Earnings Call Transcript - BATRA Q1 2023

Operator, Operator

Welcome to the Liberty Media Corporation's 2023 Q1 Earnings Call. As a reminder, this conference is being recorded, May 5. I would now like to turn the conference over to Shane Kleinstein, Vice President of Investor Relations. Please go ahead.

Shane Kleinstein, Vice President of Investor Relations

Thank you, and good morning. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in Liberty Media's most recent Forms 10-K and 10-Q filed with the SEC. These forward-looking statements speak only as of the date of this call, and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Media's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures for Liberty Media and SiriusXM including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media and SiriusXM Schedules 1 through 3 can be found at the end of the earnings press release issued today, which is available on Liberty Media's website. Now I'd like to turn the call over to Greg Maffei, Liberty's President and CEO.

Gregory Maffei, President and CEO

Thank you, Shane, and good morning. Today, we have Formula One's President and CEO, Stefano Domenicali, and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling, joining the call. I will start by updating you on the separation of the Braves and the establishment of the new Liberty Live Tracker. We have filed the amended S-4 and are pleased with the pace of the SEC review. We believe we are close to completing that process and are still aiming for completion before the end of the second quarter. First, regarding Liberty SiriusXM, we are focused on reducing debt and simplifying the balance sheet. We raised $575 million through 3.75% LSXM convertible notes and used the proceeds to repurchase $703 million of LSXM debt, including $591 million of the 1.375% converts and $112 million of the 2.125% SIRI exchangeables. We also paid off the remaining balance of those in April. This results in a gross debt reduction of over $400 million year-to-date, including the April actions. The reclassification of the LSXM tracker without the live stake will further streamline our structure, and we remain committed to rationalizing the SIRI and LSXM structures in the near future. As expected, SiriusXM experienced a tough first quarter due to trends in SAAR and the advertising market. We anticipate this being the low point of the year for self-pay net additions. This is driven by lower trial starts in Q4, higher seasonal churn in Q1, and reduced marketing as we prepare to launch our new app. However, advertising performed better than expected, and podcasting is a continued highlight. We made solid progress in launching 360L, our innovative product enhancement that combines our content and interactivity effectively. We expect a 40% penetration rate in new car trials by year-end 2023 and see a strong conversion boost in vehicles with 360L, especially as consumers familiarize themselves with the advanced features. We have reduced costs at SiriusXM with an 8% workforce cut in March, and we are confident that we will see improved operating results for the year, likely resulting in positive self-pay net additions in the second half, alongside cost savings and seasonal ad revenue benefiting EBITDA. Consequently, SiriusXM raised both EBITDA and free cash flow guidance by $50 million each during their earnings announcement. We are pleased to announce Tom Barry as the new CFO. He was our Chief Accounting Officer and has been with SiriusXM since 2009, possessing extensive knowledge of the financial and strategic aspects of our business. We wish Sean well in his new role and wish him success on the course. Turning to Live Nation, they had a tremendous quarter with ongoing growth in live events across all segments, achieving a strong Q1 despite tough comparisons from last year, even though some international markets were not open in the prior period. Ticketing gross transaction volume increased by 60%, adjusted operating income rose an impressive 53% to $320 million, and they converted 59% of that into $190 million of free cash flow. We anticipate another record year at Live, with about 90 million tickets sold for Live Nation shows year-to-date, and we expect to manage 600 million tickets globally. We will welcome a record number of fans, even compared to a strong 2022 that benefited from rescheduled shows. We believe the adjusted operating income at Live can grow at double digits for the foreseeable future. On legislative updates, we are making solid progress and hope the market will begin to recognize the momentum. We are gaining traction with the FAIR Ticketing Act, and the proposed Ticket Act represents a significant positive step toward implementing initiatives we support. Now turning to the Formula One Group, on the corporate side, we paid $202 million in cash to LSXM to settle intergroup interest related to the buyback of basket converts, effectively repurchasing 3.1 million Quanta shares at $65 each, proportional to the convert amount repurchased. The Formula One season has returned after a brief hiatus, with an exciting Miami race this weekend. I should also note that we held our first F1 Accelerate Conference yesterday, which was successful. This summit brought together leaders in sports, technology, and media, and we anticipate holding more events like this in the future. We have made adjustments to the Sprint events, now a standalone event with separate points that do not affect the grid for the grand prix. I expect continued improvements in this format, leading to three full days of exciting on-track action. The sport continues to grow; the TV audience during the Baku Sprint weekend was up 7% compared to the 2022 grand prix, partly due to the Sprint event. In Miami, we are seeing growth in U.S. fandom. The Saudi GP was ESPN's most-watched live GP to date. Additionally, U.S. social media followers increased dramatically by 43% in the first quarter compared to the previous year, and the U.S. is now Formula One's largest audience across Instagram, YouTube, TikTok, and Snapchat. Regarding Vegas, we have completed ticket sales for Waves 1 and 2 with strong demand, and final Wave 3 sales are expected later this spring. We are optimistic about our sponsorship pipeline, having announced several major deals, including with Virgin at Hard Rock. The paddock building construction is over 60% complete, and capital expenditures are in line with expectations, slightly exceeding our original land purchase cost. For the first year, we expect total revenues to approach $500 million, positioning it as a top-5 race in terms of profit. As for our balance sheet, F1 leverage at the end of the quarter was 2.2 times, which will trigger a permanent reduction of 25 basis points in the margin on our existing term loan B, independent of future leverage ratios. Turning to the Braves, they have had a fantastic start to the season, currently at 22 wins and 10 losses, with the best record in the National League and a six-game lead in the NL East. Ronald Acuna Jr. earned the title of NL Player of the Month for April, leading Major League Baseball in stolen bases and runs. We experienced the largest home opener crowd in Truist Park history and have seen remarkable ticket demand thus far. For the first time in franchise history, we stopped selling season tickets and initiated a waitlist before opening day. We expect to sell out over half of our games this season, benefiting from MLB's rule changes that have made games more action-packed with less downtime. Stolen base attempts are up over 30% compared to last year, marking the highest rate since 2012, and games are approximately 30 minutes shorter than last year, now averaging under three hours. In terms of innovation with the Braves, we plan to implement a new point of sale system this year to enhance the fan experience, which will help mitigate any impact on concessions from shorter games. We are already noticing positive trends in concessions for the year-to-date. Now, I will hand it over to Brian Wendling for more on our financial results.

Brian Wendling, Chief Accounting and Principal Financial Officer

Thanks, Greg, and good morning, everyone. At quarter end, Liberty SiriusXM Group had attributed cash and liquid investments of approximately $337 million, which excludes $53 million of cash held directly at SiriusXM. There's also $1.5 billion of undrawn margin loan capacity at the parent level related to our SiriusXM and Live Nation margin loans. As of May 4, the value of our SiriusXM stock held by LSXM was $11.5 billion, and the value of the Live Nation stock was $4.7 billion. We have $2.7 billion in principal amount of debt against these holdings or $2.4 billion pro forma for the additional paydown that occurred after the quarter. Total Liberty SiriusXM Group attributed principal amount of debt was $13 billion, which includes $9.6 billion directly at the Sirius level. In March, Liberty SiriusXM Group issued $575 million aggregate principal amount of 3.75% LSXMA convertible notes due 2028. We used the net proceeds of this offering to repurchase $591 million principal amount of the 1.375% cash convertible notes and $112 million of the 2.125% SIRI exchangeable debentures. In addition to the proceeds raised from the new convertible, LSXM used cash on hand, including $39 million from the proportional net settlement of the bond hedge and warrant and cash received from the Formula One Group to retire 3.1 million FWONA intergroup interest shares underlying the corresponding portion of the convertible repurchase. Subsequent to quarter end, Liberty SiriusXM settled the remaining 2.125% SIRI exchangeables for $275 million at the April foot call date. There's approximately $199 million remaining on the 1.375% cash convertible notes, which mature in October. All remaining intergroup interest are expected to be settled and extinguished in connection with the Bright Spin-off, and additional information regarding the intergroup interest is available in our press release and as well as the S-4 that was filed with the SEC. Formula One Group had attributed cash, liquid investments, and monetizable public holdings of $1.8 billion at quarter end, which includes $1 billion of cash at the Formula One level. Formula One Group purchased $129 million of exchange-traded funds in the first quarter which we expect to attribute to the Liberty Live Group tracking stock in connection with the announced reclassification of the trackers. Total Formula One Group attributed principal amount of debt was $3 billion, which includes $2.4 billion of debt of F1, leaving $538 million at the corporate level. F1's $500 million revolver is undrawn and their leverage ratio at quarter end was 2.2x, which will trigger a 25 basis point reduction in the margin on the term loan B debt. Looking quickly at the F1 operating business, given quarterly variability, we remind you to look at this business on a full-year basis. But that being said, let's take a quick look at the quarter. Our race count in the first quarter was consistent year-over-year with two races. Primary revenue grew with increases across race promotion, media rights and sponsorship. Other F1 revenue decreased in the first quarter, primarily due to easing of freight, cost inflation versus the prior year, which was partially offset by growth in Paddock Club attendance. On the cost side, our team payments grew in the first quarter due to the prorata recognition of increased payments for the year. Reminder that other cost of revenue, F1 revenue, and SG&A are best viewed as a percent of total revenue. Other costs of F1 revenue benefited from the easing of the freight inflation. This was largely offset by increased hospitality costs and higher commission and partner servicing costs paid related to the growth in the primary F1 revenue streams. On SG&A, the first quarter included $6 million of costs from the Las Vegas Grand Prix. Looking at Vegas, nearly all of LVGP's revenue and costs will be recognized in the fourth quarter when the race takes place. Just a reminder on that. The Paddock Club building is progressing on schedule. In the first quarter, we incurred approximately $53 million of corporate-level capital expenditures related to Las Vegas. We will not be providing forward-looking allocation between the F1 opco and the Formula 1 corporate CapEx. LVGP will pay rent and other fees out of the F1 opco to Formula 1 corporate for use of the building during the race period, which will show up in our financial statements as revenue at the corporate level in the fourth quarter but will eliminate in consolidation. Finally, at the Braves Group at the quarter end, they had attributed cash and liquid investments of $215 million, which excludes $30 million of restricted cash. Braves Group had attributed principal amount of debt of $542 million. Liberty and our consolidated subsidiaries are in compliance with their debt covenants at quarter end.

Stefano Domenicali, President and CEO of Formula One

Thanks, Brian. Good morning from Miami. We are thrilled to be back for our second Miami Grand Prix where the excitement in the city is as vibrant as in year one. This year, the event featured an expanded Paddock now located inside the Dolphin stadium and upgraded Paddock Club and a fully resurfaced track. We have had four races into our record of '23 race calendar. While Red Bull has dominated the race to date, it is still very early in the season, and the races have been packed with excitement and drama. A lot of fans have unmatched cheer about Aston Martin's recent performance. Alonso's first-place finishes in Saudi Arabia marked his 100th podium, making him one of only six drivers in F1 history to claim this feat. The Australian Grand Prix featured three red flags adding even more complexity to tire strategy and ended with only two of twenty drivers crossing the finish line. The newsprint format was unanimously approved by the teams F1 and FIA in advance. We all believe that the new format is the right one for our fans and the sport and increases the level of intensity and action across the weekend. Starting this season, at the six sprint events, all three days of the weekend will be packed with on-track excitement. The Saturday sprint shootout is a shorter qualifying session to determine the sprint grid later that day. This makes the sprint a stand-alone event with no bearing on the Grand Prix allowing drivers to race more aggressively without fear of the implications. Formula One is engaging with our plans across the plateau. Global audiences exceeded 70 million viewers for the first two races of the season with significant increases in key markets across Europe and North America. In the U.S., the Saudi Arabian Grand Prix broke 1.52 million viewers, marking ESPN and cable's most viewed Grand Prix record. Across our digital channels, F1 reached 62.9 million social media followers as of Q1, up 31% year-over-year. Our F1.com website and F1 apps have launched additional content, including a new "What is F1" section, dedicated to new fans with videos and a beginner’s guide to the sport. Crowds continue to flow to our races globally. The vast majority of events are sold out for the 2023 season. Bahrain set its new record with nearly 100,000 fans over the weekend. Melbourne topped last year’s record as the largest weekend sporting event in recent Australian history. We welcomed 445,000 fans over the course of the weekend, up from 420,000 the prior year. This also marks a new record recently for Formula One in terms of total race weekend attendance. Turning to recent updates on our commercial agreements. On race promotion, we extended our Austrian Grand Prix through 2027, following last year’s sold-out crowd of 303,000 fans. This year's event will mark our tenth anniversary since F1 returned to Spielberg. We also announced the extension of the Azerbaijan Grand Prix through 2026. On media rights, we entered into a multiyear extension of our partnership with ESPN to broadcast the F1 channel in Latin America and in the Caribbean. ESPN will provide live coverage of over half of the races with the full season available on the streaming service Star Plus. ESPN has continued to develop dedicated content across web and social platforms, allowing us to expand our global reach and attract an increasing diverse fan base. Our Pro and Access product continues to see solid subscriber growth this season. On sponsorship, we made LIQUI MOLY an official partner. Our enhanced agreement includes track signage at the three races and visual branding at 15 races, demonstrating the opportunity for digital ad insertion within the broadcast fee. We first welcomed LIQUI MOLY as a regional sponsor in 2019, grew our relationship to official sports in 2020, and now official partner in 2023. We continue to demonstrate growing value to our partners. We were thrilled to announce Paramount+ as an official partner following our successful sport and entertainment collaboration last season. Our new multiyear agreement will feature the popular series at fan zone on trackside displays and in digital placement. This week, we announced Puma as the official provider of F1 sports apparel in a new multiyear partnership and we extended our agreement with MSC Cruises as global partners throughout 2026. As part of the extension, MSC will bring a unique hospitality experience. Our sponsorship pipeline remains strong. To try to survive, we returned for its fifth season in February. Avid, casual, and new fans alike continue to be drawn to the cities. The latest season didn't disappoint. On April 14, we celebrated the topping out of our Las Vegas Grand Prix Paddock Building by placing a symbolic concrete barrier on top of the structure. We are very pleased with our progress. The efficiency of this project is a function of the incredible collaboration between the Las Vegas Grand Prix team, our talented design and construction crew, and local officials. We thank them all for their support. The Paddock Building spans 1,000 feet long, 100 feet wide, and three stories tall with the rooftop deck. It will be the largest Paddock Building on the race calendar and will host the largest Paddock Club. On the roof, we have a 28,000 square foot LED screen in the shape of our F1 logo that provides unparalleled branding opportunities. When you fly over Las Vegas, you will know that F1 has established a permanent home in the U.S. We can monetize the LED screen and display third-party branding in future years. The building itself has advanced AV capabilities, temporary walls between thin garages, and additional features ensure ample flexibility to convert the entire space for a broad range of year-round users. Future year-round activations are under development, and we hope to have more to share in the coming months. I encourage you to visit the Las Vegas Grand Prix website for the time lapse video of the extraordinary construction progress. Our track surfaces in Las Vegas began last month, and the second phase is scheduled for July. Once complete, this track surface can last six to ten years. The team also recently announced additional sponsors in this lineup. Virgin Hotel Las Vegas was named an event partner and will have entitlement to the East Harmon fan zone. Hard Rock International will be the presenting partner and will build a grandstand in front of the Mirage on the street. In March, we announced an event partnership with Switch, the technology infrastructure company that will supply LVGP with its sustainable goals and establish environmentally conscious practices for the race weekend and beyond. Finally, touching on our broader F1 sustainability and inclusion effort, the European Union recently recognized the role that sustainable fuel needs to play as part of the automotive solution alongside electric vehicles up to 2035. This cements the future of sustainable fuels following F1's extensive work with policymakers. Our F2 and F3 cars are running 55% sustainable fuel this season. Current F1 cars are running at 10% sustainable fuels, and we are on track to introduce 100% advanced sustainable fuels in 2026. The F1 Academy, our new all-female series began its season in Austria last weekend, following two testing sessions in Barcelona and Portugal. Congratulations to Marta Garcia from PREMA Racing on winning two of the three races on opening weekend, with just 0.3 seconds separating her and the second-place finisher in the third race. The season will have seven race weekends with the final race alongside us in Austria in October. I'm pleased to say that in the 2024 season, we'll have all F1 Academy races joined on F1 weekends. The creation of F1 Academy is an important step forward towards increasing opportunities for female participation in motorsport. It is the start of a journey, and we hope it will be aspirational for young female drivers aspiring to reach professional motorsport. We now have the F1 Academy to inform. I believe we are creating the best possible structure to find and nurture female talent, including those already in the series and those yet to come through from the grassroots level. We are looking forward to the season. Yesterday, F1 partnered with Custom Events from Wall Street Journals to host our first F1 Accelerate Summit. We brought together trailblazers from the world of sport, entertainment, and business to discuss how they can make a significant impact on the future of technology, performance, diversity, and sustainability, not only in their own business but across industry and culture. We welcomed familiar faces from the F1 grid and management alongside marquee sports figures, including Maria Sharapova and Adam Levine. Jay Leno was our host as business executives traveled from across the country including Jerry Bruckheimer, Joe Kosinski, Maverick Carter, Sarah Harden, and Burke Magnus. We hope to continue to leverage F1 brands to drive innovation and commercial success for the sporting and entertainment worlds. It is an exciting time for Formula One, both on the track and in the commercial operation. Our unusual early season spring break didn't have a mandatory shutdown like the summer break, meaning teams were hard at work with their car upgrades. I believe competition will intensify as the season progresses. Miami closed out the first double header of the season before we head to Europe for the first triple header. There is plenty of action to come. Full speed ahead.

Gregory Maffei, President and CEO

Thank you, Stefano, and thank you, Brian. To our listening audience, we appreciate your continued support of and interest in Liberty Media. We hope you will all tune in to see the Miami Grand Prix this weekend and the start of our Braves series against the Orioles tonight. And with that, operator, I'd like to open the line for questions.

Operator, Operator

The first question is coming from David Karnovsky of JPMorgan.

David Karnovsky, Analyst

Stefano, just on the new Sprint format. I'm interested to know what the response has been from your partners on the promotion side. How are they thinking about the potential lift to their own ticket sales? And then what's the process you had to determine what GP gets that format? And is that something you can build into your contracts?

Stefano Domenicali, President and CEO of Formula One

Well, thanks, David. Of course, we did think in accordance with the teams and with the FIA because, as you know, our idea is to make sure that during the racing there is always action on the track. Actually, the result of the first one this year has been very encouraging. And every one of our partners, promoters, media partners, and also teams are very positive about that. Of course, there is something that we want to take as a lesson to learn and to see at the end of the summer if there is something that we can learn to do even better. But in general, the first run of the Sprint format has been great. As always, when you want to do something different in a very standardized ecosystem, the reaction of the, let's say, traditional fans is the one that needs to be waited for longer term. However, with the new fans, we've seen a very, very positive reaction. Promoters were pushing for that. I would say the real thing is that we don't want to enter a situation in the future where we are going to roll out the races with the Sprint format. We want to keep a limited number of them on the calendar and create something special regarding the competition that we can give a supporting value with trophies and of course, commercial opportunities to these things. I think that's the right way to go. If I may summarize another point that I think is important, I see a big trend today in motorsport, not to remain stable, let's say, not to stay consistent with your regulation. We're just following what the base will be, then just following what NDA has done. So that means that all professional sports need to listen to the requests and new inputs that fans, promoters, and partners ask for in order to have more excitement around the games. So I am positive and looking forward to keep working on this project.

David Karnovsky, Analyst

Okay. And then you've called out F1 TV in your releases for a few quarters now. Just wanted to see if you could update us on the product and where you see it in terms of the growth trajectory? And then just for Brian, to the extent someone buys an annual plan at the start of the season, is that all booked in the first quarter with the partner cost? Or is that proportional to the number of races?

Stefano Domenicali, President and CEO of Formula One

So if I may, the first part of it, F1 TV is really working very well. You know that we are not providing any numbers on that, but what I can tell you in terms of quality, in terms of product and in terms of attention, is also an opportunity to select new markets where there is not really a strong broadcast provider, and we are doing that with certain countries and the effect is very good. We have a new plan also to update some of the content we want to give to our fans. After several years of heavy investment, we're now paying back what has proven to be a great decision taken a couple of years ago. Brian, you want to progress with the other question?

Brian Wendling, Chief Accounting and Principal Financial Officer

Yes, David, on your second question, it's proportional over the season.

Operator, Operator

The next question is coming from Bryan Kraft of Deutsche Bank.

Bryan Kraft, Analyst

Greg, I wanted to ask you, how should we think about the capital needs of the Liberty Live Tracker, both initially and over time, particularly as the business side of Liberty Live evolves and begins to invest in owning and operating venues? I assume that's still part of the plan. It seems like it's capital-intensive. So just wanted to understand how you might go about funding those endeavors.

Gregory Maffei, President and CEO

Thanks, Bryan, for the question. As we've outlined, we expect to capitalize Liberty Live with a decent amount of cash. But candidly, the degree to which we go out and do something large there, we'll have to find other sources of capital, other sources of cash capital. So I don't think it will be a massive generator of cash, as you would expect, looking at what's in the asset base there. But we have some ideas that involve leveraging Liberty Live itself, not relying as much on other trackers, if that's your concern, Bryan.

Bryan Kraft, Analyst

Yes, that was the nature of the question.

Gregory Maffei, President and CEO

That's right. I just might have read that subject a little bit.

Bryan Kraft, Analyst

Well, a lot of people are asking about it. So I think it's good to get the message out there.

Gregory Maffei, President and CEO

You get to ask it straight up front.

Bryan Kraft, Analyst

If I could ask you also maybe related to the F1 side. I mean, it seems like what you're doing in Vegas is really exciting. Do you see other opportunities to invest in F1's business by taking on the promoter role in other markets and investing in facilities to drive that longer-term growth?

Gregory Maffei, President and CEO

Look, I think Vegas was unique in the opportunity and also the geography and a bunch of other factors, which made it the place where we should be the promoter first. We'll try not to have too much hubris and assume that we need to prove we can be a good promoter first. I don't look at many other places where it's as obvious. I have mentioned in the past that I do think, in some cases, some of our partners in the promoter space are not necessarily as capital-rich as Formula One. And so there may be opportunities for us to participate alongside them, maybe not a full co-promotion role but to take elements of the chain of value being created further for both of our benefits. So we'll certainly look at that and talk to partners to the degree that's available.

Stefano Domenicali, President and CEO of Formula One

And if I may add another comment, Bryan, and that is direct qualitative effect is that with this investment, we are also pushing the quality of the promoters that are already very important for us in Formula One. The game now is to have unique events that are working very, very well, of course, commercially viable, but I would say that direct effect has improved the qualitative approach of Grand Prix.

Operator, Operator

The next question is coming from Vijay Jayant of Evercore.

Vijay Jayant, Analyst

I have a couple on Formula One. So Greg, the $112 million of team payments in the quarter implies a little less than, I think, $1.3 billion for the year. Can you sort of talk about how team payments have been communicated to the teams given the fact that this year you have something sort of different with the Vegas rates that is not sort of contractual? And is that something we should look at as a proxy and what you're sort of thinking on the full year EBITDA number? And second, obviously, the free cash flow was very, very strong at Formula One, and I'm assuming that had to do with ticket sales for I think Wave 1, Wave 2 on Vegas. Any way you can help us think about what sort of the underlying free cash flow is, excluding the ticket sales, if possible?

Gregory Maffei, President and CEO

So I'll comment on the first and second. And then Brian, you want to add anything on the free cash flow when I'm done, that would be great. Looking at the team payments, I think if you look at our history, we try to manage that conservatively. Particularly in the first quarter of the year. And as you rightly know, probably even more conservatively this year given we've added some volatility of the payroll due to potential changes with Vegas. We think it's positive volatility. It's going to be a great event, but it is unknown. It is not as well experienced compared to some of the other events that we have. So I think you should look at that as a conservative proxy for how we expect the year will go. The last thing we want to do is have teams overspending in anticipation of money that may not show up towards the end of the year. The free cash flow, you rightly note, because of the Wave 1 and 2 sales, a lot of cash has been brought to us as deferred collection, but it's generated in that free cash flow line. So it has probably overstated the true impact of the operating business for Q1, but we do expect to recognize that as free cash flow as the year progresses. Brian, if you want to comment or can provide a more normalized level without providing Vijay too much clarity because, gosh, we wanted to do some real work.

Brian Wendling, Chief Accounting and Principal Financial Officer

Yes. I mean to help your efforts, I guess, I would say, if you look at our tracking stock schedules, you can see the deferred revenue as of March 31, 2023, and you can go back and look at our first quarter from last year. You can see the deferred revenue related to Formula One at 2022. It's up roughly $130 million, give or take, and you could think of that largely being related to Vegas, although there are other puts and takes.

Stefano Domenicali, President and CEO of Formula One

If I may add one comment. So Vijay, I just want to add two comments that I think are important to consider as a true number. At the end of the day, it's essential to remember that the teams are benefiting from what we are doing so far. Investing in Vegas for them is an incredible opportunity and directly also for them to develop their business. Indirectly, it will strengthen our proposition even more as an ecosystem in Formula One. I think that is really something that I was mentioning; we have a prudential approach that gives you the security about what we need to do and need to deliver on this project, which will be very important for all of us.

Operator, Operator

The next question is coming from Peter Supino of Wolfe Research.

Peter Supino, Analyst

On the Concorde Agreement, Greg, I wondered, or Stefano, if you could comment on how you'd like investors to think about the timing of that renegotiation. And then the second question, Greg, if you would talk about Live Nation, your view of both the risks posed by the DOJ investigation? And then separately, the bear case that the business ought to slow down a lot in 2024 after this post-pandemic surge of supply?

Gregory Maffei, President and CEO

Look, we have several years left to run on the Concorde Agreement. But I think there's a consensus among the teams, the FIA, and ourselves that now might be a good time to try to strike while the iron is hot and renew and extend the Concorde Agreement. There's certainly no obligation to do that, and there's certainly no risk if that doesn't get done. As you may recall, we went right to the end, and historically, in many cases, the teams have operated without a Concorde Agreement. They've basically done a handshake then completed the deal post the period when the new Concorde Agreement was supposed to start. Our hope is that this time, we'll be able to change that dynamic in part because of the way that's changed and Stefano has changed the dynamic with the teams in particular. I hope we have a more positive relationship and everybody sees the benefit of going early and providing certainty for all involved.

Stefano Domenicali, President and CEO of Formula One

Nothing, because I think that you synthesized perfectly the situation. That will be our strategy now.

Gregory Maffei, President and CEO

On Live Nation, I would not say it's a DOJ investigation. You can always say that. But look, we've had a DOJ consent decree and monitor now for several years, and it was renewed. There is a hotline that anybody can report what they perceive as violations of that consent decree, and the DOJ has a monitor who is investigating continuously perceived or alleged violations of the consent decree. There obviously is another track, which is legislative potential, and we've talked about some of those; I mentioned a couple of bills that are being considered. I'm not sure those bills will get done, but in the main, we view those bills as positive. Frankly, I think anything that moves forward and ends the negative speculation about the regulatory side is positive because we do not perceive it nearly as big a risk as the market proceeds to be. On the business itself, it is hard to project what the consumer will do, and you can imagine recession scenarios and the like. But we see none of that. We see strong demand, and we see it going forward with upcoming tours and our expectations; as I noted, the business is going to continue to grow.

Operator, Operator

The next question is coming from Stephen Laszczyk of Goldman Sachs.

Stephen Laszczyk, Analyst

Maybe one on F1 sponsorship for Stefano. It seems like you're finding a fair amount of success in stepping up some sponsors and some more comprehensive packages. You had Paramount+, MSC, and LIQUI MOLY this past quarter. I was wondering if you could talk about this more—how much opportunity do you think there is as you look out across your sponsorship portfolio to step more sponsors up? And if there's any constraints, especially with there being ten global partners already that could limit us?

Stefano Domenicali, President and CEO of Formula One

Well, thanks, Stephen, for the question. I think that we always need to look behind to understand what we are doing today. I mean we were talking about all the four official partners just two years ago. Now we are heading to ten official partners plus an incredible group of technical projects that are part of our family. I think that our main goal is to connect with potential business partners that are interested in developing business together. But in any case, we don't have to overcrowd our group in order to offer what they need. It's up to us to prepare for them different packages with different countries with different experiences, with different opportunities. This is what we are doing, and the fact that we are so strong at this moment indicates that the pipeline is still very soluble for the future, providing us with the clear ticket to work on the digital landscape to offer different propositions in different markets as one of the opportunities that we have today, as well as including other categories that are interested in coming back to Formula One. So I would say now the real focus is not to just add more but ensuring that each of our partners receives the right qualitative response to their questions. And I think that another relevant aspect is that it shows we are serious about sustainability, as no one will invest today in a business that is not credible in this regard. Therefore, that is another constructive push as we work together to strengthen our positions.

Stephen Laszczyk, Analyst

Great. And then maybe one for Greg. Could you just update us on the way you're thinking about capital allocation at Formula One, now that you had to trigger on your term loan this quarter? Should we expect this to give you some more flexibility from this point going forward to ramp leverage back to more historical levels?

Gregory Maffei, President and CEO

Well, thank you, Stephen. I think, look, we are pleased to have triggered the reduction. Honestly, that's a nice benefit, but it has not been what's driving our thinking about capital allocation. We are looking for and believe we will find attractive opportunities for our cash generation. I talked about some of those in the past, including the Vegas effort, which I think is going to generate a good return, ancillary businesses around which are synergistic and around our existing business, and the potential for return of capital versus share repurchase. As I noted, we effectively did that this quarter for just over 3 million shares to the intergroup interest settlement. So I expect you'll see us look at all of the alternatives above. Again, it was nice to click off the 25 basis points reduction, but that wasn't what drove our thinking. It's really the strength of the business, which is generating the capital.

Operator, Operator

The next question is coming from David Joyce of Seaport Research Partners.

David Joyce, Analyst

A couple of questions. First on Formula One, what's the current view of Formula One, the league, and FIA and F1 teams related to the potential addition of new teams? What are the gating factors from here? And then secondly, if you could provide any update on your views of what's happening with the regional sports network as it pertains to Atlanta Braves?

Gregory Maffei, President and CEO

I'll let Stefano handle the first part, and I'll handle the second question.

Stefano Domenicali, President and CEO of Formula One

Thank you, Greg. I mean with regard to the situation of a new team potentially entering or being interested in F1, as I've always said, there are some who are quite vocal, and some others who are quite silent. As you may know, David, there is a process in place that has been activated by the regulator to see and collect the interest of other partners to be part of Formula One. The first step will be finished, I think, within the middle of May. Then there will be an analysis done properly, checking the technical visibility, the financial visibility, and then we're going to have the discussion to see if any kind of potential entrance will fit into the equation of creating more value for the sport. That is something we're going to take the decision on at the right time within the end of this year. That's the plan. Of course, that is once again showing the growth of Formula One. I mean just a couple of years ago, the number of teams was very small, actually almost none. Today, the value of the franchise is very high. We have the duty to protect the business and make the right decision.

Gregory Maffei, President and CEO

And regarding the RSN, look, obviously, it's a difficult situation given Diamond's filing. That having been said, we continue to receive payments from our Sports South contract. That is not true for some other RSNs out there, but my understanding is that three or four have not received payments from Diamond. That, I think, reflects the fundamental strength of the territory we have and the interest in the Braves, such that our understanding is we have a profitable RSN. It's unlikely that Diamond will view us as an executory contract which they wish to reject. Even if they were to reject it, which I again don't expect, I think there are other alternatives we could construct in the marketplace that would enable us to get paid and have our products shown to our fans, which is really the most important thing. We're prepared, if we have to, to go out and exercise those alternatives.

Operator, Operator

The next question is coming from Matthew Harrigan of Benchmark Company.

Matthew Harrigan, Analyst

Live Nation among its other acquisitions has the absolute home run acquisition of OCESA for Mexico and Colombia. I think they said that in Asia, they were like 50% of AOI growth in the quarter year-over-year. Do you see there are many other targets out there to expand internationally as the music business is just now unbelievably globalized given the cross-market appeal of artists as Michael and Tino talked about yesterday?

Gregory Maffei, President and CEO

Thank you, Matthew. You're right, OCESA is a great deal, and it's nice that Autodromo Hermanos business, who is also our partner in the Formula One Mexico City Grand Prix, is acting so successfully. There are other targets out there, probably not as many with the scale of OCESA that we could get done because of potential regulatory issues. Live Nation has a long history of successfully adding primarily promoters into the fold, usually in some point of a partnership agreement where the management stays involved, but we take some ownership interest as well. I expect you'll continue to see that either in venues or promoter relationships as we continue to take advantage of the strength of our business and our ability to try to offer both fans and artists a global product. The more we can fill in our global footprint, the better for both of them.

Operator, Operator

I think we're done. To our listening audience, again, thank you for your interest in the Liberty Media Companies. We look forward to speaking with you next quarter, if not sooner. Have a great weekend.