Liberty Media Corp Annual Shareholders Meeting

May 30, 2019 PM UTC 查看原文

FWONA - Liberty Media Corp
Liberty Media Corp Annual Shareholders Meeting
May 30, 2019 / 02:00PM GMT

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Corporate Participants
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* Gregory B. Maffei
Qurate Retail, Inc. - Chairman
* John C. Malone
Liberty Media Corporation - Chairman of the Board
* Pamela L. Coe
Qurate Retail, Inc. - Senior VP, Deputy General Counsel & Secretary

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Presentation
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John C. Malone, Liberty Media Corporation - Chairman of the Board [1]
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Okay. Good morning. Welcome to the 2019 Annual Meeting of Stockholders of Liberty Media. I'm John Malone, Chairman of the Board. I'll act as chairman of this meeting. On behalf of the directors and senior officers of the company, I want to thank you for taking the time to attend this annual meeting. We appreciate your continued interest in Liberty Media. At this time, I would like to introduce the company's Corporate Secretary, Pam Coe, who will act as secretary of this meeting and will say a few words about our 2019 annual meeting procedures.

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Pamela L. Coe, Qurate Retail, Inc. - Senior VP, Deputy General Counsel & Secretary [2]
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To conduct this meeting in an orderly fashion, we respectfully direct your attention to the rules of conduct you received when you entered the meeting this morning.

Any stockholder wishing to address the meeting should, at the appropriate time, wait for a microphone to be passed to the stockholder before speaking. Please state for the record your name and whether you own shares of the company. We ask that you address your questions to the Chairman and either he or another appropriate person will respond. Please limit your remarks to 3 minutes. And if you had a chance to speak, please let others speak before you ask to be recognized a second time. Only Liberty Media stockholders are permitted to address the meeting and ask questions during the question-and-answer session that will follow the Qurate Retail (sic) [Liberty Media] shareholder meeting. Members of the press are not permitted to ask questions.

During a question-and-answer session today, we may discuss certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about business strategies, market potential, future financial prospects 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. These forward-looking statements speak only as of the date of this meeting, and we expressly disclaim any obligation to update these statements. We refer you to our publicly filed reports, including our most recent Forms 10-K and 10-Q, for additional information about our company.

We thank you in advance for helping us conduct the 2019 Annual Meeting in an orderly fashion.

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John C. Malone, Liberty Media Corporation - Chairman of the Board [3]
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Thank you, Pam.

We'll now proceed with the formal item of business. Chris Amrhein of American Election Services, the company that provides stockholder proxy services for this meeting, has been appointed to serve as inspector of election. If there are any stockholders who have not turned in proxy cards, please identify yourself to the inspector of elections so that your shares may be counted as present.

We are here today to vote upon each of the proposals described in the notice of annual meeting and proxy statement.

Has the inspector of election tabulated the number of shares represented here today either in person or by proxy?

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Pamela L. Coe, Qurate Retail, Inc. - Senior VP, Deputy General Counsel & Secretary [4]
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Mr. Chairman, the inspector of election reports that shares of the company's Series A and Series B Liberty SiriusXM common stock, Series A and Series B Liberty Formula One common stock, and Series A and Series B Liberty Braves common stock, representing at least a majority of the aggregate voting power of such stocks outstanding on the record date are present in person or represented by proxy at this meeting. Therefore, a quorum is present for this meeting. The report of the inspector of election has been confirmed in writing and signed by the inspector of election. The inspector's affidavit will be attached to the minutes of this meeting, together with a signed and notarized oath.

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John C. Malone, Liberty Media Corporation - Chairman of the Board [5]
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Thank you, Pam.

As reported, a quorum is represented here today. Therefore, the annual meeting is formally called to order.

The proxy vote report, the list of stockholders entitled to vote at the meeting, the affidavit of mailing and the oath of the inspector of election will be available for inspection throughout the meeting at the registration table. Copies of the notice of annual meeting and proxy statement relating to the annual meeting are also available at the registration table.

As stated in the notice of annual meeting and proxy statement, stockholders will vote on 2 proposals, each of which will be described in turn. If you desire a ballot, please raise your hand and one will be provided to you. If you previously voted by proxy, you do not need to vote today unless you wish to change your vote.

Proposal 1, the election of directors proposal, is a proposal to elect Bob Bennett, Ian Gilchrist and me, John Malone, to continue serving as Class III members of our Board of Directors until the 2022 Annual Meeting of Stockholders or until our earlier resignation or removal. Mr. Bennett, Mr. Gilchrist and I have been nominated by the Board's Nominating and Governance Committee, and no other nominations were made in accordance with the company's bylaws. Our biographies can be found on Page 18 and 19 of the proxy statement. Meeting is now open for any questions concerning the director nominees.

Seeing no questions, Proposal #2. The auditor's ratification proposal, is a proposal to ratify the selection of KPMG LLP as our independent auditors for the fiscal year ending December 31, 2019. Barry Amman, our -- a partner with KPMG LLP, is prepared to respond to appropriate auditing questions. The meeting is now open for questions for the representative of KPMG.

Seeing none, the voting requirements for each of the proposals are described in the proxy statement. The Board of Directors recommends that you vote for each nominee listed in Proposal 1 and for Proposal 2. The time is now 8:07 a.m. on May 30, 2019, and the polls are now open for voting on each of the proposals.

Are there any stockholders entitled to vote at this annual meeting who wish to vote in person on any of the proposals who have not done so? Seeing none, the time is now 8:08 a.m. on May 30, 2019. The polls for voting on each of proposals are now officially closed. Has the inspector of election tabulated the votes represented here and by proxy on each of the proposals?

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Pamela L. Coe, Qurate Retail, Inc. - Senior VP, Deputy General Counsel & Secretary [6]
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Mr. Chairman, the inspector of election has completed the tabulation of votes and has certified that the requisite number of shares has been voted in favor of the election of Mr. Bennett, Mr. Gilchrist and you and in favor of Proposal 2.

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John C. Malone, Liberty Media Corporation - Chairman of the Board [7]
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Therefore, Mr. Bennett, Mr. Gilchrist and I have been duly elected as Class III members of our Board of Directors and Proposal 2 has been approved.

This concludes the scheduled business as presented on notice of annual meeting and proxy statement.

Is there any other business to come before this meeting? Hearing none, do I have a motion for adjournment?

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Unidentified Participant, [8]
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Mr. Chairman, I move that the meeting is adjourned.

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John C. Malone, Liberty Media Corporation - Chairman of the Board [9]
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Do I have a second?

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Unidentified Participant, [10]
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(inaudible)

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John C. Malone, Liberty Media Corporation - Chairman of the Board [11]
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All in favor, aye. Aye.

(Voting)

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John C. Malone, Liberty Media Corporation - Chairman of the Board [12]
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Opposed?

(Voting)

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John C. Malone, Liberty Media Corporation - Chairman of the Board [13]
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The motion that the 2019 Annual Meeting of Stockholders be adjourned is carried. I would like to thank you for your attendance at this meeting and your continued interest in our company. The meeting is now adjourned and we're open for questions. Do I have questions?

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Questions and Answers
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Unidentified Participant, [1]
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(inaudible) have you had any...

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John C. Malone, Liberty Media Corporation - Chairman of the Board [2]
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I think they're telecasting this so you need to speak in a mic.

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Unidentified Participant, [3]
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John, are you having any second thoughts about having the tracking stock structure? The tracking stock, I think when you did it a few years ago, Liberty Sirius was at about a 14% discount. At the time, we were hoping never go down from there. That has gone up to about a 27% discount. And maybe having it as like a Berkshire Hathaway kind of a structure where it was all in one entity might have had benefits that you can't access now, I don't know. Why don't you talk about that.

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John C. Malone, Liberty Media Corporation - Chairman of the Board [4]
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Well, I think you're talking about 2 different things. One is our ownership of Sirius, which started life at around 40% and has grown to today just under 70%, I believe, right? So in any event, we own less than 100% of Sirius, so we're always going to be in a situation where we're less than a -- until or unless those businesses merge. The tracking stock structure really is a way that we hold our interest in Formula One and Live Nation or in the Braves, right? And the reason that structure is appropriate, still appropriate is because that structure allows us to separate those entities in a very convenient way should we choose to do so, right, with their equities being represented through tracking stocks of each individual entity. So it gives us enormous flexibility, while at the same time, consolidating for tax and financial balance sheet purposes. So I think that structure still makes sense.

What you'd rather ask me is, can we get rid of that discount in SiriusXM? And the answer there is, I believe that, that discount will shrink over time and potentially disappear, but the only real way to get rid of it quickly is to merge the companies, right? And at the present time, that would be a transaction that would require the approval of the independent directors of Sirius, Sirius being a separate public company. We haven't put that to them at this point. You'd have to ask what is their motivation to be willing to do that, and that's a complex subject that comes up from time to time and gets looked at. Needless to say, those of us who are shareholders of LSX would like to see that discount shrink.

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [5]
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Can I add something, John?

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John C. Malone, Liberty Media Corporation - Chairman of the Board [6]
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Sure.

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [7]
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I'd say 2 things. One is the valuations that the Braves get and Formula One gets inside that tracking stock structure are both pretty good, healthy valuations. Two, at one point the discount got down to 2%, and we tried to do as John suggested, merge out the LSXM/SXM combo. At 27%, that's not attractive. Take another strategy and we're pursuing that by doing things like repurchasing LSXM stock with the dividends that we are getting from SXM and other cash, for example, the cash we're going to get out of selling our iHeart debt, selling our Clear Channel Outdoor equity more. We're going to take advantage. If somebody's going to offer you a 27% discount on underlying stock, we'll take advantage by buying the cheap one.

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John C. Malone, Liberty Media Corporation - Chairman of the Board [8]
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Now let's Let look at it another way, which is it's an attractive investment vehicle because you can -- if you want to invest in Sirius, you can invest in LSX at a substantial discount. The reason the hedge funds don't squeeze that discount is because they're uncertain about the timing at which that discount would go away, if ever. Also, there is a limit to how much Sirius stock can be bought and shorted in order to play the hedge. So it's a problem that comes up at the Board level every time we have a meeting. And we focus on it and we talk about patience and the value creation of shrinking the holding company stock at -- where you're effectively buying back Sirius at a substantial discount. So it depends on your timing, but it's clearly an economic opportunity that we are addressing over time.

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Unidentified Participant, [9]
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Yes. I mean, as the largest shareholder of SiriusXM [for sale to the entire company, are you able to hold the rights as long as] nobody else [logs them in terms of when you might have rights] ?

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John C. Malone, Liberty Media Corporation - Chairman of the Board [10]
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Well, the door is always open, okay? I mean, they all know our phone number. So if somebody -- and it's a public company. So if somebody saw a benefit of buying this odd collection of assets, yes. I mean, we answer the phone. So are we going to put a for sale sign on our back and parade around? No.

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [11]
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And also, given our structure, frankly, it would be highly unlikely that we would be a seller at this point because we would be paying corporate-level tax, so I think it's the opposite. Your point that it would clean everybody out, not quite. It would make us pay $7 billion of taxes, $6 billion of taxes?

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John C. Malone, Liberty Media Corporation - Chairman of the Board [12]
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No. Much more likely if something...

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [13]
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And then would you defer the taxes. It's the same problem.

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John C. Malone, Liberty Media Corporation - Chairman of the Board [14]
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No. Somebody would have to buy the parent, right? At least for me in some kind of tax-efficient transaction way that would fully value the underlying assets. And they likely would then spin off the pieces that they didn't want, right, that didn't fit, which they could conveniently do because they're all being tracked. And so you don't have an argument about valuation. That's one of the beauties of the tracker, of having these separate businesses represented by separate equities and separate valuations, because it does give us that kind of flexibility. At this point, nobody has -- the phone hasn't rung. And frankly, as we take dividends out of Sirius, which at this point are somewhat limited because they're choosing to use most of their free cash flow to shrink their equity rather than pay dividends. As we get that flow of capital, we buy back the LSX stock and so we're buying Sirius effectively at a 30% discount from market, and I think that's a pretty good wealth creator myself. So I'm not that anxious as a shareholder of the holding company to do away with that structure because I think you're essentially getting -- if you believe in Sirius, you should believe in LSX a lot more. So that's kind of the way we see it.

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [15]
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We probably have time for one more question, yes. We have a -- we go to the Qurate one next. So...

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Unidentified Participant, [16]
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So just as a related question is, do you guys view SiriusXM as integral to Liberty Media in terms of -- are these operating companies supposed to be together in your view? Or at some point, spinning the shares off to shareholders, could that -- is that an option? Or do you view the 2 businesses as integral to each other?

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John C. Malone, Liberty Media Corporation - Chairman of the Board [17]
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Well, first of all, LSX or Sirius is the biggest single investment position that Liberty Media has. And if you follow the history of Liberty Media, we build things, we grow them. And sometimes, we spin them off when we think it's appropriate or we might merge them into somebody else if we think that's a better combination. So as a holding company, we're always seeking to optimize and retain optionality because we think that's the best way to create value.

In terms of whether or not there are synergies between the pieces, I think you could argue that there is always tax synergy because you're in one consolidated tax return. So there's financial and tax synergy in the structure. So other things equal, you would tend to want to keep them together for that reason. There's also potentially a lot of synergy between Live Nation, okay, and Sirius in the music category, in the live performance category. And getting Live Nation, which we own 35% of, to cooperate with Sirius and vice versa in terms of finding those synergies is enhanced by having them under one umbrella. And in fact, the CEO of Live Nation is on the Board at Sirius in an effort to get some cross-synergies realized.

Thank you. That's it for Liberty Media.

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Presentation
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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [1]
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We'll go to Qurate. Thanks, John. Pam, are we ready?

Good morning, and welcome to the 2019 Meeting of Stockholders of Qurate Retail. I am Greg Maffei, Chairman of the Board. I will act as Chairman of this meeting. On behalf of the directors and senior officers of the company, I want to thank you for taking the time to attend this annual meeting. We appreciate your continued interest in Qurate Retail.

At this time, I'd like to introduce the company's Corporate Secretary, Pam Coe, who may be familiar to you, who will act as Secretary of this meeting and will say a few words about our 2019 annual meeting procedures.

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Pamela L. Coe, Qurate Retail, Inc. - Senior VP, Deputy General Counsel & Secretary [2]
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Thank you, Mr. Chairman.

To conduct this meeting in an orderly fashion, we respectfully direct your attention to the rules of conduct you received when you entered the meeting this morning.

Any stockholders wishing to address the meeting should, at the appropriate time, wait for a microphone to be passed to the stockholder before speaking. Please state for the record your name and whether you own shares of the company. We ask that you address your questions to the Chairman, and either he or another appropriate person will respond. Please limit your remarks to 3 minutes. And if you had a chance to speak, please let others speak before you ask to be recognized a second time. Only Qurate Retail stockholders are permitted to address the meeting and ask questions during the Q&A session following the formal meeting. Members of the press are not permitted to ask questions.

During our Q&A session today, you may discuss certain -- we may discuss certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about business strategies, market potential, future financial prospects 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. These forward-looking statements speak only as of the date of this meeting, and we expressly disclaim any obligation to update these statements. We refer you to our publicly filed reports, including our most recent Forms 10-K and 10-Q, for additional information about our company.

We thank you in advance for helping us conduct this meeting in an orderly fashion.

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [3]
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Thank you, Pam.

We'll now proceed with the formal items of business.

First, the appointment of inspector of elections. Chris Amrhein of American Election Services, the company that promoted stockholder proxy services -- provided, rather, stockholder proxy services for this meeting, and might have promoted them too, but has been appointed to serve as inspector of election. If there are any stockholders who have not turned in proxy cards, please identify yourself to the inspector of elections so that your shares may be counted as present.

We are here today to vote upon each of the proposals described in the notice of annual meeting and proxy statement. The first is the declaration of quorum and formal call to order. Has the inspector of election tabulated the number of shares represented here today, either in person or by proxy?

The report of the inspector of election has been confirmed in writing and signed by the inspector of election. The inspector's affidavit will be attached to the minutes of this meeting, together with a signed and notarized oath.

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [5]
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Thank you, Pam.

As reported, a quorum is represented here today. Therefore, the annual meeting is formally called to order.

The availability of documents, the proxy vote report, the list of stockholders entitled to vote at the meeting, the affidavit of mailing and the oath of the inspector of election will be available for inspection throughout the meeting at the registration table. Copies of the notice of annual meeting and proxy statement related to the annual meeting are also available at the registration table.

As noted, the notice of annual meeting and proxy statement, stockholders will vote on 2 proposals, each which will be described in turn. If you desire a ballot, please raise your hand and one will be provided to you. If you previously voted by proxy, you do not need to vote today unless you wish to change your vote.

Proposal 1. The election of directors proposal is a proposal to elect John Malone, Ian Gilchrist, Mark Vadon and Andrea Wong to continue serving as Class III members of our Board of Directors until the 2022 Annual Meeting of Stockholders or until their earlier resignation or removal. Mr. Malone, Mr. Gilchrist, Mr. Vadon and Ms. Wong have been nominated by the Board's Nominating Governance -- Corporate Governance Committee, and no other nominations were made in accordance with the company's bylaws. Their biographies can be found on Pages 8 to 10 of the proxy statement. The meeting is now open for any questions concerning the director nominees.

There being no questions, Proposal 2. The auditor's ratification proposal is a proposal to ratify the selection of KPMG as our independent auditors for the fiscal year ending 2030 -- excuse me, December 31, 2019. Barry Amman, a partner with KPMG, is prepared to respond to appropriate auditing questions, I love that word. The meeting is now open for questions for the representative of KPMG. Seeing no question, the voting requirements for each of the proposals are described in the proxy statement.

The Board of Directors recommends that you vote for each nominee listed in Proposal 1 and for Proposal 2. The time is now 8:24. And the polls are now open for voting on each of the proposals. Are there any stockholders entitled to vote at this annual meeting who wish to vote in person on any of the proposals who have not done so yet? Not seeing any. The time is still -- it's now 8:25 on May 30, 2019. The polls for voting on each of the proposals are now officially closed. Has the inspector of election tabulated the votes represented here and by proxy on each of the proposals?

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Pamela L. Coe, Qurate Retail, Inc. - Senior VP, Deputy General Counsel & Secretary [6]
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Mr. Chairman, the inspector of election has completed the tabulation of votes and has certified that the requisite number of shares has been voted in favor of the election of Mr. Malone, Mr. Gilchrist, Mr. Vadon and Ms. Wong and in favor of Proposal 2.

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [7]
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Great. Mr. Malone, Mr. Gilchrist, Mr. Vadon and Ms. Wong have been duly elected as Class III members of our Board of Directors and Proposal 2 has been approved.

This concludes the scheduled business as presented in the notice of annual meeting and proxy statement. Is there any other business to properly come before this meeting? At this time, I'd like to adjourn the meeting. All in favor, say yea.

(Voting)

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [8]
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Any opposed, say nay.

(Voting)

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [9]
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The motion that the 2019 Annual Meeting of Stockholders be adjourned is carried. I would like to thank you for your continued -- for your attendance at this meeting and your continued interest in our company. The 2019 Annual Meeting of Stockholders is now adjourned. Are there any questions related to Qurate we can answer? Yes? If we run out of Qurate questions and people want to go back on Liberty Media, we're probably -- we're not going to -- but we'll get the Qurate ones out first.

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Questions and Answers
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Unidentified Participant, [1]
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My question is sort of capital allocation. And I think...

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [2]
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Could you identify yourself?

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Unidentified Participant, [3]
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Sorry. [Patrick Brennan]. My question is that, I think, John Malone, you talked about in the past that the public markets have a tremendous trouble with businesses that are plus or minus, or for a lack of a better word, something of a melting ice cube conceivably. Even if they produced a large amount of free cash flow, but if the growth story is not there, there is going to be this secular overhang. And so the question, as it relates to Qurate, you're probably a little currently running closer to the minus than you'd like. You have some feeling that you turn this around. But from a free cash flow per share perspective, it would seem you could drive tremendous value taking out cheap stock here. But the secular overhang is likely going to continue for the foreseeable future. So how do you think about just the IRRs that you get on driving -- continued buying back the stock versus, conceivably, you'd like to take the Qurate cash flow and invest it somewhere else? So just what -- I mean, if you can just walk through how you're thinking about this and because the concern, it's probably most acute at Qurate. But there's other kind of Liberty companies where arguably there is, and some not here today, but where this kind of comes up as well. So just the melting ice cube phenomenon and how you think about this.

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Gregory B. Maffei, Qurate Retail, Inc. - Chairman [4]
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Great question and one that we spend quite a lot of time thinking about. I'm not sure I think any of our companies is a melting ice cube, even Qurate. I think Qurate has had a history of -- if you look QVC's 30 years of good cash flow growth, more recently, more slow cash flow growth, had a negative cycle sort of in the 2009 recession, had a negative cycle in 2016 that they fixed and had a downturn over the last 6-ish months. I think management and we have -- unfortunately, Mike George couldn't be here today, but we have Jeff Davis, the CFO, at the opco level is very focused on understanding the sources of that downturn. And you can point to some various things that are both secular out in the world and point to things that have occurred that are internal where our eye might have been off the ball, for example, the merger with H caused reorganizations and things like that. So I'm not sure we're quite ready to describe it as a melting ice cube.

But the larger question about capital allocation is one that we spend a lot of time on. As you rightly point out, Qurate is a large free cash flow generator. Somewhat variable, not only in its kind of its operating results, but how working capital has gone, but serious cash flow generation. Historically, we've used the bulk of that for share repurchase on the belief that we would have forward IRRs that were positive. More recently, that's been slowed, partly because of the deterioration of the business, which we're not conceding is a permanent one by any means, but one that gave us reason to pause on the buyback. If you look where the stock was a year ago, it was probably 35%, 40% higher than where it is today, maybe more, depending on what time frame in the year. So that gave us some pause about how much we were buying down. We've also done capital allocation into other things. A good percentage of the cash flow over the last few years effectively got hived off into Liberty Ventures, which became GCI Liberty and has risen with the benefit of our purchases of Charter and helping fund that. And we got into Charter at prices of $105 and $195 versus high $300s today, so that's been a pretty good deal. So we weigh where that capital goes. I think our first choice, because we sort of told the marketplace we'd like to have as clean a story as possible at Qurate, would be share repurchase when we had confidence in that. It's the most tax-efficient way to return value to shareholders. Unfortunately, as I said, over the last 12 months, that's not been as effective as we would like and is giving us that reason, combined with the operating business results, currently to have pause. So we're weighing that continually. I can't -- I don't think there's a topic that gets more discussion here in Englewood or at the board level than that exact question, and we'll weigh that down.

We've also effectively done some deleveraging of the business over the last few quarters because there's been cash that came across with the re-attribution of the exchangeables and cash that was generated in the business, not from the operating business, but with the sale of ILG, both the shares that we got for cash and then the subsequent share -- sale of those shares which was done pretty well at effective prices compared to the current price. Both of those had the effect of deleveraging, and we didn't utilize all that share -- all that cash rather for share repurchase. So we are saving a little powder. We're certainly looking at buyback. You've seen the actions of the CEO, the Chairman and major shareholder and John vote with our own feet for share repurchase -- or share purchase rather at -- down in these prices. And the stock is significantly cheaper than it was when we made the comment that the -- when I made the comments at the earnings call. So not sure that's a definitive answer on any of it, but it's something to give you an insight into how we're thinking. I hope that's helpful.