Liberty Media Corporation ("Liberty Media" or “Liberty”)
(NASDAQ: LSXMA, LSXMB, LSXMK, FWONA, FWONK, BATRA, BATRK) today
reported fourth quarter and year end 2017 results. Highlights
include (1):
- Attributed to Liberty SiriusXM Group
- SiriusXM reported strong full year 2017
results
- 2017 revenue climbed 8% to $5.4
billion
- Self-pay net subscriber additions of
1.56 million in 2017
- 2017 net income totaled $648 million
after $185 million charge related to Tax Cuts and Jobs Act
- Adjusted EBITDA(2) grew 13% to a record
$2.12 billion in 2017
- SiriusXM beat 2017 financial and
subscriber guidance, confirmed expectations for growth in 2018
- SiriusXM’s Board of Directors approved
additional $2 billion to share repurchase program
- Liberty Media’s ownership of SiriusXM
stood at 70.4% as of January 29th
- Attributed to Formula One Group
- Repaid $400 million of first lien term
loan and reduced margin on remaining balance from 3.00% to 2.50% in
January 2018
- 2017 season audience figures increased
across TV and digital platforms; Formula 1 (“F1”) was fastest
growing sports brand on social media platforms
- 352 million unique TV viewers across
all F1 programming
- Announced several broadcast agreements,
including RTL agreement in Germany, Movistar in Spain, Fox Sports
in Latin America and Sky Italia in Italy
- 2018 F1 season kicks off March 25th in
Melbourne; 21 Grands Prix in 2018 season
- Attributed to Braves Group
- Braves Group revenue grew meaningfully
in first season at SunTrust Park
- Ticket revenue increased 76%,
concession sales increased 31% and retail sales increased 45% in
2017
- Attendance increased 23% per game in
2017 season
- Retail and residential developments
both over 70% leased as of February 12th
“SiriusXM delivered another outstanding year of results and
continues to innovate with the launch of 360L. When Liberty
completed its purchase of F1 last January, we knew the business
would require investment to achieve its full potential. Chase Carey
and team made great progress on their strategic goals and we look
forward to more in 2018,” said Greg Maffei, Liberty Media President
and CEO. “The Atlanta Braves increased revenue in 2017 by an
astounding 47%, demonstrating the appeal of the new SunTrust Park
and Battery Atlanta.”
Operating Results
Unless otherwise noted, the following discussion compares
financial information for the three months or year ended December
31, 2017 to the same period in 2016.
LIBERTY SIRIUSXM GROUP – The following table provides the
financial results attributed to Liberty SiriusXM Group for the
fourth quarter and full year 2017. Approximately $8 million and $40
million of corporate level selling, general and administrative
expense (including stock-based compensation expense) was allocated
to the Liberty SiriusXM Group in the fourth quarter and full year
2017, respectively.
Three months ended
Twelve months ended December 31,
December 31, 2016 2017 %
Change 2016 2017 % Change amounts in millions
amounts in millions
Liberty SiriusXM Group Revenue
SiriusXM $ 1,303 $ 1,404 8 % $ 5,014 $
5,425 8 % Total Liberty SiriusXM Group $ 1,303
$ 1,404 8 % $ 5,014 $ 5,425
8 %
Operating Income (Loss) SiriusXM 319 384
20 % 1,386 1,588 15 % Corporate and other (13 ) (9 )
31 % (34 ) (41 ) (21 ) % Total Liberty
SiriusXM Group $ 306 $ 375 23 % $ 1,352
$ 1,547 14 %
Adjusted OIBDA SiriusXM
473 541 14 % 1,853 2,109 14 % Corporate and other (6 )
(2 ) 67 % (15 ) (15 ) — %
Total Liberty SiriusXM Group $ 467 $ 539 15 %
$ 1,838 $ 2,094 14 %
The increases in Liberty SiriusXM Group revenue, operating
income and adjusted OIBDA(2) in the fourth quarter and full year
2017 were primarily attributable to an increase in SiriusXM’s daily
weighted average number of subscribers and an increase in
SiriusXM’s average monthly revenue per subscriber due to certain
rate increases.
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 fourth quarter and year end results on
January 31, 2018. For additional detail on SiriusXM’s fourth
quarter and year end financial results, please see SiriusXM’s
earnings release posted to their Investor Relations website. For
presentation purposes on page one of this release, we include the
results of SiriusXM, as reported by SiriusXM, without regard to the
purchase accounting adjustments applied by us for purposes of our
financial statements. Liberty Media believes the presentation of
financial results as reported by SiriusXM is useful to investors as
the comparability of those results is best understood in the
context of SiriusXM's historical financial presentation. 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-K for the year ended
December 31, 2017.
The businesses and assets attributed to Liberty SiriusXM Group
consist primarily of Liberty Media’s interest in SiriusXM.
FORMULA ONE GROUP – The following table provides the
financial results attributed to the Formula One Group for the
fourth quarter and full year 2017. Approximately $13 million and
$49 million of corporate level selling, general and administrative
expense (including stock-based compensation expense) was allocated
to the Formula One Group in the fourth quarter and full year 2017,
respectively.
“The 2017 season was successful in increasing viewers across TV
and digital platforms,” said Chase Carey, Formula 1 Chairman and
CEO. “In 2018, we continue to focus on fan engagement through
increasing carriage on linear and digital platforms, enhancing the
race excitement, hosting more F1 Live events and collaborating with
our partners. We look forward to the start of the season later this
month in Melbourne.”
Three months ended Twelve
months ended December 31, December 31, 2016 2017
2016 2017 amounts in millions amounts
in millions
Formula One Group Revenue Formula 1 $ NA
$ 570 $ NA $ 1,783 Total Formula One Group $ —
$ 570 $ — $ 1,783
Operating Income
(Loss) Formula 1 $ NA $ 39 $ NA $ 17 Corporate and other
(17 ) (15 ) 443 (57 ) Total Formula One
Group $ (17 ) $ 24 $ 443 $ (40 )
Adjusted
OIBDA Formula 1 $ NA $ 150 $ NA $ 438 Corporate and other
(13 ) (12 ) (45 ) (41 ) Total Formula
One Group $ (13 ) $ 138 $ (45 ) $ 397
Liberty completed the acquisition of F1 on January 23, 2017. For
comparison and discussion purposes, the pro forma results of F1 are
presented below for the three and twelve months ended December 31,
2017 and 2016, inclusive of purchase accounting adjustments, as if
the acquisition of F1 occurred on January 1, 2016. The financial
information below is presented for illustrative purposes only and
does not purport to represent the actual results of F1 had the
business combination occurred on January 1, 2016, or to project the
results of operations of Liberty for any future periods.
Pro Forma F1
Operating Results
Three months ended Twelve months ended
December 31, December 31, 2016
2017 % Change 2016 2017 % Change
(unaudited) (unaudited) amounts in USD millions amounts in USD
millions Primary Formula 1 revenue $ 459 $ 447 (3 ) % $ 1,502 $
1,483 (1 ) % Other Formula 1 revenue 120 123
2 % 294 301 2 %
Total Formula 1 revenue $ 579 $ 570 (2 ) % $ 1,796 $ 1,784 (1 ) %
Operating expenses (excluding stock-based compensation included
below): Team payments (275 ) (269 ) 2 % (966 ) (919 ) 5 % Other
cost of Formula 1 revenue (99 ) (114 ) (15 ) %
(290 ) (302 ) (4 ) % Cost of Formula 1 revenue $ (374 ) $
(383 ) (2 ) % $ (1,256 ) $ (1,221 ) 3 % Selling, general and
administrative expenses (16 ) (37 ) (131 ) %
(90 ) (125 ) (39 ) % Adjusted OIBDA $ 189 $ 150 (21 ) % $
450 $ 438 (3 ) % Stock-based compensation — (3 ) — — (24 ) —
Depreciation and Amortization (108 ) (114 ) (6 ) %
(403 ) (451 ) (12 ) % Operating income (loss) $ 81
33 (59 ) % $ 47 (37 ) (179 ) %
Number of races in period 6 6 21 20
Pro Forma F1 Revenue
Breakdown
Twelve months ended December 31,
2016 2017 % Change Promotion revenue
36.4 % 34.1 % (7 ) % Broadcast revenue 32.7 % 33.7 %
3 % Advertising and sponsorship revenue 14.6 % 15.3 % 4 %
Primary Formula 1 revenue 83.7 % 83.1 % (1 ) % Other Formula 1
revenue 16.3 % 16.9 % 2 % Total Formula 1 revenue 100.0 %
100.0 % (1 ) %
______________________
Note: Percentages may not sum due to
rounding.
Primary F1 revenue represents the majority of F1’s revenue and
is derived from (i) race promotion fees, (ii) broadcasting fees and
(iii) advertising and sponsorship fees. F1 held 20 races in the
2017 season compared to 21 in the 2016 season.
Race promotion revenue decreased in the fourth quarter,
primarily due to legacy contractual terms of one Grand Prix event,
which provided for a one time material step down in the promotion
fee effective after the 2016 season and carrying through the
remaining term of the contract through 2020. This agreement was
entered into by previous management and is atypical and not
reflective of terms carried in F1’s other promotion agreements. For
the full year 2017, race promotion revenue decreased due to one
less event being held, the aforementioned reduction in one
promotion fee, as well as a contract amendment discussed in the
second quarter that provided for a decrease in promotion revenue
which was partly offset by the impact of increases in other revenue
streams. The reduction in race promotion revenue for the fourth
quarter and full year was partially offset by the impact of other
contractual increases.
Broadcast revenue increased in the fourth quarter and full year
2017 due to the impact of certain contractual rate increases. The
increase in the fourth quarter was also driven by the pro-rata
recognition of broadcast revenue across the season, as 6/20 of the
full year fees were recognized compared to 6/21 in the prior year.
The increase in the full year was partially offset by the adverse
impact of weaker prevailing foreign currency exchange rates used to
translate a small number of Pound and Euro-denominated contracts
into US dollars.
Advertising and sponsorship revenue decreased in the fourth
quarter primarily due to the prior year recognition of a proportion
of two non-renewed sponsorship agreements, partially offset by
revenue from one new sponsorship contract. For the full year,
advertising and sponsorship revenue increased as higher fees and
growth in certain contractual arrangements plus revenue from new
sponsors more than offset the aforementioned two non-renewed
agreements.
Other F1 revenue increased modestly in the fourth quarter and
full year 2017, primarily due to higher logistics and digital media
revenue, contributions from broadcasting in Ultra High-Definition
and higher hospitality revenue, partially offset by lower spend by
competing teams in the GP3 series due to it being the second year
of the GP3 vehicle cycle.
Operating income decreased in the fourth quarter and operating
loss increased for the full year 2017. Adjusted OIBDA decreased in
the fourth quarter and full year 2017 primarily due to the
aforementioned reduction in revenue and increased costs. Cost of F1
revenue increased primarily due to spend on fan engagement, filming
in Ultra High-Definition and higher freight costs, which more than
offset reduced team payments. Selling, general and administrative
expense also increased for the fourth quarter and full year 2017 as
a result of additional headcount and new corporate offices.
Additionally, stock-based compensation increased related to awards
granted to members of F1 management.
On January 22, 2018, Liberty provided revised expectations
regarding certain F1 tax considerations. Liberty now expects a mid-
to -high-single-digit effective cash tax rate on UK EBITDA for the
F1 business. This update is due to the cumulative impact of changes
in UK tax law, conclusions reached by Her Majesty’s Revenue and
Customs regarding the future treatment under UK tax law of certain
historic transactions and the effects of an F1 corporate
restructuring in the fourth quarter of 2017. F1’s adjusted OIBDA
(as reported) less stock-based compensation is a reasonable proxy
for UK EBITDA for this purpose.
F1’s total net debt to covenant OIBDA ratio, as defined in F1’s
credit facilities for covenant calculations, was approximately 7.1x
as of December 31, 2017, as compared to a maximum allowable
leverage ratio of 8.75x.
The businesses and assets attributed to the Formula One Group
consist of all of Liberty Media’s businesses and assets other than
those attributed to the Liberty SiriusXM Group and the Braves
Group, including Liberty Media’s subsidiary F1, its interest in
Live Nation, minority equity investments and an intergroup interest
in the Braves Group. There are approximately 9.1 million notional
shares of the Braves Group underlying the Formula One Group’s 15.1%
intergroup interest as of January 31, 2018.
BRAVES GROUP - The following table provides the financial
results attributed to the Braves Group for the fourth quarter and
full year 2017. Approximately $3 million and $7 million of
corporate level selling, general and administrative expense
(including stock-based compensation expense) was allocated to the
Braves Group in the fourth quarter and full year 2017,
respectively.
Three months ended Twelve
months ended December 31, December 31, 2016 2017
2016 2017 amounts in millions amounts
in millions
Braves Group Revenue Corporate and other
$ 18 $ 20 $ 262 $ 386 Total Braves
Group $ 18 $ 20 $ 262 $ 386
Operating Income (Loss) Corporate and other (16 )
(68 ) (61 ) (113 ) Total Braves Group $ (16 )
$ (68 ) $ (61 ) $ (113 )
Adjusted OIBDA Corporate and other
(12 ) (44 ) (20 ) 2 Total Braves
Group $ (12 ) $ (44 ) $ (20 ) $ 2
The following table provides the operating results of Braves
Holdings, LLC (“Braves”).
Braves Operating
Results
Three months ended Twelve months
ended December 31, December 31,
2016 2017 % Change 2016 2017
% Change amounts in millions Total revenue $ 18 $ 20 11 % $
262 $ 386 47 % Operating expenses (excluding stock-based
compensation included below): Other operating expenses (16 ) (29 )
(81 ) % (224 ) (281 ) (25 ) % Selling, general and administrative
expenses (12 ) (33 ) (175 ) % (54 ) (98
) (81 ) % Adjusted OIBDA $ (10 ) $ (42 ) (320 ) % $ (16 ) $ 7 144 %
Stock-based compensation (3 ) (6 ) (100 ) % (9 ) (46 ) (411 ) %
Depreciation and Amortization (2 ) (17 ) (750 ) %
(32 ) (67 ) (109 ) % Operating income (loss) $ (15 )
$ (65 ) (333 ) % $ (57 ) $ (106 ) (86 ) % Number of home
game openings in period 2 0 81
81
Braves revenue increased in the fourth quarter, primarily due to
revenue generated at the Braves mixed-use facility, which more than
offset the decline in baseball related revenue due to zero home
games being played in the fourth quarter of 2017 versus two in the
prior year. Braves revenue increased for the full year 2017,
primarily attributable to an increase in ballpark operations
revenue driven by the move to the new Braves ballpark, SunTrust
Park. Ticket sales, concessions, corporate sales, suites and
premium seat fees all increased for the full year 2017 compared to
the prior year.
Operating loss increased in the fourth quarter primarily as a
result of increased depreciation and amortization expense due to
the depreciation of assets associated with the Braves mixed-use
facility and SunTrust Park. Operating loss increased for the full
year 2017 primarily as a result of increased stock-based
compensation expense due to an increase in the estimated value of
the Braves, combined with the continued vesting of outstanding
awards, which resulted in a higher accrual for Braves’ equity
compensation, as well as the aforementioned increase in
depreciation and amortization expense. Adjusted OIBDA decreased in
the fourth quarter primarily due to increased costs associated with
the new ballpark and the mixed-use facility. In addition, the
Braves recognized a $13 million write-off of certain contractual
rights in 2017 related to international players, the majority of
which was recognized in the fourth quarter. Adjusted OIBDA
increased for the full year 2017, primarily due to the increase in
ballpark operations revenue as discussed above, partially offset by
increased costs associated with baseball and ballpark operations
and the mixed-use facility and the aforementioned write-off.
The Formula One Group holds an approximate 15.1% intergroup
interest in the Braves Group as of January 31, 2018. Assuming the
issuance of the shares underlying the intergroup interest held by
the Formula One Group, the Braves Group outstanding share count as
of January 31, 2018 would have been 60 million.
The businesses and assets attributed to the Braves Group consist
primarily of Liberty Media’s subsidiary the Braves, which
indirectly owns the Atlanta Braves major league baseball club, five
minor league baseball clubs and certain assets and liabilities
associated with its ballpark and mixed-use development project.
Share Repurchases
There were no repurchases of Series A or Series C Liberty
SiriusXM common stock, Series A or Series C Liberty Formula One
common stock or Series A or Series C Liberty Braves common stock
from November 1, 2017 through January 31, 2018. The total remaining
repurchase authorization for Liberty Media 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 12:15 p.m.
(E.S.T.) on March 1, 2018. For information regarding how to access
the call, please see “Important Notice” later in this document. 2)
For definitions of adjusted OIBDA (as defined by Liberty Media) and
adjusted EBITDA (as defined by SiriusXM) and applicable
reconciliations, see the accompanying schedules.
NOTES
The following financial information with respect to Liberty
Media's equity affiliates and available for sale securities is
intended to supplement Liberty Media's consolidated balance sheet
and statement of operations to be included in its Form 10-K for the
year ended December 31, 2017.
Fair Value of
Corporate Public Holdings
(amounts in millions) 9/30/2017
12/31/2017 Liberty SiriusXM Group(1) $ — $ 100 Formula One Group
Live Nation Equity Method Investment(2) 3,033 2,965 Other Public
Holdings(3) 502 467 Total Formula One Group $ 3,535 $
3,432 Braves Group N/A N/A
Total Liberty Media
$ 3,535 $ 3,532
______________________
(1) Includes other public AFS securities. SiriusXM’s
investment in Pandora is excluded from public holdings presented
above. (2) Represents the fair value of debt and equity investments
attributed to Formula One Group. In accordance with GAAP, Liberty
Media accounts for its investment in the equity of Live Nation
using the equity method of accounting and includes it in its
consolidated balance sheet at its historical carrying value of $805
million and $756 million as of September 30, 2017 and December 31,
2017, respectively. (3) 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) 9/30/2017
12/31/2017
Cash and Cash Equivalents Attributable to:
Liberty SiriusXM Group(1) $ 234 $ 615 Formula One Group(2) 420 282
Braves Group 129 132
Total Liberty Consolidated
Cash and Cash Equivalents (GAAP) $
783 $
1,029 Debt: SiriusXM senior
notes(3) $ 6,500 $ 6,500 Margin loans 250 750 Other subsidiary
debt(4) 299 311
Total Attributed
Liberty SiriusXM Group Debt $ 7,049
$ 7,561 Unamortized discount, fair market
value adjustment and deferred loan costs (67 ) (65 )
Total Attributed Liberty SiriusXM Group Debt (GAAP) $
6,982 $ 7,496 1.375% cash
convertible notes due 2023(5) 1,000 1,000 1% cash convertible notes
due 2023(5) 450 450 2.25% exchangeable senior debentures due
2046(5) 445 445 Live Nation margin loan 350 350 Formula 1 bank
loans 3,302 3,302 Delta Topco exchangeable notes(5) 27 — Other
corporate level debt 35 35
Total
Attributed Formula One Group Debt $ 5,609
$ 5,582 Fair market value adjustment
325 214
Total Attributed Formula One Group
Debt (GAAP) $ 5,934 $ 5,796
Atlanta Braves debt(6) 585 667
Total Attributed Braves Group Debt $
585 $ 667 Deferred loan costs
(9 ) (5 )
Total Attributed Braves Group Debt
(GAAP) $ 576 $ 662
Total Liberty Media Corporation Debt
(GAAP) $ 13,492 $ 13,954
____________________
(1) Includes $74 million and $69 million of cash and
liquid investments held at SiriusXM as of September 30, 2017 and
December 31, 2017, respectively. (2) Includes $274 million and $165
million of cash and liquid investments held at Formula 1 as of
September 30, 2017 and December 31, 2017, respectively. (3)
Outstanding principal amount of Senior Notes with no reduction for
the net unamortized discount. (4) Includes SiriusXM capital leases
and borrowings under the SiriusXM revolving credit facility. (5)
Face amount of the cash convertible notes and exchangeable
debentures with no fair market value adjustment. (6) Includes
Atlanta National League Baseball Club, LLC borrowings, Braves
Stadium Company, LLC debt to fund 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 $381 million during the fourth quarter. Additional
borrowing at Liberty SiriusXM combined with cash from operations at
SiriusXM more than offset SiriusXM’s stock repurchases and dividend
payment as well as investments at Liberty SiriusXM. Included in the
cash and liquid investments balance attributed to Liberty SiriusXM
Group at December 31, 2017 is $69 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 increased $512
million during the fourth quarter primarily as a result of
increased borrowings under Liberty’s SIRI margin loan to fund
investing activities and general corporate purposes.
Total cash and liquid investments attributed to Formula One
Group decreased $138 million during the fourth quarter, primarily
as a result of a reduction in operating cash flows due to normal
timing fluctuations combined with interest payments.
Total debt attributed to Formula One Group decreased $27 million
during the quarter. In November, the remaining Delta Topco
exchangeable notes issued to the F1 selling shareholders in
connection with the F1 acquisition were exchanged for 1.2 million
FWONK shares.
Subsequent to quarter end, on January 31, 2018, Liberty Media
announced the closing of the refinancing of F1’s first lien term
loan. Concurrent with the refinancing, F1 repaid $400 million of
the first lien term loan using a combination of $150 million of
excess cash on the balance sheet and $250 million of loans under
the first lien revolving credit facility, reducing the first lien
term loan from $3.3 billion to $2.9 billion. Following the
refinancing, the margin on the first lien term loan was reduced
from 3.00% to 2.50%. The transaction was net leverage neutral and
the refinanced term loan remains non-recourse to Liberty Media.
Total cash and liquid investments attributed to the Braves Group
was flat in the quarter as capital expenditures related to the
mixed-use development and new spring training facility were offset
by net cash from operations and additional borrowings.
Total debt attributed to Braves Group increased by $82 million
during the fourth quarter primarily as a result of additional
borrowings, net of repayments, for funding the Braves’ mixed-use
development and new spring training facility in Sarasota, Florida.
The total cost of construction for the spring training facility is
estimated to be approximately $125 million, of which the Braves are
contributing approximately $55 million using debt and cash on hand,
and the remaining funding is coming from municipal and private
entities.
As of December 31, 2017, construction of the Braves new ballpark
was completed on-budget and materially all associated costs have
been incurred. The total cost of the project was approximately $722
million, of which approximately $392 million of funding was
provided by Cobb County and related entities and approximately $330
million provided by the Braves. As of December 31, 2017,
approximately $419 million had been spent on the mixed-use
development. The Braves have provided $388 million of this funding,
of which approximately $188 million was contributed in equity and
approximately $200 million in debt.
Important Notice: Liberty Media Corporation (Nasdaq:
LSXMA, LSXMB, LSXMK, BATRA, BATRK, FWONA, FWONK) President and CEO,
Greg Maffei, will discuss Liberty Media's earnings release in a
conference call which will begin at 12:15 p.m. (E.S.T.) on March 1,
2018. The call can be accessed by dialing (866) 548-4713 or (323)
794-2093, passcode 4793919 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 performance and prospects, certain tax
matters relating to F1, the continuation of our stock repurchase
plan, 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, possible changes in market acceptance of new products
or services, regulatory matters affecting our businesses, 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 press release, 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 Form 10-K, 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 press release.
LIBERTY MEDIA CORPORATION
BALANCE SHEET INFORMATION
December 31, 2017 (unaudited)
Attributed Liberty
SiriusXM Braves Formula One
Inter-Group Consolidated Group
Group Group Eliminations Liberty
amounts in millions Assets Current assets: Cash and cash
equivalents $ 615 132 282 — 1,029 Trade and other receivables, net
242 32 84 — 358 Other current assets 207 56
113 — 376 Total current assets 1,064
220 479 — 1,763 Intergroup
interest in the Liberty Braves Group — — 202 (202 ) — Investments
in available-for-sale securities and other cost investments 580 8
526 — 1,114 Investments in affiliates, accounted for using the
equity method 672 145 933 — 1,750 Property and equipment, at
cost 2,274 1,150 172 — 3,596 Accumulated depreciation (927 )
(51 ) (77 ) — (1,055 ) 1,347 1,099 95
— 2,541 Intangible assets not subject
to amortization Goodwill 14,247 180 3,956 — 18,383 FCC licenses
8,600 — — — 8,600 Other 931 143 — —
1,074 23,778 323 3,956 —
28,057 Intangible assets subject to amortization, net
972 49 5,110 — 6,131 Other assets 117 22 501
— 640 Total assets $ 28,530 1,866
11,802 (202 ) 41,996 Liabilities and
Equity Current liabilities: Intergroup payable (receivable) $ 9 (39
) 30 — — Accounts payable and accrued liabilities 934 58 258 —
1,250 Current portion of debt 755 13 — — 768 Deferred revenue 1,882
51 8 — 1,941 Other current liabilities 3 8 9
— 20 Total current liabilities 3,583
91 305 — 3,979 Long-term debt
6,741 649 5,796 — 13,186 Deferred income tax liabilities 1,447 62
(31 ) — 1,478 Redeemable intergroup interest — 202 — (202 ) — Other
liabilities 283 435 61 — 779
Total liabilities 12,054 1,439 6,131
(202 ) 19,422 Equity / Attributed net assets 10,861
413 5,669 — 16,943 Noncontrolling interests in equity of
subsidiaries 5,615 14 2 — 5,631
Total liabilities and equity $ 28,530 1,866
11,802 (202 ) 41,996
LIBERTY MEDIA CORPORATION
STATEMENT OF OPERATIONS
Twelve months ended December 31, 2017
(unaudited)
Attributed Liberty
SiriusXM Braves Formula One
Consolidated Group Group Group
Liberty amounts in millions Revenue: Subscriber revenue $
4,473 — — 4,473 Formula 1 revenue — — 1,783 1,783 Other revenue
952 386 — 1,338 Total revenue
5,425 386 1,783 7,594 Operating costs and expenses, including
stock-based compensation: Cost of subscriber services (exclusive of
depreciation shown separately below): Revenue share and royalties
1,210 — — 1,210 Programming and content 388 — — 388 Customer
service and billing 385 — — 385 Other 119 — — 119 Cost of Formula 1
revenue — — 1,219 1,219 Subscriber acquisition costs 499 — — 499
Other operating expenses 113 281 — 394 Selling, general and
administrative 812 151 199 1,162 Depreciation and amortization
352 67 405 824 3,878
499 1,823 6,200 Operating income (loss)
1,547 (113 ) (40 ) 1,394 Other income (expense): Interest expense
(356 ) (15 ) (220 ) (591 ) Share of earnings (losses) of
affiliates, net 29 78 (3 ) 104 Unrealized gain/(loss) on
inter-group interest — (15 ) 15 — Realized and unrealized gains
(losses) on financial instruments, net (16 ) — (72 ) (88 ) Other,
net (11 ) 3 16 8 (354 ) 51
(264 ) (567 ) Earnings (loss) before income taxes 1,193 (62
) (304 ) 827 Income tax (expense) benefit 466 36
561 1,063 Net earnings (loss) 1,659 (26 ) 257
1,890 Less net earnings (loss) attributable to the noncontrolling
interests 535 (1 ) 2 536 Net earnings
(loss) attributable to Liberty stockholders $ 1,124 (25 )
255 1,354 Programming and content 27 —
— 27 Customer service and billing 4 — — 4 Other costs of services 5
— — 5 Operating 16 — — 16 Selling, general and administrative
98 48 32 178 Stock compensation
expense $ 150 48 32 230
LIBERTY MEDIA CORPORATION
STATEMENT OF OPERATIONS
Twelve months ended December 31, 2016
(unaudited)
Attributed Liberty
SiriusXM Braves Formula One
Consolidated Group Group Group
Liberty amounts in millions Revenue: Subscriber revenue $
4,194 — — 4,194 Other revenue 820 262 —
1,082 Total revenue 5,014 262 — 5,276 Operating costs and
expenses, including stock-based compensation: Cost of subscriber
services (exclusive of depreciation shown separately below):
Revenue share and royalties 1,109 — — 1,109 Programming and content
354 — — 354 Customer service and billing 387 — — 387 Other 144 — —
144 Subscriber acquisition costs 513 — — 513 Other operating
expenses 82 224 — 306 Selling, general and administrative 761 67 58
886 Legal settlement, net — — (511 ) (511 ) Depreciation and
amortization 312 32 10 354
3,662 323 (443 ) 3,542 Operating income
(loss) 1,352 (61 ) 443 1,734 Other income (expense): Interest
expense (342 ) (1 ) (19 ) (362 ) Share of earnings (losses) of
affiliates, net 13 9 (8 ) 14 Unrealized gain/(loss) on inter-group
interest — (27 ) 27 — Realized and unrealized gains (losses) on
financial instruments, net — 1 36 37 Other, net (25 ) —
21 (4 ) (354 ) (18 ) 57 (315 ) Earnings
(loss) before income taxes 998 (79 ) 500 1,419 Income tax (expense)
benefit (341 ) 17 (171 ) (495 ) Net earnings (loss)
657 (62 ) 329 924 Less net earnings (loss) attributable to the
noncontrolling interests 244 — — 244
Net earnings (loss) attributable to Liberty stockholders $
413 (62 ) 329 680 Programming
and content 21 — — 21 Customer service and billing 4 — — 4 Other 5
— — 5 Other operating expenses 13 — — 13 Selling, general and
administrative 85 9 13 107 Stock
compensation expense $ 128 9 13 150
LIBERTY MEDIA CORPORATION
STATEMENT OF CASH FLOWS
INFORMATION
Twelve months ended December 31, 2017
(unaudited)
Attributed Liberty
SiriusXM Braves Formula One
Consolidated Group Group Group
Liberty amounts in millions Cash flows from operating
activities: Net earnings (loss) $ 1,659 (26 ) 257 1,890 Adjustments
to reconcile net earnings to net cash provided by operating
activities: Depreciation and amortization 352 67 405 824
Stock-based compensation 150 48 32 230 Share of (earnings) loss of
affiliates, net (29 ) (78 ) 3 (104 ) Unrealized (gains) losses on
intergroup interest, net — 15 (15 ) — Realized and unrealized
(gains) losses on financial instruments, net 16 — 72 88 Noncash
interest expense 7 3 6 16 Losses (gains) on dilution of investment
in affiliate — — (3 ) (3 ) Loss on early extinguishment of debt 35
5 8 48 Deferred income tax expense (benefit) (492 ) 2 (574 ) (1,064
) Intergroup tax allocation (6 ) (39 ) 45 — Intergroup tax
(payments) receipts 4 15 (19 ) — Other charges (credits), net (4 )
18 (10 ) 4 Changes in operating assets and liabilities Current and
other assets 30 (57 ) 77 50 Payables and other liabilities
127 (15 ) (359 ) (247 ) Net cash provided (used) by
operating activities 1,849 (42 ) (75 ) 1,732
Cash flows from investing activities: Cash proceeds from
dispositions of investments — 5 16 21 Net cash paid for the
acquisition of Formula 1 — — (1,647 ) (1,647 ) Investments in and
loans to cost and equity investees (851 ) (2 ) (9 ) (862 ) Capital
expended for property and equipment (288 ) (219 ) (10 ) (517 )
Other investing activities, net (115 ) (5 ) (12 ) (132 ) Net
cash provided (used) by investing activities (1,254 ) (221 )
(1,662 ) (3,137 ) Cash flows from financing activities: Borrowings
of debt 4,553 544 1,600 6,697 Repayments of debt (3,216 ) (218 )
(1,673 ) (5,107 ) Proceeds from issuance of Series C Liberty
Formula One common stock — — 1,938 1,938 Shares repurchased by
subsidiary (1,409 ) — — (1,409 ) Braves Rights Offering (60 ) — —
(60 ) Taxes paid in lieu of shares issued for stock-based
compensation (100 ) (30 ) (5 ) (135 ) Other financing activities,
net (35 ) (8 ) (13 ) (56 ) Net cash provided (used) by
financing activities (267 ) 288 1,847 1,868
Effect of foreign exchange rates on cash and cash
equivalents — — 4 4 Net increase
(decrease) in cash and cash equivalents 328 25 114 467 Cash and
cash equivalents at beginning of period 287 107
168 562 Cash and cash equivalents at end of
period $ 615 132 282 1,029
LIBERTY MEDIA CORPORATION
STATEMENT OF CASH FLOWS
INFORMATION
Twelve months ended December 31, 2016
(unaudited)
Attributed Liberty
SiriusXM Braves Formula One
Consolidated Group Group Group
Liberty amounts in millions Cash flows from operating
activities: Net earnings (loss) $ 657 (62 ) 329 924 Adjustments to
reconcile net earnings to net cash provided by operating
activities: Depreciation and amortization 312 32 10 354 Stock-based
compensation 128 9 13 150 Share of (earnings) loss of affiliates,
net (13 ) (9 ) 8 (14 ) Unrealized (gains) losses on intergroup
interest, net — 27 (27 ) — Realized and unrealized (gains) losses
on financial instruments, net — (1 ) (36 ) (37 ) Noncash interest
expense 6 5 — 11 Loss on early extinguishment of debt 24 — — 24
Deferred income tax expense (benefit) 332 1 94 427 Intergroup tax
allocation (13 ) (19 ) 32 — Intergroup tax (payments) receipts 7 7
(14 ) — Other charges (credits), net 21 11 (2 ) 30 Changes in
operating assets and liabilities — — — — Current and other assets
59 (17 ) (17 ) 25 Payables and other liabilities 184
105 (12 ) 277 Net cash provided (used) by operating
activities 1,704 89 378 2,171
Cash flows from investing activities: Cash proceeds from
dispositions of investments — — 62 62 Proceeds (payments) from
settlement of financial instruments, net — — (1 ) (1 ) Investments
in and loans to cost and equity investments — (20 ) (764 ) (784 )
Repayment of loans and other cash receipts from cost and equity
investees — — 48 48 Capital expended for property and equipment
(206 ) (360 ) (2 ) (568 ) 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 ) (33 ) 1 (36 ) Net cash
provided (used) by investing activities (210 ) (413 ) (641 )
(1,264 ) Cash flows from financing activities: Borrowings of debt
1,847 460 438 2,745 Repayments of debt (1,471 ) (276 ) (2 ) (1,749
) Intergroup (payments) receipts 58 16 (74 ) — Shares repurchased
by subsidiary (1,674 ) — — (1,674 ) Braves Rights Offering — 203 —
203 Cash dividends paid by subsidiary (16 ) — — (16 ) Taxes paid in
lieu of shares issued for stock-based compensation (47 ) — (11 )
(58 ) Other financing activities, net (16 ) 15 4
3 Net cash provided (used) by financing activities
(1,319 ) 418 355 (546 ) Net increase
(decrease) in cash and cash equivalents 175 94 92 361 Cash and cash
equivalents at beginning of period 112 13 76
201 Cash and cash equivalents at end of period $ 287
107 168 562
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 Braves Group and the Formula One 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 (loss) calculated in
accordance with GAAP for the three months and years ended December
31, 2016 and December 31, 2017, respectively.
QUARTERLY
SUMMARY
(amounts in millions) 4Q16 4Q17
Liberty SiriusXM Group Revenue $ 1,303 $ 1,404
Adjusted OIBDA 467 539 Depreciation and amortization (77 ) (82 )
Stock compensation expense (38 ) (37 ) Legal settlements and
reserves(1) (46 ) (45 )
Operating income $ 306
$ 375
Formula One Group Revenue $ — $
570 Adjusted OIBDA (13 ) 138 Depreciation and amortization
(3 ) (110 ) Stock compensation expense (1 ) (4 )
Operating income (loss) $ (17 ) $ 24
Braves
Group Revenue $ 18 $ 20 Adjusted OIBDA (12 ) (44 )
Depreciation and amortization (2 ) (17 ) Stock compensation expense
(2 ) (7 )
Operating income (loss) $ (16 ) $
(68 )
Liberty Media Corporation (Consolidated)
Revenue $ 1,321 $ 1,994 Adjusted OIBDA 442 633 Depreciation
and amortization (82 ) (209 ) Stock compensation expense (41 ) (48
) Legal settlements and reserves(1) (46 ) (45 )
Operating income $ 273 $ 331
____________
(1) During the fourth quarter of 2016 and 2017,
SiriusXM recorded expenses of $46 million and $45 million,
respectively, related to music royalty legal settlements and
reserves. These expenses are included in the revenue share and
royalties line item in SiriusXM’s consolidated financial statements
for the years ended December 31, 2016 and December 31, 2017, but
have been excluded from Adjusted OIBDA for the corresponding
periods as these expenses were not incurred as part of SiriusXM’s
normal operations for the periods, and the lump sum amounts do not
relate to the on-going performance of the business.
ANNUAL
SUMMARY
(amounts in millions) 2016 2017
Liberty SiriusXM Group Revenue $ 5,014 $ 5,425
Adjusted OIBDA 1,838 2,094 Depreciation and amortization (312 )
(352 ) Stock compensation expense (128 ) (150 ) Legal settlements
and reserves(1) (46 ) (45 )
Operating income $
1,352 $ 1,547
Formula One Group Revenue
$ — $ 1,783 Adjusted OIBDA (45 ) 397 Depreciation and
amortization (10 ) (405 ) Stock compensation expense (13 ) (32 )
Legal settlement(2) 511 —
Operating
income (loss) $ 443 $ (40 )
Braves Group
Revenue $ 262 $ 386 Adjusted OIBDA (20 ) 2 Depreciation and
amortization (32 ) (67 ) Stock compensation expense (9 )
(48 )
Operating income (loss) $ (61 ) $ (113 )
Liberty Media Corporation (Consolidated) Revenue $ 5,276 $
7,594 Adjusted OIBDA 1,773 2,493 Depreciation and
amortization (354 ) (824 ) Stock compensation expense (150 ) (230 )
Legal settlements and reserves(1)(2) 465 (45 )
Operating income $ 1,734 $ 1,394
________________
(1) During the fourth quarter of 2016 and 2017,
SiriusXM recorded expenses of $46 million and $45 million,
respectively, related to music royalty legal settlements and
reserves. These expenses are included in the revenue share and
royalties line item in SiriusXM’s consolidated financial statements
for the years ended December 31, 2016 and December 31, 2017, but
have been excluded from Adjusted OIBDA for the corresponding
periods as these expenses were not incurred as part of SiriusXM’s
normal operations for the periods, and the lump sum amounts do not
relate to the on-going performance of the business. (2) During the
first quarter of 2016, Liberty entered into a settlement with
Vivendi which resulted in a $775 million payment. Following the
payment of a contingency fee to Liberty’s legal counsel, as well as
amounts payable to Liberty Global plc, an additional plaintiff in
the action, Liberty recognized a net pre-tax gain on the legal
settlement of approximately $511 million. This settlement resulted
in a dismissal of all appeals and mutual releases of the parties.
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 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 SiriusXM’s business. SiriusXM
believes adjusted EBITDA is a useful measure of the underlying
trend of its operating performance, which provides useful
information about its business apart from the costs associated with
its capital structure and purchase price accounting. SiriusXM
believes investors find this Non-GAAP financial measure useful when
analyzing past operating performance with current performance and
comparing its operating performance to the performance of other
communications, entertainment and media companies. SiriusXM
believes investors use adjusted EBITDA to estimate its current
enterprise value and to make investment decisions. As a result of
large capital investments in its satellite radio system, its
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
the legal settlements and reserves related to the historical use of
sound recordings, loss on extinguishment of debt and loss on
disposal of assets, to the extent they occur during the period, is
useful as they are significant expenses not 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
operating results after giving effect for these costs, should refer
to net income as disclosed in SiriusXM’s 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 Years Ended December
31, 2016 2017 ($ in thousands) Net income: $ 745,933 $
647,908 Add back items excluded from Adjusted EBITDA: Purchase
price accounting adjustments: Revenues 7,251 7,251 Sound recording
legal settlements and reserves 45,900 45,100 Loss on disposal of
assets 12,912 — Share-based payment expense 108,604 124,069
Depreciation and amortization 268,979 298,602 Interest expense
331,225 345,820 Loss on extinguishment of debt 24,229 43,679 Other
income (14,985 ) (12,844 ) Income tax expense 345,727
616,301 Adjusted EBITDA $ 1,875,775 $
2,115,886
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