Liberty Media Corporation ("Liberty Media" or “Liberty”)
(NASDAQ: LSXMA, LSXMB, LSXMK, BATRA, BATRK, LMCA, LMCK) today
reported third quarter 2016 results. Highlights include (1):
- Attributed to Liberty SiriusXM Group
- SiriusXM reported strong third quarter
2016 results
- Revenue climbed 9% to $1.3 billion, a
quarterly record
- Net income rose 16% to $194 million and
adjusted EBITDA(2) grew 10% to $492 million
- SiriusXM increased 2016 revenue and
adjusted EBITDA(2) guidance on October 27th
- SiriusXM initiated regular quarterly
dividend of $0.01 per share
- SiriusXM’s share buyback authorization
increased by $2 billion
- Liberty Media’s ownership of SiriusXM
stood at 65.5% as of October 25th
- Attributed to Liberty Braves Group
- Braves named Brian Snitker as manager
for 2017 season
- On-field turnaround second half of
season, finishing with 37-35 record post All-Star break
- Attributed to Liberty Media Group
- Made minority investment in and
announced agreement to acquire Formula 1 (“F1”)
- Raised $445 million through private
offering of senior debentures exchangeable into Time Warner Inc.
shares to partially fund F1 minority investment
“We were thrilled to announce our planned acquisition of F1, the
iconic global motorsports business. We see tremendous opportunities
and are excited for Chase Carey to bring his media and business
experience to the sport,” said Greg Maffei, Liberty President and
CEO. “SiriusXM again turned in stellar results, now servicing
nearly 31 million customers, and also intends to institute a
quarterly dividend. Live Nation also produced outstanding results,
with record quarterly growth in operating income and adjusted
operating income across each core division. The Atlanta Braves
dramatically improved on-field performance in the second half of
the season and we look forward to moving to SunTrust Park in
2017.”
F1 Acquisition
On September 7, 2016, Liberty entered into two agreements
relating to the acquisition of F1, a global motorsports business.
The first stock purchase agreement was completed on September 7,
2016 and provided for the acquisition of an 18.7% fully diluted
minority stake in Delta Topco Limited, the parent company of F1
(Delta Topco herein referred to as "F1"), for $746 million in cash.
Also pursuant to the first purchase agreement, on October 27, 2016,
Liberty acquired an additional 0.4% equity interest in F1 for
approximately $13 million in cash, increasing its stake to
approximately 19.1% on a fully diluted basis. Liberty’s interest in
F1 is attributed to the Liberty Media Group. Liberty expects to
acquire 100% of the fully diluted shares of F1, other than a
nominal number of shares held by certain F1 teams, in a closing
under the second purchase agreement (and following the unwind of
the first purchase agreement) during the first quarter of 2017. At
the second closing, Liberty’s interest in F1, along with existing
F1 cash and debt (which will be non-recourse to Liberty), will be
attributed to the Liberty Media Group. Liberty’s minority stake in
F1 is currently being accounted for as a cost investment until
completion of the second closing, at which point Liberty expects to
consolidate F1.
The transaction price for the acquisition represents an
enterprise value for F1 of $8.0 billion and an equity value of $4.4
billion, calculated at the time of the first closing in September
2016. The aggregate consideration is comprised of $1.1 billion in
cash (which includes the cash consideration already paid to the
selling shareholders under the first purchase agreement), up to 138
million newly issued shares of Liberty’s Series C Liberty Media
common stock (“LMCK”) and approximately $351 million in
exchangeable debt instruments to be issued by Delta Topco Limited
and exchangeable into LMCK shares. Funding for the remaining cash
component of the acquisition is expected to come from cash on hand
at the Liberty Media Group and liquidity from a $500 million margin
loan with shares of Live Nation and Viacom common stock pledged as
collateral, expected to close this week. The newly issued LMCK
shares will be subject to market co-ordination and lock-up
agreements.
Liberty has agreed to use its reasonable endeavors between the
first and second closing to secure commitments from certain third
party investors to purchase a portion of the LMCK shares that are
otherwise deliverable to the selling shareholders at a price per
share no less than the LMCK transaction reference price of $21.26,
subject to certain exceptions. If shares are issued to third party
investors, the proceeds of such investment (net of selling
expenses) will be used to increase the cash consideration paid to
the selling shareholders and the number of LMCK shares issued to
selling shareholders will be reduced. Liberty Media will not retain
any proceeds from any sale to third party investors. The second
closing is not conditioned upon the consummation of any third party
investment. The maximum aggregate number of LMCK shares to be
issued to the selling shareholders and the third party investors at
the second closing is approximately 138 million shares.
The second closing is subject to the satisfaction of certain
conditions, including (i) anti-trust approval, (ii) a Liberty Media
Corporation shareholder vote approving the issuance of the LMCK
shares at the second closing, and (iii) certain third party
consents including approval of the FIA, the F1 governing body. It
is expected that the Liberty Media Group will be renamed the
Formula One Group upon completion of the second closing (subject to
stockholder approval of the name change, which Liberty has agreed
to use its reasonable endeavors to obtain), and the ticker symbols
for the Series A, Series B and Series C Liberty Media Group
tracking stocks will be changed from LMC (A/B/K), respectively, to
FWON (A/B/K), respectively.
Operating Results
On April 15, 2016, Liberty Media completed the recapitalization
(the “Recapitalization”) of its common stock into three new
tracking stock groups: (i) the Liberty SiriusXM Group, (ii) the
Liberty Braves Group and (iii) the Liberty Media Group. For
purposes of presentation herein, the assets and liabilities of
Liberty Media have been allocated among the three tracking stocks
as if the Recapitalization had occurred on January 1, 2015. This is
intended to supplement and enhance the information included in our
prior period financial statements, but is not intended to provide a
comprehensive view of what each tracking stock group's performance
would have been had the Recapitalization actually occurred on such
date.
LIBERTY SIRIUSXM GROUP – Liberty SiriusXM Group's revenue
increased 10% to $1.3 billion in the third quarter, operating
income increased 12% to $367 million and adjusted OIBDA(2)
increased 7% to $482 million. The increases in revenue, operating
income and adjusted OIBDA were primarily attributable to an
increase in the daily weighted average number of subscribers and an
increase in SiriusXM’s average monthly revenue per subscriber due
to select price changes and the mix of pricing plans. In the third
quarter, $14 million of corporate level selling, general and
administrative expense (including stock-based compensation expense)
was allocated to the Liberty SiriusXM Group.
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 27, 2016.
For presentation purposes in this release, we include below 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. For a
reconciliation of revenue, adjusted OIBDA (as defined by Liberty
Media) and operating income for SiriusXM's stand-alone operating
results as reported by SiriusXM to those results as reported by
Liberty Media, see Liberty Media's Form 10-Q for the quarter ended
September 30, 2016.
Highlights of SiriusXM's earnings release included the
following:
- Revenue climbed 9% in the third quarter
to $1.3 billion, a quarterly record
- Third quarter net income rose 16% to
$194 million and adjusted EBITDA(2) grew 10% to $492 million
- SiriusXM increased 2016 revenue and
adjusted EBITDA(2) guidance
- SiriusXM initiated regular quarterly
dividend of $0.01 per share
- SiriusXM’s share buyback authorization
increased by $2 billion
The businesses and assets attributed to Liberty SiriusXM Group
consist primarily of Liberty Media’s interest in SiriusXM.
LIBERTY BRAVES GROUP - Liberty Braves Group's revenue
decreased $10 million to $109 million in the third quarter,
operating income decreased $15 million to $1 million and adjusted
OIBDA(2) decreased $14 million to $16 million. The decreases in
revenue, operating income and adjusted OIBDA were primarily due to
a decline in ticket sales and broadcast revenue as a result of
having fewer home games in the third quarter of 2016, with 35 home
games in 2016 versus 42 home games during the same period in 2015.
In the third quarter, less than $1 million of corporate level
selling, general and administrative expense (including stock-based
compensation expense) was allocated to the Liberty Braves
Group.
The Liberty Media Group holds an approximate 15.5% intergroup
interest in the Liberty Braves Group as of October 31, 2016,
discussed below. Assuming the issuance of the shares underlying the
intergroup interest held by the Liberty Media Group, the Liberty
Braves Group outstanding share count as of October 31, 2016 would
have been 58.5 million.
The businesses and assets attributed to Liberty Braves Group
consist primarily of Liberty Media’s subsidiary Braves Holdings,
LLC (“Braves Holdings”), which indirectly owns the Atlanta Braves
major league baseball team, and certain assets and liabilities
associated with its ballpark and mixed-use development project.
LIBERTY MEDIA GROUP – In the third quarter, the Liberty
Media Group incurred $15 million of corporate level selling,
general and administrative expense (including stock-based
compensation expense).
The businesses and assets attributed to Liberty Media Group
consist of all of Liberty Media’s businesses and assets other than
those attributed to the Liberty SiriusXM Group and the Liberty
Braves Group, including its interests in Live Nation and F1,
minority equity investments in Time Warner and Viacom and an
intergroup interest in the Liberty Braves Group. There are
approximately 9.1 million notional shares underlying the Liberty
Media Group’s 15.5% intergroup interest in the Liberty Braves
Group.
Share Repurchases
Between the reclassification of the original Liberty Capital
tracking stock on March 3, 2008 and July 23, 2014, Liberty Media
repurchased shares of Series A common stock for aggregate cash
consideration of $2.9 billion, representing 51% of shares
outstanding(3). For the period covering the creation of the Liberty
Media Series C common stock on July 24, 2014 through January 31,
2016 (prior to the creation of the Liberty SiriusXM, Liberty Braves
and Liberty Media tracking stocks), Liberty Media repurchased
approximately 9.2 million shares of Series A and Series C common
stock, collectively, at an average cost per share of $37.96 for
total cash consideration of $350 million, representing 2.7% of
shares outstanding(4). There were no repurchases of Series A or
Series C Liberty Media Corporation common stock from February 1,
2016 through the Recapitalization on April 15, 2016, and there were
no repurchases of Series A or Series C Liberty SiriusXM common
stock, Series A or Series C Liberty Braves common stock or Series A
or Series C Liberty Media common stock from April 15, 2016 through
October 31, 2016. The total remaining repurchase authorization for
Liberty Media stock is approximately $1.3 billion 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 highlights and other matters in Liberty Media's
earnings conference call which will begin at 11:00 a.m. (E.S.T.) on
November 8, 2016. 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. 3) Based on shares
outstanding at the time of the introduction of the original Liberty
Capital stock. 4) Based on shares outstanding as of October 31,
2014.
LIBERTY MEDIA FINANCIAL METRICS -
QUARTER
Three months ended September 30, 2015
2016 amounts in millions
Revenue
Liberty SiriusXM Group SIRIUS XM $ 1,165 $ 1,276
Total Liberty SiriusXM Group 1,165 1,276
Liberty Braves Group Corporate and other 119
109 Total Liberty Braves Group 119
109 Liberty Media Group Corporate and other —
— Total Liberty Media Group —
— Consolidated Liberty $ 1,284 $ 1,385
Operating Income (Loss) Liberty SiriusXM Group SIRIUS
XM $ 328 $ 381 Corporate and other — (14 )
Total Liberty SiriusXM Group 328 367
Liberty Braves Group Corporate and other 16 1
Total Liberty Braves Group 16 1
Liberty Media Group Corporate and other (23 ) (16 )
Total Liberty Media Group (23 ) (16 ) Consolidated
Liberty $ 321 $ 352
Adjusted OIBDA
Liberty SiriusXM Group SIRIUS XM $ 451 $ 490 Corporate and other
— (8 ) Total Liberty SiriusXM Group 451
482 Liberty Braves Group Corporate and other
30 16 Total Liberty Braves Group
30 16 Liberty Media Group Corporate and other
(8 ) (13 ) Total Liberty Media Group (8 )
(13 ) Consolidated Liberty $ 473 $ 485
NOTES
Unless otherwise noted, the foregoing discussion compares
financial information for the three months ended September 30, 2016
to the same period in 2015.
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, 2016.
Fair Value of
Corporate Public Holdings
(amounts in millions) 6/30/2016 9/30/2016
Liberty SiriusXM Group $ N/A $ N/A Liberty Braves Group N/A N/A
Liberty Media Group Live Nation Debt and Equity(1) $ 1,661 1,938
Other Public Holdings(2) 406 420 $ 2,067 $ 2,358
Total Liberty Media $ 2,067 $
2,358 (1) Represents the fair value of
debt and equity investments attributed to Liberty Media 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 consolidated balance sheet at its historical
carrying value of $746 million and $776 million as of June 30, 2016
and September 30, 2016, respectively. (2) Represents the carrying
value of other public holdings which are accounted for at fair
value.
Cash and
Debt
The following presentation is provided to
separately identify cash and liquid investments and debt
information.
(amounts in millions) 6/30/2016
9/30/2016
Cash and Cash Equivalents Attributable to:
Liberty SiriusXM Group(1) $ 526 $ 611 Liberty Braves Group(2) 149
109 Liberty Media Group 554 220
Total Liberty
Consolidated Cash and Cash Equivalents (GAAP) $ 1,229 $
940
Debt: SiriusXM senior notes(3) $
6,150 $ 6,150 Margin loans 250 250 Other subsidiary debt(4)
16 14
Total Attributed Liberty SiriusXM
Group Debt $ 6,416 $ 6,414
Unamortized discount, fair market value adjustment and
deferred loan costs (53 ) (52 )
Total Attributed
Liberty SiriusXM Group Debt (GAAP) $ 6,363
$ 6,362 Liberty 1.375% cash convertible
notes due 2023(5) 1,000 1,000 2.25% Exchangeable Senior Debentures
due 2046(5) — 445 Other corporate level debt 37
36
Total Attributed Liberty Media Group Debt
$ 1,037 $ 1,481 Fair
market value adjustment (6 ) 65
Total
Attributed Liberty Media Group Debt (GAAP) $
1,031 $ 1,546 Atlanta
Braves debt(6) 145 220
Total
Attributed Liberty Braves Group Debt $ 145
$ 220 Deferred loan costs (8 )
(9 )
Total Attributed Liberty Braves Group Debt (GAAP)
$ 137 $ 211
Total Liberty Media Corporation Debt (GAAP)
$ 7,531 $ 8,119
(1) Includes $476 million and $572 million of cash
and liquid investments held at SiriusXM as of June 30, 2016 and
September 30, 2016, respectively. (2) Includes $46 million and $36
million of cash and liquid investments held at Braves Holdings as
of June 30, 2016 and September 30, 2016, respectively. (3)
Outstanding principal amount of Senior Notes with no reduction for
the net unamortized discount. (4) Includes SiriusXM capital leases.
(5) Face amount of the cash convertible notes and exchangeable
senior debentures with no fair market value adjustment. (6)
Includes Atlanta National League Baseball Club, LLC borrowings,
Braves Stadium Company, LLC debt to fund the construction of the
new ballpark and drawdowns under various credit facilities to fund
development costs for the mixed-use development.
Total cash and liquid investments attributed to Liberty SiriusXM
Group increased $85 million during the quarter primarily as a
result of cash from operations, partially offset by stock
repurchases and capital expenditures at SiriusXM. Included in the
cash and liquid investments balance attributed to Liberty SiriusXM
Group at September 30, 2016 is $572 million 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 ready access to SiriusXM’s cash
balance.
Total debt attributed to Liberty SiriusXM Group was flat versus
the prior quarter. During October 2016, Liberty refinanced its
SiriusXM margin loan for a similar financial instrument with a term
loan of $250 million and a $500 million undrawn line of credit,
which is scheduled to mature during October 2018. 145.4 million
shares of SiriusXM common stock are pledged as collateral and the
previously pledged Live Nation shares were removed as collateral
pursuant to this agreement. Also during October 2016, SiriusXM
redeemed $650 million principal amount of its 5.875% Senior Notes
due 2020 for an approximate purchase price of $669 million,
including premium. This redemption was funded with $359 million of
SiriusXM’s cash and cash equivalents and $310 million of borrowings
under SiriusXM’s Credit Facility
Total cash and liquid investments attributed to Liberty Braves
Group decreased $40 million during the quarter primarily as a
result of capital expenditures related to the construction of the
new ballpark and adjacent mixed-use development, partially offset
by additional borrowings.
As of September 30, 2016, approximately $496 million had been
spent on the new ballpark, of which approximately $373 million of
funding was provided by Cobb County and related entities and $123
million provided by the Braves. As of September 30, 2016,
approximately $238 million had been spent on the mixed-use
development (including $7 million of cost towards future
development phases, including purchased land cost, not reflected in
currently forecasted equity contribution towards mixed-use
development), of which approximately $27 million was provided by JV
partners’ equity.
Total debt attributed to Liberty Braves Group increased by $75
million primarily as a result of additional borrowings, net of
repayments, for funding the ballpark and mixed-use development.
Total cash and liquid investments attributed to Liberty Media
Group decreased $334 million during the quarter, primarily as a
result of the minority investment in F1 for $746 million in cash,
which is equal to $821 million in consideration less a $75 million
discount to be repaid by Liberty to selling stockholders upon
completion of the second closing (as previously described). The
investment was funded by cash on hand and additional borrowings of
debt, including proceeds from the completed private offering of
2.25% Exchangeable Senior Debentures exchangeable into Time Warner
Inc. common stock.
Total debt attributed to Liberty Media Group increased $444
million as a result of proceeds raised from the private offering of
2.25% Exchangeable Senior Debentures to fund the previously
discussed minority investment in F1.
Important Notice: Liberty Media Corporation (Nasdaq:
LSXMA, LSXMB, LSXMK, LMCA, LMCK, BATRA, BATRK) President and CEO,
Greg Maffei, will discuss Liberty Media's earnings release in a
conference call which will begin at 11:00 a.m. (E.S.T.) on November
8, 2016. The call can be accessed by dialing (844) 838-8043 or
(678) 509-7480 at least 10 minutes prior to the start time. The
call will also be broadcast live across the Internet and archived
on our website. To access the webcast go to
http://www.libertymedia.com/events. Links to this press release
will also be available on the Liberty Media website.
This press release includes certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements about business strategies, market
potential, future financial prospects, the proposed acquisition of
Formula 1, including its expected benefits and the anticipated
timing for the second closing, other potential third party
investments in LMCK shares in connection with the proposed
acquisition of Formula 1, the renaming of the Liberty Media Group
and the corresponding change in ticker symbols, the future
financial performance of SiriusXM, future dividend issuances by
SiriusXM, the continuation of our stock repurchase plan, the
repurchase activity of SiriusXM, the construction of the new
stadium for the Atlanta Braves and the associated mixed use
development, our entry into a new margin loan arrangement and other
matters that are not historical facts. These forward-looking
statements involve many risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
by such statements, including, without limitation, satisfaction of
conditions to the proposed acquisition of Formula 1, possible
changes in market acceptance of new products or services,
regulatory matters affecting our businesses, the competitive
position of SiriusXM versus other radio and audio entertainment
providers, the ability of SiriusXM to attract and retain
subscribers, the dependence of SiriusXM upon the auto industry,
general economic conditions, the failure of SiriusXM’s satellites,
the interruption or failure of SiriusXM’s information and
communication systems, the security of personal customer
information, royalties SiriusXM pays for music rights (which
increase over time), the unfavorable outcome of pending or future
litigation, the failure to realize benefits of acquisitions, rapid
technological and industry change, failure of third parties to
perform, changes in consumer protection laws and their enforcement,
continued access to capital on terms acceptable to Liberty Media
and changes in law and market conditions conducive to stock
repurchases. These forward-looking statements speak only as of the
date of this presentation, 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. Please refer to the publicly
filed documents of Liberty Media, including the most recent Forms
10-K and 10-Q, for additional information about Liberty Media and
about the risks and uncertainties related to Liberty Media's
business which may affect the statements made in this
presentation.
Additional Information
Nothing in this communication shall constitute a solicitation to
buy or an offer to sell shares of Liberty Media’s Series C Liberty
Media common stock or any other series of its common stock. Liberty
Media stockholders and other investors are urged to read the proxy
statement (a preliminary filing of which has been made with the
SEC) because it will contain important information relating to the
proposed acquisition of Formula 1. Copies of Liberty Media’s SEC
filings are available free of charge at the SEC’s website
(http://www.sec.gov). Copies of the filings together with the
materials incorporated by reference therein will also be available,
without charge, by directing a request to Investor Relations, (720)
875-5420.
Participants in the Solicitation
The directors and executive officers of Liberty Media and other
persons may be deemed to be participants in the solicitation of
proxies in respect of any proposals relating to the proposed
acquisition of Formula 1. Information regarding the directors and
executive officers of Liberty Media is available in its definitive
proxy statement, which was filed with the SEC on July 8, 2016, and
certain of its Current Reports on Form 8-K. Other information
regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, will be available in the proxy materials
regarding the foregoing (a preliminary filing of which has been
made with the SEC). Free copies of these documents may be obtained
as described in the preceding paragraph.
LIBERTY MEDIA CORPORATION
BALANCE SHEET INFORMATION
September 30, 2016 (unaudited)
Attributed
Liberty Liberty Liberty
SiriusXM Braves Media Intergroup
Consolidated Group Group Group
Eliminations Liberty amounts in millions Assets
Current assets: Cash and cash equivalents $ 611 109 220 — 940 Trade
and other receivables, net 233 39 2 — 274 Other current assets
236 16 6 — 258 Total
current assets 1,080 164 228 —
1,472 Intergroup interest in the Liberty Braves Group — —
158 (158 ) — Investments in available-for-sale securities and other
cost investments — 8 1,241 — 1,249 Investments in affiliates,
accounted for using the equity method 165 56 935 — 1,156
Property and equipment, at cost 2,038 783 159 — 2,980 Accumulated
depreciation (703 ) (46 ) (68 ) — (817 ) 1,335
737 91 — 2,163 Intangible
assets not subject to amortization Goodwill 14,165 180 — — 14,345
FCC licenses 8,600 — — — 8,600 Other 930 143 —
— 1,073 23,695 323 —
— 24,018 Intangible assets subject to
amortization, net 1,001 69 — — 1,070 Other assets, at cost, net of
accumulated amortization 156 12 294 (27
) 435 Total assets $ 27,432 1,369 2,947
(185 ) 31,563 Liabilities and Equity Current
liabilities: Intergroup payable (receivable) $ (6 ) (1 ) 7 — —
Accounts payable and accrued liabilities 732 66 26 — 824 Current
portion of debt 609 — — — 609 Deferred revenue 1,811 27 — — 1,838
Other current liabilities 3 — 12 —
15 Total current liabilities 3,149 92
45 — 3,286 Long-term debt 5,753 211
1,546 — 7,510 Deferred income tax liabilities 1,952 37 47 (27 )
2,009 Redeemable intergroup interest — 158 — (158 ) — Other
liabilities 279 431 55 — 765
Total liabilities 11,133 929 1,693
(185 ) 13,570 Equity / Attributed net assets 10,026
425 1,254 — 11,705 Noncontrolling interests in equity of
subsidiaries 6,273 15 — — 6,288
Total liabilities and equity $ 27,432 1,369
2,947 (185 ) 31,563
LIBERTY MEDIA CORPORATION
STATEMENT OF OPERATIONS
Three months ended September 30, 2016
(unaudited)
Attributed Liberty
Liberty Liberty SiriusXM Braves
Media Consolidated Group Group
Group Liberty amounts in millions Revenue: Subscriber
revenue $ 1,069 — — 1,069 Other revenue 207 109
— 316 Total revenue 1,276 109 — 1,385
Operating costs and expenses, including stock-based compensation:
Cost of subscriber services (exclusive of depreciation shown
separately below): Revenue share and royalties 273 — — 273
Programming and content 90 — — 90 Customer service and billing 95 —
— 95 Other 31 — — 31 Subscriber acquisition costs 121 — — 121 Other
operating expenses 18 78 — 96 Selling, general and administrative
202 18 15 235 Depreciation and amortization 79 12
1 92 909 108 16
1,033 Operating income (loss) 367 1 (16 ) 352 Other income
(expense): Interest expense (93 ) — (5 ) (98 ) Share of earnings
(losses) of affiliates, net 2 2 33 37 Realized and unrealized gains
(losses) on financial instruments, net — — 7 7 Unrealized gains
(losses) on intergroup interest — (25 ) 25 — Other, net 1
1 3 5 (90 ) (22 ) 63 (49
) Earnings (loss) from continuing operations before income taxes
277 (21 ) 47 303 Income tax (expense) benefit (127 ) (1 ) (6
) (134 ) Net earnings (loss) 150 (22 ) 41 169 Less net earnings
(loss) attributable to the noncontrolling interests 54
— — 54 Net earnings (loss) attributable
to Liberty stockholders $ 96 (22 ) 41 115
Programming and content 6 — — 6 Customer service and
billing 1 — — 1 Other 1 — — 1 Other operating expenses 3 — — 3
Selling, general and administrative 25 3 2
30 Stock compensation expense $ 36 3 2
41
LIBERTY MEDIA CORPORATION
STATEMENT OF OPERATIONS
Three months ended September 30, 2015
(unaudited)
Attributed Liberty
Liberty Liberty SiriusXM Braves
Media Consolidated Group Group
Group Liberty amounts in millions Revenue: Subscriber
revenue $ 969 — — 969 Other revenue 196 119 —
315 Total revenue 1,165 119 — 1,284 Operating costs
and expenses, including stock-based compensation: Cost of
subscriber services (exclusive of depreciation shown separately
below): Revenue share and royalties 239 — — 239 Programming and
content 68 — — 68 Customer service and billing 94 — — 94 Other 33 —
— 33 Subscriber acquisition costs 133 — — 133 Other operating
expenses 18 75 — 93 Selling, general and administrative 170 17 20
207 Depreciation and amortization 82 11 3
96 837 103 23 963
Operating income (loss) 328 16 (23 ) 321 Other income (expense):
Interest expense (80 ) (1 ) (3 ) (84 ) Share of earnings (losses)
of affiliates, net 1 2 26 29 Realized and unrealized gains (losses)
on financial instruments, net — — (200 ) (200 ) Other, net —
— 4 4 (79 ) 1 (173 ) (251
) Earnings (loss) from continuing operations before income taxes
249 17 (196 ) 70 Income tax (expense) benefit (97 ) (7 ) 75
(29 ) Net earnings (loss) 152 10 (121 ) 41 Less net earnings
(loss) attributable to the noncontrolling interests 63
— — 63 Net earnings (loss) attributable
to Liberty stockholders $ 89 10 (121 ) (22 )
Programming and content 5 — — 5 Customer service and billing
1 — — 1 Other 2 — — 2 Other operating expenses 5 — — 5 Selling,
general and administrative 28 3 12 43
Stock compensation expense $ 41 3 12 56
LIBERTY MEDIA CORPORATION
STATEMENT OF CASH FLOWS
INFORMATION
Nine months ended September 30, 2016
(unaudited)
Attributed Liberty
Liberty Liberty SiriusXM Braves
Media Consolidated Group Group
Group Liberty amounts in millions Cash flows from
operating activities: Net earnings (loss) $ 471 (22 ) 289 738
Adjustments to reconcile net earnings to net cash provided by
operating activities: Depreciation and amortization 235 30 7 272
Stock-based compensation 90 7 12 109 Share of (earnings) loss of
affiliates, net (11 ) (6 ) (26 ) (43 ) Unrealized (gains) losses on
intergroup interest, net — (2 ) 2 — Realized and unrealized (gains)
losses on financial instruments, net — — 33 33 Deferred income tax
expense (benefit) 319 (10 ) 98 407 Intergroup tax allocation (9 )
(4 ) 13 — Intergroup tax (payments) receipts 2 7 (9 ) — Other
charges (credits), net 27 3 5 35 Changes in operating assets and
liabilities Current and other assets 6 (39 ) 4 (29 ) Payables and
other liabilities 67 55 7 129
Net cash provided (used) by operating activities 1,197
19 435 1,651 Cash flows from investing
activities: Investments in and loans to cost and equity investees —
(13 ) (749 ) (762 ) Cash proceeds from sale of investments — — 61
61 Proceeds (payments) on financial instruments, net — — (1 ) (1 )
Capital expended for property and equipment (132 ) (185 ) (1 ) (318
) Purchases of short term investments and other marketable
securities — — (258 ) (258 ) Sales of short term investments and
other marketable securities — — 273 273 Other investing activities,
net (4 ) (27 ) 26 (5 ) Net cash provided (used) by
investing activities (136 ) (225 ) (649 ) (1,010 ) Cash
flows from financing activities: Borrowings of debt 1,387 194 438
2,019 Repayments of debt (749 ) (126 ) (1 ) (876 ) Intergroup
(payments) receipts 8 (34 ) 26 — Shares repurchased by subsidiary
(1,225 ) — — (1,225 ) Proceeds from Liberty Braves common stock
rights offering — 203 — 203 Taxes paid in lieu of shares issued for
stock-based compensation (34 ) — (9 ) (43 ) Other financing
activities, net 51 65 (96 ) 20 Net cash
provided (used) by financing activities (562 ) 302
358 98 Net increase (decrease) in cash and cash
equivalents 499 96 144 739 Cash and cash equivalents at beginning
of period 112 13 76 201 Cash and cash
equivalents at end of period $ 611 109 220 940
LIBERTY MEDIA CORPORATION
STATEMENT OF CASH FLOWS
INFORMATION
Nine months ended September 30, 2015
(unaudited)
Attributed Liberty
Liberty Liberty SiriusXM Braves
Media Consolidated Group Group
Group Liberty amounts in millions Cash flows from
operating activities: Net earnings (loss) $ 328 (9 ) (160 ) 159
Adjustments to reconcile net earnings to net cash provided by
operating activities: Depreciation and amortization 240 25 7 272
Stock-based compensation 115 5 27 147 Share of (earnings) loss of
affiliates, net 3 (6 ) 11 8 Realized and unrealized (gains) losses
on financial instruments, net — — 188 188 Deferred income tax
expense (benefit) 225 (5 ) (122 ) 98 Intergroup tax allocation (3 )
2 1 — Intergroup tax (payments) receipts — 1 (1 ) — Other charges
(credits), net 16 3 1 20 Changes in operating assets and
liabilities Current and other assets (154 ) 12 1 (141 ) Payables
and other liabilities 113 (8 ) 37 142
Net cash provided (used) by operating activities 883
20 (10 ) 893 Cash flows from investing activities:
Cash proceeds from dispositions of investments — 24 151 175
Proceeds (payments) from settlement of financial instruments, net —
— (88 ) (88 ) Capital expended for property and equipment (91 ) (84
) (1 ) (176 ) Purchases of short term investments and other
marketable securities — — (51 ) (51 ) Sales of short term
investments and other marketable securities — — 231 231 Other
investing activities, net — (10 ) (30 ) (40 ) Net
cash provided (used) by investing activities (91 ) (70 ) 212
51 Cash flows from financing activities: Borrowings
of debt 1,579 200 — 1,779 Repayments of debt (688 ) (130 ) — (818 )
Intergroup (payments) receipts 9 — (9 ) — Repurchases of Liberty
common stock — — (303 ) (303 ) Shares repurchased by subsidiary
(1,648 ) — — (1,648 ) Taxes paid in lieu of shares issued for
stock-based compensation (39 ) — (12 ) (51 ) Other financing
activities, net — — 4 4 Net cash
provided (used) by financing activities (787 ) 70
(320 ) (1,037 ) Net increase (decrease) in cash and cash
equivalents 5 20 (118 ) (93 ) Cash and cash equivalents at
beginning of period 148 11 522 681
Cash and cash equivalents at end of period $ 153 31
404 588
NON-GAAP FINANCIAL MEASURES
SCHEDULE 1
This press release includes a presentation of adjusted OIBDA,
which is a non-GAAP financial measure, for the Liberty SiriusXM
Group, the Liberty Braves Group and the Liberty Media Group,
together with reconciliations to operating income, as determined
under GAAP. Liberty Media defines adjusted OIBDA as revenue less
operating expenses, and selling, general and administrative
expenses, excluding all stock based compensation, and excludes from
that definition depreciation and amortization, restructuring and
impairment charges and separately reported legal settlements that
are included in the measurement of operating income pursuant to
GAAP.
Liberty Media believes adjusted OIBDA is an important indicator
of the operational strength and performance of its businesses,
including each business' ability to service debt and fund capital
expenditures. In addition, this measure allows management to view
operating results and perform analytical comparisons and
benchmarking between businesses and identify strategies to improve
performance. Because adjusted OIBDA is used as a measure of
operating performance, Liberty Media views operating income as the
most directly comparable GAAP measure. Adjusted OIBDA is not meant
to replace or supersede operating income or any other GAAP measure,
but rather to supplement such GAAP measures in order to present
investors with the same information that Liberty Media's management
considers in assessing the results of operations and performance of
its assets.
The following table provides a reconciliation of adjusted OIBDA
for Liberty Media to operating income calculated in accordance with
GAAP for the three months ended September 30, 2015 and September
30, 2016, respectively.
QUARTERLY
SUMMARY
(amounts in millions) 3Q15 3Q16
Liberty SiriusXM Group Revenue $ 1,165 $ 1,276
Adjusted OIBDA 451 482 Depreciation and amortization (82 ) (79 )
Stock compensation expense (41 ) (36 )
Operating
Income $ 328 $ 367
Liberty Braves
Group Revenue $ 119 $ 109 Adjusted OIBDA 30 16
Depreciation and amortization (11 ) (12 ) Stock compensation
expense (3 ) (3 )
Operating Income $ 16
$ 1
Liberty Media Group Revenue $ — $ —
Adjusted OIBDA (8 ) (13 ) Depreciation and amortization (3 ) (1 )
Stock compensation expense (12 ) (2 )
Operating
Income $ (23 ) $ (16 )
Liberty Media Corporation
(Consolidated) Revenue $ 1,284 $ 1,385 Adjusted OIBDA
473 485 Depreciation and amortization (96 ) (92 ) Stock
compensation expense (56 ) (41 )
Operating
Income $ 321 $ 352
SCHEDULE 2
This press release also includes a presentation of adjusted
EBITDA, which is a non-GAAP financial measure used by SiriusXM,
together with a reconciliation to SiriusXM's stand-alone net
income, as determined under GAAP. SiriusXM defines adjusted EBITDA
as follows: EBITDA is defined as net income before interest
expense, income tax expense and depreciation and amortization.
SiriusXM adjusts EBITDA to exclude the impact of other income as
well as certain other charges discussed below. Adjusted EBITDA is
one of the primary Non-GAAP financial measures SiriusXM uses to (i)
evaluate the performance of their on-going core operating results
period over period, (ii) base their internal budgets and (iii)
compensate management. Adjusted EBITDA is a Non-GAAP financial
measure that excludes (if applicable): (i) certain adjustments as a
result of the purchase price accounting for the merger of Sirius
and XM, (ii) share-based payment expense and (iii) other
significant operating expense (income) that do not relate to the
on-going performance of their business. SiriusXM believes adjusted
EBITDA is a useful measure of the underlying trend of their
operating performance, which provides useful information about the
business apart from the costs associated with their capital
structure and purchase price accounting. SiriusXM believes
investors find this Non-GAAP financial measure useful when
analyzing their results and comparing their operating performance
to the performance of other communications, entertainment and media
companies. SiriusXM believes investors use adjusted EBITDA to
estimate current enterprise value and to make investment decisions.
Because of large capital investments in SiriusXM’s satellite radio
system, their results of operations reflect significant charges for
depreciation expense. SiriusXM believes the exclusion of
share-based payment expense is useful as it is not directly related
to the operational conditions of its business. SiriusXM also
believes the exclusion of settlements related to the historical use
of pre-1972 sound recordings and loss on disposal of assets is
useful as it does not represent an expense incurred as part of
normal operations for the period.
Adjusted EBITDA has certain limitations in that it does not take
into account the impact to SiriusXM’s statements of comprehensive
income of certain expenses, including share-based payment expense
and certain purchase price accounting for the merger of Sirius and
XM. SiriusXM endeavors to compensate for the limitations of the
Non-GAAP measure presented by also providing the comparable GAAP
measure with equal or greater prominence and descriptions of the
reconciling items, including quantifying such items, to derive the
Non-GAAP measure. Investors that wish to compare and evaluate
SiriusXM’s operating results after giving effect for these costs,
should refer to net income as disclosed in their unaudited
consolidated statements of comprehensive income. Since adjusted
EBITDA is a Non-GAAP financial performance measure, SiriusXM’s
calculation of adjusted EBITDA may be susceptible to varying
calculations; may not be comparable to other similarly titled
measures of other companies; and should not be considered in
isolation, as a substitute for, or superior to measures of
financial performance prepared in accordance with GAAP. The
reconciliation of net income to the adjusted EBITDA is calculated
as follows:
Unaudited For the Three Months Ended September 30,
2016 2015 ($ in thousands) Net income: $
193,901 $ 166,550 Add back items excluded from Adjusted EBITDA:
Purchase price accounting adjustments: Revenues 1,813 1,813
Share-based payment expense 30,020 23,393 Depreciation and
amortization 67,880 70,404 Interest expense 89,092 76,624 Other
income (2,370 ) (4,133 ) Income tax expense 111,556
112,543 Adjusted EBITDA $ 491,892 $ 447,194
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version on businesswire.com: http://www.businesswire.com/news/home/20161108005390/en/
Liberty Media CorporationCourtnee Chun, 720-875-5420
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