Liberty Media Corporation

Welcome to the Liberty Media Corporation's 2023 Q1 earnings 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 have a question, please press star 1 on your telephone keypad. As a reminder, this conference is being recorded May 5th. I would now like to turn the conference over to Shane Kleinstein, Vice President of Investor Relations. 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 filed with the SEC. 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 for Liberty Media and SiriusXM, including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media and SiriusXM, Schedules 1 through 3, 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, Shane, and good morning. Today, speaking on the call, we will also have Formula One's presidency EO, Stefano Domenicali, and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendley. I'm gonna first update you on the split up of the Braze and the creation of the new Liberty Live Tracker. We filed the amended S-4 and are pleased with the speed of the SEC review. We believe we are nearing the end of that SEC process, and we are still targeting completion before the end of the second quarter. Turning first to Liberty SiriusXM, we continued our efforts to delever and simplify the balance sheet there. We raised $575 million of three and three-quarter LSXM converts, and we used the proceeds to repurchase 703 principal amount of LSXM debt, including $591 million of the one and three-eighths basket convert and $112 million of the two and 2.125% Siri exchangeables. we also repaid the remaining balance of those in April. That was a reduction in gross debt just over $400 million year-to-date, including the April activity. The reclassification of the LSXM tracker without the live stake will simplify our structure further, and we continue to be focused on rationalizing SIRI and LSXM structures in the near term. Let me look at SiriusXM itself. As expected, they had a challenging first quarter due to the SAR and ad market trends. We expect this is the low point of the year on net self-pay net ads due to the lower Q4 trial starts, the seasonal Q1 higher churn, and the pullback in marketing as we wait to roll out our new app. Advertising did perform better than expectations, and podcasting continues to be a bright spot. We saw solid progress in rolling out 360L, our revolutionary new product enhancement, which leverages the best of our content and interactivity. We expect 40% penetration in new car trials by year-end 2023. We see a good conversion lift in vehicles with 360L, particularly as consumers are aware of and use advanced features. We did take costs out of the business at SiriusXM with an 8% workforce reduction in March, and we were confident we will see improvement in operating results for the year with likely positive self-pay net ads in the back half of the year and the cost savings and ad revenue seasonality benefiting EBITDA. As a result, SiriusXM on their earnings announcement raised both EBITDA and free cash flow guidance $50 million each. We were excited to name Tom Berry as the new CFO. He was previously our chief accounting officer. He's been with SiriusXM since 2009 and has a detailed knowledge of financial and strategic elements of the business. We do wish Sean well in his new role and his success on the course. Turning to Live Nation, tremendous quarter, continued growth. in live events across all of its segments with a great Q1, as I said, even against a pretty reasonably strong comp last year, though there were some international markets that were not open in a prior period. Ticketing GTV was up 60%. AOI was up a stunning 53% to $320 million. And they converted 59% of that AOI into $190 million of free cash flow. We look forward to yet another expected record year at live. With about 90 million tickets sold for Live Nation shows year-to-date, we expect to manage 600 million tickets globally. We will host a record number of fans, even against a strong 2022 comp, which benefits from rescheduled shows in prior periods. We believe the AOI at Live can compound at double digits for the foreseeable future. On the legislative updates, we continue to make solid progress and hope the market will begin to recognize the momentum there. We continue to gain momentum on the Fair Ticketing Act, and the proposed bill in the Senate called the Ticket Act is actually a significant positive first step towards implementing initiatives we support. Turning now to the Formula One group. On the corporate side, we paid $202 million of cash to LSXM to settle the intergroup interest in connection with the purchase of the basket converts. That's an effective buyback of 3.1 million FWANA shares at $65 a share, proportionate to the amount of the convert repurchased. The F1 season is back after several weeks off, beginning here with the exciting Miami race this weekend. I would note we had our first F1 Accelerate conference yesterday. It was successful. This business summit brought together leaders in sports, tech, and media, and we expect we'll have further iterations of that in the future. We announced format tweaks to sprint events. now a standalone event with separate points and no impact to the grid on the GP itself. I also expect we'll see continued improvements in this format and three full days, resulting in three full days of on-track excitement. We continue to see growth in the sport. The Baku sprint weekend TV audience was up 7% versus the 2022 GP in part due to the sprints. Continuing from here in Miami, We see growth in the U.S. fandom on full display. The Saudi GP was on ESPN and cable's most live GP on record to date. U.S. social media followers are up dramatically, 43% in the first quarter versus the prior year. And the U.S. is now Formula One's biggest audience across Instagram, YouTube, TikTok, and Snapchat. Quick update on Vegas. We completed the wave one and two ticket sales with strong demand. The final wave three, Sales are expected later this spring. We remain confident in our sponsorship pipeline with many big deals already announced. We most recently added Virgin at Hard Rock. The construction of the paddock building itself is over 60% complete. CapEx is running in line with expectations, modestly exceeding our original cost of land purchase. Reiterating the race-specific economics for year one, We expect total revenues will approach $500 million, and we do expect it will be a top-five race in profit economics. On the balance sheet, F1 leverage at quarter end was 2.2 times. This will trigger a 25 basis point permanent reduction in the margin on our existing term loan fee, regardless of future leverage ratios. Turning to Braves, great start to the season, 22 and 10, best record in the NLM, and leading the NL East by six games. Ronald Acuna Jr. was named NL Player of the Month for April. He led the Major League Baseball in stolen bases and runs. We had the largest home opener crowd in Truist Park history. We've seen incredible ticket demand for season to date. We stopped selling season ticket tales for the first time in franchise history and started a wait list before opening day. We expect to sell out over half the games this season. Baseball is clearly benefiting from MLB's rule changes. Games have more action and less downtime. Across Major League Baseball, you've seen stolen base attempts up over 30% versus last year to the highest rate since 2012. Games are about 30 minutes shorter versus last year and dropping below three hours. Looking at the Braves themselves and innovations there, we already plan to implement a new We already planned to implement a new POS system this year to enhance our fan experience, and this will help mitigate any impact to concessions from shorter gains. And we are actually seeing favorable trends in concessions year-to-date. Let me turn it over to Brian for more on our financial results.