Liberty Media Corp Q2 FY2022 Earnings Call

Please standby. Ladies and gentlemen, thank you for standing by. Welcome to Liberty Media Corporation’s 2022 Q2 Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference is being recorded August 5th. I would now like to turn the conference over to Courtnee Chun, Chief Portfolio Officer. Please go ahead.

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 Acquisitions' most recent Form 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 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 Acquisitions expectations with regard to there to 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 one and two 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. Greg.

Sorry, I was on mute. Good morning. Today on the call, I am joined by Formula One’s President and CEO, Stefano Domenicali, and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling. Let's start with Liberty’s SiriusXM, where we received a $70 million regular dividend from Sirius in the second quarter, which was tax-free. We also repurchased $93 million across the LSXMA and LSXMK shares from May to July, with a look-through price on Siri of $2.88 per share. We recognize that the discount has widened, which is frustrating. While the decline of LSXM aligns with the overall market, the continuing widening of the discount has been disappointing. We still consider share repurchases an attractive option to capture that discount, but they alone may not be sufficient. We are committed to addressing this issue. Although not exhaustive, potential actions we might contemplate include reducing data LSXM to facilitate a merger with a reasonably leveraged Siri LSXM, enhancing the visibility of our live stake's value, and exploring other possible actions. I want to remind you that with Liberty Media and some of our fund entities, we have a long history of corporate actions aimed at reducing discounts, including structuring the GCI acquisition as a mid-lane ATB, the DirectTV RMT and the subsequent sale to AT&T, and the separation of Liberty Expedia followed by its merger with Expedia. In summary, we have various options and a track record of implementing them. Now, looking at Siri itself, I believe it is managing market challenges effectively and maintaining its financial guidance despite a revised subscriber outlook due to a weak SAR, attributed to documented reasons such as chip supply issues. They reported strong financial results for the second quarter, including a 4% increase in revenue, a steady churn rate of 1.5%, and new and used car penetration rates of 84% and 51%, respectively. We also extended partnerships with key automakers, including Mazda and Mitsubishi. We've made progress with our connected TV platforms like Amazon Fire, Android TV, LG, and Roku. We signed a new agreement to fully integrate and launch the SiriusXM audio experience on XFINITY with Comcast, with video to follow. On-demand music listening within the SiriusXM app has increased 41% year-over-year, partly due to the introduction of new and diverse content. Overall sports listening in the app is also up. Our agreement to make Siri the exclusive third-party platform for NFL games has been beneficial, and in keeping with our family of services, we announced an extension with F1 to cover every race on the World Championship calendar. Lastly, we're thrilled about our ongoing efforts in podcasting, which saw a 9% increase in listenership last year, and our podcasting and off-platform business revenues rose by 50%. We also expanded our agreement with Comscore to release AI-powered podcast audience targeting features. Shifting to Live Nation, they reported very strong results, indicating that live events are thriving globally, evidenced by yet another quarter of record results. Compared to 2019, AOI increased by 50% and free cash flow rose by 72%, amounting to $379 million. At Ticketmaster, AOI increased by 86%, with transacted GTV up by 76% over 2019. Sponsorship AOI has seen an 81% increase compared to 2019, welcoming new clients like Google, AWS, and Hulu. We've achieved the highest quarterly attendance ever, exceeding 33 million fans, and our onsite fan spending continues to grow across all venues. We are poised for a record 2022, having already sold 100 million concert tickets, with fan attendance up 13% in our operated venues and almost 30 new venues in development. The August 2023 pipeline is the largest we've experienced at this point in the year. Regarding the Formula One Group, F1 has experienced record attendance and viewership in the second quarter. The Austrian Grand Prix was our second sprint event, with viewership increasing by 39% compared to the 2021 Austrian Qualifying. Our coverage's return on CCTV is boosting our audience in China. Notably, four races this year have surpassed 300,000 in attendance, highlighting an incredible demand for the Paddock Club. For example, the attendance during the Hungarian weekend reached 290,000, marking the largest ticketed sporting event in Hungary's history. We are witnessing robust ticket sales and strong demand for the remainder of the year. The new regulations from the Concorde Agreement are succeeding in encouraging closer racing and more overtaking. We continue to test sustainable drop-in fuels and regenerative engine development, which we believe could have wide-ranging implications across the transportation industry. In our latest endeavors in Las Vegas, we completed the land acquisition at the corporate level and are excited about the potential of this property, expecting to have year-round activities on site. The primary Paddock building is projected to be 900 feet long, equivalent to the length of three football fields, and we are actively collaborating with potential commercial partners to enhance our opportunities there. We are expanding the F1 team in Vegas, focusing on sales, marketing, race operations, and more, while also utilizing local expertise and talent, including that from the LVCVA and our partners at Live Nation. We are in the process of finalizing capacity specifics, but it's worth noting that our founding partners in Vegas—Caesars, Wynn, and MGM—are experiencing tremendous demand, even before we announce the official date. We will share more details about Vegas as they become available. While some of you might be relieved not to wake up early for races during the summer break, we at Liberty are eager to resume Formula One at Spa on August 28th. Turning to the Braves, they've been performing excellently over the past couple of months. As of today, our record is just under .600 for the season, and since June 1st, we hold the best record in baseball, despite a disappointing loss to the Mets last night. This is an exciting team, and our performance continues to attract fans to Truist Park, with Braves attendance up 23% compared to a strong 2019 season. We've recorded 24 sellouts leading up to the All-Star Break and are trending towards roughly 50% sellouts for the year. Revenue from tickets, parking, concessions, and concerts at the Roxy is performing well. We have named six All-Stars this year, the highest number from the team since 2011 and double the amount from last year. We just signed a 10-year, $212 million extension with Austin Riley, which is the largest in franchise history, following his outstanding performance this season, including a record-setting July. Alex Anthopoulos deserves recognition for the moves he made to strengthen the team before the trade deadline, recalling last year's successful acquisitions in left field and pitching that added depth to our lineup and bolstered our bullpen. We congratulate Snit on his 500th career win after our victory over the Phillies last week. Currently, there is nothing new to report regarding LMAC, though we are continuing to examine opportunities and assess the market environment; it has been challenging for specs lately. Now, I will hand it over to Brian to delve into our financial results.

Thanks, Greg, and good morning, everyone. At quarter end, Liberty SiriusXM Group had attributed cash, liquid investments, and liquid public debt and equity securities of approximately $368 million, which excludes $126 million of cash held directly at SiriusXM. There's also $1.3 billion of undrawn margin loan capacity at the parent level related to our SiriusXM and Live Nation margin loans. As of August 4th, the value of our SiriusXM stock held at Liberty SiriusXM Group was $21.5 billion, and the value of the Live Nation stock was $6.8 billion. We have $2.8 billion in principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $13.7 billion, which includes $10 billion of debt at SiriusXM. Formula One Group had attributed cash, liquid investments, and monetizable public holdings of $1.1 billion at quarter end, which excludes $935 million of cash held directly at Formula One. Total Formula One Group attributed principal amount of debt was $3.2 billion, which includes the $2.9 billion of debt at Formula One, leaving $306 million at the corporate level. During the quarter, we repurchased $146 million face value of 1% FWONK cash convertible notes due in 2023 for approximately $240 million, effectively retiring 3.95 million underlying FWONK shares at an average price of $59.88. F1’s $500 million revolver is undrawn, and Formula One leverage at the end of the quarter was three times. As we discussed last quarter, under the current Concorde Agreement, team payments now take the form of an entirely variable price fund, which is calculated with reference to a measure of F1's adjusted EBIT rather than the adjusted EBITDA measure used in previous agreements. Such that the calculation now takes into account CAPEX incurred by including depreciation cost. There is an immaterial difference today between Formula One's adjusted EBIT and adjusted EBITDA for purposes of this calculation. Note that our reported F1 depreciation and amortization includes purchase accounting amortization related to the acquisition that is excluded for purposes of the price on calculations. We've quantified this purchase accounting amortization in our earnings release to assist in calculations. Also at Formula One, other F1 revenue was running materially higher than the prior year, up about $80 million in the second quarter and $130 million year-to-date compared to 2021. Increased freight and hospitality income accounts for 98% of the quarter-over-quarter increase. Note that the Paddock Club didn't run until July of last year, while year-to-date through the second quarter, F1 has welcomed over 35,000 guests at the seven events where we've run our Paddock Club. Other costs of F1 revenue are higher primarily due to the same factors. These costs were up $76 million in the second quarter, approximately 75% of which is due to freight and hospitality cost variances. Finally, at F1, at last year's Investor Day, we included an appendix slide detailing F1's foreign exchange exposure. These percentages are still accurate, with approximately 80% of F1's revenue and costs denominated in U.S. dollars. Finally, the Braves Group at quarter-end had attributed cash and liquid investments of $207 million, which excludes $66 million of restricted cash. Braves Group had attributed principal amount of debt of $602 million. The Atlanta Braves also announced several new construction projects for 2022; a new office building will be constructed known as 5 Ballpark Center that will house the national headquarters for Truist Securities under a 15-year lease. Construction is expected to begin in the second half of 2022. The Braves estimate their cash contribution will be approximately $20 million. The Braves are also working on a new project with Goldenrod Development Company called the Henry, a luxury apartment building. If completed, the Braves would have a minority equity stake in exchange for two acres of contributed land with no additional cash contribution from the Braves. Additionally, the Braves are evaluating a Phase 2 project with Goldenrod to build an adjacent hotel and condominium complex. This is still in the evaluation phase, but would be another minority investment with a modest cash investment. Our real estate projects have individually and collectively performed ahead of our expectations. The Battery is generating healthy cash flow, which is partially used to support the operations of and future investments in the Battery and partially to support Braves Baseball. Liberty and our consolidated subsidiaries are in compliance with the debt covenants at quarter-end. With that, I'll turn it over to Stefano to discuss Formula One.

Thanks, Brian. For the last earnings calls, we were in Miami for the inaugural Miami Grand Prix. It was an incredible weekend as Formula One was welcomed to the city with open arms. The celebrities came out in full force, and much of the coverage helped in the establishment of Formula One in the U.S. It was wonderful to see so many of you in person. We are now over halfway through the 2022 race season, and we have seen unpredictable outcomes and a lot of wheel-to-wheel racing, especially in the midfield. It is a testament to the new regulations that everything this season. Carlos Sainz secured his first F1 career race win at Silverstone and Lewis Hamilton marked his 300th race start with a second-place finish and first double podium of the season for Mercedes in France. Max Verstappen currently leads the Driver’s Championship over Charles Leclerc of Ferrari has shown incredible speed, and the battle between these two is intense. We have seen the fight between McLaren and Alpine, and it is great to see it is beginning to move forward, cornering the championship. And as we said, Mercedes continues to fight back with Lewis and George. This action on the track has drawn in fans with sell-out crowds at our events with 420,000 at Silverstone, 300,000 in Austria, 300,000 in Hungary, and 338,000 for Canada. And Paddock Club has experienced record sales. We're coming over 35,000 people across nine events this year, including record-breaking attendance at Silverstone, where we have 7,500 guests. The TV audiences are also tuning in, with the average audience program through France up to 9% versus the 2021 season average. We continue to see tremendous growth on all platforms. We were thrilled to announce that the highly popular network series Drive to Survive has been renewed for the fifth and sixth season. The series is still attracting new fans, and Season 4 broke into the weekly top 10 in 56 countries. Bidding on media rights, we reached a renewal agreement with Bandeirantes in Brazil throughout 2025, which will cover all qualifying sessions and Grands Prix live for our fan base. Additionally, we secured a strategic partnership with Claro Brasil to be the exclusive distributor of F1 TV Pro in the country. F1 TV Pro has proven to be a compelling product for our fans, so it's worth a brief overview. F1 TV Pro offers coverage of every F1 session live on demand, as well as live access to all 20 onboard drivers' cameras and team radio channels, session replays and highlights, live streaming of every F2, F3, and F4 super cap session, and a library spanning over 2,000 hours of archival and feature programming. The platform was revamped in 2021 and is now more accessible than ever before with the release of the service across many of these streaming platforms, enhancing the viewing experience for Formula One fans around the world. On the racing promotion side, we were pleased to reach a long-term agreement with Melbourne that will have us racing there through 2035. This new agreement will bring F2 and F3 to the track for the first time ever. We were also thrilled to announce Honda as the title sponsor of the Japanese Grand Prix when we return to Japan in October. We are focused on the calendar for 2023 and expect to have more details around early October. On the sponsorship front, we announced PATRÓN Tequila as the first-ever official tequila partner of the F1 Paddock Club. We also focused on licensing opportunities and partnering with Round Room Studios for the first official exhibition in Formula One history. Details, including venues and the sale days for tickets, will be announced this fall. We also extended our agreement with the Memento Group through the 2025 season. This already covers authentic certified and licensed F1 memorabilia and now includes the right to sell ex-F1 race and show cars. They recently completed the auction for the 1990 Leyton House CG901, which placed second in the French Grand Prix, sold for over 500,000 Pounds. We continue to push to hit our net-zero carbon by 2030 target. F1 is developing a 100% sustainable fuel that will be used in Formula One cars from 2026 in line with the introduction of the next-generation hybrid engine. The fuel is purposely designed to drop in for both internal combustion engines and hybrids. It is already in development with support from our key stakeholders, the FIA, Aramco, and from the F1 global partners, fuel providers, and F1 piston manufacturers. While racing fuel represents only 0.7% of our emissions, we believe sustainable fuels are where we can have the greatest impact on the global transportation sector. While we have already instituted significant changes to create a more sustainable sport, we are now focusing on the following areas; exploring carbon reduction measures for fast revenue to Formula One events, sharing the carbon reduction activities from across our sporting community, and taking steps to continue to investigate our measures to deliver more efficient logistics and travel arrangements from air, sea, and land. Furthering our commitment to the environment, we have partnered with Banco Santander to amplify the Santander Global Challenge to come down to zero, a competition that challenges entrepreneurs to create sustainable solutions for the future. We continue to promote diversity in each sport and hosted the F1 Esports Women’s Wildcard Experience Day at the McLaren Technological Center. First launched in 2021, the Women Wildcard represents another route into F1 Esports for female participants. The initiative was born from the desire to create a space that encourages females to take part and submit their time trials via the official F1 video games with passes securing a spot in F1 Esports pro-exhibition for the chance to be selected by a team for the Pro Championship later this year. We also announced earlier in the year our extended funding commitment to the Formula One Engineering Scholarship Program for underrepresented groups until 2025, continuing its drive to increase diversity within the sport. We hope everyone has enjoyed the first part of the season. While the teams and the drivers enjoy a much-deserved break, we will continue to capitalize on the growing popularity of F1 and convert this into opportunities to drive the business forward. Avanti tutta, full speed ahead. And now I will turn the call back over to Greg. Thank you. Bye-bye. Ciao.

Thank you, Brian and Stefano. Our Annual Investor Day will be Thursday, November 17th in New York. Please save the date. Additional details will be provided soon. We hope to see many of you there. We appreciate your continued support of and interest in Liberty Media. And with that, operator, I'd like to open the line for questions.

Thank you. We'll turn first to Ben Swinburne with Morgan Stanley.

Thank you. Good morning. Greg, a couple of things on the structural side I want to ask you about. You mentioned separating Live Nation. I think you mentioned in that context with Siri. Maybe just talk about sort of the pros and cons...

Ben, just to be crisp, I said, highlight the value. I didn't say separate, but go ahead.

Okay, can you highlight the value for us? My question relates to how you would approach that. Additionally, I'd like you to address the common inquiry about a spin-off of the Braves. Could you share your thoughts on the advantages and disadvantages of that approach? Lastly, regarding Vegas, how do you plan to manage staffing and capital expenditures for the track and the Paddock Club in the latter half of this year? It would be helpful to understand the projected investment as we look toward next year's race. Thank you.

I'll address the structural questions first and then discuss Vegas and other matters. From a structural perspective, we are not making any announcements today; you will be informed when we do. Our structure has provided benefits through trackers, giving us the flexibility to manage and reposition our assets for optimal tax efficiency. We see value in keeping everything together until we can exercise flexibility with ATV across the board, which offers us more options. In terms of highlighting value, we have various methods available, including spinning off entities or creating new trackers, but we have not made any decisions to announce today. Historically, Liberty has tended to take businesses that we believe we can enhance, keep them within the company, and eventually spin them out when we feel they would be more valuable as independent entities in the long term. We will continuously evaluate this for all our entities. Although this may seem vague, it aligns with our past practices. It is important to note that we have taken corporate actions to spin off businesses before, and I outlined some of those previous instances and the outcomes of those companies. On Vegas, it's a little hard to forecast the CAPEX because we are still putting together the program that we will undertake there. And I mentioned our goal is to have a facility that is not only magnificent for the race but has the opportunity to have ongoing activations at that facility even when the race is not underway. I think you should be thinking we can well manage this within the capital we have. It's not going to drain us in any way, and it's not going to forestall us from doing other actions, including potentially investments around the SPAC, repurchases, debt management, and the like. I don't know if Brian or Renee or Stefano want to add anything on the Vegas question.

No, totally good, Greg.

If I may, Greg, I want to emphasize that while the CAPEX builds and the tight program have been in place for almost 16 months, we are putting in significant effort to engage and excite the new city about Formula One. We will return with detailed plans to ensure we bring F1 to life with the passion necessary to enhance the level of engagement we anticipate from Vegas City.

Thanks everybody.

We'll take our next question from Bryan Kraft with Deutsche Bank.

Thank you, good morning. I guess Greg, I also had a structural question. I guess in eliminating or narrowing the NAV discount at LSXM, it sounds like you alluded to a RMT spin merge. I guess another option that you have would be to distribute SiriusXM shares to Liberty shareholders. The former, though, would basically make the combined company still a Liberty company with the Liberty Board and Management and the Liberty ability for Liberty Management and Board to make strategic investments and acquisitions. The latter would sort of be an exit from that as a management team. So I guess, are both of those on the table or do you really want to still control Sirius and be able to use it strategically? And then I also want to ask a question on Formula One costs. How should we think about the higher SG&A level this quarter in the context of future quarters? It seems as though there may have been some temporary impacts in there from legal and advisory fees, I guess, is that the right way to think about it or is that meaningful or is there kind of a reset in the SG&A run rate going forward and maybe that has to do with something with Vegas? Thanks.

So on the first point, Bryan, there are various options available regarding the distribution of shares. This approach might not be ideal unless we can find a way to benefit from our controlled position. There are other possibilities in between, such as our previous experience with Liberty, where we spun off our DIRECTV shares while retaining some influence through the B shares. This is similar to other fully separated spins or merger examples, like what we did with GCI or Expedia. I don't believe any options are off the table considering our potential actions or past experiences. There is a wide array of opportunities, and we'll pursue the one that we believe will maximize long-term value. On the side of expenses, I'll let others comment as well, but we know we did have some increased expenses, increased investment to start up the round in Vegas, including some issues there. So as far as the longer term, I think we're not at an elevated level, but I'll let others add their views.

Yes. This is Brian. I'd say we had some higher personnel and other costs to support the large increase in revenues and higher activities that we had in 2022 versus the prior year. There were some minor onetime professional fees that we wouldn't expect to repeat, and I would say pretty minor Vegas expenses at this point in time.

Okay, thank you very much.

We'll turn next to Vijay Jayant with Evercore.

Thanks. On Formula One, obviously Greg, the equity is like because there's a contractual nature of the business. But obviously, there are numerous macro headwinds with inflation, higher rates. Obviously, you gave some color on the impact of FOREX. And with the escalators, can you help us really think about what the variability of outcomes are given all those pressures out there, given your contractual nature of the business? Is sort of the budget and expectations pretty much in line with what you sort of expected at the beginning of the year for what the performance could be at Formula One's operation?

I think you make a valid point, Vijay, regarding the highly contracted nature of our business, which helps manage potential downsides. There are certainly risks from foreign exchange and costs, but overall, we've observed demand that surpasses those challenges. We approached our budget conservatively, including contingencies, which is part of our strategy, and we have managed to exceed those contingencies even with the existing cost structures. Therefore, I am confident that the demand we are experiencing and the robustness of our business, supported by our contracted nature, will enable us to navigate through most of the challenges. However, we cannot predict every inflationary impact. Generally, we have successfully addressed those issues, including foreign exchange. I'm not sure if Brian, Stefano, or anyone else would like to add anything further.

Nothing to add there, Greg.

I would like to follow up on the upcoming race calendar for next year. While it may be a bit early to discuss, there are several European races that are under contract, including those in France, Belgium, and Monaco. Additionally, we have some new races coming back, like Qatar and Shanghai. Can you provide insight into what the race outlook might look like for next year? It seems we'll have more than 22 races, and will there be a trend toward hosting more high-revenue races compared to those that generate less income?

I'll let Brian or Stefano.

If I may, Greg or Stefano, please?

Okay. Thank you, Wendling. As I've stated before, we will come back in early October due to the process of course, having the clearance from the World Motorsport Council of our calendar. Of course, there are discussions to make sure that the calendar is robust; it is following also the fact that we would like to keep the right flow in terms of efficiency around the world, considering the needs of a calendar to be spread out from March to November, all around the world. Of course, the effect that you were seeing before on the choice between the Europe and then out of European races has an effect on the revenue side. But I would say the main point is to have an exciting calendar; the demand is very high, and it's our responsibility to put in place a calendar that is available to our stakeholders but also valuable to respond to the requests that we have all around the world. So we cannot spot anything more than what we are saying because we are finalizing all the details, but we expect to have higher dollar value races more than this year, but less than 25%. That's for sure.

Thanks so much, guys.

Next up is David Karnovsky with J.P. Morgan.

Hi, thank you. First off, we've seen in the press the possibility of some auto OEMs entering F1 either on the manufacturer or engine side. And a question we sometimes get is what's the potential benefit to Formula One, either from a commercial standpoint or to the product itself, so I wanted to put that question to you? And then separately, with other F1 revenue, I know there's a lot of noise in there because of the freight cost. But wondering if you could speak to the performance outside of the pass-through revenues, in particular areas like Paddock Club or licensing, and maybe how that looks relative to the pre-pandemic period? Thanks.

With regards to the two new OEMs coming in, as you can imagine, it's not for us to say anything that will be, let's say, inappropriate to mention. It's true that we are adding contracts without the manufacturer. And hopefully, we will have the information soon. I think that in terms of what is the benefit, the beneficial credibility, the benefit is showing that our strategy of the future will help the manufacturer to have another route that will allow them not to be only fully electric in the offer to the mobility side, but also using the expertise that only Formula One can help them in order to find new ways of being present in the market with average engines with sustainable fuel that will be much more effective in our opinion, all around the world if we want to achieve the goal of carbon neutrality. On the other hand, from the sporting point of view, the more manufacturers we have, the more structured teams will enable the sporting side to have, I would say, more things that could be seen even in a more independent way into the sport. So I think that will be terrific news. Let's see how the situation will evolve. But no matter what, it will be the decision that the OEMs provide to the market soon. We strongly believe that our technological platform for the future is the right one in terms of redundancy. This is something that time will prove.

And if I can just add, as Stefano just said, obviously, and Stefano touched on this, it's a great validation to have these OEMs want to enter or reportedly want to enter. If they were, they're both the ones discussed or both enormous engines of innovation and promotion, and all of those have only seemed to be good for our sport.

No, no, I was just trying to briefly touch base on the second question. We see, and this is what we have already seen for this year, incredible numbers with regard to Paddock Club, with regard to new licensing that will be seen as an effect on our balance sheet. We see already an incredible number of orders despite the calendar has not been announced yet in terms of reservations for the races that would be in any case definitely in the calendar next year. So there is great attention, which means the attention on our platform is very huge today.

And just to add to that, David. In the other F1 category, 98% of what we're seeing on the increase is all coming from Paddock Club and freight, as we talked about in our prepared remarks, where we didn't have races last year, and we weren't traveling as much. So big increases there. But within primary revenue, we're seeing increases across the board, as Stefano just mentioned. So licensing to your point and F1 TV as well as the main three categories: promotion, sponsorship, and media rights.

If you look at some of these things like Paddock Club, yes, just to add to Brian, I mean if you look at some of these things like Paddock Club, we've never seen more demand. And we've not only seen demand, we've been able to, in some cases, promoters are able to increase the size of the Paddock Club areas and still manage it at a higher number and higher prices. So a lot of positives there.

Thank you.

Barton Crockett with Rosenblatt Securities has our next question.

Hi, thanks for taking the questions. Greg, the discount at Liberty Sirius versus Sirius is so much larger than the discount you would see at Liberty Broadband and Charter. Why do you think that is? Why is there such a disconnect? Does that inform in any way what some of the solutions might be for that?

Barton, that's a great question. There may be a bit more complexity involved, as well as potential investor fatigue and the difference in scale and size between the two entities compared to the broadband entity. It's difficult to say for certain why that is, but those could all be contributing factors. Unlike broadband, where the future seems clearer, we haven't acted on it yet. However, as we mentioned earlier, we're looking to take advantage of that discount. At some point, we will take action to reduce that discount, but for now, we're focused on purchasing that stock to enhance our NAV in relation to the underlying NAV.

Okay. And if I could ask one other kind of separate question. I'm just interested in your perspective on streaming at this point as pertains to kind of baseball. We have the direct-to-consumer launches at Nessun and at Diamond Sports. The Braves are not participating at this point. There's been some roll-up of rights at some of the big platform players like Apple. And do you think that this is the time to move in and restructure the streaming rights for baseball, or do you think it's not right yet, you don't know what to do yet?

Well, I think baseball has a more complicated situation because of the regional sports network situation than other sports, in particular, the cleanest comparisons or the completeness is football. And certainly, my understanding is that MLB would love to find a structure where they could deliver more national rights, which is really not available or difficult today on some kinds of games. The streaming interest has been high from people like Apple, which is a good sign. And obviously, the RSN weakness is going to create an opportunity, whether that happens this year or next. I do think there will be some change in that given where Diamond appears to be headed. Looking just at the Braves, we're blessed, as we've said before, with a lot of demand and good audience in our territory. We're also blessed with the largest broadband household territory among baseball teams. So we remain optimistic about our relative position on any kind of streaming deal, and we feel good that we have a product that people want in a big territory and probably what some people estimate may be the most profitable RSN, where we're getting paid pretty well, but the RSN owner is also making money. So that seems to create some opportunity where there will be somebody who wants to do something interesting in our space. But stay tuned.

Yeah, thank you.

We'll now move to David Joyce with Barclays.

Thank you. I would like some clarification on the structural opportunities. Greg, in response to Brent's question, you mentioned reasons for keeping things together until there is full ATV flexibility. I may have misheard or misunderstood, but I was wondering what restrictions are still in place.

No, I think we are looking for as much flexibility on ATVs as possible. That's one factor, but it's not the only reason. I mentioned wanting to keep the Corpus together and also other considerations like the ability to move assets and tax advantages. I just wanted to clarify that before you asked your question.

No, that's fine. No, that's fine. That clarification was part of my question. And then the other aspect is, are there any other further guiding factors on the separation of the equities such as do you need to prioritize getting something done with Almac to spec or is that completely a separate path?

I can't provide an exact answer off the top of my head, but regarding the point you mentioned, I don't believe any initiatives related to Almac will be affected by structural changes since they are primarily financed through excess cash, and any additional funding will also come from further excess cash. Therefore, I don't think that's the determining factor.

Next up is Jason Bazinet with Citi.

Hi, I just had a high-level question. You guys over the years have done such a good job improving the financials of the Braves and Formula One. I was just curious, as you sort of look at the landscape, would you describe both of those as sort of one-off rare exceptions, unique opportunities, or do you think you're sort of building a competency that might be applicable to other potential assets or experiences?

I'd like to think that credit goes to the teams at both the Braves and Formula One for what they've done with those assets. I think they've taken attractive businesses and only made them better. I credit that. So if we deserve any credit for finding the right management teams and backing them and doing the great work that they've done, I'm not sure we can take much beyond that.

Okay, thank you.

Now we'll move to Matthew Harrigan with Benchmark.

Oh, thank you. Firstly, getting more specific on the Synfuels Ventures. There's a report in the European media that Porsche has something down in Chile that they're testing that's basically carbon capture synthetic methanol. And the story also alluded to Saudi Aramco building plants in Saudi Arabia and Spain. I guess you probably wouldn't be that specific, but have you nailed down a path on the technology? Are you looking at a lot of different things, and what sort of capital commitment just vaguely would go into having that sort of plant because this sounds a little more real as well as aspirational at this point? And then secondly, on the venture that Ticketmaster did with Snapchat and now with TikTok, is that something that you really see pushing the event demand as well as people for pencil just to get outside the house right now? And now I had one super quick follow-up, if you don't mind?

Stefano, do you want to take the synthetic fuel question?

Yes, yes. Thank you, Greg. Thank you, Matthew. I think that all these technologies, carbon capture and other things that are related to the path of technology is related to the transition in this sector that we live. The beauty of what I believe we are doing with tremendous effectiveness is the fact that we are just pushing the system towards the future in the right way. So all the commitment that we have taken on our side to go to zero carbon fuel in such a short term is because we believe that's the right way to go. And the good news is that, on the other side, the investment on our side is not relevant because we don't own any CAPEX in that respect. So we are just the enabler to all the stakeholders of our business to push for the future. And this is something we believe is our way to go. And we don't have to forget one other important element of the equation that we are not talking about only the manufacturers that are part of our teams. But with our system, we have promoters. We have a lot of people that have to invest a lot because when we are talking about big events, we are talking about places where the needs of energy for hosting a Grand Prix, where there are more than 400,000 people, needs to have a path of evolution for this technology. And this is also where we are pushing the system to improve it in this direction. So I think we should be very proud of this idea of pushing forward this technology to our leadership in that respect.

Matthew, on the second point, I'm not sure exactly what you're referring to. Maybe you could help repeat the question, sorry.

They did arrangements with Snapchat a number of months ago to push basically Ticketmaster pushing tickets on Snapchat. And just a couple of days ago, they announced something really similar with TikTok. Is that something that you really see as being a nice impetus for demand on the ticketing side, or do you think it's just people hurrying outside the house right now?

I think it's part of Live Nation's strategy to be ubiquitous as possible in making buying tickets as simple as possible. And the technologies that they built to distribute their ticket-buying capabilities are a unique advantage, I think, compared to most in the industry. And they want to be where buyers are. If buyers are on TikTok, which they increasingly are and looking for music and events, it's a logical place for them to be. And the same thing, I think, about Snapchat, which has obviously had music aspirations as well. So I think it's an important element of continuing to grow the strategy, but I'm not sure it's uniquely different than anything else we've done; it’s just a continuation.

And then lastly, if you don't mind, do you have a secular view on sports teams' valuations going up even higher that makes you want to wait further with the Braves in terms of doing something?

I think it's facts and circumstances will dictate. Obviously, these have been trophy assets that people have wanted to buy the best of. We've certainly looked at purchasing in a lot of cases, other sports assets and have been surprised at some of the prices. Nonetheless, they continue to move upwards. I think, for the right kind of trophy assets, the valuations are going to continue to rise.

Thanks, Greg.

Thank you.

And with that, we'll conclude today's question-and-answer session. I'll now turn the conference back over to the speakers for the closing remarks.

I just want to say thank you to all our listening audience for your questions and your attention. We appreciate your interest in Liberty Media. Hope to see you next quarter, if not sooner. And again, at our November meeting for many of you. Have a great rest of your summer. Thank you.

Thank you. Bye-bye.

With that, we'll conclude today's conference. Thank you, everyone for your participation. You may now disconnect.