on the revenue side and on the cost side, potentially. And iHeart is an attractive free cash flow generator. At the right place in combination with those other factors, I think it would be additive to our music holdings.

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Operator   [21]
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 John Tinker with Gabelli has our next question.

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 John Philip Tinker,  G. Research, LLC - Senior Research Analyst   [22]
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 Just a change in companies a minute. Atlanta Braves. Could you just give some idea as to what you might get from the sale of the residences? And are you thinking about selling more assets? And also, I know it's a very small state but you still actually have a piece of BAMTECH. Is there any value there or is it so small it doesn't matter?

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 Mark David Carleton,  Liberty Media Corporation - CFO   [23]
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 Well, I think on the -- this is Mark Carleton. On the residential side, we are going through a process, and we certainly haven't gotten to the point in that process where we're talking about ranges of dollars. But certainly, the areas -- the ranges we've discussed are pretty accretive. And I think, in general, as we look at those projects down at the Battery, to the extent that we think it makes the most sense to sell those off to our partners or others, we'll certainly look at those, if it's logical and accretive to us. So far, we're performing well above, I think, what our projections have been on lease up and on revenue and on activity down there. So it's going very well. But obviously, being able to maintain the look and feel of SunTrust Park and the entire Battery and the experience for our fans is key. But we will be opportunistic as some of these projects get closer to completion and get fully online.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [24]
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 If I can just add a little. We think, the Battery, combined with the Braves, is a unique, live experience. Our strength comes from developing interesting opportunities around that, including residential, including office, including the Live Nation music center, that music environment we have there. All of those things. But we don't really necessarily see ourselves as long-term holders of real estate assets. We see ourselves as people developing interesting opportunities.

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 John Philip Tinker,  G. Research, LLC - Senior Research Analyst   [25]
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 And BAMTECH. Disney seems to be spending a lot of money. I think you still own a small piece at the back end.

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 Charles Carey,  Formula One Group - CEO   [26]
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 I think that's really being driven at the board level of MLB. And we're -- the tail on that, we did receive, as you know, capital already from that. I think we're very happy with the price that Disney paid us for that asset, and we're enthusiastic to receive the back end. But I don't think it's been disclosed how much the value of that is going to be yet.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [27]
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 Correct.

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Operator   [28]
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 Our next question will come from Brandon Ross with BTIG.

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 Brandon A Ross,  BTIG, LLC, Research Division - Associate Analyst   [29]
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 Two. First, NASCAR appears to be for sale. Just curious, Greg and Chase, to get your thoughts on that asset. And then on the Liberty Sirius discount. You bought back what? $100 million over the last 3 months but the spread continues to widen. What's the path from here? How do you think you can effect change in that spread? And I guess, related, if SIRI was willing to do an RMT, would you be open to that at this point? Or do you see an eventual GCI-type transaction there? Just like to know your thoughts.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [30]
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 Chase, you want to go first on NASCAR?

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 Charles Carey,  Formula One Group - CEO   [31]
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 Yes, I mean -- like, I guess, first and foremost, I'm focused on -- priority 1 for us here is really getting Formula One to where we think it can and should be over the next couple of years. So we're not trying to put blinders on but I think we -- I feel we have an opportunity to really take this business to another level. And if that is what's driving it -- and NASCAR's a fairly different franchise for us. You look at the fan base, the regionalization of it in the U.S., it's not really even a broad-based U.S. sport. Yes, I don't -- I think people -- we both race cars. I'm not sure beyond that. There's a lot that sort of would really make it a natural fit for us. It would certainly give us scale in the U.S., and we could use that scale to build. But I think there are probably more differences than similarities in that. And I think, for us, our priority is really making Formula One everything it can be and focusing on things that would really strengthen Formula One in a unique way. So Liberty may have a different perspective. They acquire more businesses than we do. I said, I'm only worrying about one business, which is Formula One. And I think there are limits to which degree that fits in a way that would really make 1 plus 1 is 3 is probably my take on it. Although, again, the guys in Denver look at more businesses than we do. So they may have a different view.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [32]
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 But we are largely in agreement with Chase. I think it's not as clear what the synergies are between the 2 assets. And I would note, the trends have not been perfect at NASCAR. Unless we had a good thesis on how and why we could fix them, it's not an obvious to us. On the second point, about the discount, we're taking advantage of that. I know we bought back stock. I would expect that we will buy back more stock, and we will continue to take advantage if the market wants to give us that at a discount. Is there a GCI transaction or RMT out there? Maybe. But I don't see that as -- there's a silver bullet in any of those. There is a -- we do things that we think are logical instead. And if the market wants to give us this stock at a discount, we're going to continue to buy it back and take advantage of it. You may note that SIRI bought less back of their own, and we bought more back here. It speaks to something about what is the combination of their stock price and our discount. So we'll see.

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Operator   [33]
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 Our final question today will come from Jason Bazinet with Citi.

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 Jason B Bazinet,  Citigroup Inc, Research Division - MD and U.S. Cable and Satellite Analyst   [34]
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 Just had a question for Mr. Maffei. I'm asking you a question that's really one that I should be able to answer but I can't. Do you have a hypothesis in terms of why this sort of customary Liberty SIRI discount became uncustomary this year?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [35]
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 I think we -- Jason, thank you. We've talked about some of this in the past, relates in general of the supply where there's now currently a far larger market cap at Liberty Sirius than there is at Sirius. Sirius has been a far larger consumer of its own stock than we have of Liberty Sirius. My understanding is that there have been a number of other RF-type situations where hedge funds have not had success and have had to blow out their positions, including potentially this one, which may have widened the spread. The fear that we might utilize Liberty SiriusXM currency to overpay for and dilute ourselves by purchasing SXM stock, all of those, I think, are potentially factors you could point to and why it has widened is probably the number 3. Yes, there's -- I think one -- somebody else pointed out, there's no borrow on the shares, which is another thing exacerbating some of the internal mechanics around why people are not orbing the discount. But as I've noted, we'll -- Jason, if the great people want to give that stock at a discount, we're likely to continue to take advantage of it. And we have been sometimes clever in finding ways to take advantage of it in better ways, like the GCI transaction.

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 Jason B Bazinet,  Citigroup Inc, Research Division - MD and U.S. Cable and Satellite Analyst   [36]
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 Do you think the potential purchase of iHeart is part of it? Another is it going from a tracker discount to tracker plus complexity pro forma?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [37]
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 Yes, that's a decent thesis. I think you should -- that wouldn't be just with us. I think, however that ends up, it's not like we're going to do an iHeart transaction apart from SIRI. We bought the debt because that's something we do probably with more efficiency and more regularity than SIRI. But all of our actions there are fully coordinated with Sirius. It would not be like we're going to do this thing on a stand-alone basis.

 That's the last question for the day. Thank you all for joining us. We look forward to speaking with you next quarter, if not sooner.

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 Charles Carey,  Formula One Group - CEO   [38]
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 All right. Take care.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [39]
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 Thanks, Chase.

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Operator   [40]
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 Thank you. That will conclude today's event. Thank you all once again for your participation, and have a wonderful day. You may now disconnect.




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