Formula One Group (FWONK) on Q1 2024 Results - Earnings Call Transcript
Operator: Welcome to the Liberty Media Corporation's 2024 First Quarter Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct the question-and-answer session. [Operator Instructions] As a reminder this conference will be recorded May, 8. I would now like to turn the call over to Clare Adams, Senior Manager Investor Relations. Please go ahead.
Clare Adams: 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 the most recent Form 10-K and 10-Q filed by Liberty Media and Atlanta Braves Holdings with the SEC. These forward-looking statements speak only as of the date of this call and Liberty Media and Atlanta Braves Holdings expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Media or Atlanta Braves Holdings' 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 our non-GAAP financial measures for Liberty Media, SiriusXM and Atlanta Braves holdings including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media, SiriusXM and Atlanta Braves holdings schedules one through three can be found at the end of the earnings press release issued today, which are available on Liberty Media and Atlanta Braves Holdings websites. Now I'd like to turn the call over to Greg Maffei, Liberty's President and CEO.
Greg Maffei: Thank you, Clare, and good morning to all. Today speaking on the call, we will also have Formula One's President and CEO, Stefano Domenicali; and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling. Also during Q&A, we will answer questions related to Atlanta Braves Holdings and Braves' management will be available as well. So beginning with Liberty Sirius XM, the LSXM, Sirius transaction is progressing well. The regulatory process is on track and we still expect a close by the early in the third quarter. Turning to Sirius XM itself, a solid first quarter performance, revenue up 1%, EBITDA up 4%. There continuing to benefit from cost optimization across the board, they expect if they don't pay net adds, improvements in the second half and in fiscal 2024 versus 2023, they did also on their call reiterate the 2024 guidance. They are maintaining margins while investing to support future growth. Management's focus on a couple of key strategic initiatives and we've seen some still early but promising metrics on the new app. We continue to move engagement for lower listening cohorts to higher listening levels, and we've been able to adapt to consumer feedback more quickly utilizing this application. Sirius exclusive content continues to attract new customers. James Corden series, which was recently initiated quickly moved into the top three talk shows. Notably, we're also progressing with the rollout of 360L it was an expanded Hyundai Genesis partnership, which will integrate 360L and adoption of 360L leads to better consumer trends including higher conversion. Now turning to Formula One Group. We were thrilled to announce in April, the acquisition of MotoGP. I want to reiterate the attractive qualities of this asset at a global league level sport with incredible racing. For example, across the first four races, we've had 10 riders across seven teams, reach the podium and the average time to decide the race winner has been about a second. Monday, the new technical regulations for the sport were announced for the 2027 timeframe that expect even closer racing and more overtaking utilizing these new technical race, attendance at the races is performing very well. For example, the Portuguese GP at Portimao was up 41% versus the prior year. And the Spanish GP has highest attendance since 2015. The sport is awesome and Liberty has experienced to help them hopefully grow the exposure across the world. A couple of deal updates here. We're also progressing on required regulatory filings. We have syndicated the financing commitments and hedged our foreign exchange exposure and we still expect to close by year-end. Turning now to First quarter, we've had successful races in several key growth markets. We returned to China for the first time since 2019 and the first time with a Chinese driver. It was a sold-out race and live viewership and CCTV was up 50% versus 2019. Miami was an exciting and very competitive race. I want to congratulate Lando on winning his first GP after 15 podiums. McLaren upgrades are working well, and we expect more competitive racing from that going forward. We continue to see growth in the US engagement. Miami was sold out with a new attendance record of 275,000, F1 achieved its largest live US TV audience at 3.1 million with a peak of 3.6 million. We also had our largest audience for a Sprint race since the format was introduced in 2021. We also hosted the second F1 Academy event of the season in Miami. We are excited that we have contributed to and promoting continued momentum in women's sports. We are attracting more diverse audiences with it. They're exciting and relevant to all. At F1 Academy, Instagram followers are 55% female, but also 45% male everything launches women's sports. We recently announced new Docu series with Netflix and Reese Witherspoon’s production company, Hello Sunshine about F1 Academy, and we look forward to seeing the series grow. Turning now to LVGP. A few updates. We redefined the product ladder to reach a greater range of fan base. We are now integrating the commercial and marketing functions across F1 LVGP. and Quint more closely to achieve better harmony and cost savings. We think this will allow us to have aligned sponsorship and sales or efforts across the board. And as I mentioned, it will be more cost effective. We kicked off the events business at Grand Prix Plaza in Las Vegas, hosting some exciting brands including, a Super Bowl media party, Autodesk CrowdStrike and our own QVC's age of possibility. Now touching briefly on Quint. We closed the acquisition in early January. Some of the first quarter highlights were the 2024 All-Star game, which was NBA experiences largest event ever for ticket packages and revenue and F1 experiences sees -- saw solid demand across the first three races of F1 including a solid across all products in Australia. We do believe there is strategic value in having Quint and F1 under the same roof. The data sharing across companies allows us to know the fan better and improve our touch points and leveraging Quint sales and marketing will create efficiencies and leverage the sales process including at LVGP, as I mentioned. I want to reiterate, we expect Quint to be adjusted OIBDA accretive to F1. Turning on touch on Live Nation briefly our global fan demand continues to surge. First quarter revenue was up 21% and AOI was up 15%. They had a record first quarter for sponsorship also up 24%. Indicators point to another record year, over 85% of the large shows have booked -- were booked versus 75%, at this time, in the prior year. And concert ticket sales for Arena [ph] and amphitheaters are pacing up double digit levels. We also see continued success in international markets and with venue -- venue nation strategy. Ticket sales for the Latin backs were up double digits in the US and at Venues we're opening at least 12 major global venues in the 2024 time frame and we have capacity for 8 million additional fans and we think we can enhance the consumer experience and generate strong returns. Finally touching on the Braves. Off to another great start to the season despite early injuries and a tough Dodgers series last weekend, great win last night in the ninth inning as usual with us. Strong demand continues, we've seen multiple satellites sellouts already this season. We're trending number four in average attendance per game across MOV and we have sold 93% of our ticket capacity season today. We've completed the renovations at Truist Park ahead of the season. There's a new Lexus level premium boxes. There's an expanded retail store capacity. We have the Jim Beam Bourbon Decks with bars replicating the links between the pitchers [indiscernible] plate and these upgrades are already generating incremental revenue this season. We announced several new sponsors this season early including Ball Corp. and Lexus and we are creating more inventory around the Ball Corp including LED signage. And we are leveraging the demand for renewals on our existing partnerships. The Braves are positioned for another great year, on and off the field. So with that, I'll turn it over to you Brian for more on our financial results.
Brian Wendling: Thank you Greg, and good morning. At quarter end Liberty SiriusXM Group had attributed cash and liquid investments of $64 million, excluding 71 million of cash held at SiriusXM. During the quarter Liberty SiriusXM paid down 65 million under the SiriusXM margin loan using cash on hand. There's 1.1 billion of undrawn margin loan capacity related to our SiriusXM margin loan as of quarter-end. As of May 7, the value of our SiriusXM stock was $10 billion and we have $1.2 billion in principal amount of debt against these holdings. Total Liberty Sirius XM Group attributed principal amount of debt is $11.1 billion which includes $9.3 billion of debt at Sirius XM. Turning to the Formula One Group, at quarter end, Formula One Group had attributed cash liquid investments and monetizable public holdings of $1.3 billion which includes $1 billion of cash at Formula one. Quint acquisition closed in January and from within was funded with $205 million of Formula One Group cash on hand net of the cash that was acquired. Total Formula One Group attributed principal amount of debt was $2.9 billion, which includes $2.4 billion of debt at Formula One leaving $531 million at the corporate level. F1 $500 million revolver is undrawn and our leverage at quarter end was 1.7 times. Looking at the F1 operating business, as we've reiterated multiple times at its best annual analyze on an annual basis giving variability in the calendar. With that said, however, I will make some brief remarks on the first quarter. There were three races held in the first quarter compared to two races in the prior year period, F1 recognized an additional race promotion fee this year as well as a higher proportion of season-based income due to three out of 24 races occurring during Q1 2024 compared to two out of 23 in the prior year, which was ahead of the Imola race cancellation in Q2 '23. Other revenue increased due to the start of the F2 vehicle cycle, which is largely offset within other cost of F1 revenue as well as higher hospitality revenue and freight income. F1 also recognized revenue and costs related to the F1 Academy due to the earlier start of the season compared to last year. Adjusted OIBDA grew alongside revenue in the quarter. Team payments were higher due to the higher pro rata recognition as well as the expectation of increased team payments for the full year. A reminder that team payments should be analyzed on a full year basis. The revenue recognized based on the mix of flyaway and European races impacts how team payments appear as a percentage of pre-team share EBIT when looking on a quarterly basis. As F1 has grown EBIT over the past several years, the percentage payout has shifted, with F1 recognizing a greater proportion of the economic upside as pre-team share EBIT has reached certain thresholds. We expect to continue to realize leverage on the team payment -- team payout going forward. To note that the incremental payout percentage on pre-team shared EBIT growth recognized in 2023 should not be applied to future growth. Other costs of F1 revenue and SG&A continue to be best viewed as a percent of total revenue for the year. Looking at corporate and other results, which as of this quarter includes the consolidation of Quint, corporate and other revenue includes Quint results and approximately $7 million of rental income related to the Las Vegas Grand Prix Plaza. Corporate and other adjusted OIBDA was a loss of $6 million in the quarter. This includes the rental income, Quint results and other corporate overhead. Note at the start of the year seasonally live for Quint with modest event activity, while the business still incurs ordinary course fixed operating expenses, which largest and most profitable events take place in the second quarter and fourth quarter with the Kentucky Derby in May and larger and more frequent -- or an increased quantity of F1 hospitality events held in the fourth quarter. We expect corporate and other adjusted OIBDA will benefit from rental income and Quint results through the rest of the year. At the Liberty Live Group, there's attributed cash, liquid investments and monetizable public holdings of $423 million, which includes ETF assets. There's a $400 million -- or there's $400 million of undrawn margin loan capacity related to our Live Nation margin loan. And as of May 7, the value of our Live Nation stock held at Liberty Live Group was $6.7 billion. We have $1.2 billion in principal amount of debt against these holdings. Liberty and our consolidated subsidiaries are in compliance with their debt covenants at quarter end. And I will turn quickly with that to AVH. There were no regular season home games played in either the first quarter of 2023 or -- 2024 or 2023. Revenue growth primarily reflects higher broadcasting with more away games in the current year held due to the earlier start of the regular season as well as higher game day related revenue from increased demand and attendance at spring training home games. Braves continue to invest in payroll, which is reflected in increased baseball operating costs, and the Battery grew revenue 13% and adjusted OIBDA 9% in the quarter. CapEx related to the capital improvement projects completed at Truist Park ahead of the 2024 season will total approximately $15 million across Q4 of 2023 and early 2024. These projects are generating incremental revenue, as Greg said, for the Braves already. And at the Battery, the Triust headquarter remains -- headquarters project remains on budget and on schedule. With that, I'll turn it over to Stefano to discuss Formula One.
Stefano Domenicali : Thanks, Brian. The 2024 season is off to a great start with lots of action on the track and the gaps between the teams across the grid getting closer. While Red Bull and Max Verstappen continue to show their strength, we have seen regular produce from Ferrari, including one and two in Melbourne, showing their ongoing improvement as well as increasingly strong performance from McLaren including a great first race win by Lando Norris in Miami in front of a sellout crowd. The battle in the midfield is the closest it has been for many years, and we look forward to this continuing as the season progresses. We have 24 races this year with six Sprints events and are also delighted to have the F1 Academy alongside us at seven F1 events. The return to China after full year break was incredible, and it was great to see a sold-out event, with over 200,000 weekend attendees. Interest in the events underline a growing younger fan base in the country, with all our Chinese fans cheering on their home hero Zhou Guanyu. Over 1.5 million viewers watched the race live on CCTV-5, far beyond the $1 million when we last visited in 2019. China was also host to our first sprint of the season, won by Max Verstappen and Red Bull with Lewis Hamilton taking second place. The sprint continues to deliver great action for our fans, broadcasters, sponsors and promoters. There has been plenty of drivers news of the track at the start of 2024. We have the exciting announcement that Lewis Hamilton will join Ferrari in 2025. Fernando Alonso has committed to remain with Aston Martin. Hulkenberg will go to Sauber in 2025, and we have yet to see where Carlos Sainz will be next year. This continues to create huge excitement and anticipation for our fans with 10 drivers been left confirmed their seat for the next year. We have seen records being broken for attendances at our races for the start of 2024 and expect very strong figures throughout the season. Bahrain saw record raise the attendants and in Melbourne we have a huge crowd of 452,000 beating last year record attendances of 445,000. We also saw good growth in Japan will come in 229,000 fans up 3% on 2023. Alongside this, we continue to see very strong demand for the power plant with over 11,000 tickets sold for the first four races of the season, where we operate the power plant we had to sell out in Bahrain and Saudi for the 2nd year running and 2,500 race day gas to China compared to just 1,100 when we last ratio there in 2019. F1 continues to grow our overall engagement and fan base. We are evolving our view data methodology to ensure we are capturing all our audiences globally and are working with Nielsen to build the model that capture a fuller scope. We had over EUR70 million cumulative TV viewers for the opening Grand Prix we can in Bahrain with 12 million in Germany thanks to extensive free to have coverage on RTL. Through the first three races, we've seen particularly strong viewership in growth markets such as China and the Middle East. We now have 79 million total social media followers up 24% year on year with new followers' growth also boosted by the introduction of new platforms like threats and WhatsApp. On Instagram our most popular social platform 75% of our followers are under 35% 40% are under 25% and 30% of our under 25 followers are female. The US has gained 500000 new followers in 2024 up to the Chinese Grand Prix, which is up 90% over the further growth for the same period last year. We also have a year's worth of forward growth in one week in the Chinese market surrounding, the Chinese Grand Prix. In the US, we've also seen year on year growth across other digital platforms. US F1 TV subscribers are up 16%. Page view across F1.com and app are up to 28% energy per users or those who sign up for an account on F1 platforms are up 32%. Globally, unique visitors to F1.com and app are up 4% year on year with page views up 29% registered users up 28%. The total number of F1 TV subscribers is seen strong growth with lower churn rates at all times high customer satisfaction. Season 6 of Drive to Survive premiered February 23rd. We have reached the top 10 on that phase in over 40 markets and continues to have among the highest completion rate or the numbers of people watch more than 90% of the sellers on the platform when compared to both the risk and scripted and unscripted content. Production continues for the Apple fame which is on pace for the expected release in summer 2025. On the commercial side of the business, we had a very strong first quarter. We had growth across all revenue stream benefiting from one additional race as compared to last year, as well as growth from new sponsorship and media rights agreements and underlying escalators. We continue to see our business and partners benefiting from growth in overall Tandem and the value of form brings to par. As you know sponsorship last week, we announced the world's leading software provider digital consultant Global has joined as an official partner in a new multi-year agreement. Also, in March, we announced McDonald's as regional partner Formal One in Latin America. This is the first of its kind for F1 in the region has the support of the US continues to grow in Latin America. On media rights, we continue to see strong demand and impressive work by all our broadcaster to bring our sport to millions of fans around the world. We recently announced five years renewal with Viaplay in the Netherlands and across the Nordic markets. The deal retains our partnership structure in the region, creating a strong position for our F1 TV Pro product that will continue to generate substantial additional fee. We also announced a new two year agreement with fan code that sees the sports streaming platform become the exclusive broadcast partner to Formula One in India until the end of 2035 seasons. This is a huge opportunity in a market with a growing fan base especially among younger and female supporter. Our estimate shows that we have 60 million fans in India with one into having started following F1 in the last four years. F1 TV Pro with also remaining market in India. 2024 results are also benefiting from the new been support agreement in the Middle East which we referenced on our fourth quarter earnings call. We recently announced a subscription free streaming channel fast for the fires in the US to watch F1, F2, F3 and F1 Academy race replays and highlights for the rounds of classic Grand Prix and popular racing documentaries. The new channel will be distributed for fast watch on leading platforms including Samsung TV plus, Amazon Free-TV and Pluto TV. In addition to generating AD revenue, we also expect it to push more fans to both ESPN and F1 TV Pro. We are confident heading into our US media rights renewal through 2026 with strong growth in our US tandem, sports content remaining highly attractive to broadcasters and newer players continue to bid for sports rights. In addition to the US, key media rights renewal up after 2035 season include Latin America, Brazil, Canada and most of Asia including Japan. Also on media rights, following a successful first season, F1 kids will return to 2024. The program is providing to be an effective way to engage children in Formula One in a way that's accessible and fun for them. So I'm delighted he's back for a second season. Turning to race promotion, we announced our 2025 race calendar in April, for what will be the Formula One 75 anniversary here. We expect to announce details of the 6, 2025 sprint venues in due course. The calendar featuring 24 races that will commence in Australia on 16 March and conclude in Abu Dhabi on 7 December. We will have just one Saturday night race in Las Vegas and Saudi and Bahrain will return to their traditional Sunday race days. Announced in the calendar earlier than we ever had allow us to focus on optimizing the schedule for the future years and planned logistics more efficiently for 2025. It also makes our promoter more sustainable partners by giving them greater certainty around planning their races and other events for next year. There continues to be huge interest and demand for our races around the world and our focus is to maintain the right strategic balance of location and opportunities, while being clear. We currently believe a 24 race schedule is the optimal number of events. Turning to Vegas, we are looking forward to year two of the race building our success of last year event, as DGP continues to generate great demand on the sponsorship site both locally and for the sport more broadly. For example, we could not be more excited about our partnership with American Express and they're engaging activation on site across the F1 ecosystem as well as their support for F1 ACADEMY. In March, we enjoyed a successful American Express presales to kick off ticket sales for 2024 Vegas race and we look forward to the continued growth of our partnership. We also continue to see progress on offtrack action for fans. Our F1 racing series got underway recently and continues to provide exciting action for France and all competitors. At Wagner Kate recently opened the first of several planned US vendors in Boston as their kids seeks to take advantages of F1 continued momentum in the US. Boston is off to a strong start and have the great launch in hosting 600 summit 2 guests with a ton of media coverage. F1 Arcade London saw a 14% increase in attendance this quarter compared to the same period last year. And the Birmingham Venues is also performing very, very well. F1 exhibition is now moving to other venues around the world having opened in Indiana in February and Toronto last week. This follows the successful opening of residency in Madrid, where it was the biggest selling temporary exhibition of 2023. Turning to sustainability and diversity and inclusion initiatives. In April, we were pleased to publish our first F1 impact report, providing an update on all the work delivered on our journey to net zero by 2030, we are on track to meet our targets. We achieved a 13 reduction through increasing our remote operation, using renewable energy in factories, offices and events and from reducing the volume of freight. We have a strong pipeline of action to deliver the remaining 37% reduction target by 2030. On ENI [ph] our first group of students from Formula One’s engineering scholarship took placement with F1 teams. And by 2025 we will have founded the studies of 50 students from the underrepresented groups who undertake their studies in mechanical engineering. F1 ACADEMY started a second season in Saudi and join us for their second event in Miami with exciting racing agreed driving across the field. In Miami, America races Courtney Crone joint to greet at wildcard entry in a deal with the regaining teams championship [indiscernible] racing and the KBC. The F1 ACADEMY series will be shown live in over 160 international territories will be on F1 TV Pro and streamed live on F1 ACADEMY social channels. We have also been delighted to announce Charlotte Tilbury, PUMA, Tommy Hilfiger, and American Express as official partner of the series. We have also launched the F1 ACADEMY Discover Your Drive aimed at giving young female Carter's the opportunity to get into grass roots level of our sport. Its first initiative was launched by Motorsport UK to identify and nurture UK carting talent from the age of eight. The number of female participate in age 11, 16 qualify for the British indoor carting championship has more than tripled and engagement programs will run alongside the all seven F1 ACADEMY events in 2024. We are proud of this work and remain very focused on making the sport more open, diverse and sustainable place. 2024 will continue to be an exciting time for our sport and I'm looking forward to the on-track action and opportunities we have as a business as we continue to go from strength to strength. Avanti Tutta full speed ahead. And now, I will turn the call back over to Greg. Bye-bye. Ciao.
Greg Maffei: Thank you, Stefano and Brian. And to the listening audience, we appreciate your continued interest in Liberty Media and the Atlanta Brace Holdings. And now, operator, I'd like to open the line for questions.
Operator: Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Vijay Jayant with Evercore ISI. Please proceed with your question.
Vijay Jayant: Thank you. Good morning. Can you talk about the trajectory of team payments as a percentage of pre-team EBITDA? Over the last couple of years, that's sort of declined about 300 basis points. I know there's structures in the splits with the teams that we're not aware of, but could we assume that kind of operating leverage again in 2024? And then anything you could say about the sponsorship pipeline at Formula 1? It seems to be that revenue stream is slowing down a bit. Obviously, we can't really know what's happening there. Thanks.
Brian Wendling: Yeah, Vijay, this is Brian. I'll take the team payment one. We'll try to give you the most information we can here without giving you the full model. But over the past few years, as F1 has grown pre-team share EBITDA and EBIT under the current Concord Agreement, we've moved through various bands of pre-team share EBITDA where the payout to the teams has decreased as a percentage for each band. We're now at a point where the percentage to the teams is fixed for incremental EBITDA and EBIT through the end of this current Concord Agreement. We do expect to continue to have leverage in the team payments as a percent of pre-team share EBIT this year or adjusted EBITDA on our reported results, but not at that incremental rate that you noted that we saw from 2022 to 2023.
Greg Maffei: Stefano, do you want to touch on sponsorship?
Stefano Domenicali: Yeah. Thank you, Greg. I would say, Vijay, just to talk about our sponsorship pipeline, I would say the situation is very positive because I think that if you just look back just a couple of years ago, we had only four global sponsors. Now we have 10 global sponsors, a lot of regional partnerships, and the pipeline is very strong. And I would say, as you know, we are not giving here any kind of expectation, but the situation is very solid. And today, it's not only a problem of quantity of sponsorship, it's really related to the quality, and we need to ensure that everyone who is investing in F1 has the right quality in terms of exposure, in terms of experience, in terms of what we can offer. So I would say that's really a very, very positive trend that we will see together with our partners who believe in F1.
Greg Maffei: If I could just add, I agree with everything Stefano said. I feel very good about where we are recognizing sponsorship revenue for the balance of this year and into 2025, and are working hard at building that pipeline for 2026 and beyond.
Vijay Jayant: Great. Thanks so much.
Operator: Our next question comes from Jeff Wlodarczak with Pivotal Research Group. Please proceed with your question.
Jeff Wlodarczak: Good morning. First of all, congrats on Lando winning the Miami GP. It's always good to get a new face at the top of the podium. I've actually got two questions not related to F1, one on Live Nation and one on Siri. Greg, on Live Nation, can you comment on the pending antitrust case against Live Nation? And then also, Greg, you mentioned the car app and seeing some sort of early positive signs. When are we going to know if that was successful? Is that sort of a second half thing we should be looking for? And then looking forward, do you feel comfortable, I guess all else being equal economically, that Siri can get back to positive subscriber growth? Thanks.
Greg Maffei: Hold on. App and economic growth. Okay. So look, I think on the discussion around Live Nation and the antitrust issues, the management team led by Joe summarized it well on their call last Thursday. The DOJ investigation appears focused on specific business practices within divisions of the company, not the merger or the business structure. Live doesn't believe the breakup of Live Nation Ticketmaster would be legally defensible remedy. And beyond that, we're kind of limited to what was said on that Live earnings call, if you listened to that. Turning to Siri, look, I think it's early days. We certainly would hope during the balance of this year to see positive impact and greater learnings from the new app. The way the app is being rolled, because of the app as a platform, you'll see us continue to roll out at Siri new modules and new opportunities which will help us get benefits. So I think you'll see some learnings early and hopefully more growing over time. But the exact timing of those and how the consumer, both how we release them and how the consumer takes them up are still open to question. On economic growth, I do believe that we can start driving, we'll see better numbers in 2024 versus 2023 on SP&A. And I do think over time, this app will be critical to helping us grow and getting back to a growth path at Sirius.
Jeff Wlodarczak: All right. Thank you.
Greg Maffei: Thanks Jeff.
Operator: Our next question comes from David Karnovsky with JPMorgan. Please proceed with your question.
David Karnovsky: Hey, thanks for the question. For Stefano or Greg can you talk to F1 TV and how we should think of this as a possible growth driver for media rights this year? Wanted to understand better how the price increases have been received so far along with the new user experience? And then on Quint, I appreciate the commentary and the strategic value to F1. But maybe you can also discuss Quint on a standalone basis the market for premium hospitality, what's the kind of growth drivers over the long-term? And just for Brian on this on an end to note on the seasonality for Quint with revenue or margin? Thanks.
Greg Maffei: All right. Stefano, do I want to start?
Stefano Domenicali: Yes, Greg, if its fine for you. Absolutely. I would say first of all, F1 TV as we always said these initial is an additional arm for our fabs at offer to fund that some of them are very, very expert, they can analyze all the data we are putting on the screen. And the good thing is that the numbers that we have seen so far are very encouraging because -- actually even in Miami that has been almost a record subscribers that we see. So, it's a very, very important element that is related to the future of the media evolution that we want to offer to our customer. We didn't receive any negative comment on price increase. You may see maybe because it was too low before that to be a good point, but so far no one have said anything. And I would say for us it's really relevant to keep up in term of quality of the product, in term of content of the product. And this is something that will develop even further with artificial intelligence that will be -- that will play a very important part of our development with our future.
Greg Maffei: Great. Thank you, Stefano. And I'll touch briefly on the Quint business drivers and let Brian as you noted, touch on some seasonality, which I expect his comments will be fairly limited, but I don't want to cut him down. Look at the drivers for the business, I think there are several. One is and we mentioned -- I mentioned one already, the opportunity to help us be a better sales arm and be more effective for Formula One itself, particularly around LBGP. And you've seen us do more integration of that sales arm and utilize their customer knowledge, their customer strengths, the things that they do well to help us sell better, particularly at the high end at LBGP. Another driver of the business though is their ability to help other F1 promoters and elements sell their products. So, they work with both teams and promoters for example Qatar to help sell tickets to their events, not just our event and to help sell out the things that they do and do ancillary services and ancillary events around the GPs. Third driver is obviously adding new sports and new events and you've seen them grow on that and expect that they will continue to do that over time. And hopefully that's a place where Liberty may be able to help them open the door to new sports.
Brian Wendling: David on seasonality we can't give you the very specific details, but what I'll say is that Q1 is probably the lowest quarter for Quint followed by Q3. Q2 and Q4 really ramp up because you have the Kentucky Derby and you have a lot more of the larger F1 events that Quint participates in. So, you'll see that Q2 and Q4 definitely vary materially from what you see in Q1.
David Karnovsky: Thank you.
Operator: Our next question comes from Ben Swinburne with Morgan Stanley. Please proceed with your question.
Ben Swinburne: Thanks. Good morning. Greg now that you've had at least the public announcement with Moto GP, I'm just wondering if you had any update on opportunities that may have emerged or conversations you've had in terms of what you can do with that business now that you're all the partners of Moto GP? Know that Liberty is going to be acquiring most of the company. Anything maybe you would add from the call you did a couple of months ago? And then Stefano I think last quarter you said sort of concrete agreement, the next one would be something you guys could maybe finish up pretty quickly not a lot of controversy wanted to see there is an update there, particularly as it relates to Brian's point about team splits being fixed going forward for this deal. Any thoughts on how we might want to think about what that might look like in the next one. Thank you guys.
Greg Maffei: Thanks Ben. So, on Moto GP when we after the announcement we had an outpouring of interest from both our potential broadcast partners OEM's potential sites all of which are very interesting. Unfortunately due to the nature of the regulatory process, we will be formulated those amongst ourselves in our plans but we really can't reach out and do anything concrete with the Moto GP management team to avoid gun jumping until we have regulatory approval. So, we are considering plans we have some really good ideas. I think I hope and we hope to get permission to execute on those sooner rather than later.
Stefano Domenicali: On my side Ben with regard to the update on Coke agreement. As we always said that the situation as you know very well this will expire until 2025. Now we are in the process of discussion with the teams. The most important point is to keep the situation as stable as possible. These are the points of discussion. And as you can imagine, we cannot go into detail of it. But as soon as we can, we will share what we can do. As I said that the situation is optimal to keep discussing with the teams that with all the relevant part is the best way to finalize everything for a stronger future up to a longer term.
Ben Swinburne: Okay. Thank you.
Operator: Our next question comes from Stephen Laszczyk with Goldman Sachs. Please proceed with your question.
Stephen Laszczyk: Hey. Great. Thanks for the questions. And maybe for Greg on F1 media rights, I'm curious if you could talk more about this strategy. Have you -- and some of the renewals you called out in the release, it looks like you took a good bit of duration in MENA maybe align the Nordics with Sky. I know some of the Americas and Asian contracts are up in 2025. Anything more to add to that that conversation or that strategy on media rights would be helpful?
Greg Maffei: Thanks for the question. And I think in general on media rights, we've been very happy with the renewals and interest we've seen. We -- as you noted, some of the good renewals we've had that have been very attractive. We continue to see strong demand and we continue to see as we talked about F1 TV, we continue to see interesting ways in which F1 TV can be an asset working with our media partners. The US renewal is, obviously, out ahead. It's been interesting to watch some of the most recent renewals around either other motorsports or other sports in general in the US. And hopefully those give us some confidence about given where the demand we've seen both among broadcasters and the like, and the level of interest in races like, I obviously, mentioned already the Miami one, what that will lead to.
Stephen Laszczyk: Got it. And then just on race promotion, you have I think 10 raises up for renewal over the next two years. Stefano you called out the 11 interested cities being serious contenders for GPUs this past weekend. Could you add a little bit more context around the supply demand dynamic you're seeing right now and what you think that could mean for things like promotion step-up investments in hospitality fan experience that would be helpful. Thank you.
Stefano Domenicali: Well, for sure, what we have seen and what we have seen happening in the course of the last years, because of the strong demand of our product, and because of the standard we are, let's say, asking and working together with our promoter. We have seen everything going up in term of quality of demand of course economical impact for both the promoter and our site. And the strong demand we are receiving, just shows really the strategy is right. The point is to keep the balance between the different continents that are requesting the different run rate and of course, what is important is it to…
Greg Maffei: I think we may have lost Stefano or maybe we are off. Operator?
Operator: Checking. Let me -- the line is still connected.
Greg Maffei: So just in check are we on mute. Is Stefano on mute or our line is still connected to the other audience, just checking on the logistics.
Operator: Correct. It is yes.
Greg Maffei: So, we’ll assume that we'll get Stefano back. Maybe we can move to the next question and we'll come back and answer that and either will tried again without Stefano or we'll hopefully get Stefano to answer.
Operator: Okay.
Greg Maffei: Next question operator. Thank you.
Operator: Of course. Our next question comes from Barton Crockett with Rosenblatt Securities. Please proceed with your question.
Barton Crockett: Okay. Great. Thanks for taking the questions. I guess I wanted to switch gears a little bit and just gave Greg your thoughts on baseball on the Braves and TV and Diamond Sports now some question about the viability of the emergence with the blackout a comp. What can you tell us about what the Braves could do if Diamond isn't viable? And what are your thoughts longer-term about what should happen there with the TV rights situation there for the Braves?
Greg Maffei: Well, I'll give you one cursory comment and then let Derek, perhaps, if you want to contribute. Happy have you take over. I think we have some visibility into the Diamond holdings not only from our experience with the Braves but our experience with Charter, and we watch the situation obviously very carefully. We have a benefit as we mentioned before have an enormously attractive territory and think we have options in the event that they are unable to complete their successful emergence from Chapter 11, but I'll let Derrick touch on that a little more if he would like.
Derek Schiller: Thanks Greg. Yes, to the first point and obviously, Carriage disputes are sort of commonplace unfortunately and we don't like the fact that this Carriage dispute is going on. We're not a party to it. We're hoping that Comcast and values get together. To Greg's point we're obviously monitoring the whole bankruptcy proceedings and doing our part to protect our rights. At this point in time Diamond Valley's is fulfilling their terms with us including full payment. But if the rights come back to us, we are very optimistic, because as Greg noted we have a very large territory, one of the largest in sports. There's huge demand on the team, and we believe there's more optimism than pessimism with the future of Braves' television rights in that marketplace.
Barton Crockett: That's great. If I could just follow-up. I mean, the precedent at some of the other baseball teams has been if they lose their RSN carriage that they're having to move to a lower revenue model where perhaps they get broader exposure on broadcast, but less revenue. It sounds like you don't think that, that's what the Braves would face if they came to it. Am I hearing you correctly?
Derek Schiller: Yeah, I think you are hearing me correctly, partly because the other situations that we've seen around in particular, baseball, the marketplaces are just vastly different. And their situations, I don't think are necessarily analogous to us. We have about six states that are in our territory and about 35 million people in that territory. So one way to look at this is, to the extent that we can unlock the opportunity to offer the Braves content to a wider stretch of that territory to more of those 35 million people, we think that the revenue should follow and we've been modeling that and feel like we're in a good position should those rights come back to us. But again, at this point in time, we're still operating under the terms of the Bally's agreement, and they are as well. So we'll continue that to the extent that, that stays the case.
Barton Crockett: Okay. Thank you.
Operator: Our next question comes from Bryan Kraft with Deutsche Bank. Please proceed with your question.
Bryan Kraft: Hi. Good morning. I had one for Greg on Sirius and one on F1 for Stefano if he's back or for Greg. Greg, sorry to ask this question again this quarter, but a lot of people want to know. I know you stated that the Sirius transaction is on track to close in early 3Q. But can you just walk us through the sequence of steps to close and just comment on whether it might -- closing might get pulled into early June. It seems like it could from someone on the outside looking in? And then on F1, I was just wondering if you could talk about what you're seeing in terms of race promotion contract renewals as far as step-ups on renewals and escalators within the contracts. I think pre-COVID race promotion didn't seem like much of a growth opportunity. But with growth in demand over the past few years and improving promoters economics, wondering if you think that race promotion is now more of a growth opportunity over the medium to long term, even outside of Vegas, which is kind of its own thing. And then separately, can you talk about what you've seen with Las Vegas ticket sales since they went on sale in late March? Thank you.
Greg Maffei: Well, I'm going to let Renee walk you through the regulatory steps that we anticipate. And then Stefano, I think you're back on so after we'll let you talk about rate promotion.
Stefano Domenicali: Yeah, yeah. Thanks, Greg, yeah.
Renee Wilm: So with regard to the SIRI closing, we're making very good progress with the SEC as well as on the FCC front. And we are still on target. I think as we mentioned earlier this year that we'd be looking to close sometime during the summer.
Greg Maffei: Stefano, do you want to touch on the rate promotion?
Stefano Domenicali: Yeah. Yeah, I would say following to what I was trying to say before, I don't know whether it was captured, but for Brian information, the race promotions, before COVID, everyone was worried about the fact in terms of revenue stream, this could have been a very flat line. And actually, the fact that we have a lot of demand, of course, is pushing up also the possibility of having or maximizing in the best way that we can at the racing promotion fees. Connected, of course, that this is, of course, a relevant point, but has to be connected to our strategic development in different markets. So everything is progressing very, very well. And I would say, in the next couple of years, I'm expecting to see and we are expecting to announce also some new venues that could be very attractive to grow the business of Formula One.
Greg Maffei: So if I could just add to that to Stefano's point. I think for a long time, it was perceived that the growth in promotion would come from incremental races. And we obviously went from 18-or-something up to this 24 level, which is where we do not anticipate growing any more races. But as I think we talked about at the Investor Day back in November, it actually creates a great incentive scarcity to be able to play promoters off against each other and not to try and take advantage of them. But just given the amount of demand we have, both among fans to attend and among promoters to host an event, we've been able to find attractive pricing and good uplifts, and we continue to find new venues and new locations, which find it very attractive given the amount of demand we have and given the opportunities they've seen others pursue. So, so far, so good on promotion, and I do think it continues tremendous growth area. And we'll go back to Renee and let you touch on Vegas tickets.
Renee Wilm: Sure, Thanks, Greg. We were very happy with the results of our presale with our partner, American Express. But overall, we are seeing a trend towards ticket purchases closer to the event particularly in the US. And I would say even more so in Vegas, which is known as the last-minute market. That being said, we are working very hard on our product ladder this year. We have looked to really differentiate those products creating about 10,000 new GA tickets available, which will be very much, I think, appealing to that last-minute market. We have now three different zones at tiered pricing. We will have the T-Mobile Sphere Zone continuing to focus on the news and entertainment as well as the racing phenomenon on the Sphere Zone. We have a new entry-level price point in Flamingo which will have a viewing structure for fans to watch and the racing and football and then a third new product offering which is going to be announced very soon which will focus on this skewing in the heart of the DRS zone along cobalt stream. This is allowing us to continue to really reach out to those individual consumers and the new F1 fans who want to come and watch really on track for our racing we had as well as enjoying VM unique Vegas style entertainment that we will continue to offer throughout the year.
Bryan Kraft: Thank you, Renee. And if I could just follow up on your comments on the Sears closing, you mentioned very good progress with the SCC. I mean my understanding is that you had as you see approval already for the proxy but you have to update basically for the March quarter numbers. And so was just curious if that you know like what's the timing for updating the filing it seemed like that would be sort of a rubber stamp approval from the SEC since they already approved it. And then so you should be able to get to a shareholder vote on probably within the next 30 days. I was just looking for a little more color if there's anything that you can share.
Renee Wilm: Sure. Well, I think it will be ready to file within the next few weeks now that we've gone through our quarterly audits. And then I would never say the SEC is going to rubber stamp anything, but we have at least cleared our financial and legal comments which is great progress. It's hard to say exactly when we'll be ready to close. But I do think we're looking at end of Q2 early Q3, once we get everything in order for the shareholder meeting.
Bryan Kraft: Okay. Got it. Thank you so much.
Operator: Our next question comes from David Joyce with Seaport Research Partners. Please proceed with your question.
David Joyce: Thank you. And thinking about the other factors outside of the pre-Team Share EBIT calculation are there any other significant expenses that are either from just straight lined or variable then sort of related to that with Quint. Just wondering that how we've been accounting for that with the Quint's F1 related revenue is that going to be within the former one and therefore and pre-Team Share EBIT and then there other events are going to be outside of that just went just wanted to verify that there has been a split of Quint activities that way?
Greg Maffei: Brian, you want to take this?
Brian Wendling: Yeah. So I'll start with Quint piece first. Yeah. So revenue that Formula One generates from Quint related to those ticket sales do flow through the team payment calculation. So those are included just like they've been beforehand. And then on your first question…
Greg Maffei: I'm sorry just to add there. So but you're correct David that non-F1 related events like will not get conducted Kentucky Derby all those flow through flying, but not the F1 team suggested that correct sorry.
Brian Wendling: And then on your question about straight line expenses, a team payment is really the largest expense that is straight line. Other things are more, long when they're incurred when they're incurred. So think about hospitality when the event actually happens same with freight those types of things. Obviously there's much fixed expenses related to payroll and the like that are relatively smooth throughout the year. But team payments would be the largest example of a per race kind of amortization.
David Joyce: All right. Thank you.
Operator: Our final question is from Matthew Harrigan Benchmark Company. Please proceed with your question.
Matthew Harrigan: Thank you. My last dangling MLP question might be more for per day or what's your present view on how the changes rule changes are fostering interest in the game? I think Greg. Next great investment might be a surgical clinic doing Tommy John Surgery. If you look at what are coming off the clock no changes just kind of where are we now on midstream in terms of listing for the popularity of the sport? And are there any downsides to what's happening? Thanks.
Brian Wendling: I’ll say there are overwhelmingly the hardware, but I'll let Derek go ahead. Go ahead please. Yeah. I mean I think obviously the bulk of the rule changes took place last season. So we saw the results of those and have been able to study all of last season as well as the first part of the season. I think that the overwhelming viewpoint from fans, media, players, teams is that the real changes were successful and have been embraced. And we're excited to continue with those. Primarily the idea that you're creating again that is a little bit shorter a little bit more action inside of that game with some of those changes including the elimination of the shift things like that. But we've seen some of the small little changes that have taken place from last year to this year some a couple of seconds taken off of the pitch clock as one example. I think it's really hard to correlate those changes to some of the things that you might be seeing and whether it be our pitcher pitchers or others. I think it's the sample size is just too small and we're going to rely a little bit on MLB to do a full study with the Players Association on that. But I think over overall I would tell you the real changes have been from our vantage point fans vantage point very successful and have continued to make a great gain even better.
Matthew Harrigan: Great. Thanks.
Greg Maffei: Thank you to our listening audience for all of your questions and your interest in Liberty Media and the Atlanta Braves Holdings. We look forward to speaking with you again next quarter, if not sooner.
Operator: This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.
