Liberty Media Corp Q4 FY2021 Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation 2021 Q4 Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a Q&A session. As a reminder, this conference is being recorded February 25. I would now like to turn the conference over to Courtnee Chun, Chief Portfolio Officer. Please go ahead.

Good morning. 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 acquisitions 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'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 and 2 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.

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's special dividend. We expect our share though to be about $770 million net of a pass-through to bondholders. We did continue during the quarter repurchasing shares, buying back $189 million across LSXMA and LSXMK shares from November through January. As you know, the discount remains and we therefore were able to repurchase our shares at a look-through price of just over $4. We will continue to take advantage of the discount opportunity. We also settled the exchange of our 2.25% Live Nation exchangeable in January for a consideration of $664 million using cash and some margin loan draws. Looking at the underlying business SiriusXM, they recorded record results for the year, record high subs revenue and adjusted EBITDA. And also experienced the fifth straight year of improving churn. New car penetration is up to 82% from 78% in the prior year. And we launched 360L in more than 30 new vehicle models across various OEMs in 2021. Now more than 25% of SiriusXM-equipped vehicles sold in the fourth quarter incorporated our new 360L opportunity. We also teamed up with Apple and Discovery during the quarter adding 12-month subscriptions to Apple Music and Discovery Plus for new and existing Platinum VIP plan subscribers. We introduced AudioID powered by AdsWizz, a listener identity solution enabling marketers to reach and connect with consumers at scale. Stitcher went live with distribution and monetization of the popular Crime Junkie podcast in January. We launched new exclusive artist channels including Alicia Keys, David Bowie, and Neil Young, and we had a Small Stage Series of intimate live performances which featured premier artists spanning music generations, including Ed Sheeran, The Go-Go's, H.E.R., J. Cole, and John Mayer, and more. So, a busy quarter. At Live Nation, a great quarter as well. Fan attendance at outdoor events in the U.S. and U.K. in the last five months of 2021 was up 25% versus the same period in 2019. On-site spend per capita continues to grow at a double-digit rate versus 2019, and ticket sales in October, November, and December were the top three months ever in terms of GDP. We have expanded our venue portfolio as well, adding 31 new venues in 2021, half through the OCESA acquisition. Every leading indicator in the business reports points to a record 2022. Confirmed show count through February is up 30% versus 2019. We sold 45 million tickets for shows this year already, and no-show rates are back down to their 2019 levels. Live Nation is entering its strongest multiyear growth chapter in concert history. Looking at the Formula One Group, on the corporate side, we effectively repurchased 2.2 million FWONA and FWONK shares at an average per share price of $58.59. That included both FWONA share repurchases and an effective share repurchase of FWONK shares due to the purchase of the underlying $64 million of FWONK cash convert that we bought. And now let me turn to F1 and first address the circumstances in Russia. I'm sure you saw our statement this morning. As we said, we are watching the situation with sadness and shock and it's impossible to hold the Russian GP in the current circumstances. Turning back now to 2021, what a cliffhanger ending to a thrilling season. And since then we've had a month of announcements coming out of F1 with more to come. Fans are attending and tuning in. Even with COVID affecting a good chunk of the season, we saw very strong attendance and tuning across many platforms, with 1.55 billion cumulative TV viewers, with the highest race viewership being 109 million in Abu Dhabi, which rivals that of the Super Bowl. Average attendance was up 14% on like-for-like races. Once again, we saw great growth in social media followers, making F1 once again the fastest-growing major sport on social media. We signed numerous race renewals at desirable locations, showing continued strength in our contracted revenue, and we continue to further our sustainability initiatives. F1 came in at number two out of 102 Global Motor Sports championships evaluated by the FIA on a Sustainable Championship Index, ahead of many such as Extreme E, MotoGP, and NASCAR. We are ready to kick off our record-breaking 23-race 2022 season and we hope to see you at some, if not all, of the races this year. Turning now to the Braves. We capped off an incredible 2021 with our World Series title. But in addition to that, we had 239 home runs, which ranked second in the National League. We had a 3.88 ERA, which was the second best in the annual leagues, and there are too many player accolades to even name. The World Series trophy tour will visit 151 stops, celebrating the 151 seasons of Braves baseball. We will start 2022 with the highest number of season ticket holders in 22 seasons since 2000. We are sold out of our premium seats for the first time in Truist Park history, including all the suites. Truist Park will hold five stadium concerts in 2022, its highest ever. The TK Tower and Innovation Center grand opening took place on February 9th. In 2021, the Battery had close to nine million visitors, including 330,000 during the three World Series games. We also closed on the sale of the Minor League teams in January. The geographic alignment of the teams is important, and the Major League reorganization of Minor League last year ensured that this will continue. The teams do remain affiliates for future player development. Let me just address the CBA for one moment. We are certainly aware of the latest developments in our discussions with Braves management but are obviously prohibited from commenting any further. We continue to review opportunities for LMAC and SPAC. As I've said before, we do believe the turbulence in the SPAC market has made deals more difficult but will ultimately benefit Liberty and our strength. And with that, let me turn it over to Brian for more financial results.

Thank you, Greg, and good morning, everyone. As Greg mentioned in January, we settled exchanges on the 2.25% Live Nation exchangeable bonds for a total consideration of $664 million. This was funded with cash and margin loan draws, including drawing in part on our newly amended Live Nation margin loan, which had upsized in Q4 reflecting appreciation in the underlying Live Nation share price. Pro forma for the exchanges, Liberty SiriusXM Group had attributed cash, liquid investments, and liquid public debt and equity securities of approximately $143 million, which excludes $191 million of cash held at SiriusXM. We also had $925 million of undrawn margin loan capacity at the parent level. As of yesterday's close, the value of the SiriusXM stock held at Liberty SiriusXM Group was $19.4 billion, and the value of the Live Nation stock held was $8.7 billion. We have $3.1 billion in principal amount of debt against these holdings pro forma for the exchanges of the Live Nation exchangeable bonds. Total pro forma Liberty SiriusXM Group attributed principal amount of debt is $13.1 billion, which includes $8.9 billion of debt held directly at SiriusXM. Formula One Group had attributed cash, liquid investments, and liquid public debt and equity securities of $1.6 billion at quarter end, which excludes $709 million of cash held at Formula One. Total Formula One Group attributed principal amount of debt was $3.4 billion, which includes $2.9 billion of debt at F1, leaving $455 million at the corporate level. As Greg mentioned in the fourth quarter, we repurchased $64 million face value of 1% FWONK converts, effectively retiring 1.7 million of underlying FWONK shares. Formula One's $500 million revolver remains undrawn, and Formula One's leverage at the end of the quarter was 4.4 times, and we are revising our target leverage range down to be less than 5 times on a go-forward basis. Note, we are still in a period of covenant waiver until March of this year. As previously disclosed beginning in January of 2021, F1 began reclassifying certain components previously reported in other F1 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, as well as digital advertising, amongst other items. Additional detail, including the impact of the revenue reclassification for the years ended 12/31/19 and 2020, can be found in Schedule four of our earnings release posted on our website. At quarter end, the Braves Group had attributed cash and liquid investments of $142 million, which excludes $102 million of restricted cash that's on their balance sheet. Braves Group had attributed principal amount of debt of $700 million. At the end of the year, Liberty and all of our consolidated subsidiaries are in compliance with their debt covenants. With that, I'll turn it over to Stefano to discuss Formula One.

Thanks, Brian. The 2021 season will be discussed for decades to come as one of the greatest. It came down to not just the final race, but to the final match for Max Verstappen to edge past Lewis Hamilton and win his first World Championship. We look forward to this continued rivalry in 2022, between Max and Lewis, who will be returning to pursue his eighth World Championship, and we hope to see new drivers moving up the field to challenge for podiums more regularly. The action on and off the track brought in fans in-person and across all platforms. We sold 2.6 million stands in Grandstand around the globe, even sold we were limited in our capacity due to COVID. This includes three events with attendance of over 350,000 in the U.S., Great Britain, and Mexico. Eleven events attracted crowds of over 100,000 people. Our total cumulative TV audience over the season was 1.55 billion, an increase of 4% over 2020. The average audience per race was 70.3 million, with our biggest audiences of 108.7 million tuning in for the season finale in Abu Dhabi. Markets that saw significant growth in cumulative audiences were the Netherlands, Italy, the UK, Spain, and the U.S. Our Sprint events proved to be a draw with a TV average audience uplift of 70% for the weekend. Looking only at markets where like-for-like broadcasting arrangements were maintained across 2020 and 2021, the average audience was 60.3 million, up 13% year-on-year and the best since 2013. Please note that in 2021, despite our broadcasting arrangement in Germany and Brazil changing significantly, we saw positive developments. In Brazil, we are now enjoying far more in-depth coverage and more hours of F1 being broadcast than in 2020. In Germany, Sky's cumulative audiences in 2021 have seen significant growth of 55% year-on-year. Our digital reach was very strong. In 2021, social media followers grew 40% to 49.1 million, once again making Formula One the fastest-growing major sport league in follower growth. We tallied 1.5 billion engagements with 7 billion video views. F1 web and app unique users, video views, and page views were all up double digits. The digital share of video minutes consumed increased from 10% in 2020 to 16% in 2021. We look forward to the start of the season in March 2020 in Bahrain. We have a record 23-race season planned and are scheduled to return to many tracks we could not visit in 2020 and 2021. We are extremely excited to welcome the Miami Grand Prix to the calendar in May and have reached a unanimous agreement with the teams and the FIA to again have the Sprint at three venues this year; Imola, Austria, and Brazil. On the driver front, we look forward to the new pairing of Lewis Hamilton and George Russell, and we welcome a new driver from the grid with Guanyu Zhou joining Alfa Romeo, who will provide excitement and opportunity to engage and grow our fan base in China. Speaking of the 2022 season, there are many changes to the cars and regulations, all aimed at improving racing and increasing relevance to road car technology. The most visible change will be the switch from 13-inch to 18-inch tires with covers. This, along with the other changes to the regulations, aims to reduce the dynamic weight coming off the cars with the goal of allowing for closer racing and more overtaking. Safety is also a focus, and the new 2022 cars will be able to absorb more impact at the front and laterally. Additionally, more components of the car are now standardized, which should help keep costs down and promote closer racing. In addition, changes will also include the implementation of E10 fuel in the F1 cars, comprising 10% ethanol, which will reduce CO2 emissions, and a free zone performance development for the Power Unit starting March 1st. We have recently made many exciting announcements driving future growth for our sport. On the racing front, we extended race agreements in China through 2025; Singapore until 2028; Abu Dhabi until 2030; Spain through 2026; Bahrain until 2036; and Circuit of America through 2026. Each of these locations brings something unique to the calendar, and we appreciate this long-term partnership, where our sustainability goals will feature prominently. On the sponsorship front, it is a busy time with robust interest and a very strong pipeline of discussions ongoing. We expect to announce further details soon on a number of opportunities that have been progressing in the past few weeks. On media rights, due to the closure of business Fox Sports channels in October 2021, we successfully concluded nine new partnerships across Southeast Asia, securing new broadcasters in Hong Kong, Singapore, Indonesia, Malaysia, Brunei, Papua New Guinea, the Philippines, Thailand, Vietnam, and Myanmar. We also extended our existing partnership with Disney Japan and India. Additionally, we will have a new partnership in the Netherlands for the start of the 2022 Championship Season with the Viaplay, NENT's new streaming platform. The 2021 F1 Esports Series Pro Championship presented by Aramco also had a thrilling season. Mercedes' Jarno Opmeer clinched a second consecutive title and secured the Team Championship for Mercedes. The 2021 F1 season audience and the attendance figures broke viewership and engagement records, building upon the huge momentum gathered in 2020. The full series, which went throughout 2021, achieved over 23 million views across digital platforms, a 103% year-on-year increase. We are already on to the second step of qualifying for the 2022 Esports Series and look forward to another fantastic season ahead. We continue to invest in our ESG initiatives to address the biggest issues facing our sports and global communities. Sustainability is a major focus for Formula One and many of our promoters' partners are targeting areas where we can have the greatest environmental and social impact. Our initiatives can take many forms, including 100% sustainable fuels in the 2026 hybrid engine, renewable energy sources, targets around net-zero carbon emissions, reducing the capital footprint, increasing recycling efforts, significant savings on overall energy costs, and a large initiative working with our promoters' partners on event sustainability. A comprehensive ESG briefing note is posted on our website. I encourage you to read it. We recently announced our extended funding commitment to the Formula One Engineering Scholarship Program for underrepresented groups through 2025, part of our drive to increase diversity within the sport. This program was launched in 2021 with the selection of 10 scholars in the UK and Italy. Their scholarship covers the full cost of a student's tuition and living expenses for the full duration of their degrees. As part of a wider program of diversity and inclusion initiatives, Formula One has also committed to creating apprenticeships and internships across our business. In advance of the Miami Grand Prix, we launched the F1 in School STEM Programme in Miami Gardens. F1 in School is the largest STEM program in the world, operating in over 50 countries and providing hands-on interactive experience to develop key engineering and social skills. We were proud to announce that the W Series will continue to join us at eight Formula One races in 2022. The series will visit five new venues in 2022, including making a step in Asia. We believe in the importance of providing everyone the opportunity to reach the highest level of sport, and our partnership with the W Series demonstrates our result to build greater diversity across Formula One. It seems like we just concluded our thrilling 2021 season, but we are ready for the 2022. We believe in the new regulations and the changes to the cars, combined with old rivalries and new drivers, will provide more drama on and off the track. Get ready by watching Season four of Drive to Survive, which airs on Netflix on March 11. I wanted to tell you – full speed ahead. And now I will turn the call back over to Greg. Thank you.

Thanks, Stefano and Brian. And to the listening audience, we appreciate your continued interest in Liberty Media and look forward to a productive 2022. And with that, operator, I'd like to open the line for questions.

Thank you. We will take our first question from Vijay Jayant. Please go ahead. Your line is open.

Thanks. Good morning. A couple of questions on sort of buybacks. First on Formula One. Obviously, you have new leverage targets that you talked about today, but you have $2 billion of cash, a lot of free cash flow generation, and obviously EBITDA growth, at least that's what we think 2022 onwards. Can you just talk about how we should think about buybacks at Formula One going forward? Conceptually, we do sort of run to your new leverage target, which is way below that right now. So that's my first one. And then sort of on SiriusXM, obviously, they announced a special dividend. Curious to understand why special dividend versus sort of a buyback philosophically and you guys selling into the buyback. There's some leakage as you called out on a dividend. Is that really have to do with the Live Nation exchangeable payments this time? And maybe you revert back to another strategy there on return of capital? Thank you.

Thank you, Vijay. Lots of questions. Okay, we'll try. On the buybacks on FWON, you'd note I'm sure that we did execute buybacks on FWON effectively. And we're doing both liability management and buyback there when we repurchase those in the money converts. That's effectively both debt reduction and an equity buyback. You've seen that we have quite a lot of cash and free cash flow generation. And we do have an option to buy in terms of a board authorization on repurchase. I don't think we've ever said we're going to buy X in a quarter or we plan to buy X. But you can look at our history, what we've done with what we have for free cash flow and available cash and assume that we will act as we usually do in history. We are also looking to be fair at opportunities that FWON may help the LMAC to SPAC. So far those have been difficult, but we do keep in mind that there may be opportunities that arise outside just the share repurchase. But as you noted, we have quite a lot of cash and a lot of free cash flow. So I hope that's a round enough answer around our intentions and what other things might come and arise. On SIRI, SIRI I believe has stated that they still intend to do a buyback. Obviously, that's not entirely in our control. We are on the board, but there is an independent group of directors who also have the opinion on where cash flow should go. They do have their own constraints around how much they want to shrink their available float, and there are triggers at things like 90% that they probably are fearful of crossing in a hurry. So they have their own issues around share repurchase. We have our issues around selling into the buyback because it is actually not taxable to us unless we have a relationship directly with the company. That's complicated given some of the ongoing litigation. So if we were just to sell and maintain our equity position, that has the effect of looking like from a tax perspective a dividend. So the special dividend was not taxable to us, and we found it attractive both to help address some of the liability management issues that you pointed out, and to allow us to continue to share repurchase. Hope that helps answer some of your questions.

Thanks for that.

We will now take our next question from Ben Swinburne. Please go ahead. Your line is open.

Hey good morning. Maybe a couple on F1 and then if I could ask a Braves one as well. Stefano, what's the pipeline look like for race promotion or new host cities? Obviously, there's been a lot of news about Las Vegas. There seems like there's a ton of demand. Something you guys are replacing Russia with something else. Can you just talk about the outlook there? And can you expand the count beyond 23 races realistically? Are the teams on board with that? That's my first one. And maybe for you or Greg on the U.S. Media Rights deal that's coming up; you've had this great success with ESPN. How are you thinking about reach versus monetization? You've seen deals like the UFC on a fairly limited platform like ESPN Plus but a big fat check what's your priority as you look forward? And then I'll ask my Braves one after that.

Stefano, do you want to comment on races first? Yes. Stefano, go ahead.

It's okay for you, Greg? I will go ahead on that. So good morning from London. Thanks Ben for the question. I mean, I just can reiterate one point that is related to the fact that now due to the great success that the F1 platform is having, the possibility of having new races in the future is still very, very big. I mean if you are talking specifically about the situation this year because of the Russian situation, I just can confirm to you that we have already proven, in the last couple of years, to be very flexible and not to have any problem in finding possible solutions to that. So, I can just confirm that could be an option for this year with no problem at all. With regard to other voices around possible venues for the future, yes, I mean we can just say that there are a lot of discussions going on. We need to make the right choices for the strategic market that we believe is the right one for Formula 1. But for sure, I mean we can expand the calendar, because technically speaking, as you know, we can go up to 25—that is written in our regulation and COVID agreement. The teams would follow our vision on that. I would say that it's already something that we don't have to forget that this year will be the 23 calendar races—the highest number of races in the history of Formula 1. So I think that we can watch that in the right way, taking the right decision. We are not in a rush for that. It's just a matter of tuning in on the different possibilities that we have in front of us.

Yes. I'll add on that just to say I think Stefano and team and the FIA and the teams themselves have done a great job managing both through the flexibility of COVID and also increasing the number of races. We understand there are constituents who are less enthusiastic about that, and we have to add the races in a way that is logical and doesn't strain the resources of all involved. So, we'll see how 23 goes and as Stefano rightly noted, contractually we can go to 25, but we're going to do it in conjunction with our partners. On the media rights, I think you probably know and credit Chase, and obviously Stefano you can add any comments, that we took a perspective on taking a shorter broader deal, meaning broader coverage over the money on the last deal. And I think that's paid off. We will weigh what's available to us. And I don't think, as you know, it's a complete trade-off. There will be degrees of access and degrees of coverage and there'll be degrees of money. And having the benefit of more U.S. races and more potential U.S. sponsorship or more global sponsorship which wants a U.S. presence weighs into our thinking about that breadth and how long a deal we want to cut. We are very confident that our product will be more desirable in the coming years in the U.S. than it even is today. We continue to build enthusiasm and audience, etc. So it's not just breadth and money, it's also duration. And we'll weigh all those factors. Stefano, you want to add anything on that?

Got it. That’s very helpful.

No. That was absolutely spot on, Greg. That's exactly the point. We need to measure between or the ratio between awareness growth and the return on that is a key point. And also, I have to say, the content that is developing in new markets, talking about Formula 1, it's something that we are really focused on, because we are having now the possibility of engaging with new fans that need to understand Formula One with a different cut. So, it's up to us to provide the right quality and the right typology that will be different from the added fans approach. So that's the beauty of this challenge that we have in front of us, but it's all great news I have to say.

Yeah. And then, Greg, I'm sure you know there's a lot in the news also about direct-to-consumer Sports Networks and Diamond Sports and Bally. Can you just remind us what are your rights at the Braves level in terms of either enabling or not enabling a valid sports service in the Southeast? And then, do you obviously know the cable business well through Charter, etc. Do you think the market can bear a direct-to-consumer RSN without putting the full distribution benefits of Pay TV in the region at risk? Obviously, that's a pretty tricky balancing act. But what's your perspective from a Braves point of view?

There are certain out-of-market rights that could get triggered. But frankly, the way it's structured, I don't think it's attractive for most teams to do that. So I don't think that will happen. And you've seen Rob Manfred's comments, I'm sure you have about that those are not owned by Diamond Sinclair Bally, whatever we want to call it. And there's not really an incentive, the way it's structured, to trigger those. How a DTC offering will play over-the-top offering against the RSN seems pretty self-evident. If you can get it on DTC, you're going to put more pressure on the negotiation between the MVPDs, traditional MVPDs and any suppliers of an RSN type product. So again, it's like that discussion around reach breadth and money and time. There's probably not an absolute relationship with any of those, but obviously competitive offerings make the bundled product that much harder to push.

Yeah. Thank you.

We will now take our next question from David Karnovsky. Please go ahead. Your line is open.

Hi. Thank you. Question for Greg or Stefano. With Drive to Survive set to release in a few weeks on Netflix, we would be interested to get your thoughts on how you view the importance of the series for Formula One and its growth. Obviously, it's been a notable success especially here in the United States in terms of widening the fan base. Do you see F1 continuing this for the long-term? And is that something where you think there's buy-in from the teams?

Stefano, I'll let you go first.

Okay. Thanks, Greg. I will. It's no doubt David that Drive to Survive has an incredible effect mainly on the new audiences and also in other new markets like the U.S. for sure. And this will continue and I can anticipate to you that you have to stay tuned to the new series, because I've just had the possibility to see it, and it will be fantastic. And with the right tone and, as you can imagine with what has happened last year, there will be a lot of action on. So that's good. But I think that what we have shown as Formula One has been always to be in front of the step change that everything has to happen. So I think that it's important for us to be with Drive to Survive with our Netflix friends, up to the moment where we believe that will make a show that it's a differentiating factor. It is becoming just a different way to not to speak about Formula One without having or giving the Formula One platform maybe added value. Maybe, I think it's better to renegotiate and see with Netflix or the other partners what could be a possibility to do something different in the future. But for sure, this is, this platform has been a vital point in the growth of awareness, mainly with a young generation and with newcomers to Formula One. For that, we need to thank that vision and the product and the quality that has been really very, very good.

I agree with Stefano's comments. Let me, if I could just add a couple more. I think it's a great partnership. While it has clearly helped us, and you've seen growth in our TV audience for example in the U.S. across, we noted 58% this year, and our average age over the last few years has come down four years in terms of who our fan base is. That contrasts dramatically with how many other sports have—many other sports have both aging fan bases and declining TV viewership. That having been said, it's a win product for Netflix too. It was the number one at some point during the year in 27 countries. It is relatively cost-effective programming for them. So I think it's an absolute win. As much as Netflix has done for us, I'd like to think we've done well for Netflix. And when I've talked to Reed and Ted, I know they're very enthused about the product. We've clearly seen a change in the mentality of the teams. I love to tease Toto about how he hated Drive to Survive in the first season, wouldn't participate, had a host of reasons. And now I would describe him as a pretty enthusiastic fan. I think he's representative of the way most of the teams feel. So it's been a win all the way around. Clearly, grown our sport, not only in the U.S. but around the world, but it is a great thing for Netflix as well. So I hope the marriage continues for a long time.

And then, maybe just one more for Stefano would be interested to get your thoughts on the Kindred Concepts partnership. What's the opportunity in terms of broadening the fan reach here? And can you say what F1's long-term financial commitment is? Thanks.

So David, can you repeat the question, because I had a cut-off of the line, sorry.

Sure. Just want to get your high-level view on the Kindred Concepts partnership you guys announced a few weeks ago, what's the opportunity to broaden the fan reach and if it's possible to frame the financial commitment on their side.

It's about the podcasting, Stefano.

Okay. Sorry because the line is not very clear to us. And, I mean, this is something for sure that is an opportunity to increase, as I said, the possibility of— for our fans to be connected in a different way of talking about Formula One. So potential is great. And I think that together we can do really good stuff because at the end of the day, it's something that is going to be very important to increase once again the level of what we see in Formula One, because I know that podcasting is getting and having the bigger uses for the future.

We will now take our next question from Jason Bazinet. Please go ahead. Your line is open.

I have sort of a dumb question. Perhaps erroneously I was operating under the assumption that if Sirius did a buyback and you participated in that buyback that those proceeds were tax-free to you because of the tax sharing agreement. But I think at the beginning of the call, in response to Vijay's question, you hinted at some potential complexities related to that. So do you mind just circling back to that and elaborating a bit, Mr. Maffei?

Happy to do that, Jason. So if you look at the deal, for example, where Liberty Broadband sells in an agreement, we have directly with Charter back to Charter, that is one kind of a relationship. We do not have that current tax deal with SiriusXM. We have a tax-sharing arrangement related to the fact that we now are an 80% owner but we do not have a deal to sell a certain percentage of our stock or commensurate percentage or holdout percentage with SiriusXM. If we sell into the marketplace that is taxable. If we sell back to the company being over 80%, that would not be taxable but we do not currently have that agreement with SiriusXM.

That makes sense. Okay. Thank you.

We will now take our next question from David Joyce. Please go ahead. Your line is open.

Thank you. Two questions, please. First on sponsorship for Formula One. A lot of investors have been wondering why there possibly hasn't been more sponsorship generation since you acquired Formula One, given that there looks like there will still be room in some categories for some global sponsorship deals. And also in light of the large Oracle deal for one of the F1 teams. So what does the sponsorship success at the F1 teams do to your efforts for potentially growing that revenue line some more? And then secondly, just a technicality on LMAC. Do you have to have an acquisition deal announced or fully closed by the end of the two years—the two-year period early next year? Thank you.

Well, David with regard to the sponsorship in Formula One, as I stated before in my speech, there are very important negotiations that are in place. So we cannot anticipate the outcome of it yet. Otherwise, we would have done it. What is clear is that the world of Formula One is really capable of attracting new sponsorship both for the commercial holder and also for the teams. That means that we are really doing a good job and there is a lot of interest around that platform. With regard to us, as I said, I think that in the coming weeks we're going to see some good news that we can share together.

Great. And on LMAC, the SPAC, the base agreement is to get a deal done in two years but there is an opportunity for us to pay a little more money and extend for another year. So I think we have, and there's three months past that—and then we could extend for another year by paying for some more money. So I think we have a fair amount of runway left if we found something attractive.

We will now take our next question from Stephen Laszczyk. Please go ahead. Your line is open.

Great. Thank you. A question on F1 ticket prices. We've seen some pretty strong demand tailwinds in the live events space coming out of the pandemic. I was wondering if you could maybe talk a little bit more about how you work with promoters on the ticket pricing strategy. Maybe the opportunity you see over the next couple of years to benefit alongside these partners on ticket pricing, perhaps as those deals renew.

Thanks, Stephen for the question. With regard to ticket pricing, the promoters have the right to—not the right even more they know the market better than anyone else. So they are able to prepare the different offer that we can present to the different customers and clients. And of course, we know that and we are informed about the strategy because it's important that we give our position on that. But the structure we have so far with our promoters is that this is the business in which we want to give our input because we believe that we can add some value. But they know better that anyone else within the local market, the local interest and of course, if you just look at what has happened in the last couple of events and because of the success, there was a new way of dynamic pricing I would say that we saw growing and this is something that could be interesting for the future. But so far with regard to the model, this is—as I mentioned—that belongs to the promoter. If you're talking about the Paddock Club experience, of course that's a different story. This is something that we manage, and this is something related to the fact that we know the market and we believe to present to our customers the right pricing versus the level of and the quality of the service that we want to provide to them. And as always, this is something that we are working on the other way around with the promoters, because they know that market. But on that, it's a business that depending from place to place is managed by us.

Great. Thanks for that. And then one for Greg. Not to belabor the Series buyback question too much here. But I think you alluded to a potential legal complication for why you might not have that arrangement with SIRI you might not be able to have that arrangement? Did I hear that correctly? And if so, is there a possibility you could elaborate on that?

Sure. We would have to go—to get a tax-free deal, we would have to go and negotiate an arrangement with SiriusXM for that buyback. And you might do something where a typical arrangement might be something where you bought back at the average weighted price that they bought back during the quarter—something like that. But to have that kind of relationship would probably put pressure on the independent directors of Sirius at a time when we've seen other litigation, so it's probably a bridge too far at the moment. Perhaps down the road, we'll have something like that, but we have no deals signed and really have done no negotiation about trying to negotiate to have an arrangement like that with SiriusXM independence.

We will take our final question from Doug Mitchelson. Please go ahead. Your line is open.

Thanks so much. Greg, I actually would love to belabor the SIRI buyback question. So my question is—and I think you’ve sort of suggested this with your comments on this call, but I wanted to ask this more directly, Greg. Are there any other options for Liberty to close the discount versus SIRI that investors should be thinking about at this point?

Well, there are a lot of choices out there about closing that. If they continue to repurchase stock, we continue to repurchase stock, which maybe we close out and eventually become the 100% owner. That seems like at some point that's the natural situation. How we get there remains to be seen. But I think all of those will move forward. The degree that we have special dividends and that capital moves up to LSXM, I think that allows us to go attack that discount with more vigor, and that's been our hope.

Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.