Liberty Media Corporation

Welcome to the Liberty Media Corporation's third quarter 2022 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you'd like to ask a question, please press star 1 on your telephone keypad. As a reminder, this conference will be recorded today, November 4th. I would now like to turn the call over to your host, Courtney Chun. Chief Portfolio Officer, please go ahead.

Thank you and good morning. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in Liberty Media's most recent forms, 10-K and 10-Q, or Liberty Media Acquisitions' most recent forms, 10-K and 10-Q, filed with the SEC. These forward-looking statements speak only as of the date of this call, and Liberty Media and Liberty Media Acquisition expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media or Liberty Media Acquisition's expectations with regard thereto, or any change in events, conditions, or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures for Liberty Media and SiriusXM, including adjusted OIDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media and SiriusXM, Schedules 1 and 2, can be found at the end of the earnings press release issued today, which is available on Liberty Media's website. Now I'd like to turn the call over to Greg Maffei, Liberty's President and CEO.

Thank you. Good morning. Today, speaking on the call, We will also have Formula One's President and CEO, Stefano Domenicale, and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling. So let me start with Liberty SiriusXM. Last quarter, we discussed our intention to reduce debt at LSXM, and we took action during the third quarter. We opportunistically repurchased about 21% of the 1-3-8 basket, combining prudent debt management and effective share buyback. Juan paid $64 million and Batter paid $14 million to LSXM to settle their respective intergroup interests. The remainder of the repurchase was funded with LSXM cash and $27 million from an unwind of a bond hedge and warrant. Effectively, this was a share repurchase across the LMC equities with $179 million effective cost to repurchase $4.5 million LSXM and 1.1 million FWANA and 500,000 FATRA intergroup inter-shares effectively repurchased. We are still hedged on the remaining exposure under that convert with our intergroup interest. Turning now to SiriusXM itself, they reported solid third quarter financial results despite the macro factors impacting the business. The resilient sub-base experienced a record low churn of 1.5%, revenue was up 4%, and EBITDA was flat as we continued to make investments, including in product development. Despite soft auto sales, we continue to achieve vehicle penetrations with an available fleet of approximately $150 million. SiriusXM also set out strong cash flow business and guidance for the year, full year guidance for 2022. We continue to monitor headwinds in advertising and the reduced SAR impact on the top of the funnel. Sirius is also making progress in the streaming business. September was one of the biggest streaming sub-acquisition months they've experienced to date. And we continue to add exclusive and diverse content both in and out of the car. For example, we extended the NFL agreement. Sports has proven obviously to be high appeal for new subs who both converted a higher rate and a higher retention once they are obtained. Turning to Live Nation. Live Nation continues to see incredible demand with fans prioritizing spending on live events. Versus 2019, AOI was up 45%, and free cash flow was up 88%. Live also beat last quarter's record for highest quarterly attendance with over 44 million fans across 11,000 events. Per-fan spending was up 30% through September in U.S. amphitheaters, and Ticketmaster experienced all-time high GTB which was up 62% versus 2019. Live is closing at a record year, but there is more growth to come with 115 million tickets already sold and sponsorship for 2023 up 30% over this point last year. Turning now to the Formula One group. We continue to come up with new analogies, which are familiar, and F1 continues to fire on all cylinders, with incredible fan demand. There is significant both in grandstand and paddock club attendance with many sellouts and records broken. Importantly, as we've invested, there's been a continued growth also in the U.S. market with three races planned for next year, including our landmark Vegas race. We also announced the renewal of our ESPN contract at a value which was many multiples of the prior contract. We also announced a record 24-race calendar for the coming year, including renewing in Monaco, where we have a three-year agreement to keep that iconic race on schedule, renewing in Mexico City, where we have a three-year deal, which highlights the value that F1 brings to all cities. For example, between 2015 and 2021, the Mexico City Grand Prix generated $2.4 billion of economic activity and created 57,000 jobs. We will continue to capitalize on the momentum in the business. An example recently is the film that Apple has planned, which we think will be epic. We have a star-studded cast, including Brad Pitt. It's directed by Joseph Kavinsky, and it's produced by Jerry Bruckheimer, all stars in their own right. Very exciting. At the corporate level, We refinanced the flunk convertible on attractive terms with fewer shares underlying the instrument and a lower initial conversion price of $8,606. And now turning to the Braves. Braves finished an impressive season, securing their fifth straight NLE title. They finished 101-61 for the first time since 2003. They won over 100 games. And it was an epic comeback for the second half of the season. As you may recall, beginning at the start of June, we were 10 and a half games behind the Mets. From there, we went on a major league best, nearly 700 win rate from the start of that June to the end of the season. The fans had an incredible turnout with 52 game sellouts at Truist and more tickets sold at the stadium since we had done since last in 2000. Obviously, the finale was not what we had hoped. But I remind you, we did win the World Series last year. We are, for a few more weeks, the reigning World Series champions. And there are wonderful things that come from that, but it also can lead to increased costs. We think they ultimately increase value for the franchise and advantage gave it, which will drive revenue. But on the increased cost side, the largest component has been reinvesting in increased payroll, We think that sets us up well for future years. But other elevated costs from our record attendance and four additional home games at the Truist Ballpark. There were also modest cost increases for post-World Series activities. For example, a trophy tour and creating special merchandise. And let me finish by talking about LMAC. We recently sent out a press release announcing our vote for an early rewind. While the results have not been what we wanted in terms of finding the deal that we thought was attractive, I would tell you we evaluated over 140 targets, but the high valuations for 2021, the poor IPO market, plus overall market volatility, led us to the conclusion that we could not find a solid target with attractive valuation and return characteristics. Finally, the recent tax law changes under the IRA created additional corporate liabilities if we were to extend the unwind into 2023, and therefore we took action to unwind and return the capital to the investors in 2022. And with that, I'm going to turn it to Brian to let him talk about our financial results in more detail.