Earnings Call Transcript - BATRA Q2 2021

Operator, Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation 2021 Q2 Earnings Call. As a reminder, this conference is being recorded, August 6. I would now like to turn the conference over to Courtnee Chun, Chief Portfolio Officer. Please go ahead.

Courtnee Ulrich, Chief Portfolio Officer

Thank you. Before we begin, we'd like to remind everyone 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 or Liberty Media Acquisition's Form S-1 registration statement filed with the SEC. These forward-looking statements speak only as of the date of this call and Liberty Media and Liberty Media Acquisition expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media or Liberty Media Acquisition Corporation's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is made. 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.

Gregory Maffei, President and CEO

Thank you, Courtnee, and good morning to all of you. Today speaking on the call, we will also have Formula One's President and CEO, Stefano Domenicali; and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling. So beginning with Liberty SiriusXM, we continue to repurchase shares purchasing $141 million across LSXMA and the K shares from May through July. The discount remains, and we, therefore, repurchased at a look-through price on SIRI of just over $4 per share. We continue to take advantage of the discount opportunity, and I expect we will continue to do it going forward. And our ownership of SiriusXM is 78.1% as of July 23. Looking now at Sirius itself, they had outstanding results for the quarter, another beat and raise with record low churn at 1.5%. EBITDA also set a new quarterly record and new car penetration increased to 82%. We have a continued focus on growing the already strong presence in the car. There are 140 million vehicles on the road today which are enabled for SiriusXM and the 360L enhanced feature set continues to evolve based on data received from users. We're also growing engagement outside of the car and the rebranded SXM app is gaining traction. The variable margins are as good or better than satellite. I encourage you to get it today. And please don't forget, we are growing our advertising platform with 150 million listeners, the largest digital audio ad platform in North America. With all these combined platforms and capabilities, we believe SiriusXM presents a compelling comprehensive offering for talent, media and social brands to create and monetize audio experiences. So turning to Live Nation. The reopening accelerated led by outdoor concerts in the U.S. and the U.K. with other countries coming along as vaccination levels increase. Festivals and amphitheaters are the focus for the summer, led by Lollapalooza, Rolling Loud, the Hip Hop festival in Miami, Latitude in the U.K. Between them, they all had 750,000 fans, which is back to pre-COVID levels. Live Nation is helping to put on the New York reopening concert in Central Park on August 21. And Veeps, our streaming service, continues to be an incremental live revenue stream for us with the Bob Dylan show later this month. Live expects all segments to return to AOI profitability in the second half of '21. And all signs continue to point to a great 2022, and we expect 2022 activity and financial results will exceed 2019. Turning now to the Formula One Group. There was phenomenal racing in the first half of the season up until the summer break with a fierce battle between Lewis and Max. Among the rest of the drivers, there is a tight competition for third and the Constructor's Championship is also highly competitive with Mercedes and Red Bull going wheel to wheel, and McLaren and Ferrari battling for the third spot. We remain impressed with the way Formula 1 continues to navigate the continued challenges from the pandemic. I have lost count of how many times we have made changes to the 2021 calendar, but we continue to move forward. And the Formula 1 team continues to plan for the known and unknown variables that come at them. We did welcome a full crowd at Silverstone; 356,000 fans over the weekend, which was tremendous. And we remain confident in our ability to have a full '23 race season. We also had our first sprint event there, which was a resounding success. We make meaningful progress on sponsorship and we continue to do. And we're consistently announcing new partners. And if you haven't already, I encourage you to tune into the Business Breakdowns podcast with Stefano, where he's quite articulate about the future of the business. The link to it is on our IR homepage. The Braves, baseball fans nationwide, but particularly in Atlanta and here in certain parts of Colorado, were devastated to see Acuña end his season early. We do wish him a speedy recovery. The team has been battling despite setbacks. We had an impressive comeback last night to sweep the Cardinals and the Braves are now over .500. Truist Park fans are back in a big way. We expanded the capacity of 100% in early May. Baseball revenue per home game is up in the second quarter compared to 2021, despite only partial capacity early in the quarter. Ticket sales, concessions and retail per caps are all trending very favorably. We are having trouble keeping jerseys in stock, a high-quality problem. The Braves do lead Major League Baseball in total attendance at over 1.5 million and average attendance at over 29,000 per game. With our financial strength, we are reinvesting in on-field talent before the trade deadline. You saw us do that rather. And at the Battery, development revenue continues up in the quarter due to rental income for new tenants for TK and Papa John's and the end of COVID-related modified rents. You'll also see the Phase 2 office tower. We are confident it will be fully leased in the near term. And thyssenkrupp will move into their new headquarters later this month. Finally, we continue to make good progress on LMAC, the SPAC. We think the trends in the SPAC market, which are challenging for many, actually played to the benefit of Liberty.

Brian Wendling, Chief Accounting and Principal Financial Officer

Thank you, Greg, and good morning, everyone. Liberty SiriusXM Group had attributed cash, restricted cash and liquid investments of approximately $418 million, excluding $1.1 billion of cash and restricted cash held at SiriusXM. We also have $1.1 billion of undrawn margin loan capacity at the parent level related to our SIRI and Live Nation margin loan. Note that a portion of our cash will be used later in 2021 to repay our 2.25% Live Nation exchangeable bond. Based on the fair value of the liability at quarter end, the amount of cash used would be $517 million. As of August 5, the value of our SiriusXM stock held at Liberty SiriusXM Group was over $20 billion. And the value of the Live Nation stake was nearly $6 billion. We have $3.2 billion in principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $14.1 billion, which includes the $9.9 billion of debt that's held directly at SiriusXM. Formula One Group had attributed cash and liquid investments of $1.7 billion at quarter end, which excludes $537 million of cash held directly at F1. The corporate cash balance includes $384 million that was received from LSXM in Q2 related to settling out the call spread. Total Formula One Group attributed principal amount of debt was $3.4 billion, which includes $2.9 billion of debt at F1, leaving $546 million at the corporate level. F1's $500 million revolver remains undrawn. While we are still in the period of a covenant waiver at F1, target leverage for the business remains 5 to 5.5x. Please note that during the 3 months ended March 31, 2021, F1 began reclassifying certain components previously reported and other revenue into primary F1 revenue to better align with the way it currently evaluates the business. Components reclassified in the primary F1 revenue include F1 TV subscriptions, F2 and F3-related fees, broadcast origination and support fees and digital advertising among others. Additional detail, including the impact of the revenue reclassification for the years ended December 31, '19 and '20, can be found on Schedule 3 of our earnings press release posted to our website. Lastly, to the Braves. At quarter end, the Braves had attributed cash, liquid investments and restricted cash of $231 million and attributed principal amount of debt of $694 million. Liberty and our consolidated subsidiaries are in compliance with their debt covenants at quarter end.

Stefano Domenicali, President and CEO, Formula One

Thank you, Brian. The 2021 season is exceeding expectations across the board. Each weekend on the track brings drama and the unexpected. The Hungarian GP did not disappoint as Ocon claimed his maiden victory and Alpine's first as the newly branded team, and Alonso impressed with his expertise holding off Hamilton for numerous laps. The rivalry between Lewis and Max continues to build in their tight race for the championship, which culminated with the incident at Silverstone, and with the unpredictable outcome on Sunday, Hamilton and Mercedes enter the summer break slightly ahead in the standings. The battle for third is tight between Norris, Bottas and Perez. The contest among the constructors is just as fierce between Red Bull and Mercedes for first and McLaren and Ferrari for third. Formula 1 is living up to the promise and the fans are responding. We had a full crowd at Silverstone, hosting 356,000 over the weekend with 140,000 on Sunday. This sort of attendance is unrivaled in sports. Attendance was certainly aided by the tight battle for the Championship, the inaugural F1 Sprint event that produced compelling racing, and the return of the Paddock Club. On the Sprint, the first of 3 events this season, we have received overwhelmingly positive feedback from the teams, drivers, and fans, and certainly this provides additional opportunities for our promoter, media and sponsor partners. We will continue to discuss any lessons learned from the format with the teams, but the fundamentals are strong. We believe this can be expanded in 2022 and look forward to the next Sprint in Monza. Fans are engaging across all platforms. We have data through to the British Grand Prix and on the digital front, unique users for the F1 website and app this season are up over 80% compared to 2020. Social engagement continues to grow, reaching over 40 million social interactions for the British Grand Prix. And we've seen this growth reflected in our total number of those following F1 on social media, which now stands at almost 42 million. TV audiences are tuning in, and we have seen strong growth over 2020 and 2029 in many markets, notably, France, the Netherlands, Norway, Spain, Sweden, and the United States. F1 TV remains a great way for fans to catch all the actions of the race weekends. Peak concurrent views for race days have consistently been more than 2.5x higher than the 2020 season average with minutes viewed over a race weekend, also up by more than 2.5x versus last season. We are now 11 races into our planned 23-race season. This time last year, we had only completed 4. 2021 has presented some of the same challenges as 2020, along with some new ones. I'm proud of our team and our partners as we continue to navigate the landscape. On our last earnings call, the Canadian Grand Prix had just been replaced by the Turkish Grand Prix. However, due to travel restriction related to Turkey, we had to quickly pivot again and secure back-to-back races in Austria by moving the French Grand Prix a week earlier. Ultimately, we were still able to secure a slot for Turkey later in the calendar as a replacement for the Singapore Grand Prix. All of these changes require great nimbleness, creativity and hard work from our partners and the countries in which we race and live. Formula 1 has a demonstrated ability to manage the logistics of COVID restrictions in multiple countries and has set the gold standard in testing and effective protocols to deal with positive cases. Through the British Grand Prix, we have conducted 56,000 tests on drivers, teams and personnel that produce 38 positive cases for a positivity rate of 0.06%. Through these finely tuned operations, we feel confident in our ability to safely deliver a 23-race season. Demand to host Formula 1 races persists at an all-time high as evidenced by venues that were quickly able to finish slots in 2021. And we will still have interest from new venues that are now currently part of the 2021 calendar and existing venues that are open to hosting a second race. As different parts of the world are at various stages of emerging from the pandemic, governments view an F1 race as an exciting way to return to the public stage and welcome visitors back. We have made tremendous progress in 2021 in sponsorship and the momentum has continued since our last earnings call in May. Crypto.com joined as a global partner and inaugural partners of the F1 Sprint series and will become the official cryptocurrency sponsor and as the NFT partner of F1. They will present a brand new award that will be announced ahead of the Belgian Grand Prix. We have also welcomed BWT as the title sponsor of the Austrian double-header and last week announced that they will become F1's official water technology partner, working with F1 to deliver a single-use plastic-free paddock by 2025. Workday signed on as the regional finance and HR enterprise partner of F1 across the UK and Germany. Finally, we completed a multi-year extension to our Fanatics deal covering e-commerce and manufacturing, following outstanding performance on our F1 online store. Sales on the official online F1 store grew by more than 40% in 2020 and accelerated to triple-digit growth through the first 6 months of 2021. The U.S. market is the largest in terms of sales on the F1 side, highlighting the increased relevance of the sport in the country. Furthering our goal to expand our reach, we announced that Formula 1 car and liveries for all 10 F1 teams will feature in the video game Rocket League's latest Fan Pack, beginning a multiyear partnership. We are less than halfway through the 2021 season, but planning for 2022 has been ongoing for some time. As mentioned before, there is a high demand for venues to make the 2022 calendar, and we hope to announce the provisional calendar in September, October. We can confirm that the much-anticipated Miami Grand Prix will happen in the first half of May. Demand for these tickets is high, even though sales that have not officially started. We also look forward to our move to St. Petersburg for the Russian Grand Prix beginning in 2023. These iconic cities will provide a stunning backdrop for Formula 1. We have previously discussed the foundations that were put in place over the last few years with cost caps, regulations and the new Concorde agreement, which have created a sustainable and flourishing ecosystem for the sport. These, along with the compelling products on the track, have created interest and opportunities across the board. This includes ongoing discussion at the highest level with engine manufacturers who see the brand value in Formula 1 as well as opportunities for the new engines and development of sustainable fuels. Along these lines, we continue to develop programs under Formula 1's #WeRaceAsOne initiatives. For the British Grand Prix, we delivered a carbon neutral broadcast. We plan to take these learnings as we work towards our goals for ensuring all F1 events are sustainable by 2025 and on our way to become net-zero carbon by 2030. We have also seen great interest from OEMs in our plans for the next Formula 1 engine to be 100% sustainably fueled and those positive discussions are continuing. For our focus to increase diversity and inclusion across Formula 1, we have recently announced commitments relating to 10 engineering scholarships for underrepresented groups and apprentice and internship programs within the F1 organization. We believe that as a truly global sport, we can make a difference by ensuring that we are a diverse and inclusive in our own community as the communities we serve around the world. We thank Chase for his general donation to funding these scholarships. As we head into August break, I want to thank everyone at Formula 1, including all of our drivers, teams and business partners for their dedication and hard work so far this season. Enjoy some much-deserved time off, and we look forward to resuming racing on August 29. Avanti Tutta: full speed ahead. And now I will turn the call back over to Greg. Thank you so much. Bye-bye.

Gregory Maffei, President and CEO

Thank you, Stefano and Brian. In very exciting news, our investor meeting will be held on Thursday, November 18. The full experience will be offered in person at the New York Time Center and virtually. Please save the date. Additional details will be provided soon. Please note that all in-person attendees will need to be fully vaccinated against COVID-19. We appreciate your continued interest in Liberty Media and hope you all stay safe and healthy. And with that, operator, I'd like to open the line for questions. Thank you.

Operator, Operator

And our first question will come from Ben Swinburne with Morgan Stanley.

Benjamin Swinburne, Analyst, Morgan Stanley

Greg, just to clarify, is it November 18 or August 18?

Gregory Maffei, President and CEO

November 18. Did I say August?

Benjamin Swinburne, Analyst, Morgan Stanley

You did, yes, which I thought you meant November. So thanks for clarifying and I'm excited for in-person. I have two questions. Greg, regarding the discounts, I know this isn't a Liberty Broadband call, but it's relevant for Liberty Sirius. The discount has not improved and may have even widened since the buyback started. I'm curious about your thoughts on this as we consider the opportunity to address the discount at Liberty Sirius, especially since SIRI will have access to more capital in the next quarter or two. Also, you mentioned in the release that Formula 1 TV is contributing to revenue growth. It seems like that product shifted from being a major focus to fading a bit. Given COVID and the sport's increasing popularity, what is your vision for it? Are you investing more in it? Do you see it as a significant revenue opportunity or more as an enhancer of the core rights and a driver of engagement? Can you update us on your thoughts about the OTT streaming product right now?

Gregory Maffei, President and CEO

Thank you, Ben. Regarding the discounts, I'm aware of the situation with Liberty Broadband. During the quarter, Charter increased by about 15%, and our net asset value per share of Liberty Broadband related to Charter rose by approximately 17% as we were able to acquire shares at a discount. We are effectively increasing the net asset value of Liberty Broadband at a faster rate than Charter itself. I believe this will lead to positive outcomes. Good things come to those who wait. While we are not suggesting that everyone should wait indefinitely, we believe this will ultimately benefit us. We can already see the mathematical results in the net asset value per share of Liberty Broadband compared to Charter. We anticipate having more capital in the coming months and look forward to seeing how that develops. On the vision for F1 TV, it has evolved. I'll let Stefano comment as well. The significant amount of content we have has led us to consider whether it would serve as a meaningful connection to our customers or an enhancement. I believe it will primarily be an enhancement, and how much of it generates additional revenue or fosters customer engagement will develop over time. We've observed the success of WWE moving into Peacock, where the volume of content is considerably greater than ours. It's challenging for a standalone service to think it could replace what we currently have with scaled aggregated services, be they linear or digital. Ultimately, those will likely be our main sources of revenue, but we will seek additional ways to add value and generate revenue through options like F1 TV. I hope I didn't take away from your points, Stefano.

Stefano Domenicali, President and CEO, Formula One

No, Greg. I think that you're perfectly spot on. And I think, Ben, if I may add on what Greg has said is F1 TV has a huge potential to make sure that we can enhance the experience with more and more content for our customers. And we are exploring projects together with our promoters to give real and live content we can offer in a special position to the ones that attended to the event and then extend the appetite of having unique content on our platform in order to grow that experience because that's really an incremental way of adding more and more appetite and content for people that love Formula 1. On TV, we have completed many of our major deals, which puts us in a great position to observe its evolution. This evolution is not uniform across regions, and we believe that OTT development will certainly make a significant impact in the future. We have the largest content prepared, allowing us to leverage our current productions to ensure we are ready to take full advantage of the strong position Formula 1 is in today.

Bryan Kraft, Analyst, Deutsche Bank

I have one for Stefano and one for Greg. Greg, curious if there's anything from the infrastructure legislation that could be an opportunity or risk for Liberty that you're watching, whether it's something for an existing portfolio company or a new opportunity for Liberty to invest behind? Sort of an open-ended question, but curious on your thoughts there. And then Stefano, sports betting was one of the opportunities that Chase had identified when he first became CEO. And I'm just wondering if you could give some perspective on that opportunity for Formula 1 going forward and any plans or activity that you have going on in the sports betting area?

Gregory Maffei, President and CEO

Touching on the infrastructure bill, we've already addressed many LBRD questions in the LMC call, but I believe there are opportunities that will emerge, primarily at Charter or GCI. In terms of our businesses, I don't expect significant changes at SIRI. While greater connectivity is likely beneficial for our 360L, it's a marginal improvement rather than a significant opportunity on its own. It's more about the continuation or acceleration of existing trends. For the remainder of our businesses, such as Formula 1 and the Braves, the benefits of the infrastructure bill are not as clear. Of course, there are opportunities at Broadband, Charter, and GCI related to increasing customer funds for broadband and expanding our broadband footprint, but there are also risks as new competitors may be encouraged. Overall, the bill has its pros and cons for Charter and GCI. The situation could have been much worse given some of the initial proposals. The threat levels now appear significantly lower compared to earlier suggestions that favored fiber over coax, prioritized overbuilds, or were supportive of municipal bills.

Stefano Domenicali, President and CEO, Formula One

If I may, Bryan, on your question with regards to betting, first of all, we don't have to forget that we have already one partner is 188BET that we are working together. But as you know, the area of betting is an area with a lot of issues depending on the region and the country. And we need to make sure that everything is really clear on that side. For sure, it's a big opportunity that could be explored in the future. So once again, working in progress to make sure that the next step of our partnership will be the right one in terms of dimension, opportunity that could be good for our sport.

David Karnovsky, Analyst, JPMorgan

On Formula 1, Stefano, can you discuss in more detail your takeaways on the sprint race format, both in terms of how you think it was received by the fans but also by your partners on the race promotion and television side? And I think you mentioned maybe expanding the format next year. Any sense for how many races you roll this out to? And then maybe one for Greg. You mentioned good progress on LMAC. I know you're somewhat limited in what you can say on this, but is there any more color you can provide on it or your position in the SPAC market overall?

Stefano Domenicali, President and CEO, Formula One

Thanks, David, for the question. First of all, regarding the big sprint format, we aimed to introduce something new for all stakeholders in Formula 1. We planned three tests: one has already taken place in Silverstone, the next will be in Monza, and the final one will be at the end of the season in Brazil. After these tests, we will develop a plan for the next steps. I can already share that the feedback from the first sprint event in Silverstone has been overwhelmingly positive from drivers, teams, and the media. Additionally, the promoter is pleased as we have new content each day. Fans arrive on Friday excited for the first qualifier. Overall, the results from the first event have been very good, increasing attention and interest from TV and partners, including Crypto.com, which has positively impacted our finances. So, there have been encouraging signs, and we want to emphasize our intention to provide a comprehensive update at the end of the season. We have a future plan in development, taking into account the feedback we've received. If we continue in that direction, I believe we will not have this format at every race, but we have ideas to create special promotions for specific Grand Prix and unique awards to enhance the already fantastic Formula 1 platform.

James Ratcliffe, Analyst, Evercore ISI

I have two questions, one regarding LSXM and the other about Formula 1. First, can you provide an update on how many attractive sponsorship opportunities are still available? Secondly, concerning Liberty Formula One, I noticed that you repurchased $140 million in stock during the quarter. With the expectation of receiving tax-free cash flows from Sirius at the end of the year, why not accelerate the buyback now? You currently hold around $1 billion in debt from margin loans, along with the substantial value of the Sirius stake. Why not increase the buyback activity now instead of waiting until you can access the cash tax-free?

Stefano Domenicali, President and CEO, Formula One

Thank you, Greg. James, I mean, from my perspective, we have seen already great momentum this year in the sponsorship growth that is connected to all what we have seen in the championship. But going to your direct question regarding to how many verticals you believe there could be still open in our global partners, I would say maybe 1 or 2. And maybe the one on which we are working on that is very important for us is the technological provider. That is something related to our possible commercial offer that we want to exploit to a great broadband that can be available around the world. That's mainly, I would say, the most important one that I think will be important for us to work on.

Gregory Maffei, President and CEO

If I could add on sponsorship, I think it's an evolving market. And we certainly see new categories and technology, as Stefano pointed out, is one. When we bought the business nearly 5 years ago, I don't think we thought about a crypto sponsorship. I don't think that was really on our horizon, and now it's a meaningful number. So I think new categories are created, things change. BWT was a team sponsor. Now they're one of our sponsors. Things move around. So I'm not sure it's static that can answer that is this many or this number. I think it moves around, and there are lots of opportunities still out there, and it's our challenge to go in and pursue them. On the question about LSXM, we have been ramping up and we do have a plan in place. We will receive more capital as it comes in. The way we support the debt at LSXM is mainly through flows from Sirius, as we don’t have an operating business there. We have been cautious with margin debt and similarly limited in how much we can do with exchangeables given our current liquidity. You can expect a more aggressive plan considering what is on the horizon, but those have been some of the factors holding us back.

David Joyce, Analyst, Barclays

I have a couple of questions. First, regarding Formula 1, given the changes in the race schedule this year, have the race promotion contracts been renegotiated based on the capacity regulations, or are they fixed with the expectation that some royalties will be received later next year? Additionally, do you anticipate achieving a normal capacity and race promotion revenue level by the fourth quarter? Second, I have a question about Liberty Sirius related to your options. If you were to sell into a Sirius share buyback program once your ownership exceeds 80%, would those stock sales be tax-free, or would there be any tax implications?

Stefano Domenicali, President and CEO, Formula One

Okay. Thank you, Greg. David, as you said, the fluidity is really the thing that we have to manage this year. And we are heading into the second part of the season where that will be a topic. The good thing is that it's a situation we have to manage is unique, different because every agreement is different from the one that we have, country by country, place by place. I have to say that, of course, the effort is always to make sure that from all the points that we need to manage and of course, also on the financial side, is to optimize the dimension of it and minimize any negative possible impact we can have. We have agreements where, honestly, the number of attendees doesn't mean anything to us. Some others we are working together to see what would be the benefit if we can bring home depending on the situation. And we are working closely with all the promoters and the authorities to make sure that we can really make the right plan for the future, knowing that, as Greg was saying before, the situation is evolving continuously. And the thing that we can say so far today is that we didn't have any material cash impact on our numbers.

Gregory Maffei, President and CEO

I agree with Stefano's comments. We collaborate with our promoter partners to maximize the audience safely at each race, which in turn affects our revenue. The market is changing every day. It's difficult to predict with factors like Delta and Lambda at play. We aim to boost attendance while ensuring safety. We briefly touched on LMAC and our excitement about Formula 1; however, I have limited commentary available. Our views on the SPAC market align with those of many investors and analysts on this call. It has become increasingly challenging to raise SPAC funds and finalize deals due to difficulties in the pipe market and widening discounts from fair trading value. This situation has likely eliminated some weaker players. There are deals that were proposed at certain prices that did not close, even below those prices. I believe this trend may benefit us since we have a strong investor group in LMAC that is willing to participate in a pipe with us. Additionally, unlike many sponsors who are primarily incentivized by profit, we are committing at least $250 million to the deal and could invest more if a suitable opportunity arises. Our role as a pipe investor alongside other investors seems to be reassuring. I've been approached by several firms expressing interest in partnering on a deal. There is ample capital available for the right opportunity, which may require more funding to scale compared to a typical IPO, likely due to COVID recovery. While we've encountered many such opportunities, we have yet to find the ideal deal at the right price, but I am optimistic that we will. Regarding selling into the buyback, our tax implications will depend on whether we sell to the company, which we currently have no plans to do, or if we sell on the market. The former would be tax-free, while the latter would incur taxes.

Jason Bazinet, Analyst, Citi

I think this is going to be an easy question for you to answer. But if I just fast forward a bit and we get to the point where there is some sort of equity exchange or takeover between LSXMA and SIRI, where we get the one operating business and one security. Is it obvious to you which one of those is the surviving entity? Can you just talk about the pros and cons?

Gregory Maffei, President and CEO

Thank you, Jason. I don't think it's an easy question. It's not clear. You could envision situations where SIRI operates as a subsidiary of Liberty with its own tracking stock, or where there is a Reverse Morris Trust arrangement, and our shares are eventually distributed to our shareholders, making SIRI a publicly traded company. Both scenarios are certainly possible.

Operator, Operator

And our last question will come from Matthew Harrigan with Benchmark.

Matthew Harrigan, Analyst, Benchmark

Now where I get to the default raised question. Stepping back from the phrase and looking at MLB. Overall, you've got good new TV contracts, 28, albeit pretty fast even the non-baseball team, plus you have some real issues over a longer period of time with ratings for the sport and the competition in the field. Do you think Manfred and the owners group overall are amenable to really draconian measures like maybe even moving back the pitcher's mound to get more excitement into the game? I know that's kind of a fourth question, but it translates to financials over a period of time as well.

Gregory Maffei, President and CEO

Thank you, Matthew. We are very enthusiastic about the Braves. There is ongoing effort led by commissions involving owners, representatives from MLB, and player representatives to make the game more thrilling. Much of this effort focuses on increasing the pace of the game to shorten playing times. You’ve seen changes like double-headers being reduced to 7 innings for a limited time. There were also changes during the pandemic, such as starting a tie game with a runner on second base, among others. Clearly, there are initiatives to quicken the pace. I don't believe we will see moving the pitcher's mound happen anytime soon, but everything remains on the table. People value the game's traditions but also seek to enhance excitement, and we aim to find a balance between the two. Thank you to our audience and those who posed questions. We look forward to connecting with you next quarter, if not sooner, and at our investor meeting in November, just to clarify. Thank you very much.

Operator, Operator

That does conclude today's call. We thank you for your participation. You may now disconnect.