Liberty Media Corp Q2 FY2024 Earnings Call

Welcome to Liberty Media Corporation's second quarter earnings conference call for 2024. Please note that this conference will be recorded today, August 8. I will now hand over the call to Clare Adams, Senior Manager of Investor Relations. Please proceed.

Good morning. Before we begin, we would 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 Forms 10-K and 10-Q 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 statement 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.

Thanks, Clare, and good morning to all. Today, speaking on the call, we will also have Formula One's President and CEO, Stefano Domenicali; Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling; and also during Q&A, we will answer questions related to Atlanta Braves Holdings and Braves management will be available to answer them as well. So, beginning with Liberty SiriusXM, the transaction is progressing towards close. We've received SEC and FCC approvals. We've set the shareholder meeting date for August 23, and we expect to close on September 9. You may note the adjusted merger exchange ratio has been reset to reduce the shares of new Sirius by 90%. We expect the New Sirius share price will be higher at close because of that, and we expect enhanced trading dynamics, including increased potential for index inclusion. I look forward to remaining Chairman and a meaningful shareholder. Turning now to SiriusXM itself, the company maintains its strong financial position. Self-pay net adds improved sequentially and year-over-year, driven primarily by a reduction in voluntary churn. EBITDA was flat versus the prior year, but up 8% versus the first quarter. We expect solid margin and cash generation through the balance of 2024. 2024 is also going to be a peak CapEx year, and we expect to return to free cash flow growth in the coming years. We believe SiriusXM is attractive on a free cash flow multiple basis. Sirius continues to pursue growth opportunities, beginning in the car with a new three-year subscription with a new vehicle purchase at certain automakers, free access, the first free ad-supported platform, which aims to increase trials and win back listeners, and 360L continues to drive improved share of listening in the car. Looking at streaming, Sirius is launching new features and updates every month, and we've seen early improvements in multi-day listening. We've also seen increased engagement in the trial period versus the first quarter, and finally, by pursuing smart unique content, the SmartLess podcast is kicking off its partnership in August with an exclusive subscriber event featuring Howard Stern, Jelly Roll, and many more. Turning to Formula One Group, despite early questions, this is turning out to be one of the most competitive seasons certainly since the start back in 2012. Across the first 14 races, we've seen seven different race winners and eight drivers have been on the podium. This season is on track to have the closest Constructors Championship across the top four since 2012 as well. The difference in time from front to back of the grid at this point in the season is the closest also since the start of the current qualifying system in 2010. Looking at the 2020 driver market, it continues to provide interest and excitement with Carlos Sainz going to Williams, and Haas announcing Ocon joining as a current Ferrari reserve driver. Bearman is showcasing the pipeline of support Sirius talent that it's delivering to Formula 1. And the biggest open question remains, what will Mercedes do with its open seat? Looking now at the financial results for F1, we had a great first half. Year-to-date revenues are up 29% and OIBDA was up 35%, partially driven by three additional races in the period this year. We announced LVCVA as an official partner. They're going to activate across 25 races in 2024 and 10 in 2025, and we continue to successfully scale partners brought in through LVGP. We remain excited about our sponsorship pipeline. Let me turn briefly to MotoGP. The transaction is progressing well. Regulatory filings are progressing on track. We've received foreign investment control clearance in both jurisdictions needed, Italy and Spain, and we recently received merger clearance in Brazil and Australia. We continue to expect the transaction to close by year-end. At MotoGP, the racing has been awesome. Pecco Bagnaia quickly closed the gap with Jorge Martin, but Martin just took the lead back in Silverstone. We are seeing a very competitive title fight now separated by only three points. And at MotoGP, 12 riders across 18 have been on the podium this season. Attendance is up across our races, with a new all-time attendance record set at Le Mans, and Germany was at 253,000, up 8% off an already record 2023 attendance number. Similar to F1, rider movements are fueling excitement. We've also seen interesting movements in the Constructors Championship, with Pramac switching from Ducati to Yamaha next season. The summer break ended last weekend in Silverstone. We're excited for more action in the second half. Turning briefly to Quint, some of the second quarter highlights include the 150th Kentucky Derby, which was an enormous success, the largest single event executed in Quint history, serving over 12,000 customers per day. F1 Experiences has seen meaningful growth across eight races this year, and we've completed inaugural activations for several new partnerships, including the WNBA All-Star Game and the Men's and Women's U.S. Open for the USGA. Turning to Live Nation, we saw another record quarter with no signs of slowdown. 2024 is a year of AOI, amphitheaters, and arenas, and in the second quarter, despite stadium activity being lower, concert attendance was up 5%, AOI was up 21% with record concert segment profitability, and this was one of the top five quarters in history for ticket sales. Revenue from on-site spending is also up double digits year-to-date, and cancellation rates for North America are tracking lower than last year. The ticketing and artist pipeline continues to expand globally. New artists have increased touring by 130% year-to-date, and two-thirds of all total new enterprise tickets signed year-to-date are from international markets. Turning briefly to Venue Nation, we're continuing to see the enhancements made generate incremental revenue. Major festival's average per fan spend is up double digits year-to-date. The amphitheater average per fan spend is also expected to grow by $2 per fan, and Live Nation plans to open 14 major global venues across 2024 and 2025. Turning to the Braves, we've had strong performance from key players this season through last weekend. Ozuna led the National League with 86 RBIs. Since April 12, Sale has had a 2.64 ERA, and Fried has had a 2.71 ERA, which ranked second and third respectively in the National League. Ahead of the trade deadline, the Braves announced the return of Jorge Soler to fill a key position in the outfield and right-handed pitcher Luke Jackson. Both players were on the 2021 World Series winning team. Fan demand remains strong, with per caps up in ticketing and concessions year-over-year. There are 18,000 on the season ticket waitlist, and we've seen a 90% renewal rate to date on season tickets for 2025. Several of the master planning projects completed earlier this year are adding value and enhancing the fan experience. The new 60-foot six-inch Jim Beam Bar concessions are up double digits versus 2023 concessions in the same location. Recently, they've announced further upgrades ahead of the 2025 season, including a new seating product, the Bullpen, which includes access to an exclusive lounge underneath seats, and an extension of the Coors Light Chop House seating area. Also, the Braves recently unveiled the logo to kick off the 2025 All-Star Game. The Braves are thrilled to host the All-Star Game, as it’s an incredible opportunity to showcase the Truist and the Battery sections.

Thank you, Greg, and good morning, everyone. At quarter-end, Liberty SiriusXM Group had attributed cash of $88 million, excluding $100 million of cash held at SiriusXM. During the quarter, Liberty SiriusXM paid down $35 million under the margin loan using cash on hand. There's $1.1 billion of undrawn margin loan capacity as of quarter-end. As of August 7, the value of our SiriusXM stock was $10 billion, and we have $1.2 billion in principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $10.9 billion, which includes $9.1 billion of debt at SiriusXM. As Greg mentioned, the transaction with SiriusXM is expected to close on September 9. In connection with the transaction close, the 3.75% Liberty SiriusXM convertible notes and the 2.75% Sirius exchangeable notes will be assumed by New Sirius and the margin loan will be retired. Following the transaction close, holders of the 2.75% exchangeable notes will have the right to require New Sirius to repurchase the notes, and we expect a substantial majority of holders will exercise this right. Turning to the Formula One Group, at quarter-end, Formula One Group had attributed cash, liquid investments, and monetizable public holdings of $1.5 billion, which includes $1.2 billion of cash at F1 and $58 million of cash at Quint. Total Formula One Group attributed principal amount of debt was $2.9 billion, which includes $2.4 billion of debt at F1, leaving $530 million at the corporate level. F1's $500 million revolver is undrawn, and their leverage at quarter-end is 1.3 times. The MotoGP transaction is progressing well. We have syndicated all bridge financing commitments and reduced the total commitment from $2 billion to $1.65 billion. Note that the $1.65 billion commitment is expected to be replaced with a combination of cash and debt financing at the F1 OpCo level. We also entered into commitments for a $150 million incremental Term Loan A at Formula 1 conditioned on the transaction closing. We obtained commitments from banks to provide Dorna with a new EUR150 million Term Loan A and an upsized EUR100 million revolver to be entered into after and subject to transaction close and to be used by Dorna for general corporate purposes. Looking at the F1 business, I will remind you that the business is best analyzed on an annual basis given variability in the year-over-year race calendar. With that said, I'll make a few brief remarks on the quarterly results, but I would very much encourage you to focus on the year-to-date results. During the quarter, F1 recognized a higher proportion of season-based income with eight out of 24 races occurring during the period compared to six out of 22 in the prior year period. Media rights and sponsorship revenue also increased due to contractual increases in fees and revenue from new agreements. Growth in F1 TV continues to benefit media rights revenue. Race promotion revenue was relatively flat given the mix of races, with Australia and Azerbaijan dropping out of Q2 compared to last year, with Japan, China, and Austria being added in the current period. Other revenue increased primarily due to higher hospitality and freight revenue driven by the additional races. Adjusted OIBDA grew in the quarter as revenue growth more than offset increased costs due to higher pro rata recognition of team payments and the expectation of increased team payments for the full-year over 2023, as well as increased costs due to the additional races held and costs supporting revenue growth. Team payments are best viewed on a year-to-date basis and represented 61.9% of pre-team OIBDA for the first half of the year compared to 62.6% in the prior year. I would note Q2 and Q3 tend to have the highest percentage payout ratios based on the greater mix of European races in these quarters. Other costs of F1 revenue and SG&A are best viewed as a percent of total revenue for the year. Again, looking at it on a year-to-date basis, the adjusted OIBDA margin improved from 24.6% through Q2 '23 to 25.8% through Q2 '24. Looking briefly at corporate and other results in the second quarter, corporate and other revenue was $141 million, including Quint results and approximately $6 million of rental income related to the Las Vegas Grand Prix Plaza. Corporate and other adjusted OIBDA was $5 million in the second quarter and includes Quint results and Grand Prix Plaza rental income, offset by corporate expenses. Quint results in the second quarter were primarily driven by the Kentucky Derby and F1 Experiences across the eight races held. Reminder that Quint's business is seasonal, with the largest and most profitable events taking place in Q2 and Q4. We expect corporate and other adjusted OIBDA will benefit from the rental income and Quint results for the full year. At the Liberty Live Group, there's attributed cash of $406 million, and there's $400 million of undrawn margin loan capacity related to our Live Nation market loan. As of August 7, the value of our Live Nation stock was $6.3 billion, and 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. Turning briefly to the Atlanta Braves Holdings, revenue grew in the second quarter despite three fewer home games compared to last year. Baseball event revenue growth was driven by new sponsorship agreements as well as contractual increases on season tickets and existing sponsorship contracts. Broadcasting revenue grew as there were more total games between home and away played in the second quarter. Baseball operating costs increased in the second quarter, primarily due to higher player payroll, increased payments under MLB's revenue-sharing plan, and higher minor league team and player expenses. The Battery continues to perform very well with revenue up 11% and adjusted OIBDA up 13% in the second quarter. Looking at the capital improvement projects around the ballpark, a reminder that the Braves are spending approximately $15 million related to the projects completed ahead of the 2024 season across the back half of 2023 and early '24. The Braves recently announced additional improvement projects to open ahead of the '25 season, primarily related to new seating options, and expect to spend approximately $20 million on these projects across the back half of '24 and early '25. These are all high-returning projects that will generate incremental revenue for the Braves in the 2025 season. At the Battery, the Truist headquarters is progressing ahead of schedule, and we'd expect to hand that building over to Truist in September.

Thanks, Brian. The 2024 season is delivering incredible racing and action for our fans at home and our sold-out events. F1 continues to prove there is an incredible competition on track. Through 14 races this season, we have had seven different winners from four teams. The gaps between teams are getting closer both in qualifying and races. In Emilia, Max beat Lando by only seven-tenths of a second, following Lando's incredible win in Miami. In Monaco, we saw Charles Leclerc take his first home victory. In Canada, the gap between the top four in qualifying was one-tenth of a second, and we have seen Mercedes return to the top step of the podium with George winning in Austria and Lewis setting his record ninth victory at Silverstone. Hungary saw another excellent race ending in Piastri's first F1 win with the McLaren 1 and 2 and Hamilton rounding out the podium. In Spa, we had an incredible race with very tight gaps throughout and the race led by being swapped multiple times. George Russell crossed the finish line first after thrilling final lap battles against Lewis, but was disqualified after the race because the car did not meet the required weight, meaning Lewis took his second victory of the season, with Oscar Piastri second and Charles Leclerc third. By many measures, we have never had more competitive racing. I expect that the remainder of the 2024 season will continue to deliver great racing for our fans. And as we look forward, the increasingly close racing offers a very exciting prospect for 2025. The incredible competition on track is leading to even higher engagement as our diverse fan base continues to grow. We have welcomed over 3.7 million attendees through the first 14 races of this season, with the Canadian Grand Prix seeing record attendance of 350,000 and Silverstone matching its incredible 2023 record attendance of 480,000. We continue to see sold-out events, and there is strong demand for the races still to come this season. On TV, we are seeing particularly strong numbers in key growth markets, including Australia, the U.S., China, Canada, South Africa, and the Middle East. Looking at the recent races, the Canadian Grand Prix was the most viewed live race ever in Canada. The British Grand Prix was impressively the most viewed live European race on Sky U.K. and earned the largest overall weekend audience for F1 in the U.K. since 2016. In the U.S., five races this season have achieved record live viewership for their respective events, including the Chinese, Miami, Monaco, Canadian, and British Grand Prix. The Miami Grand Prix viewership peaked at 3.6 million on ABC, and the 18 to 49 demographic averaged 1.3 million, with the Sprint Races averaging 946,000 viewership on ESPN, the largest on the channel since we introduced the Sprint format in 2021. Our digital and social platform also continued to see very strong performance. We saw a 32% decrease in social media followers compared to 2023, driven by the success of the new channel, Threads and WhatsApp, with accelerated growth on Instagram. We also have higher engagement with 4.1 billion video views and 880 million interactions on Instagram year-to-date. F1 TV continues to perform well. Total subscribers are up 11% year-over-year, and in the U.S. market, subscribers are up 16% year-over-year. As previously mentioned, we implemented F1 TV price increases for the first time across markets early this year, which have been well received with limited upticks in churn. F1 TV continues to be an important and growing product. We also continue to see great results from our podcast this season. Total listens to all episodes of the F1 podcast, including Beyond the Great F1 Nation and F1 Explain since launch in 2018, surpassed 125 million this quarter. The F1 Explain podcast is engaging a new and more diverse audience, with 40% of the listeners in the U.S. market. A few weeks ago, we announced the 2025 sprint calendar with races to take place at six events: China, Miami, Belgium, Austria, Brazil, and Qatar. The sprint continues to be a big success with higher TV audiences for the Friday sprint qualifying and Saturday sprint race compared to traditional practice sessions. The events also bring extra on-track action for our fans attending the events, providing additional value for promoters. 80% of fans surveyed after the Chinese Grand Prix said that they prefer the new sprint format, and we look forward to maintaining the momentum in 2025. The F1 Academy season is also off to a strong start with the first three races completed in Saudi, Miami, and Spain, and the next race in Zandvoort. Abbi Pulling is leading the series with a recent first win as the first woman in British F4. American driver Chloe Chambers took first in race two in Barcelona, dominating victory over Pulling. F1 Academy is growing engagement and attracting new fans. In the last 12 months, F1 Academy social media followers have increased by three times, with a diverse follower base: 57% of the F1 Academy followers on Instagram are female, 57% are under 25 years old, and 83% are under 35 years old. Online coverage of F1 Academy across news sites and social reached almost 700 million Internet users. The Miami Grand Prix alone generated 14.7 million video views and 4 million interactions on social media with 2 million live viewers on broadcast TV. F1 Academy has also been engaging fans attending F1 events around the calendar. Given the success alongside F1 race weekends, many of the promoters hosting F1 Academy events this year are lining up to host again in 2025, and we've received interest from several other markets. Turning to commercial updates, on race promotion, there continues to be significant demand from potential new race hosts. We do not currently intend to go above 24 races in a season as our duty is to ensure the right strategic balance for the long-term future of the sport. The added benefit of this demand, with limited race slots, creates increased incentives for promoters to innovate and improve the experience of races across the calendar. More promoters are committing to investments in their races. For example, Hungary has committed to significant refurbishment including a new pit building from 2026. We are also seeing examples of great entertainment from promoters including the Barcelona Fan Event, a Thursday Concert in Silvester, and we look forward to returning to Las Vegas after an incredible show in 2023. We announced the 2025 calendar much earlier this year, which gives the teams and promoters more time to prepare and market their events. We now continue to focus on optimizing the calendar for 2026 and beyond. Our media rights offer some key renewals to address for 2026, including our deals across the Americas, the U.S., Canada, Latin America, Brazil, Mexico, and across most of Asia, including Japan. The continued growth of our diverse fan base around the world, including the U.S., and demand from broadcasters means we are confident in the future of our media rights deals. We are also excited about the amount of content F1 has to offer. Across race weekends, we have many events and lots of data provided by numerous cameras around the track and cars. We can offer our broadcast partners and the fans at home incredible access and insight into the weekend through all this content. Alongside this, we are very pleased to once again deliver the F1 Kids program this season for seven events. The feedback from 2023 was impressive, and F1 Kids is providing to be a brilliant way to engage children in Formula 1 in a way that's accessible and fun for them. F1 Kids is available through broadcasters around the world via a live, dedicated international feed of the Grand Prix. The feed features 3D graphics, child-friendly team radio transmission, technical explanations, and a bespoke package of colorful graphics and animation including cartoon driver avatars and upgraded car delivery design. The production returned in Saudi followed by Monaco and Silverstone and will also be available for the Dutch, Singapore, Sao Paulo, and Abu Dhabi Grand Prix later this season. Looking at sponsorship, we are confident in the pipeline with exciting conversations underway. We continue to have opportunities in categories such as financial services, consumer electronics, telecommunications, and betting. We have also more closely integrated the sponsorship, licensing, hospitality, and marketing teams in a comprehensive strategy to optimize and grow our fandom and commercial opportunities. We are also continuing strong progress on fan engagement opportunities outside of race weekends. In partnership with Apple and Warner Brothers, we were delighted to recently confirm that the much-anticipated movie titled F1, starring Brad Pitt, directed by Joseph Kosinski and produced by Jerry Bruckheimer, will be released on June 25, 2025. We are excited to release the movie teaser during the build-up of the British Grand Prix. The theme is unique in that it is being filmed authentically during our racing weekend, and it will be a great opportunity for our sport to reach new fans and engage audiences. The sixth season of Drive to Survive, after reaching the top 10 on Netflix in over 40 markets, has seen its global audience exceed 100 million viewers in the first five months since release. Across all six seasons to date, the cumulative audience for the series is close to 800 million. F1 Arcade continues to perform well, with high numbers of bookings during both race and non-race weeks. The new Boston location has seen 50,000 guests in the first two months since launch. All three F1 Arcade venues hosted a ticketed watch party during the three-day Silverstone race, and all venues sold out, with the London venue welcoming almost 600 guests. The ongoing success of the project means that in addition to the venues in London, Birmingham, and Boston, F1 Arcade is planning to open new venues in Washington, D.C. in late 2024 and Las Vegas in 2025, with more to come. Following successful runs in Madrid and Vienna, the F1 exhibition has continued its successful road show in Toronto, which has been extended to mid-September, and will open in London later this month, showcasing the incredible history of the sport in the U.K. Even though the London show is not yet open, 60,000 tickets have already been sold. These are great examples of bringing fans and future fans into our sport through different routes, mixing F1, entertainment, and hospitality. Our ESG program remains an important focus for the business. Earlier this year, we published our first impact report showing the progress we are making on our Net Zero 2030 commitment, as well as our diversity and inclusivity initiatives, both within our business and the broader sport. A key part of our plans will be to move to fully sustainable fuel in 2026, which we believe could provide huge benefit as an innovative solution to decarbonize existing and future cars for both the F1 ecosystem and the broader automotive industry. This has been a very important reason behind Ford and Audi joining the sport in 2026. We continue to work closely with the teams, the FIA, partners, and promoters to deliver on our commitment, as highlighted by recent events. The Silverstone event was powered by renewable energy, including over 2,000 solar panels, and has increased recycling at the event. Following success from last year, there have been further trials of a low-carbon energy system deployed to support activity across the pit lane and broadcast compound that has been shown to reduce-related emissions by 90%. Trials this year have taken place in Austria and Hungary, with the first scheduled for Monza. On diversity and inclusion, we were delighted to recently confirm that as part of our program to provide educational opportunities to underrepresented groups, 20 engineering students in the U.K. and Italy will become the latest recipients of the Formula One Engineering Scholarship over 2024 and 2025. Founded in 2021, the scholarship program addresses some of the key barriers to higher education for underrepresented students, including financial burden and access. By 2025, 50 students will have entered the program. As I mentioned earlier, F1 Academy continues to go from strength to strength and is critical to our goal of developing and preparing young female drivers to progress to higher levels of competition. Eight female drivers, including five F1 Academy drivers, raced in round six of the F4 British Championship, making it the highest-ever level of female participation in the championship. We also have a talented driver, Sophia Floersch, racing in FIA Formula 3 for Van Amersfoort Racing. This shows the huge importance of the FIA F3 and FIA F2 pyramid run by Bruno Michel that continues to develop and nurture young talent to reach the very top of our sport. Creating the right structure for these talented female drivers and ensuring we have the right system in place to nurture talent at a young age is incredibly important. We remain focused on the long-term goal and building a sustainable increase in female participation in motorsport. It has been a fantastic season so far with more to come after the summer break. The interest in and demand for our sport continues to be huge, and I'm confident in our future. Avanti tutta, full speed ahead. And now I will turn the call back over to Greg. Thank you. Ciao.

Thanks, Stefano and Brian. Our Annual Investor Day will be on Thursday, November 14 in New York City. Please note, we've moved to a new location. We look forward to seeing you at the Jazz at Lincoln Center. Save the date. Additional details will be provided soon. We hope to see many of you there. And with that, operator, let's open the line for questions.

Our first question comes from Bryan Kraft with Deutsche Bank. Please proceed with your question.

Hi, good morning. I wanted to ask what Formula 1 and its promoters are seeing in the coincident and leading indicators for F1 demand in terms of ticket sales, pricing, percentage sell-out, on-site spending or whatever metrics you look at. Has there been any moderation at all on the strength of demand? And maybe specifically, if you could comment on what you're seeing since the Vegas tickets went on sale in late March? Thank you.

Stefano, why don't you start, and then I'll ask Rene to comment on Vegas.

Yes. Thank you, Greg. Thank you, Bryan. I mean, for what we can see, as we have already announced, we don't see any kind of significant backdrop of any interest. I mean, we have sold out even in the events we had in front of us, and there is still a very, very, very high interest. We are, of course, monitoring the situation on the events side because we know that in other areas, there is a sort of drop in that request. But this is something that we don't see at all in our championship.

Encouraging to hear. Thank you.

To address the Las Vegas portion of your question, the ticket sales trends align with what we anticipate for a year-two event. The U.S. market leans towards last-minute purchases, and Las Vegas particularly reflects this trend. Comparing to year one isn't straightforward due to several factors. Firstly, the sales cycle was longer in year one, as we launched ticket sales six months earlier than we did this year. Additionally, the excitement generated by the initial demand of a year-one event is significant and not easily replicated. For year two, we've adjusted our approach by focusing our marketing efforts on the immediate upcoming period, a strategy that was highlighted by some of our partners in their recent earnings calls. Last year, our marketing was spread throughout the year to maintain excitement, but we've observed that the highest demand occurs in the three months leading up to an event. Therefore, we're concentrating our marketing budget on this period and are enthusiastic about the demand we are witnessing, which we expect will continue to rise.

Thank you very much, Renee.

Thank you, Bryan. Next question, please.

Our next question comes from Peter Supino with Wolfe Research. Please proceed with your question.

Hi, good morning. I wanted to ask about promotion revenue at F1. It was relatively flat year-over-year despite the two additional races. And you cited event mix as the reason. I just wondered if you could give any more color on event mix specifically and how we should be thinking about those dynamics into 2024? And then I wanted to ask about the Concorde agreement and wondered if you have any fresh thoughts on that process? Thank you.

Stefano, why don't I let Brian talk about the mix and then let you comment on the Concorde agreement.

Okay. On the second question regarding the Concorde agreement. I would say, as we said the last time, I mean, it's all good because we have the right terms, the right relationship with the teams. As you know, the Concorde is divided into three main pillars: one is financial, one is commercial, and one is related to governance. Everything is progressing very, very well. As you know, we are not in a rush to complete the long form, but everything is running smoothly as expected. This is really great because the relationship with the teams, the FIA, and all the other stakeholders is very good at this moment. So, we are working and progressing in the right way. Of course, we are focusing to try to maximize the benefit to have the maximum joint commercial activities with all the teams and making sure that what we're going to sign will be the right in terms of division of the revenues between the team and the commercial rights holder, but it's all great now.

Thanks, Stefano.

Our next question comes from Ben Swinburne with Morgan Stanley. Please proceed with your question.

Thanks. Good morning, everyone. I have two questions, probably for Greg. Live Nation continues to perform really well from a business perspective with the stock obviously limited given the DOJ overhang. Just curious from your perspective, if there's any appetite from Liberty's point of view to think about a breakup of the company kind of proactively? Obviously, that's not the desired outcome from the lawsuit, but to the extent these things can take years to play out and limit the equity, if there's any thought that you would share on potentially exploring something like that? And then I don't know if you or Stefano want to take this, but what prevented Andretti from joining F1? And obviously, there's just some DOJ noise there, which I'm imagining you're probably not too worried about, but I'm just curious if that's something that might be revisited in the future if you think team expansion makes sense for the sport and any comment would be interesting and helpful. Thanks.

I’ll take a moment to address Live Nation first. The business continues to perform strongly, and the company operates fully within the law, having had a monitor in place for 14 years. The actions taken have been well known for a long time, and we believe the DOJ's charges are unfounded, particularly the notion that breaking up the company would reduce ticket prices. We don’t believe that this remedy aligns with our interests or those of consumers, nor do we think the DOJ fully grasps the issues in the market. The reality is that prices are driven by excess demand in relation to supply. Thus, a breakup is not beneficial for Live Nation or consumers, and we will proceed accordingly. As I understand it, our plan is to continue with our current businesses, which we anticipate will function effectively throughout 2024 and into 2025. Regarding Andretti, we announced this morning that we are under investigation by the DOJ, and we plan to cooperate fully with that inquiry, including any requests for information. We believe that F1's decision was compliant with all relevant U.S. antitrust laws, and we have previously outlined our rationale regarding Andretti. We are not opposed to expansion per se; however, it follows a specific methodology that requires approval from both the FIA and F1, who must determine that certain criteria have been met. We are open to new applicants seeking approval, provided they meet those requirements.

Thanks, Greg.

Our next question comes from David Joyce with Seaport Research Partners. Please proceed with your question.

A question on Quint. If you could please help us understand how the relationship worked before you acquired it in terms of, would they buy tickets from you on a wholesale basis as part of their wholesale hospitality packages? But now that it's inside, what are the impacts on revenue, expenses, and EBITDA in terms of any eliminations from your activities, specifically at F1 events? Thanks.

Maybe Renee is in a good position to take that.

Thanks, Greg. Thanks for the question on Quint. So, I would say prior to the acquisition, Quint was obviously a third-party vendor. They would acquire inventory directly from the promoters, particularly around secondary hospitality offerings. Their relationship back to Formula 1 would be essentially that of a profit share arrangement. They did also provide some reseller capabilities with regard to Paddock Club for the teams as well as for F1 directly. Now that Quint is a subsidiary of Liberty Media, we have looked to integrate those businesses in a closer manner, but while still being cautious around leakage under the Concorde agreement. So, really keeping those business relationships on kind of a third-party basis. With regard to LVGP, we have directly integrated them, and we've outsourced our sales team to Quint. They are running our sales and ticketing program, obviously, in partnership with myself and with Emily Prazer. Their results will be consolidated up through Liberty Media with commission-based arrangements being paid to Formula 1, which commission-based payments then goes into the prize fund. Going forward, we are also going to look for new ways to really prove out the thesis around the acquisition and enable Quint to be a closer partner to all the promoters and to F1, but that is all in process still. I'll refer to Brian on the accounting question.

Yes. You can see on Page 3, the eliminations for the quarter primarily represent the eliminations between Quint and Formula One. You also have the lease payment across from LVGP up to Liberty Corporate in there as well. But that largely represents Quint buying tickets from Formula 1 and then reselling them at the price that they're buying them from Formula 1.

Thank you. Next question, please.

Our next question comes from Vijay Jayant with Evercore ISI. Please proceed with your question.

Thanks. So, Greg, you've been now saying a few times that you're really excited about the sponsorship business. Obviously, that's probably the most opaque for us on the other side. Anything you could share on what it is and how meaningful is it going to be? There's obviously been some press reports that LVMH is going to be a new partner. So, anything on that would be really helpful. And then just also for Renee, on the Vegas race, just for clarity, your hotel partners that you sort of curate high-end hospitality with rooms and everything, do they buy tickets from you directly and then do it or is it some other form of arrangement? Thanks.

Thanks, Vijay. So, I'll comment a little bit on sponsorship and let Stefano add anything he wishes. Look, I think very excited about the sponsorship pipeline, excited about what Emily Prazer and her team, Johnny are doing there. We've seen continued interest from blue-chip clients who want to be involved at prices that are more attractive for us than historical levels and filling out categories that we previously had not had an entry in the sponsorship world. So, obviously, I can't comment on any rumored or unannounced deals, but I feel very good about the pipeline, and I'm confident in where we both are on those new entrants and on renewals from some of our existing players. Stefano, anything you want to add?

I completely agree, Greg. The numbers are demonstrating the interest in our business. Looking back just four years, we had only four global partners, and now we are approaching ten. There is significant interest now, but it is crucial to maintain the quality of our partnerships at the right price levels. We are in a very strong position. I believe we have an exceptional opportunity for our partners to form collaborations with each other. This B2B relationship has a multiplier effect, which is vital for the future growth of our business. I have nothing more to add, but just stay tuned because our future looks very promising.

Yes, and I think Stefano made some excellent points. I would like to add that it's not just about the quality of our partners and their willingness to pay. They are willing to pay because they see value in it and are finding meaningful ways to activate at races, on the grid, and around events for both themselves and us. So, all of this is very encouraging. Renee, what would you like to add?

I think that's an excellent point, Greg. To elaborate on the sponsorship aspect, we utilize the LVGP as a testing ground to engage marquee sponsors more effectively in the activations on track and in the fan zones. One of the significant benefits of the Vegas race, aside from the financial aspect, is the heightened interest from prominent companies we are currently in discussions with. There is a lot of enthusiasm regarding the sponsorship opportunities. Regarding your question, Vijay, we do sell tickets to our hotel partners, who then bundle these tickets into their own packages for customers, and there are likely some complimentary arrangements for high rollers visiting for gambling. They will return to us later in the year as they require more tickets. In the first year, they purchased a substantial number of tickets early on to meet the initial demand observed. This year, we are collaborating closely with them to enhance marketing efforts and start filling those hotel rooms now that families are back from school and planning for the fall.

Great. Thanks so much.

Thank you. Next question.

Our next question comes from David Karnovsky with JPMorgan. Please proceed with your question.

Hi, thank you. Greg, as you noted, really tight performance in the constructor standings, which is great to see. You do have new car and regulations coming in 2026, and historically, that kind of change has been associated with a temporary period of one team dominance. What confidence do you have that the rules you have put in place or will put into place can prevent that kind of outcome? And then, Stefano, as you noted, I think nearly all of your Americas deals are expiring this year and next year. Interested to know if you see any prospect for a multi-country deal and whether there'd be any benefit financially or otherwise for that type of structure? Thank you.

I'll comment on the regs briefly, but I think Stefano could actually articulate on them as well. We believe the regulations are designed to create more exciting racing while also meeting many other goals around issues like sustainability and things that help our OEM partners drive innovation. So, we're trying to hit on multiple levels. I think people were doubtful about what these regulations, how the regulations would play out when we induced them last time. By many measures, as we noted earlier, we've never had more competitive racing. Our hope is that the 2026 regulations will do the same. But as you rightly note, somebody may figure out a way to get a jump and take an early lead, but we think they're designed to create more parity and more exciting racing and should over time. Stefano, what might you add?

I would say that this dilemma at the end of each regulatory cycle is there. The things that F1 together with the FIA has always done, I totally believe so, is to anticipate the need for that change. And we, of course, keep at the center the fact that we want to have a very good competition on track, give the possibility for drivers to express themselves, and make sure that with the budget cap combination and limitation development, teams can catch up quicker to keep the gaps between the teams smaller. On the other side, we have the duty to anticipate the things that are relevant in terms of technology to keep at the center of our platform, which is so important. That's why two years ago, we took the decision of putting the new power unit with sustainable fuel at the center because, in terms of technological challenges, this appeared at that moment to be the most important one. I do believe that it's part of the game, and teams are already planning for '26 because the regulations will be very, very different. I'm sure that those who are very skeptical about what we try to anticipate will think differently as soon as we see the action on track. As Greg was correctly saying before, I remember very clearly people thinking that the regulation that we are now in would slow down cash by more than six or seven seconds, and that's not happening. So, I think that we are doing the right thing, and as always in life, you need to be brave to try to anticipate the things in the right way, and that's what we did. On the second one, I think it's related to the U.S. First of all, let me say that we are very happy with ESPN and what they've done for our sport and what they are doing since the beginning of our journey together. We see now bigger interest for sure. We see some other sports trying to divide the package differently. But, of course, that's a personal opinion, and we're going to tackle that subject in the due course over the next couple of months. I do believe that, in the U.S., we are still in a place where awareness is very important. From a consumer point of view, if you are not really on the spot on the sport, creating multiple offers creates more confusion, let me put it this way. So, therefore, we need to make sure that the incredible demand we have from different partners is taken in the right way at the appropriate time. But for sure, yes, Martin will represent a big opportunity for us in the next years.

Thank you.

Thank you. Next question, please.

Our next question is from Barton Crockett with Rosenblatt Securities. Please proceed with your question.

Hi, thanks for taking the questions. I have two. First, regarding the race promotion revenue with Formula 1, you have 24 races this year compared to 22 last year. Typically, I would expect growth in promotion revenue per race, but considering the current mix and your outlook for this year, is there any reason to anticipate a different trend for 2024? Now, switching to the Braves, I noticed you've been off Comcast for most of the season due to their dispute with Diamond. Has this significantly affected the business in terms of fan interest or sales? If not, what does this indicate about the value of the TV promotion?

So, I'll comment on the first one, and I'll let Derek, if you'd like, to take the second. I think, Barton, your assumption that we get increases generally in race promotion fees is correct. Derek, do you want to take on the Braves impact of Diamond?

Sure. Thanks, Greg. Yes, obviously, we were off for three months, and you never like to see carriage disputes. We're thankful that the carriage dispute is resolved. What I can tell you is there's really no material impact on our business. We've certainly seen a reduction during that period of time in ratings that is somewhat commensurate with the reduction in the carriage. Now that that's back, we'd expect that those ratings to also go up. So, we're glad that it's done and glad they got that all resolved.

Did you guys try to do any type of additional streaming push to offset that? And if not, why not?

Well, the streaming rights are held at the league level right now, so those don't belong necessarily to Diamond. There's a provision inside of the agreement that's rather complicated as it relates to the streaming. Of course, in the future, should all these rights come back to us, I think we're prepared to evaluate all the different options including streaming.

Thank you.

Our last question comes from Stephen Laszcyzk with Goldman Sachs. Please proceed with your question.

Hi, great. Thank you. Two on Formula 1. You called out the strong demand for race promotion and the commitments you're seeing for improved hospitality from promoters. Maybe a longer-term question here, but I'm curious how you would encourage us to think about the financial opportunity from improved hospitality over the next few years. Any goals perhaps on the Paddock Club capacity side of the equation? And then just quickly on team payments for Brian, you called out some of the seasonal aspects around the payout this year. Curious if there's anything more you'd be willing to add on how the dynamic works and perhaps what that can mean for the pace of operating leverage on team payments the rest of this year? Thank you.

Stefano, do you want to take the Paddock Club issue, and I will let Brian to add?

Yes. Thank you, Stephen. We have a quality problem to take on now for sure. That is the fact that we in almost all the events are sold out. When we're talking about hospitality, what we were very good at doing is maximizing the different packages. Now the point is, if you want to add places with the right space and the right quality for the service that we're offering, there is the need, of course, to take a rate-by-rate situation to see what we can do with the promoters in terms of capacity, possible extension. This is something that we are discussing. There are advanced situations, for example, with Australian promoters and others, because for us, of course, it is a matter of experience. We cannot run the risk of overcrowding the hospitality area because the demand is very high. So, now we are watching, as I said, with everyone, what we can do in terms of having the possibility to expand this area to offer the right service for those who want to have it.

Yes, Stephen, on the team payments part, I would point you to the year-to-date results there. We are at 61.9% on a U.S. GAAP basis pre-team, team payments as a percent of pre-team share OIBDA compared to 62.6% last year. We would expect some minimal leverage as you go throughout the year and look to the end of the year, but it's fairly de minimis. But definitely focus on the year-to-date number, not the quarter.

Great. Thank you for that.

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

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.