Liberty Media Corp Q4 FY2023 Earnings Call

Greetings, and welcome to the Liberty Media Corporation and Atlanta Braves Holdings 2023 Year-End Earnings Call. Please note that this conference is being recorded.

Thank you, and good morning. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Form 10-K filed by Liberty Media and Atlanta Braves Holdings with the SEC. These forward-looking statements speak only as of the date of this call, and Liberty Media and Atlanta Braves Holdings expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Media or Atlanta Braves Holdings 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, SiriusXM and Atlanta Braves Holdings, including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media, SiriusXM and Atlanta Braves Holdings, schedules 1 through 3 can be found at the end of the earnings press releases issued today, which are available on Liberty Media and Atlanta Braves Holdings website. Now I'd like to turn the call over to Greg Maffei, Liberty's President and CEO.

Thank you, Shane, and good morning to all. 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. Also during the Q&A, we will answer any questions related to Atlanta Braves Holdings and Braves management will be available too. So let me begin with Liberty SiriusXM. The LSXM and Sirius transaction is on schedule. We filed the preliminary proxy on January 30. We still expect to close by early Q3 and the NAV discount, which was about 42% prior to the announcement, is now closed to about 25% as we had hoped, and we expect it will continue to close. Looking at SiriusXM itself, the strong operating and financial performance that it had in 2023 showed the durability of the business. Self-pay net adds were up in the second half, as expected, boosted by streaming. The strong margins and free cash flow generation remained largely through cost discipline. Importantly, they rebuilt their tech stack and relaunched their app in the fourth quarter. And we're beginning to show positive early results from that with better personalization, promising engagement, and improved service quality. We believe these initiatives, as well as the incremental content they added, will continue to drive long-term growth. Looking at the 2024 priorities of the business: first, increasing 360L adoption and boosting conversion and retention, continuing to deliver engaging content. Recently, they signed the quite popular SmartLess podcast with Jason Bateman, Will Arnett and Sean Hayes. We do expect self-pay net add improvement throughout the year. And there is a focus on maintaining stable EBITDA margins and free cash flow. I look forward to remaining involved personally in the next evolution of the business as Chairman and a shareholder. Turning to Formula One Group. It was an amazing 2023 at F1; we saw double-digit growth across all revenue streams and adjusted OIBDA up 22%. We see a strong commercial start to the season with four REITs promotion renewals, including Silverstone, a 10-year deal with venue upgrades in our important heritage market, and a new race in Madrid beginning in 2026, which will be a partial street race with convenient fan access. We do see continued growth in fandom. Recently, this week, F1 joined Threads, and 2.8 million followers were on board the platform after half a day of use. We closed the Quint acquisition in January, as we previously noted, and it's that growing partnership opportunities from Quint with F1, LPGP, and other sports properties, including the Kentucky Derby and the NBA All-Star game. Let me turn to a minute to Vegas. It was an incredible race. We were fortunate to have such a great outcome with a record 181 overtakes, and the podium came down to the final lap. It was a great result for Formula One. We created new commercial opportunities and generated fantastic global buzz. A high percentage of the first-time F1 attendees and massive audiences tuned into this race. It drew marquee brands to F1, such as American Express, T-Mobile, Moet Hennessy, and Google. We believe these brands and the marquee aspects that they are joining Vegas will continue to help us in 2024 and beyond. It was also a huge success for the local community. The total economic impact of the race was estimated at $1.2 billion, and the average visitor spent 3.6 times what a typical visitor spends for a non-F1 event. We look forward to building on the success of LVGP in 2024. For example, we're going to increase the general admission and expand the product offerings at various price points. We're going to optimize the cost structure. The year-round commercialization efforts at Grand Prix Plaza are developing, but we expect only a modest contribution from those in 2024. Corporate events at that site kicked off around the Super Bowl this year. In summary, the Vegas race exceeded our expectations on many levels, even though year 1 costs came in higher than we had anticipated. We do not intend to disclose rate specifics on this race consistent with our practice across all races. I would note that we are kicking off the F1 season with testing in Bahrain, which occurred, and we look forward to the first race in Bahrain this weekend. Turning to Live Nation, 2023 was the biggest year ever, with all-time highs for attendance, ticket sales and sponsorship. Concert attendance grew 20% with 145 million fans. Global demand for concerts continues to grow. The top 50 tours saw a 50% increase in international acts in 2023. We have an incredible pipeline for 2024 with no sign of consumer slowdown. We're seeing strong demand across all price points. For example, large venue shows are up double digits, and 65% of the full year large venue shows are already booked versus only 50% last year at this time. The number of shows at amphitheaters and other operated venues will also increase in 2024. Let me turn to the Braves. Obviously, there was incredible team performance in 2023, so much to highlight. I would note that the 947 runs scored was the first in MLB, in a tied MLB home run record as well for the team. The Braves also experienced great financial growth for the year. Baseball revenue was up 9%. We see continued success results in higher payments under MLB's revenue sharing plan. So that is the one negative about our continued revenue growth. But I'd also note the battery revenue was up 10%, and our adjusted OIBDA was up 11%. We clearly benefit from the strengths of the Braves' territory. In a recent study, YouGov found the Braves had 8.4 million fans in the South region, ranking #1 in MLB, and over 65% of all other local sports team fans support the Braves, which is the highest crossover of any fandom in Atlanta. We've seen encouraging early-season trades, including for 7x All-Star Chris Sale and Outfielder, Jared Kelenic. We are well positioned for future commercial and on-field success. For example, 2024 season tickets are already sold out, and there is a 16,000-person wait list. We are looking forward eagerly to the home opener against the DBacks on April 5.

Thank you, Greg, and good morning, everyone. At year-end, Liberty SiriusXM Group had attributed cash, liquid investments, and monetizable public holdings of $90 million. This excludes $216 million of cash held directly at SiriusXM. During the quarter, Liberty SiriusXM repaid the remaining $199 million outstanding principal of its $1.375 billion basket convertible notes using cash on hand. Also during Q4, Liberty SiriusXM paid down $80 million under the margin loan, of which $61 million was from the monetization of its 1.8 million battery K shares. At quarter end, there was $1.1 billion of undrawn margin loan capacity at the parent level related to our SiriusXM margin loan. As of February 27, the value of our SiriusXM stock was $15 billion. We have $1.3 billion in principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $11.1 billion, which includes $9.3 billion of debt held directly at SiriusXM. Turning to the Formula One Group. At quarter end, Formula One Group had attributed cash and liquid investments of $1.4 billion, which includes $1 billion of cash held directly at Formula One. The Quint acquisition closed in January, which will be a use of Formula One Group cash. Total Formula One Group attributed principal amount of debt was $2.9 billion, which includes $2.5 billion of debt at Formula One, leaving $533 million at the corporate level. And F1's $500 million revolver remains undrawn, and leverage at the end of the year was 1.9 times. As we've said in the past, the F1 business is best annualized on an annual basis, so we'll only be speaking to full year results. Total revenue grew 25% in 2023 with double-digit growth across all primary revenue streams. Year-over-year revenue increases include the significant revenue generation from self-promoting the Las Vegas Grand Prix, including ticketing revenue, which is included in race promotion, sponsorship revenue, which is recognized accordingly, and hospitality and experience income, which is included in other F1 revenue. Rates promotion revenue also benefited from the mix of events held compared to 2022, with two additional flyaway races this year with Qatar and Las Vegas versus Imola in France in the prior year. Sponsorship and media rights revenue grew due to increased fees under new and renewed commercial agreements. Other F1 revenue grew 42% or $196 million, driven by hospitality and experiences, largely attributed to the Las Vegas Grand Prix, as well as growth in the Paddock Club and other events, partially offset by reduced freight income due to easing of freight cost inflation. Team payments as a percent of pre-team adjusted OIBDA, as reported, was 63% in 2023, down from 66% in 2022. Other costs of F1 revenue increased from 23% of total revenue in the prior year to 32% of total revenue this year, primarily driven by promoting, organizing, and delivering the Las Vegas Grand Prix, as well as increased cost of servicing additional hospitality offerings. SG&A at 7% of total revenue was in line with historic averages. Corporate and other adjusted OIBDA was a loss of $39 million in 2023, which includes $15 million of revenue for use of the pit building during the Las Vegas race weekend. Formula One incurs a fixed monthly rent payment that approximates depreciation, plus a variable rent component during the race weekend. Note that the fixed rent payment in 2023 reflects only a portion of the year as the building wasn't occupied until closer to the race weekend. Corporate level expense at Formula One Group was also elevated due to the split-off and reclassification costs. In 2024, Formula One Group Corporate and other adjusted OIBDA will benefit from the Quint acquisition that closed in January as well as a full year of the rent payment. Looking to 2024, F1 will host 24 races with the return of China and Imola compared to 22 races in this past year. Quickly looking at a few cash items, F1 estimates its cash tax rate in '24 to be a high single-digit percent of F1 adjusted OIBDA, increasing towards low double digits in future years as a result of the U.K. tax rate increase. Total CapEx incurred at the Formula One Group in 2023 was $426 million, approximately $390 million of which related to the development of LVGP, with the majority incurred at the Formula One Group corporate level. At the Liberty Live Group, there's attributed cash, liquid investments, and monetizable public holdings of $418 million, which includes ETF assets. There's $400 million of undrawn margin loan capacity related to our Live Nation margin loan. And as of February 27, the value of the Live Nation stock was $6.5 billion. We have $1.2 billion in principal amount of debt against these holdings. Liberty and our consolidated subsidiaries are in compliance with their debt covenants at quarter end, and quickly looking at the Braves, the Braves business is also best analyzed on an annual basis due to fluctuations in game count. Baseball revenue increased 9% in 2023, primarily due to increased ticket demand and attendance, leading to a 14% growth in baseball event revenue and 8% growth in retail and licensing revenue. Other baseball revenue declined primarily due to fewer concerts held compared to the prior year. The battery had another great year with mixed-use revenue increasing 10%. Total adjusted OIBDA decreased for the year, primarily due to increased player payroll expense as Braves management continues to invest in its on-field success, including a number of trades and accelerated player signings in December of 2023. Adjusted OIBDA for mixed-use development increased 11% in 2023. And just a reminder that SG&A was elevated for the full year due to the split-off costs. We would anticipate a $10 million to $15 million annual run rate for corporate overhead at the Atlanta Braves Holdings. With that, I'll turn it over to Stefano to discuss Formula One.

Thanks, Brian. The 2023 season delivered incredible racing and record financial results. On the track, we want to recognize Max Verstappen and Red Bull once again on their superb performance. The rest of the grid battled until the end. The race for second in the Constructor championship came down to the final lap of the season between Mercedes and Ferrari. McLaren and Aston Martin battled for fourth, with McLaren intensifying the competition after a solid mid-season upgrade. Oscar Piastri had a stellar rookie season, securing 97 points, including two podiums and a sprint race victory. Albon fans have much to cheer about as he scored points in a number of races in 2023, helping Williams finish 7th, showing good progress under James Vowles' leadership. Across the entire 2023 season, six teams were represented on the podium, reflecting the talent across the grid. The new regulations are increasingly benefiting competition. We believe this will continue in 2024 as the benefit of the cost cap and the technical regulations mature. Financially, the business generated record revenue and adjusted OIBDA for the year. Our primary revenue stream grew, benefiting from new and renewed commercial agreements. Furthermore, our Paddock Club had an incredibly strong year with hospitality and experiences revenue growing nearly 100% year-on-year. This was driven by the expansive suite of hospitality and experience offerings at the Las Vegas Grand Prix, as well as growth in our core Paddock Club product with the Paddock Club selling out at 10 of 19 events. Towards the end of the season, we had the spectacular inaugural at the Las Vegas Grand Prix. It was a formidable undertaking to move the project from start-up planning to race delivery in a little more than one year. We are incredibly proud of the Las Vegas team, who worked with multiple stakeholders in the city and within the wider community to deliver an incredible event on and off the track. Total ticket sales were 316,000 for the weekend. The race was thrilling from start to finish. Charles Leclerc passed Perez on the last lap to secure his second-place finish. The race generated a fan reach on multiple platforms and attracted new viewers who hadn't engaged all season. The local economic benefit generated by this race is remarkable. Local casino partners had record revenues with monthly gaming revenue reaching an all-time high for November. Stepping back to the broader calendar, the 2023 season overall delivered another year of record attendance. Six million total fans attended the race weekend, up 5% compared to the 2022 season. Twelve race promoters reported a new attendance record, including 480,000 at Silverstone, 445,000 at Monza, 405,000 in Mexico, and 308,000 in Belgium. Ratios of attendees remain strong through the end of the season with record crowds in Sao Paulo and Abu Dhabi. F1 fans tuned in across platforms. Last season, we worked closely with our media partners to create new tools to estimate digital viewership on platforms and channels not covered by Nielsen. Our findings suggest an additional 29% of the audience that is not currently covered by traditional measurements globally, representing almost 20 million viewers on average per race weekend. The share of digital viewership is higher for markets like the U.S., where fans rely more on video-on-demand and streaming platforms for races, especially those at less convenient times for live viewing. We will keep working with Nielsen this year to incorporate more of these digital audiences into their standard reporting to provide the most accurate picture of our total audience. Looking at broadcast TV, the cumulative TV audience for the 2023 season, excluding digital viewership, was 1.5 billion, and average viewership per race was approximately 70 million. In the U.S., cumulative viewership was up 4% compared to the prior year, setting a new season cumulative TV audience record. Importantly, viewership among the under-35 and female demographics grew across all our markets. Our spring series continued to drive increased engagement throughout the season, boosting TV audiences and race weekend attendances. For our sponsors, there was a huge 50% decrease in average brand exposure during the spring weekend. We look forward to the six events in 2024. Formula 1 was once again the fastest-growing major sports league on social media for the fourth year in a row with the highest growth rate compared to 11 other global sports, including the NBA, NFL, and Champions League. We grew to 70.5 million followers on social media, up 17% from the prior year. Growth continued, especially in the U.S., where social media followers increased by 28%. The U.S. continues to be our largest audience on YouTube and TikTok. For our f1.com and F1 app platforms, over 100 million unique visitors viewed over 3.1 billion pages, an increase of 10% over 2022. Consumption of highlight videos on our web and app also grew by 35%. We made greater commercial progress in 2023, securing contracts that will underpin our continued success. As of year-end, we had over $12 billion in future revenue under multiyear contracts. Our momentum continued during the off-season and into 2024. With race promotion, we are prioritizing quality and value for every race slot, reaching what we believe is a comfortable near-term maximum of 24 races in 2024. Earlier this month, we announced a 10-year extension with Silverstone and look forward to enhancing the Paddock Club and upgrading the circuit infrastructure. We are excited to welcome the Madrid Grand Prix with a 10-year agreement in a new circuit that will have both street and non-street segments for 2026. The race is planned to initially welcome 110,000 fans, with potential to grow to over 140,000 over several years. We also announced five-year extensions for our Japan and Brazil races. With this announcement, we have now finalized all contract negotiations for the 2025 season, and we will focus on optimizing the race calendar for 2026 and beyond. Additionally, regarding media rights, we are delighted to have recently secured a long-term pan-regional deal across the MENA region with its biggest sports platform beIN. This follows over half of those renewals signed in 2023. F1 continues to benefit from the demand for live global premium content. We are broadcasting in 200 territories and maintain a well-diversified portfolio of media rights contracts across markets, typically ranging from three to five years. As we have mentioned, alternative bidders, including digital players, are increasingly interested in live sports, increasing competition for lucrative media rights. Our F1 TV product has grown significantly since its launch, with active F1TV Pro subscribers growing 37% in 2023 compared to 2022. This product has been bolstered by growth in the F1 calendar, F1 sprint races, new in-depth shows, all 20 onboard cameras, team radios, and continuous live programming enhancements. We believe it delivers a best-in-class product for fans and is now available in 120 countries. Early this year, we introduced a price increase across markets for the first time since the product launch in 2018 to align pricing with market rates for the quality offered. Turning to sponsorship, we had a successful 2023, growing existing partnerships while securing new brands, including leveraging new assets like Las Vegas and F1 Academy to generate incremental demand. Puma and Tommy Hilfiger were recently announced as official partners of F1 Academy, and we will have designs for the season. Beauty brands like Charlotte Tilbury also became an official partner of F1 Academy, marking their first-ever global sports partnership. We also announced an attractive multiyear renewal with our global partner, DHL, this week. Moving forward, we are optimizing our existing inventory to minimize impact, exclusivity, and value for our partners. We are also actively creating new assets to capitalize on growing demand as sponsors prefer tailored opportunities in live events. There are target verticals where we are underexposed, including financial services and betting, to name a few. Our fan engagement activities off the track continue to gain momentum. F1 Arcade's first location in London recorded 400,000 digital visitors in its first year, while the second U.K. location opened in Birmingham. The first U.S. venue will open in Boston and D.C. this year with 20 venues targeted over the next five years. The F1 exhibition moved from Madrid, where we welcomed 170,000 visitors, and opened its second location in Vienna earlier this month, continuing to tour iconic global cities to inspire the next generation of F1 fans. Sustainability remains a large priority for Formula One across our organization, commercial partners, and F1 teams. More details will be provided in the coming weeks, detailing our progress towards reaching the sustainability strategy we laid out in 2019. There are several sustainability accomplishments to highlight from last year. For example, we are continuing to develop 100% sustainable hybrid fuel that will be introduced in 2026 and will be a drop-in fuel usable in road cars without modification, providing broader global benefits to the automotive industry beyond the impact of Formula One. The nine European events of the 2023 season used freight transportation by DHL with a new fleet of biofuel trucks, reducing related logistics carbon emissions by 83%. The first cohort of students from the F1 engineering scholarship embarked on their first work placement with F1 teams, and we will welcome the third cohort this year. Finally, we launched F1 Academy, the female driver category to develop and prepare young female drivers for higher levels of competition. The second season in 2024 will see F1 Academy race as a support series at seven F1 events, with all 10 F1 teams getting involved in supporting the series. In 2024, all 10 teams will have their liveries displayed on one F1 Academy car each and will each nominate one teammate driver to race in the series. We look forward to beginning our 2024 season next month. The '24 race calendar has greater regionalization and a more efficient close of races, reducing the distance of our freight travel globally in support of our 2013 net-zero commitment. China returns to the calendar for the first time since 2019. The six Sprint series will take place in Miami, Austria, Austin, Brazil, Qatar, and China. We have made small changes to the format this season with Sprint qualifying on Friday, Sprint race followed by race qualifiers on Saturday, and the Grand Prix as normal on Sunday. Much to our fans' delight, this off-season has brought exciting news as young talents secure seats for years to come, with Charles Leclerc committing to Scuderia until at least 2025, and Lando Norris remaining with McLaren until at least 2026. Capturing headlines, Lewis Hamilton will leave Mercedes for Ferrari in 2025 after an incredible 12 seasons with the silver arrows. In closing, I am incredibly proud of the accomplishments in 2023 and eager to begin our '24 season. We have a solid financial foundation and an attractive growing fan base. Our team is focused on deepening fandom with optimized content and platforms to boost engagement while capturing more fast data to tailor our commercial outreach. These efforts spread across protecting our established fans, nurturing newly acquired fans, and growing into new cohorts, especially younger audiences and underserved growth markets like Asia. We will continue to invest in our sport to capitalize on this incredible momentum. Avanti Tutta, full speed ahead.

Thank you, Stefano, and thank you, Brian. To the listening audience, we appreciate your continued interest in Liberty Media and the Atlanta Braves Holdings. And with that, operator, I'd like to open the line for questions.

Our first question is from Ben Swinburne with Morgan Stanley.

Congratulations to Renee and the Las Vegas team on a great race and outcome. I know that was a lot of work. Greg, I have a couple of questions for you, and maybe one for Brian if he wants to consider it. You mentioned optimizing the cost structure in Las Vegas for the second year. Could you elaborate on the opportunities there and indicate where we might see this reflected in the profit and loss statement, particularly between general and administrative costs at F1 versus direct costs? Additionally, do you have any updates regarding the new Concorde Agreement that you discussed trying to execute last year? Lastly, Brian, do you have any guidance on capital expenditures for F1 in 2024 now that everything is somewhat established? There will likely be some maintenance costs for all the new assets. That's all I have.

Ben, I'll discuss optimizing the cost structure before letting Renee add her thoughts. For the Concorde Agreement, Stefano will update us on our current status. Regarding cost structure optimization, we acted quickly to get Las Vegas up and running in record time, implementing many measures to enhance the fan experience. With more time available now, we can identify areas for improvement. For instance, a temporary bridge was created over a road at our expense, but these costs won't recur. We also ensured robust security, and I believe we can find more cost-effective ways to achieve that moving forward. I'll hand it over to Renee to mention other possible areas to explore.

Sure. Thanks, Greg. So to Greg's point, we really did lean in on transportation planning and security. No one knew just how traffic would flow. We were hoping for the best, planning for the worst. And it did turn out to be significantly better than anyone feared. That will allow us this year to start looking for areas that we can cut back on. We also have the benefit in year 2 of having a playbook. Again, we had to lean in on fan experience and other events that allowed us to create that inaugural race weekend we needed for year 1. This year, we are looking closely at every line item on the budget to see where we can maximize the fan experience and ensure safety while also looking to cut back on some of those costs.

Some of that will be a direct cost. Some of that will be in G&A, but mostly in direct. Do you agree, Brian?

I believe most of them would be in the operating costs.

Stefano, do you want to touch on the Concorde Agreement?

Yes. Thank you, Greg. Yes, Ben. We expect to address the renewal of the Concorde Agreement with the teams very, very shortly. Our view is that the Concorde Agreement will not need any substantial changes this time around. So we're going to start very, very soon. We had priority to finalize before the end of the season a few regulations and other aspects that need to be settled beforehand. So now we are getting close to the time where we're going to start these discussions very, very shortly, as I said, Ben.

And then last, Ben, on the CapEx. We're not going to disclose any specific numbers, but we would expect it to start trending back to what our normal rate was in the past, specifically on LVGP. The team might evaluate different opportunities where you could put stuff on the balance sheet versus having it as rentals and OpEx. So those opportunities might arise, but overall, we wouldn't expect it to be really material.

Our next question is from Bryan Kraft with Deutsche Bank.

I had one for Greg and Stefano and Brian. Greg, I was wondering if you could walk us through the steps that you still need to take in order to close the spin merge from SiriusXM? Stefano, I was wondering if you could clarify whether the Madrid Grand Prix in 2026 will be counted toward the race count to 25, or will it substitute for Barcelona or another race? And then also, Stefano, if you could just comment, qualitatively on the media rights outlook, it seems like 2024 will be a lighter year for media rights revenue growth based on the renewal schedule and then a stronger year in '25. I just want to see if that was right. And then the last one I had was for Brian. Brian, I was wondering if you could help us with some baseline numbers for Quint events so that we could try to model that correctly? Any estimate of revenue and EBITDA from last year? And any color on seasonality?

So I'll touch on the first one. We received initial comments from the SEC on the proxy. I think those were relatively light. Credit to the legal and accounting teams for answering those or having a proxy that was clear and transparent, and we'll be able to address those relatively quickly. We will need to have the final proxy cleared by the SEC before moving forward with a vote at the Liberty-Sirius level. We also have a parallel process with the FCC that I think is relatively pro forma; we do not believe that will be the long pole in the tent. So we're still targeting early third quarter, with some chance we may be able to get it done quicker, but we're trying to manage your expectations and ours. Next question, what's the next part of the question?

I would say that I can come in, Greg, to answer Bryan's question on Madrid. In 2026, there will be a lot of Grand Prix, primarily in Europe, with different options that we can pursue. Therefore, I think Madrid shows one thing that was very important for us to see, that the attention for F1 is still there in the old continent where everyone was thinking we needed to move out of Europe because there is no more interest. Madrid shows the opposite. I think in 2026, you're going to see something interesting. We are discussing with other promoters in Europe to do something that will be announced as soon as we close, for sure. But Madrid will be a big boost because the event will be organized in an area where, as Greg was mentioning at the beginning of the speech, it will be a track and a place where we'll be around the convention area to give the opportunity for fans to engage that event in an incredible way. But of course, so far, the focus in Spain is in Barcelona. There is a big advantage to do a Grand Prix there in the next couple of years. With regard to the media rights, there are two points that I think we cannot consider 2024 light because we just signed a significant deal with beIN for the next 10 years. We believe that the F1 TV product is doing very well this year. So I think that for sure is a year where we're going to see another growth. We are preparing for a very important year in the future when the media deal in the U.S. will be a crucial matter to discuss at the right moment, where we believe this will be another step in terms of our growth in that landscape.

Yes. And then, Bryan, on Quint, we're not going to give the 2024 numbers, but what we would say is that the acquisition should be accretive to the Formula One Group overall. So you can kind of do the math from there. It's not overly material to the Formula One business, but it should be accretive going forward.

And maybe just one follow-up for Greg. Just Greg, what's the amount of time you need between SEC approval for the proxy and the vote, and then the vote closing the transaction?

Circa two months.

Our next question is from David Karnovsky with JPMorgan.

For Greg and Renee, I think your biggest hotel partners were consistent in their views on their earnings calls that the rate should have a broader appeal and benefit some of the lower-end or further properties on the strip. So, interested in how you're thinking about potentially accommodating that and what it means for the rates in terms of ticketing or operational adjustments? And then for Brian, F1 operating leverage for the year was a little better than I think some investors had anticipated. The release you called out a reduction in the gene payout percentage as per the 2021 Concorde. Just want to make sure that was the main driver, and there weren't kind of any one-time adjustments to consider.

I'll let Renee touch on the Vegas partners.

Yes. Thanks for the question. We will be going on sale pretty soon, and when we do, you'll see that we have a significantly higher number of general admission. We're actually creating a brand-new general admission-only zone, which will have single-day tickets and will be at the lowest price point that you have seen for the Las Vegas Grand Prix. This is largely driven to accommodate the lower-end properties and also to bring downtown into the mix. We are also working in partnership with the LVCVA to engage downtown with different types of activations, potentially watch parties, but really to spread this benefit of what was an incredible weekend throughout the entirety of the rally.

And then on the F1 operating leverage, to your point, it primarily is the team fees. There are lots of ins and outs, but there are no material one-time items.

Our next question is from David Joyce with Seaport Research Partners.

I just wanted to try to get a finer point on the team payments there. Would Quint's be excluded from team share payments? Or would some of those activities, if there are only F1-related, be involved? I guess the same would go for any other acquisitions. Would any tuck-ins be outside of the Concorde Agreement? And related to that, how are you balancing reinvesting in the business versus thinking about capital returns from here?

I think Quint has an arm's length deal existing prior to our purchase with F1, and we would expect that arm's length deal to continue, but the Quint results are part of the F1 tracking stock, not part of F1 itself. That would likely be the case for any other acquisitions. I can't say absolutely because it would depend on the company, but likely that would be outside the F1 group or the F1 operating statement we shared with the teams. We continue to weigh opportunities like Vegas. Obviously, we look at lots of sporting properties. We think we have something to bring to the sporting world based on what we have been able to achieve at F1, and we think there are some things we could bring forward to other sports properties, but we're judicious in that and people approach us because of those skills. Certainly, looking at continued share repurchases is an alternative as well, and we evaluate third-party alternatives that might arise with that.

And if I could add one on the brief, could just get an update, please, on where that process is with the bankruptcy courts and the RSNs?

Sure. Thanks for your question. We're watching that closely. What we see is the bankruptcy presentation that was made is still being followed. Diamond Sports seems to have a plan for emerging from bankruptcy. As you've probably read, we're watching and seeing that just like you are. For our purposes, we're still getting full payment and operating the agreement as normal. Nothing is deviating from that at this point in time, and we don't expect that, especially as they have laid out per their plan.

Our next question is from Barton Crockett with Rosenblatt Securities.

I'm just wondering about the EBITDA growth year-over-year. I understand you're not going to break out Vegas in any specificity, but is there any comment you can make on whether or not Vegas provided any material impact on that EBITDA change? Did it up, down, or was there no impact, because that was a big kind of year-over-year growth, and that was a new race that was obviously meaningful? So that's one. And then secondarily, following up on the Braves questioning, I was wondering if you could comment on some of the discussion that Major League Baseball is interested in potentially rolling up on sports, local team rights or its own kind of streaming service and that could potentially be a roadblock or something to be resolved as you go through this Diamond restructuring? If you could talk about your views, your support for that idea.

Touching on LVGP, I can say that LVGP was a positive contributor to F1's earnings for 2023. With the cost optimization measures we've discussed and frankly, improved interest in the race and improved potential price points, I believe we will see a greater contribution in 2024, and I think that's where we'll leave that. Regarding MLB, I'm reluctant to comment. You've seen some of the public actions that MLB was taking against some of the Diamond proposed restructurings. Beyond that, I think we'd leave it alone. Derek, if you want to add anything.

No, the only other thing I might add, just a point of clarification, if you're not aware, the current agreement with Diamond does not include streaming rights. So those streaming rights continue to be held at the league level. That's not necessarily the case for all teams, but in our case, it is. And so we're obviously deferential to what the league is going to do as a whole, but right now, our streaming remains at the league-wide level.

Our next question is from Stephen Laszczyk with Goldman Sachs.

Two questions on Formula One, directed at both Greg and Stefano. First, regarding Paddock, could you discuss the potential for growing hospitality revenues in 2024? I'm interested to know if any pricing increases from Paddock have positively impacted revenues over the past few years. Are there specific areas where you believe there's potential to expand capacity? Secondly, on sponsorship, we've seen nice growth in 2023. Can you elaborate on the opportunities for 2024? How much potential do you think there is to increase inventory without diminishing the existing sponsorship value? Stefano, I recall you mentioning the creation of new assets; could you provide more details on that and which verticals you see as significant opportunities?

Stefano, do you want to start on hospitality?

Yes. Thank you, Greg. Thank you, Stephen. What has been amazing is in the last couple of years, the fact that our offers in terms of Paddock Club have been always appreciated by our customers. We did some adjustment on pricing, not everywhere because, of course, we understand that the prices are very important. I think what we have done this year is maximize the potential for growth in areas where there is still availability of space. The other thing that we are doing is seeing if there is another kind of offer that we can put together. Of course, the fact that we are now together with Quint, we're going to exploit the maximum opportunity to make sure that the Paddock Club experience can grow in the area of entertainment because that's the other place where we are highlighting a different way racing can be experienced for our fans. Regarding sponsorship, I think what we have seen in the last few years has been tremendous growth in both the quality and quantity of our partners. This means we need to keep having the right focus on this revenue stream. This also means we should be ready to increase our possibilities for new opportunities. I think one area that is clear is that we can optimize what we did last year by offering differentiated digital options for our partners. On the other side, there are two main areas where we believe there is potential for growth, but we need to find the right partners because of the complexity: one area is gambling, and the other is financial services. We've already taken a big step last year with Amex, and I believe there is a significant opportunity in the future.

Our next question is from Peter Supino with Wolf Research.

One for Stefano and one for Greg. Stefano, if you wouldn't mind, with Silverstone and Madrid, and Sao Paulo and Suzuka all signed in the last quarter, I guess we have seen contracts locked in for 5 or 10 years, in some cases. So how should we be thinking about the trade-offs in terms of contract duration, escalators, step-ups for promotion rights like this? Curious about the pros and cons and how we can think about that for modeling. And then, Greg, if you could please comment on the bigger picture for sports rights. This topic is becoming very controversial, once only driven by optimism. If you could let us know how you see sports rights values playing out over the next several years given the puts and takes of when you're in streaming?

Well, Peter, thank you for your question. Regarding renewals, there are a lot of considerations. First, of course, the financial aspect is relevant. It allows us to stabilize certain promoters that represent incredible opportunities for our stability in the market. The fact that you have seen in the last couple of years that we have secured agreements with certain promoters means there is, from one side, of course, a very interesting financial package. But on the other side, it gives us incredible opportunities to grow beyond what is related to the promotional fee.

I can add to what Stefano mentioned. You need to consider the appeal of the venue and the economic opportunities for us. Generally, if we agree to a long-term deal, it indicates we see it as a favorable opportunity for both fans and economics. A shorter-term deal raises questions. On the topic of sports rights, the landscape has become more complex. More bidding means increased competition, which is a positive development, but a wider range of sports could also pose challenges. There is fragmentation and the difficulty of ensuring fans can easily access their favorite sports. We're constantly evaluating the balance between our reach and the compensation we receive, especially in light of our substantial sponsorship business. Overall, I feel optimistic about the sports properties we're involved with because both have strong fan demand, high ratings in relation to their payments, and dedicated fan bases. Take a look at the ratings for the Braves and the audience for F1, particularly during those early morning races. Both properties are not yet fully monetized compared to their peers. In general, even properties that haven’t seen significant growth have managed to secure more funding in renewals. I remain confident about sports rights, especially for the properties we are engaged with.

That's a great answer. If I could pile on with one, since my esteemed colleague seems to be comfortable doing the same. I wanted to ask you about the U.S. media rights for F1. Renewal with ESPN is generally understood that ESPN doesn't earn much advertising revenue on that contract. How do you think about the case for them paying more?

I believe the case is quite strong, even acknowledging my potential bias. There is substantial growth in fan interest, which we can clearly demonstrate across various platforms. We have an attractive upscale audience and a younger demographic, which are factors that could appeal to potential media partners. Regardless of whether it's ESPN or another company, I think we can convincingly argue that our media rights in the U.S. hold greater value, and there will likely be several interested parties, leading to a better outcome.

Our last question is from Jeffrey Wlodarczak with Pivotal Research Group.

I wanted to follow up regarding Vegas. After your experience there, do you foresee taking on a promoter role in more races after 2025? Additionally, could you explain your decision not to include it in the 11 teams? Lastly, will a new Concorde Agreement be necessary to increase the interest fee to make having more teams appealing to the existing ones?

Thanks, Jeff. I'll touch on the first part about promotion or co-promoting, and then Stefano, maybe you can comment on the 11th team. So on promotion, look, I think we went in and promoted Vegas for various reasons. We viewed it as a unique opportunity to promote the sport, and it was an excellent economic opportunity. We believed we would learn a lot about being a promoter, which would enhance our credibility with other promoters. However, I don’t know that there are many opportunities out there like Vegas where we would insist on doing this again. There may be opportunities in the future where we can partner with promoters; some promoters are short on capital or lack certain skills, which we could assist with. However, in many cases, our promoters bring valuable local knowledge, contacts, and strengths that we might not be able to supplant. So it’s more likely we will think about enhancing that and working together than becoming a promoter of many races.

Yes, Jeffrey. Regarding the second question, it is definitely related to the Concorde Agreement, but it involves joint efforts that need to happen between the FIA and FOM concerning the various evaluations we need to carry out. The process has been followed, and we presented the results appropriately. Moving forward, it will be a topic for discussion, as we will require the right commercial and technical proposal that will be addressed this year.

Alright. Thank you. I believe that was our last question. Thank you again to the listening audience for your interest in Liberty Media and the Braves. We look forward to speaking with you again next quarter, if not sooner.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.