Atlanta Braves Reel in $212M in Third Quarter
Staff Report From Metro Atlanta CEO
Tuesday, November 12th, 2019
Liberty Media Corporation reported third quarter 2019 results. Headlines include(1):
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Attributed to Liberty SiriusXM Group
-
SiriusXM reported very strong third quarter 2019 financial results
-
Third quarter revenue increased to $2.0 billion; pro forma growth of 7%
-
Net income of $246 million; diluted EPS of $0.05
-
Adjusted EBITDA(2) hit record $657 million, up 12%
-
SiriusXM repurchased $464 million of common stock in the third quarter
-
SiriusXM increased 2019 revenue, adjusted EBITDA and free cash flow guidance
-
-
Liberty Media’s ownership of SiriusXM stood at 71.5% as of October 29th
-
From August 1st through October 31st, Liberty repurchased 1.4 million LSXMK shares at an average price per share of $41.68 and total cash consideration of $60 million
-
-
Attributed to Formula One Group
-
FIA World Motor Sport Council unanimously approved Formula 1 technical, sporting and financial regulations effective 2021
-
Regulations intended to promote closer racing, more balanced competition and financial sustainability
-
-
2020 race calendar expanded to 22 races
-
Renewed or extended agreements for Italian, Mexican and Spanish races
-
Mercedes secured 6th consecutive Constructors’ Championship and Lewis Hamilton won 6th Drivers’ Championship title
-
-
Attributed to Braves Group
-
Braves won 2nd straight NL East division title
-
“SiriusXM continues to deliver and posted another record breaking quarter. The company has made great progress in monetization at Pandora, reaching an all-time high for ad revenue in the quarter,” said Greg Maffei, Liberty Media President and CEO. “Formula 1 continues to show great momentum and is on track to hit 2019 targets, benefitting from foundation building over the last two years, and the Braves secured their second straight NL East division title.”
Unless otherwise noted, the following discussion compares financial information for the three months ended September 30, 2019 to the same period in 2018.
LIBERTY SIRIUSXM GROUP – The following table provides the financial results attributed to Liberty SiriusXM Group for the third quarter of 2019. In the third quarter, approximately $5 million of corporate level selling, general and administrative expense (including stock-based compensation expense) was allocated to the Liberty SiriusXM Group.
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3Q18 |
|
3Q19 |
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% Change |
||||||||
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|
|
amounts in millions |
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|
|||||||||
|
Liberty SiriusXM Group |
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|
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|
|||||
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Revenue |
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|
|
|
|
|
|
|||||
|
SiriusXM |
|
$ |
|
1,468 |
|
|
$ |
|
2,011 |
|
|
|
37 |
% |
|
Total Liberty SiriusXM Group |
|
$ |
|
1,468 |
|
|
$ |
|
2,011 |
|
|
|
37 |
% |
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|||||
|
SiriusXM |
|
|
465 |
|
|
|
459 |
|
|
|
(1 |
)% |
||
|
Corporate and other |
|
|
(10 |
) |
|
|
(5 |
) |
|
|
50 |
% |
||
|
Total Liberty SiriusXM Group |
|
$ |
|
455 |
|
|
$ |
|
454 |
|
|
|
— |
% |
|
Adjusted OIBDA |
|
|
|
|
|
|
|
|
|
|||||
|
SiriusXM |
|
|
587 |
|
|
|
659 |
|
|
|
12 |
% |
||
|
Corporate and other |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
— |
% | ||
|
Total Liberty SiriusXM Group |
|
$ |
|
583 |
|
|
$ |
|
655 |
|
|
|
12 |
% |
SiriusXM completed the acquisition of Pandora on February 1, 2019. The financial results above include the results of Pandora for the three months ended September 30, 2019 but not for the three months ended September 30, 2018. Pro forma results for SiriusXM including Pandora for all periods presented, including adjustments related to amortization of acquired intangible assets, depreciation of property and equipment, acquisition costs, fair value of gain or loss on the Pandora investment and associated tax impacts, can be found in Liberty Media’s Form 10-Q for the quarter ended September 30, 2019.
SiriusXM is a separate publicly traded company and additional information about SiriusXM can be obtained through its website and filings with the Securities and Exchange Commission. SiriusXM reported its stand-alone third quarter results on October 31, 2019. For additional detail on SiriusXM’s financial results for the third quarter, please see SiriusXM’s earnings release posted to its Investor Relations website. For presentation purposes on page one of this release, we include the results of SiriusXM, as reported by SiriusXM, without regard to the purchase accounting adjustments applied by us for purposes of our financial statements. Liberty Media believes the presentation of financial results as reported by SiriusXM is useful to investors as the comparability of those results is best understood in the context of SiriusXM's historical financial presentation.
The businesses and assets attributed to Liberty SiriusXM Group consist primarily of Liberty Media’s interest in SiriusXM, which includes its subsidiary Pandora.
FORMULA ONE GROUP – The following table provides the financial results attributed to the Formula One Group for the third quarter of 2019. In the third quarter, the Formula One Group incurred approximately $10 million of corporate level selling, general and administrative expense (including stock-based compensation expense).
“We were thrilled to have the World Motor Sport Council unanimously approve the 2021 regulations, which were the result of input from all stakeholders across the sport of Formula 1. We believe these regulations stay true to the DNA of Formula 1 while seeking to improve the competition and action on the track,” said Chase Carey, Formula 1 Chairman and CEO. “This season continues to produce some spectacular racing and we congratulate Lewis Hamilton and Mercedes on their amazing achievements. We now look forward to the final two races of 2019 and a record 22 race 2020 season, including our new event in Vietnam and our return to the Netherlands.”
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3Q18 |
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3Q19 |
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amounts in millions |
||||||||
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Formula One Group |
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||||
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Revenue |
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||||
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Formula 1 |
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$ |
|
647 |
|
|
$ |
|
633 |
|
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Total Formula One Group |
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$ |
|
647 |
|
|
$ |
|
633 |
|
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Operating Income (Loss) |
|
|
|
|
|
|
||||
|
Formula 1 |
|
$ |
|
39 |
|
|
$ |
|
44 |
|
|
Corporate and other |
|
|
(8 |
) |
|
|
(12 |
) |
||
|
Total Formula One Group |
|
$ |
|
31 |
|
|
$ |
|
32 |
|
|
Adjusted OIBDA |
|
|
|
|
|
|
||||
|
Formula 1 |
|
$ |
|
158 |
|
|
$ |
|
162 |
|
|
Corporate and other |
|
|
(2 |
) |
|
|
(8 |
) |
||
|
Total Formula One Group |
|
$ |
|
156 |
|
|
$ |
|
154 |
|
The following table provides the operating results of Formula 1 (“F1”).
F1 Operating Results
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3Q18 |
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3Q19 |
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% Change |
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amounts in millions |
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|
|||||||||
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Primary Formula 1 revenue |
$ |
|
560 |
|
|
$ |
|
553 |
|
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(1 |
)% |
|
Other Formula 1 revenue |
|
87 |
|
|
|
80 |
|
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(8 |
)% |
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Total Formula 1 revenue |
$ |
|
647 |
|
|
$ |
|
633 |
|
|
(2 |
)% |
|
Operating expenses (excluding stock-based compensation included below): |
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|
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|||||
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Team payments |
|
(344 |
) |
|
|
(335 |
) |
|
3 |
% |
||
|
Other cost of Formula 1 revenue |
|
(107 |
) |
|
|
(99 |
) |
|
7 |
% |
||
|
Cost of Formula 1 revenue |
$ |
|
(451 |
) |
|
$ |
|
(434 |
) |
|
4 |
% |
|
Selling, general and administrative expenses |
|
(38 |
) |
|
|
(37 |
) |
|
3 |
% |
||
|
Adjusted OIBDA |
$ |
|
158 |
|
|
$ |
|
162 |
|
|
3 |
% |
|
Stock-based compensation |
|
(4 |
) |
|
|
(5 |
) |
|
(25 |
)% |
||
|
Depreciation and Amortization |
|
(115 |
) |
|
|
(113 |
) |
|
2 |
% |
||
|
Operating income |
$ |
|
39 |
|
|
$ |
|
44 |
|
|
13 |
% |
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Number of races in period |
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8 |
|
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7 |
|
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Primary F1 revenue is comprised of (i) race promotion fees, (ii) broadcasting fees and (iii) advertising and sponsorship fees. Results in the third quarter of 2019 were unfavorably impacted by the timing of the 2019 race calendar, with seven races taking place in the third quarter of 2019 compared to eight races in the third quarter of 2018.
Race promotion revenue decreased due to one less race held in the third quarter of 2019 and the impact of the renewal terms of one contract. Broadcast revenue increased primarily due to contractual rate increases, partially offset by the lower proportionate recognition of season-based income during the quarter (7/21 races took place in the third quarter of 2019 compared to 8/21 in the third quarter of 2018). Advertising and sponsorship revenue increased due to revenue from new sponsorship agreements. Other F1 revenue decreased in the third quarter primarily due to one less race held in the third quarter of 2019 and non-recurring television production fees in the prior year period.
Operating income and Adjusted OIBDA(2) increased in the third quarter as the revenue decline was more than offset by reduced costs. Team payments were lower in the third quarter driven by the pro rata recognition of such payments across the race season, and other cost of Formula 1 revenue was lower due to one less race in the quarter, which drove decreases in FIA regulatory fees, advertising and sponsorship, hospitality and other event based costs. Selling, general and administrative expense was relatively flat in the quarter.
F1’s total net debt to covenant OIBDA ratio, as defined in F1’s credit facilities for covenant calculations, was 5.3x as of September 30, 2019, as compared to a maximum allowable leverage ratio of 8.25x.
The businesses and assets attributed to the Formula One Group consist of Liberty Media’s subsidiary F1, its interest in Live Nation, minority equity investments and an intergroup interest in the Braves Group. There are approximately 9.1 million notional shares of the Braves Group underlying the Formula One Group’s 15.1% intergroup interest as of October 31, 2019.
BRAVES GROUP - The following table provides the financial results attributed to the Braves Group for the third quarter of 2019. In the third quarter, approximately $2 million of corporate level selling, general and administrative expense (including stock-based compensation expense) was allocated to the Braves Group.
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3Q18 |
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3Q19 |
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amounts in millions |
||||
|
Braves Group |
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Corporate and other |
|
$ |
200 |
|
$ |
212 |
|
Operating Income |
|
|
|
|
|
|
|
Corporate and other |
|
$ |
45 |
|
$ |
21 |
|
Adjusted OIBDA |
|
|
|
|
|
|
|
Corporate and other |
|
$ |
72 |
|
$ |
45 |
The following table provides the operating results of Braves Holdings, LLC (“Braves”).
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|||||
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|
3Q18 |
|
3Q19 |
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% Change |
|||||||
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|
amounts in millions |
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Baseball revenue |
$ |
|
190 |
|
|
$ |
|
203 |
|
|
7 |
% |
|
Development revenue |
|
10 |
|
|
|
9 |
|
|
(10 |
)% |
||
|
Total revenue |
|
200 |
|
|
|
212 |
|
|
6 |
% |
||
|
Operating expenses (excluding stock-based compensation included below): |
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|
|
|
|
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|||||
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Other operating expenses |
|
(105 |
) |
|
|
(145 |
) |
|
(38 |
)% |
||
|
Selling, general and administrative expenses |
|
(21 |
) |
|
|
(21 |
) |
|
— |
% | ||
|
Adjusted OIBDA |
$ |
|
74 |
|
|
$ |
|
46 |
|
|
(38 |
)% |
|
Stock-based compensation |
|
(4 |
) |
|
|
(3 |
) |
|
25 |
% |
||
|
Depreciation and Amortization |
|
(24 |
) |
|
|
(20 |
) |
|
17 |
% |
||
|
Operating income |
$ |
|
46 |
|
|
$ |
|
23 |
|
|
(50 |
)% |
|
|
|
|
|
|
|
|
|
|||||
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Number of home games in period |
|
41 |
|
|
|
40 |
|
|
|
|||
|
Baseball revenue per home game |
$ |
|
4.6 |
|
|
$ |
|
5.1 |
|
|
|
|
Baseball revenue is comprised of (i) ballpark operations, (ii) local and national broadcast rights and (iii) licensing and other shared MLB revenue streams. Development revenue is derived from the Battery Atlanta mixed-use facilities and primarily includes rental income.
Baseball revenue per home game grew in the third quarter of 2019 primarily due to increased ticket and concession sales. Development revenue was modestly lower in the third quarter of 2019 as a result of the sale of the residential development in October 2018 and therefore the loss of its revenue in the current quarter. Operating income and Adjusted OIBDA declined in the third quarter of 2019, as revenue growth was more than offset by elevated operating expenses. The increase in operating expenses was primarily driven by higher player salaries, and to a lesser extent elevated costs due to the opening of the new spring training facility, scouting expenses, increased obligations under MLB’s revenue sharing plan and stadium operation costs driven by concessions.
The Formula One Group holds an approximate 15.1% intergroup interest in the Braves Group as of October 31, 2019. Assuming the issuance of the shares underlying the intergroup interest held by the Formula One Group, the Braves Group outstanding share count as of October 31, 2019 would have been 60 million.
The businesses and assets attributed to the Braves Group consist primarily of Liberty Media’s subsidiary the Braves, which indirectly owns the Atlanta Braves Major League Baseball Club, six minor league baseball clubs and certain assets and liabilities associated with the Braves’ ballpark and mixed-use development project.
Share Repurchases
From August 1, 2019 through October 31, 2019, Liberty Media repurchased approximately 1.4 million Series C Liberty SiriusXM shares (Nasdaq: LSXMK) at an average cost per share of $41.68 for total cash consideration of $60 million. The total remaining repurchase authorization for Liberty Media is approximately $419 million and can be applied to repurchases of Series A and Series C shares of any of the Liberty Media Corporation tracking stocks.
FOOTNOTES
| 1) |
Liberty Media's President and CEO, Greg Maffei, will discuss these headlines and other matters on Liberty Media's earnings conference call which will begin at 10:00 a.m. (E.S.T.) on November 11, 2019. For information regarding how to access the call, please see “Important Notice” later in this document. |
|
| 2) |
For definitions of Adjusted OIBDA (as defined by Liberty Media) and adjusted EBITDA (as defined by SiriusXM) and applicable reconciliations see the accompanying schedules. |
NOTES
The following financial information with respect to Liberty Media's equity affiliates and available for sale securities is intended to supplement Liberty Media's condensed consolidated balance sheet and statement of operations to be included in its Form 10-Q for the period ended September 30, 2019.
Fair Value of Corporate Public Holdings
|
|
|
|
|
|
|
|
|
|
(amounts in millions) |
|
6/30/2019 |
|
9/30/2019 |
|
||
|
Liberty SiriusXM Group |
|
|
|
|
|
|
|
|
iHeart(1) |
|
$ |
105 |
|
$ |
105 |
|
|
Total Liberty SiriusXM Group |
|
$ |
105 |
|
$ |
105 |
|
|
Formula One Group |
|
|
|
|
|
|
|
|
Live Nation Investment(2) |
|
$ |
4,614 |
|
|
4,620 |
|
|
Other Public Holdings(3) |
|
|
263 |
|
|
288 |
|
|
Total Formula One Group |
|
$ |
4,877 |
|
$ |
4,908 |
|
|
Braves Group |
|
|
N/A |
|
|
N/A |
|
|
Total Liberty Media |
|
$ |
4,982 |
|
$ |
5,013 |
|
| _____________________________ | ||
|
(1) |
Includes fair value of iHeart shares and warrants which are included in other long-term assets. |
|
|
(2) |
Represents the fair value of the equity investment attributed to Formula One Group. In accordance with GAAP, Liberty Media accounts for its investment in the equity of Live Nation using the equity method of accounting and includes it in its condensed consolidated balance sheet at $756 million and $792 million as of June 30, 2019 and September 30, 2019, respectively. |
|
|
(3) |
Represents the carrying value of other public holdings which are accounted for at fair value. Excludes Braves Group intergroup interest. |
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Cash and Debt
The following presentation is provided to separately identify cash and liquid investments and debt information.
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|
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|
|
|
|
||||
|
(amounts in millions) |
|
6/30/2019 |
|
9/30/2019 |
|
||||||
|
Cash, Cash Equivalents and Restricted Cash Attributable to: |
|
|
|
|
|
|
|
||||
|
Liberty SiriusXM Group(1)(2) |
|
$ |
|
248 |
|
|
$ |
|
144 |
|
|
|
Formula One Group(3) |
|
|
334 |
|
|
|
419 |
|
|
||
|
Braves Group(2) |
|
|
169 |
|
|
|
210 |
|
|
||
|
Total Consolidated Cash, Cash Equivalents and Restricted Cash (GAAP) |
|
$ |
|
751 |
|
|
$ |
|
773 |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Debt: |
|
|
|
|
|
|
|
||||
|
SiriusXM senior notes(4) |
|
$ |
|
7,750 |
|
|
$ |
|
7,750 |
|
|
|
Pandora convertible senior notes |
|
|
194 |
|
|
|
194 |
|
|
||
|
2.125% exchangeable senior debentures due 2048(5) |
|
|
400 |
|
|
|
400 |
|
|
||
|
Margin loans |
|
|
475 |
|
|
|
550 |
|
|
||
|
Other subsidiary debt(6) |
|
|
— |
|
|
65 |
|
|
|||
|
Total Attributed Liberty SiriusXM Group Debt |
|
$ |
|
8,819 |
|
|
$ |
|
8,959 |
|
|
|
Unamortized discount, fair market value adjustment and deferred loan costs |
|
|
(116 |
) |
|
|
(102 |
) |
|
||
|
Total Attributed Liberty SiriusXM Group Debt (GAAP) |
|
$ |
|
8,703 |
|
|
$ |
|
8,857 |
|
|
|
|
|
|
|
|
|
|
|
||||
|
1.375% cash convertible notes due 2023(5) |
|
|
1,000 |
|
|
|
1,000 |
|
|
||
|
1% cash convertible notes due 2023(5) |
|
|
450 |
|
|
|
450 |
|
|
||
|
2.25% exchangeable senior debentures due 2046(5) |
|
|
211 |
|
|
|
210 |
|
|
||
|
2.25% exchangeable senior debentures due 2048(5) |
|
|
385 |
|
|
|
385 |
|
|
||
|
Formula 1 bank loan |
|
|
2,902 |
|
|
|
2,902 |
|
|
||
|
Other corporate level debt |
|
|
32 |
|
|
|
32 |
|
|
||
|
Total Attributed Formula One Group Debt |
|
$ |
|
4,980 |
|
|
$ |
|
4,979 |
|
|
|
Fair market value adjustment |
|
|
276 |
|
|
|
350 |
|
|
||
|
Total Attributed Formula One Group Debt (GAAP) |
|
$ |
|
5,256 |
|
|
$ |
|
5,329 |
|
|
|
Formula 1 leverage(7) |
|
|
5.6x |
|
|
5.3x |
|
||||
|
|
|
|
|
|
|
|
|
||||
|
Atlanta Braves debt |
|
|
470 |
|
|
|
540 |
|
|
||
|
Total Attributed Braves Group Debt |
|
$ |
|
470 |
|
|
$ |
|
540 |
|
|
|
Deferred loan costs |
|
|
(5 |
) |
|
|
(5 |
) |
|
||
|
Total Attributed Braves Group Debt (GAAP) |
|
$ |
|
465 |
|
|
$ |
|
535 |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total Liberty Media Corporation Debt (GAAP) |
|
$ |
|
14,424 |
|
|
$ |
|
14,721 |
|
|
| _____________________________ | ||
| (1) |
Includes $227 million and $90 million of cash, liquid investments and restricted cash held at SiriusXM as of June 30, 2019 and September 30, 2019, respectively. |
|
| (2) |
Includes restricted cash held in reserves pursuant to the terms of various financial obligations. |
|
| (3) |
Includes $276 million and $354 million of cash and liquid investments held at Formula 1 as of June 30, 2019 and September 30, 2019, respectively. |
|
| (4) |
Outstanding principal amount of Senior Notes with no reduction for the net unamortized discount. |
|
| (5) |
Face amount of the cash convertible notes and exchangeable debentures with no fair market value adjustment. |
|
| (6) |
Includes SiriusXM revolving credit facility. |
|
| (7) |
Net debt to covenant OIBDA ratio of F1 operating business as defined in F1’s credit facilities for covenant calculations. |
|
Total cash, liquid investments and restricted cash attributed to Liberty SiriusXM Group decreased $104 million in the third quarter as cash from operations at SiriusXM and net borrowings were more than offset by return of capital at both Liberty SiriusXM Group and SiriusXM and capital expenditures. Included in the cash, liquid investments and restricted cash balance attributed to Liberty SiriusXM Group at September 30, 2019 is $90 million held at SiriusXM. Although SiriusXM is a consolidated subsidiary, it is a separate public company with a significant non-controlling interest, therefore Liberty Media does not have unfettered access to SiriusXM’s cash balances. Liberty SiriusXM Group received $38 million of dividends from SiriusXM during the quarter.
Total debt attributed to Liberty SiriusXM Group increased $140 million during the quarter primarily as a result of additional borrowing under Liberty SiriusXM’s margin loan and SiriusXM’s revolving credit facility.
Total cash and liquid investments attributed to the Formula One Group increased $85 million during the quarter primarily due to cash from operations at Formula 1. Total debt at Formula One Group was flat in the quarter.
Total cash, liquid investments and restricted cash attributed to the Braves Group increased $41 million during the quarter as cash from operations at the Braves and additional borrowing more than offset capital expenditures related to the mixed-use development. Total debt attributed to the Braves Group increased $70 million during the quarter primarily due to draw downs on the team revolver and spring training credit facility to fund regular baseball operating activities and spring training facility capital expenditures. The second phase of the Battery Atlanta mixed-use development is expected to cost approximately $200 million, which the Braves and affiliated entities expect to fund through a mix of approximately $55 million in equity and approximately $145 million in debt.
