Earnings Call: Q3 2020

Nov 5, 2020

Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation twenty twenty Third Quarter Earnings Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. As a reminder, this conference is being recorded November 5. I would now like to turn the conference over to Courtney Ton, Chief Portfolio Officer. Please go ahead. 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 our most recent forms 10 k and 10 Q filed with the SEC. These forward looking statements speak only as of the date of this call, and the media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained herein to reflect any change in Liberty Media's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. On today's call, we will discuss certain non GAAP financial measures, including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media and SiriusXM, schedules one and two, can be found at the end of the earnings press release issued today, is available on our website. Please remember to register for our virtual Liberty investor meeting. On Thursday, November 19, we will cover Liberty Media and Liberty TripAdvisor. And Friday, November 20, we'll include Cure, GCI Liberty, and Liberty Broadband from 11AM to 2PM eastern on both days. After the presentations on both days, John Malone and Greg Muthay, along with presenting CEOs, will host the q and a session. Please pre submit questions by Friday, November 13 to investor day at libertymedia.com. You can find the link to register and all of these details on our homepage. Now I'd like to turn the call over to Greg Maffei, Liberty's president and CEO. Thank you, and good morning. Today, speaking on the call, we will also have Formula One's chairman and CEO, Chase Carey and Liberty's chief accounting and principal financial officer, Brian Wendling. I'd again like to recognize and thank our management teams and employees that have done such an impressive job managing through this COVID-nineteen crisis. So I'm going to start with Liberty SiriusXM, where we restarted share repurchases during the quarter and purchasing $110,000,000 across both LSXMA and K shares from August through October. The discount stubbornly remains, but we will take advantage of it as we can. And we repurchased Siri at a look through price of $3.66 per share. As I said, we expect to continue to take advantage of the discount opportunity. Our ownership as of October 20 at SiriusXM stood at 74.4%, and we remain focused on getting to an 80% ownership level at the Siri. Looking at SiriusXM itself, like our other subscription businesses, SiriusXM has proved resilient during the COVID crisis. Self pay net add subscribers during the quarter were 169,000, and we expect by year end to be at 90% of our original projections in Brexit given the challenges of 2020. New car penetration increased to 78%. And with our recent OEM agreements, I expect penetration to be over 80% in the next few months and even higher in the years to come. During the quarter, SiriusXM returned capital to $544,000,000 primarily through repurchase of its own stock. We also announced that Jennifer Witt will become the new CEO in January. Jim Meyer, who's done so admirably, will remain with us as Vice Chairman. And Sean Sullivan joined us as CFO. Jennifer has been with Sirius since 2002 and has a tremendous breadth of experience, including SVP of finance, chief marketing officer, and president of sales, marketing, and operation. She is the natural successor to Jim, and we all look forward to working with her in her new role. Sean brings also new perspective into and a depth of entertainment industry experience, which we will appreciate. During the quarter, we also completed the acquisition of Stitcher. We've already launched a redesigned podcast app for a more personalized experience. And once again, Sirius increased its full year guidance. Turning now to Formula One Group. We returned to racing, as you know, beginning early July and to date, impressively, have completed 13 of a planned 17 race season. It's a huge credit to the F1 team, a major feat to accomplish our target of 15 to 18 races. During the quarter, we also reached the signing of our new Concord agreement with all 10 teams. This, along with earlier cost cap and regulations, should create more parity and a healthier ecosystem. The SiriusXM team is working on the '21 calendar and shows that a new bar of races for new for number of races. Saudi Arabia has, with our consultation, announced their place on the 2021 calendar following extensive speculation, and we look forward to a new long term partnership with them. I wanna thank the major accomplishments of Chase of Chase Carey for his major accomplishments over the last four years. He reset the tone and created a spirit of cooperation in f one that has changed the collective outlook for the business. Many thought a task a cost cap couldn't be achieved, let alone new regulations and a new concrete agreement of the magnitude that has been accomplished with full credit to Chase. I'm so pleased that he will stay on and involved as nonexecutive chair. I'm also thrilled that Stefano Dimunicali will join us as CEO in January. He has a rich history in Formula One, and his appointment has been met with resounding positive feedback inside and outside the pack. I'm not gonna comment on libation now because it reports later today. But turning to the Braves, it was an amazing season for the Braves. They clinched their third straight NLE's title and won the NL wildcard in the NL division series. We won seven games into the NLCS against the eventual World Series winning Dodgers. It was sad to see it end before we got to the World Series, but we are confident that the future is bright for our team. Some other notable accolades include Freddie Freeman reserve receiving a being named player of the year and nationally outstanding player in the twenty twenty Players Choice Awards being named Baseball America player of the year and named a finalist for the National League MVP, the winner of which will be announced on November 12. Lonnel Acuna Junior led the NL with an 11.43 at bat ratio to home runs. He also had a 19 home run leadoff home runs in his career. Kunian is the most leadoff home runs through a player's first three seasons in history, eclipsing Barry Bonds. Congrats also to Max Fried on the first Golden Glove of his career. A few battery updates. 96% of the battery is open. Since January, we've opened seven new concepts representing a 100,000 square feet of new capability in retail. And the weekly vehicle traffic in October is on par with pre COVID levels. And year to date, we're at 85%. So with that, I'm gonna turn it over to Brian for a little more on our financial results. Thanks, Greg, and good morning, everyone. Liberty SiriusXM Group had attributed cash, restricted cash and liquid investments of $104,000,000 which excludes $44,000,000 of cash and restricted cash held directly at SiriusXM. We have $870,000,000 of undrawn margin loan capacity at the parent level. The value of the SiriusXM common stock and Live Nation stock held at Liberty SiriusXM as of November 4 was $22,000,000,000 This excludes the value of Live Nation call spread held at Formula One Group valued at $276,000,000 at quarter end. We have 2,100,000,000 in principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $11,100,000,000 which includes $7,900,000,000 of debt held directly at SiriusXM. Formula One Group had attributed cash and liquid investments of 1,400,000,000 which excludes $139,000,000 of cash held at Formula One. Total Formula One Group attributed principal amount of debt was $3,600,000,000 which includes the $2,900,000,000 of debt at the F1 level, leaving seven thirty million dollars at the corporate level. Hello? Hello? It is understood that you're currently on hold for today's conference call. Please stand by as you are experiencing a temporary interruption to this conference. Thank you for your patience. Please continue to Mr. Carey, would you like to continue until the speaker is firing back in, please? Okay. So everybody's on other than the Denver people. Okay. I'll continue. Okay. We're back, Chase. Go ahead. Okay. Never mind. Okay. Go ahead. I don't know where we cut off on. Chase, you can tell us how far it got cut off on Brian Wentley. So maybe just talking about cash at the Formula One, I think sort of it finishing up on $500,000,000 I think it was actually the sentence cut off F1's revolver, 500,000,000 revolver is undrawn. Why don't we let Brian give it? He's got about a few more sentences. Why don't you start with the data Formula One, Brian? Repeat that, we'll even if it's redundant for a few, and then we'll go to change after that. Okay. Thanks, Tony. Hopefully, not repetitive, but Formula One Group had attributed cash and liquid investments of $1,400,000,000 at quarter end, which excludes $139,000,000 of cash at at Formula One. Total Formula One Group attributed principal amount of debt was $3,600,000,000 which includes the $2,900,000,000 of debt held directly at the F1 level, leaving $730,000,000 of debt at the corporate level. And as Chase just pointed out, that $1,500,000,000 revolver is undrawn at ninethirty. Lastly, on the Braves Group. At quarter end, they had attributed cash, liquid investments and restricted cash of $240,000,000 and attributed principal amount of debt of $714,000,000 The Braves amended debt agreements related to the team revolver and ballpark funding during the quarter, securing covenant relief through 03/31/2022, and 09/30/2021, respectively. We expect the Braves to be out of compliance at year end on a small mixed use loan and are working with the counterparty on the necessary waivers. We just note that we previously received a waiver on such covenants through Q3. Now I'll turn it over to Chase to talk about Formula One. Okay. All right. Thanks, Brian. We're proud of the way that Formula One, our teams and our partners have managed through this year. We have three key priorities to execute once the virus hit us in March. First, to keep our fans engaged with the championship season and other initiatives that maintain the momentum we built coming into 2020 and to do so safely. Second, while mitigating the financial impact from the virus this year, prioritize strong long term relationships with our commercial partners. And third, enhance the long term growth of the sport by completing agreements and regulatory changes to strengthen the competition and action on the track, the governance of the sport and the business model for the teams in Formula One. While we still have four races to go, we believe we're well on our way to achieving our goals. Executing the race schedule safely has been challenging and our success to date is a tribute to the partnership of everybody at Formula One, the FIA and our teams. Most do not realize the complexity involved in delivering the Formula One twenty twenty competition, which require about 2,500 personnel at the track. In 2020, we will ultimately race in 12 countries, traveling from many locations requiring us to navigate constantly changing regulations on both ends. With a 17 race schedule beginning in early July, we met our goal of 15 to 18 race calendar. Building this schedule was a bit of a jigsaw puzzle as 13 of our originally planned 22 race locations canceled. We took this as an opportunity to create special interest for fans by adding races where we had not raced in years, if at all. We feel very good about the fan reaction to our season to date. While many sports have struggled with viewership this year, our viewership is up modestly over last year. To achieve these results in a season with Mercedes dominance and Ferrari struggles, while so many other sports have seen steep declines is a solid achievement. Our digital growth has been even more dramatic. Formula One is the fastest growing sports league in terms of followers across Facebook, Twitter, Instagram and YouTube with a 17% growth rate between March and September. Formula One also saw the highest year on year growth for social engagement with growth of 70%, which is more than three times higher than its closest competitor. We've had some special moments capped by Lewis Hamilton becoming the sport's lifetime leader in wins with his ninety second victory in Portugal and subsequently winning his ninety third in Imola, surpassing the previous record of 91 set by Michael Schumacher. Congratulations to Mercedes, setting new boundaries for becoming the only constructor to ever win seven consecutive constructors titles after Lewis Hamilton's win in Imola. The Eiffel Grand Prix at the Nurburgring marks a return to the podium for Daniel Riccardo and Renaud, a return he cemented with another podium in Imola. At this race, for the first time in our history, we partnered with YouTube to stream the entire weekend for fans across selected European markets. We look forward to continuing our unique partnership with YouTube as another way to engage our fans. In September, we raced twice in Italy, which produced some outstanding racing. There were multiple red flags and a multi car collision on a restart. In Tuscany, only 12 cars finished and Alexander Albon got his first podium. Monza produced one of those thrilling races in years and gave us a snapshot of the future with the youngest podium so far, with Pierre Gasly securing his hidden win and he was joined in the podium by Carlos Sainz and Lance Stroll. We hope to see more of these unpredictable outcomes with the 2022 regulations. The paddock has been a flurry of activity with driver changes. Four time champion Sebastian Vettel did indeed find a seat with Racing Point. We'll see if other drivers secure a seat such as Sergio Perez and Nico Hulkenberg. Nico doesn't even have a permanent seat this season yet has scored 10 points. There's heavy speculation about the new driver lineup from Haas and Netflix has been capturing the drama as they film Season three of Drive to Survive. Continuing on the topic of engagement, the 2021 season of our F1 Esports series presented by Aramco got underway in October with Alfa Romeo claiming the top spot. We're in the middle of a second event right now with racers competing for an industry leading 7 and $50,000 price pot. We've continued to see tremendous growth with eSports' over 237,000 participants attempted to qualify this year. We will have eight live broadcasts, double last year, which will be streamed online via F1's official channels on Facebook, YouTube, Twitch, as well as broadcast by international TV partners. With regards to our 2020 results, we recognized early on this was going to be an unprecedented and uniquely challenging year financially. The most significant impact was on our promotion revenues as only two of our 13 events to date have had fans and those were capped at less than half capacity. And only in Portugal were we able to offer a limited paddock club. There were significant impacts on sponsor revenues this year as some canceled locations had material local sponsors, a fewer number of races, reduced title sponsors and general inventory, and the lack of hospitality precluded some elements of sponsor benefits. The virus also made the completion of new sponsorship agreements more difficult. Our television revenue saw the lowest percentage impact among our three primary revenue categories, however, was still significant. We've reached revised agreements with all but a couple of our material commercial partners for 2020. We approached these agreements with a spirit of partnership. In almost all cases, we could have taken a much firmer position if we simply enforced our contracts as written, however, we believe it best to approach these discussions with a sense of fairness to maintain our momentum. On the cost side, we aggressively reduced costs where possible. Some of our operating costs like freight and travel were naturally reduced with a revised calendar. Other discretionary costs were largely eliminated. On the operating cost level, we implemented furloughs, freezes and cuts in expected discretionary compensation. Our prize fund expense to the teams is contractual and will increase as a percent of revenues. All in all, the financial impact this year is significant but manageable by both us and the teams and positions us well as we go forward. Our third priority was to implement key initiatives for the long term growth in Health and Sport. We achieved much more than most expected. Key elements include a cost cap on team expenditures to improve competition in the business model for both existing and potential new teams, new technical and sporting regulations for 2022 that will improve action on the track for fans, a five year agreement with teams to better balance price fund distribution and provide improved stability and an enhanced sense of partnership, streamlined governance structure to better grow and improve the sport, advanced initiatives on both diversity and sustainability, strengthened our balance sheet to provide both stability and the ability to be opportunistic during this period of continuing uncertainty. We still have much to do and a current focus is our engine. We need to address the costs and performance of the current engine and continue to define path forward for our next engine, which will be a centerpiece for our sustainability goals. We expect to announce the 2021 calendar soon, which will look much like our original 2020 calendar, where the March start, early December finish, and a record setting number of races, including Saudi Arabia, as Greg mentioned. We're planning for events with fans that provide an experience close to normal and expect our agreements to be honored. In the television area, we have one material market to finalize and are otherwise well positioned for next year. Likewise, in our sponsorship category, we're finalizing our last renewal and actively engaged in a number of new sponsor opportunities. If the virus does not preempt plans, we expect 2021 will be pretty close to the 2021 we would have originally planned twelve months ago, meeting continued growth on 2019 and the previously expected growth in 2020. That being said, what is obviously not predictable is the virus. What I do believe more strongly than ever is that the world will, in due course, conquer the virus and when it does, that live unique global events like Formula One will be more popular than ever as people look to the shared experience of sports and our array of partners will have a greater than ever need to reengage with fans and consumers. In closing, I want to highlight what I believe is our most important achievement in 2020, the appointment of Stefano Domenicalli, the new CEO of Formula One effective January 1. Stefano combines a rich experience and expertise in Formula One with the commercial knowledge of leading one of the world's iconic brands, Lamborghini, during the past six years. He is respected throughout the motorsport and commercial world and will hit the ground running. With that, I'll turn it back to Greg. Great. Thanks, Chase, and thanks, Brian. We hope that you all will join us for our virtual Liberty investor meetings on November 19 and November 20. We do appreciate your continued interest in Liberty Media and hope you are all staying safe and healthy. With that, operator, I'd like to open the line for questions. Thank you, sir. And now we take our first question from Brian Kraft from Deutsche Bank. Good morning. Please go ahead. Thank you. Good morning. I had two. First for Chase. Wondering if you could put some context around Honda's decision to leave Formula One as an engine supplier. Should we be concerned at all that a shift toward electrification by key teams might impact the future participation in F1? And then, Greg, on the Live Nation side, I saw an experiment was recently conducted in Germany to test the safety of concert goers with various safety measures in place. That experiment concluded that there was low transmission risk to concert attendees when certain measures were taken. So I don't know if you had seen this or if Live Nation was involved, but I was just curious if you had seen it or knew anything about it, and if so, if there were any implications for potentially being able to return to concerts earlier? Thanks. Okay. I guess say two things, ma'am, on the Honda, you know, decision. And I think one, it was, from my perspective, largely driven by challenges, economic challenges at the overall Honda entity. Clearly, the auto industry in general is having some challenges, and I think Honda clearly, you know, is living and struggling with those challenges. So I think that was, you know, the core issue. There's no question there are economics around the engine that we're going to address. But I think Honda felt those pressures existed today and they had to make some decisions. I think on the flip side, we actually are getting increasing support, and not just from the players that are in the sport, the OEMs that are in the sport, but the OEMs that aren't. They're actually incredibly enthusiastic about our sustainability future, where we're going to next generation engine. And I don't know if you saw the there was a quote a couple of months ago from the CEO of Volkswagen that couldn't have been more positive about where we're going and the importance of us as a platform. So I think as we continue to flush out and put more information out there about our next generation engine sustainability goals, we are actually getting increasing support and interest from both existing partners and potential new partners about the importance of that to their future. Great. Thanks, Chase. Turning to Live Nation, I'm just a little bit familiar with the German efforts that you mentioned, Brian. I'd note a couple of things, and I think most of you are aware of this. 86% of the fans who've had concerts postponed because of the COVID virus have said, don't send my money back. I'll wait, and I will, go to the concert when you are ready. So demand is there among our customers. Fly is also there. We have artists who want to tour, who you've seen efforts to begin tours like the German thing, but other things as well. And really, some combination of safety measures, and I think there are other experiments like the one you mentioned in Germany, but elsewhere as well, some combination of safety measures, rapid testing, and eventually a vaccine will bring live concerts back in a big way with a huge amount of pent up demand and a huge amount of pent up supply. So, I'm remain quite bullish. There is a cost to waiting. Obviously, Live Nation is burning cash while it waits, but I remain very optimistic about the ultimate TAM there, market and the ultimate terminal value. In fact, I think in many ways, could be strengthened because, sadly, other players are not as strong as Live Nation, and we will probably be able to take advantage of it both in terms of our share and in terms of improved terms with venues, artists, and the like. Thanks, Chase. Thanks, Greg. Appreciate it. Thank you. And now we take our next question from Vijay Jayan from Evercore. Please go ahead. Thanks. I have two. For for you, Greg, obviously, you talked about the goal of getting to 80% ownership at Sirius. I understand if it's done in a certain way, a noncash, I think, an active way that you could sort of qualify here as an ATB. Can you sort of explain to us what how that could be done, if I'm correct on that thinking? And and it's not getting the pretty close to 80%. Is that something that relatively imminent? And and for Chase, obviously, we haven't really seen the detail of the the new, agreement for the team, but, the the trade press has suggested that there is a new waterfall agreement on how the teams are gonna get paid as the business grows, that will deliver a better operating leverage to Formula One as a company. Any detail on that and what that could do to profitability going forward would be appreciated. Thank you. Great. So thanks, Vijay, for the question. So it isn't possible that if done in the correct way, we might be able to achieve ADB status, active trader business status for SiriusXM. But that would involve some issuance of shares. It would involve some hoops, it's not guaranteed that we would still get to being an ATB. The priority there is getting to the 80 because it really allows, upon the conclusion of a tax return arrangement with SiriusXM, it allows us to move capital in a tax free manner up to LSXM. That's really the priority. ATB would be kind of nice icing on the cake, but I would note that we are already approaching ATB status. For example, we already have it at the Braves, and we're approaching it at Formula One January 2022. It will become an ATB. So our flexibility there in within Liberty Media is pretty good around ATBs. You can never have enough ATBs, but you you're not gonna commit unnatural acts to try and make this one become an ATB. The priority is to get to 80. And I guess, if I understood the question, it's around the Concord agreement and the split between us and the teams, if that's the question. We won't go into I'm not going go into real details on it. But from a high level, essentially, what our premise was, if we can grow the business, we should receive benefits from growing it. If we don't grow the business, it goes the other way. So I think it's an incentive and an ability to get a bit more of the upside if we can successfully grow it. And I think it's all done with making sure everybody has a healthier model when you combine the cost cuts together with the revenue distribution. Every team should be better off. But I guess we believe in success, so should Formula One. Thank you, Bob. Thank you. And now we take our next question from Ben Swinburne from Morgan Stanley. Please go ahead. Thank you. Greg, are we gonna get a video montage at the Liberty Investor Day, or just kinda wipe that out too? Dan, know, COVID COVID has caused many changes, and you may not exactly the same thing, but we try not to disappoint. So we will have something for you. Don't worry. Okay. Know that was I know that was the only question you had that you cared about, but maybe if there's another side of business, we'd be happy to try and answer too. Okay. Thank you very much. Yeah. I I wanted to ask you, Greg, going back to the management changes at SiriusXM. You know, I think the market you've been very positive on Jim Jim's performance over the years. I think that's a widely held view. The market seems to be, I don't know, react with some surprise about Jim's departure, David's departure, Jennifer's elevation. Maybe it was tied to the Howard thing. Don't know. I was just wondering if you could talk a little bit more about you know, you're you're the chairman of the board there. What what, if anything, will change at SiriusXM going forward under the new team, if anything, and and maybe just spend a little more time there. And then for Chase, hopefully, this will probably be your last earnings call with us, I'm guessing, but we'd love to hear from you again if if you if you wanna come back. Any update on the Miami plans? If I think that that may be on the on the to do list for '22. And if you if if that's likely, do you think you'd go to 20, you know, 24 races? Like, how high on the race count is is sort of practical? Thank you. Yeah. Okay. Ben, I think we were surprised by the market reaction. And maybe with hindsight, we should have been smarter, but the combination of changing out perceived to be changing out the CEO and the CFO at the same time plus the overhang of potentially was how we're gonna sign. But let's put it in context. Jim has been with us as CEO for eight years. I love Jim. Jim has done an amazing job, But I'll give you I'll tease him and say there's always been a little bit of a Hamlet like aspect because if you've noticed, he's taken relatively short term extensions. And he has rightly said, I have other interests. I love Sirius. I've done a great job here. I'm proud of what's been accomplished, but I have other interests, including, his racing at, Indy and Open Wheel. So, I think this was a natural evolution for Jim, and we are likely or sorry. We are blessed to have him stay on as vice chairman and keep the benefit of his expertise. He would also tell you change is good and that having Jennifer and a new CEO come in, somebody who's both been around a long time but also has new perspectives, will be a positive tempered by some continuity with himself and myself. So all of those, you know, I think Jennifer is an absolute natural evolution. And, you know, eighteen years experience and has been as close to Jim and around the business as long as anybody and in elevated roles as anybody. As far as the, you know, tenure of David, David did a lot of great things. David is a very smart guy, very able guy, but with somewhat of a time for natural change there as well with the changing of the guard. So I think we have in Sean a very experienced CFO who knows the entertainment business and will be a great addition and add new perspective. And, you know, the other overhang as we talked about was the potential that Howard, you know, lots of people speculating without a lot of reason, but nonetheless speculating that Howard would not renew with Siri. You've seen most of the obviously we don't have a signed deal, but you've seen most of the commentary suggest Howard is likely to resign, and I think that's correct. I wouldn't, you know, I want to see the ink on the paper, and I'm sure Howard deserves the right to make his own announcement. But most people are forecasting that he's likely to resign. So I think some of that overhang has now been removed. I think the market will get very comfortable with both continuity in Jim, and I'd like to thank myself and see Jennifer for the power that she is, be Sean for the addition that he can be, and see us re sign Howard and a lot of positive things going forward. The business is doing very well. Thank you. Okay. And on Miami, you know, we're still actively engaged. I actually just had a conversation with the Dolphin Group leadership a few weeks ago. I think both of us decided that when the virus issues sort of came to the forefront and the uncertainty associated with it, we were better off going a little slower and trying to get to a place where we had a bit more visibility to how this was going to play out. So I think we're probably as excited as ever about the opportunity in Miami. But I think we felt the prudent I think both felt the prudent path forward was to make sure we're confident. And we feel pretty good about next year. Mean, our early events are all you know, it's the ones we probably had the most the deepest conversations. All seem confident about having fans and having events that, if not normal, feel pretty close to normal. So we're grading great enthusiasm, but there's still uncertainty. So I think for a new race that we want to launch in the right way, think we both thought the right thing was to try and sort of go a little slower until we had a little bit better visibility, whether it's vaccines or treatments or tests or what have you. And ultimately growing this more in The U. S, as we've said all along, is not a twelve month proposition, it's a longer term proposition. So I think it's more important we do it right than fast. The virus obviously represents challenges until you have a better sense of it. Certainly we're still engaged, but I think we'll continue to monitor the broader environment and see whether it makes sense to move to the next phase. Thank you. Thank you. And now we take our next question from David Karnovsky from JPMorgan. Please go ahead. Hi, thank you. Just on up one, regarding any contract adjustments or rebates on the Broadcasted Sponsors that side, would the impact from this be allocated to the quarter based on the proportion of races, or were there maybe some factors that might have hit in q three specifically? And then do we expect any potential adjustments to contracts maybe be reflected in future years, or is everything gonna be tied up, in 2020? Chase, why don't let you comment so we Chase, why don't I let you comment to the degree you'd like on, what years it's been? But if you want, Brian Wenling might be able to help on the quarter allocations. Brian, I'll let you Yeah. Accounting perspective? You can go first and I'll add. Yeah, would say there's a portion that the pro rata effect of the rates is having 10 prices versus the 17 for this quarter. But then obviously the promoter revenue stream has been impacted by not having fans. And then since we went down to 17 races, there were also some adjustments on the broadcast side and then some sponsor specific adjustments related to specific locations. When are those recognized as the broadcast revenue, I think the question is, is the broadcast revenue the Jimmy Davis Yeah, think the things I think it is largely recognized in the way we would have recognized it, is the events are event specific and the broadcast and sponsorships that aren't tied to individual races are still spread across the races as they come. So I think it's obviously a different calendar, but the principles underlying it are the same. And I'd say the impacts when you look beyond I can't say them are tweaks or something. Mean, obviously, we have some things like making whole on sponsorship. Largely, you know, the issues we've dealt with this year, they're not issues that predominantly fall into subsequent years. Not completely, but largely the issues are ones we've taken this year. One of our core objectives was I think we said it before you know, sort of whether we believe in 2021 we're pretty well positioned, but as we get past the virus, you know, to have the business as we know it was before the virus. So our goal has been to absorb the changes short term and protect the business, you know, as it should be and it would be in the ordinary course long term. So I can't say there's none, that was, you know, there's some tweaks here and there, some things to deal with, but it's by and large issues we've dealt with this year. Okay. And then, Keith, I'd be curious to understand the decision to livestream the iQTT on YouTube. Is this maybe an early step to more digital distribution? Or is this more of a one off experiment with the platform? No, look, I mean, there's no question. These digital players are going to be a bigger and bigger part of our future. And so one of our as you get an increasingly mature broadcast world and a maturing pay world and trillion dollar digital companies that are getting deeper and deeper into content, You know, they're an incredibly important part of our future, so we're looking to continue to try and expand those relationships. And we've got an array of things. We're in active discussions with all the key players there about various initiatives to expand and build on whether it's the events themselves or things around the events, the library. But that is an area we certainly expect not just long term but short term, to be an increasing area of activity for us. It is trying to find places we can do new things and build and expand those relationships. Thank you. Thank you. And now we take our next question from David Battle from Berenberg Capital Markets. Please go ahead. Hey, thanks a lot. Two on F1. First, I was hoping, Chase, you could fill us in on, the evolution of sponsorship talks. Last time you updated, you said that they are progressing nicely. Has the Concorde Agreement signing really accelerated those talks in any way? And, can you maybe frame what we as investors should be thinking about in terms of growth or specific opportunities next year? And then second question, just on F1 operating cash flow for the year. It's been quite negative, as indicated through the first nine months. But is there potential in Q4 to see some of that come back such that the operating cash flow outflow will be a little bit less severe than what we're seeing today? So on the sponsor front, know, we're I think as I said on the opening comments, you know, we're finishing off. We're actually in a pretty good place on renewals. And I think we've navigated the two issues we had to navigate through before getting new ones is obviously adjustments for this year and renewals. We're finalizing the one renewal left. So I think we feel good about that. I think we feel we've got probably one adjustment to navigate that we're still actively finishing up. So I think we feel we're in a good place. And, you know, we've actually had great support from our sponsors. They've been I think we really couldn't feel better about the way we're heading into next year with them and the enthusiasm and support. We are on the new sponsor front engaged with in a number of key categories that we think are opportunistic. I think probably it's fair to say that the virus doesn't make those conversations easier. Obviously, you'd like to sit down with people face to face. That's tough to do. You'd like to be able to meet and walk through. So we are engaging. People are figuring out how to move forward. We feel good about the interest. We'll find out. We'll see in the next in the coming months to what degree we can turn some of these into new relationships. So I think we do feel good about the activity. The uncertainty around virus, you know, probably again is certainly not a for the short term, you know, it's something, you we have to deal with. And I think we have to be smart about how do we deal with, you know, people's entities concerns about, you know, what's going to be the impact of the virus in the short term. Positively, probably some of the areas we're most excited about are probably areas that actually are not are in places that are not as impacted by the virus as others, sort of things like travel and hospitality are much more impacted than tech driven. We think we are. We think there are categories that fit our sport that actually have been pretty strong through the period of the virus. So we're hoping that our goal is to really continue to build sponsorship as well as the others, to build on the curve that would have existed from pre virus. And obviously, this year's down because of the impact of the virus. But we're looking to get back on the curve that would have been that we would have anticipated pre virus. And I don't think our respects are that different. I mean, Pinkus, who was came in probably a little awkwardly, came in literally almost as the virus hit. But he's been on the ground, made some changes in the team there, so we've got a sort of freshened organization. At this point, they're really picking up speed in terms of some of these commitments. So I think we have to continue to battle through the uncertainty around the virus. But I think we feel good about the reception we're getting. I think it's helped by the momentum in the business. I think people from all our partners, the momentum and strength of the business, I think the momentum this season we've been able to maintain in the sport have given people confidence and excited about the future. Operating cash flow, clearly the second half of the year, in the first half we had just costs, so we didn't have revenue. And with most of our players, we deferred payments, so we have a much more cash flow that will come through. And our expenses are more spread across the year on our end. The expenses will come through. To some degree, we probably supported the teams in cash flow on timing of some of the payments and the like. So the cash flow will improve for us as we obviously deal with more operations and are earning money that would have been paid earlier in the year that were deferred until we started racing. Very helpful. Thanks. Thank you. And now we're taking our next question from Brian Russo from Credit Suisse. Please go ahead. Hey, thanks for taking the question. So this is in reference to how SiriusXM's capital return may change once the reaches the 80% ownership. Over the summer, the former CFO of Sirius suggested he didn't see management recommending to the Board that the dividend be significantly increased. Now obviously, today, the management and the Board look different. But Greg, once you do own 80%, would you recommend that they change the capital return strategy? And if so, how would you make a case that this would be in the best interest of Sirius shareholders? For the question. Yeah, I think the Board has seen changing capital strategies over time. We didn't have a dividend before. We had buybacks at various levels. And those will be evaluated in conjunction with management as we go quarter to quarter. Obviously, from Liberty's perspective, the dividends are nice because it allows us to go after the discount. But we've also had dividend increases for everybody else, the benefit of everybody else. So I don't think we have a set plan or intent now, and it will be evaluated with management and the Board at the time. Understood. All right. Thanks. Thank you. Thank you. And now we take our next question from Brendan Ross from LifeCheck Partners. Please go ahead. Good morning. Good morning, guys. Thanks for taking the questions. Maybe this is for Greg or Chase. Wanted to get your perspective on this year's significant decline in sports ratings. You said Formula One was an exception to that trend. Maybe why do you think you guys were able to to buck the trend? And then what do you think is causing the broader issues? And is there a longer term concern for you as as a sports right supplier with the Braves and with Formula One? Chase, you want to take a shot and then I'll add? If you wanted to Sure. I'm happy to. So I guess let me sort of give perspective, guess, the two issues. I mean, broader sports industry and us. I think on the broader sports industry, I think probably a couple of things impacted it. Some of it was the overlapping of everything coming sort of being at the same time. As opposed to being spread out, you ended up with the NHL, the NBA on top of baseball and football all on top of each other. So I think that the competition of these events with each other for eyeballs, I think clearly had a significant impact on the events. And I guess I'd tell you that's the biggest. Mean, if you look at what the public cited to some degree having fans not fans, I think it varied by sports to what degree I guess if you look at us, think one of the benefits we have is fans aren't a big part of our television experience other than the pre race, the post race. You know, watching a race on TV without fans, there's no crowd, there's no noise, there's no cheering. It's not you those things aren't aren't part of a Formula One race. So I think the lack of fans to varying degrees with sports, think to what degree does it take over? Does it miss some of the energy, the excitement, the passion? So I think that's probably more not as big a factor as the competition. I think the political aspects of the political issues that have sort of bled into sports, I think, have not been a positive. I don't know how much I'd say you know, it's a, you know, it's a negative. But I think for some fans, you know, certainly, you know, the fans that want sports just to be fun, you know, and they wanna go to it to, you know, escape daily life, be reminded of the the challenges of, you know, of the the problems, you know, of the world. They wanna, you know, go have a good time with their friends and cheer for their team. And so and I think, you know, again, play not as big an impact, but probably, you know, not a, you know, not a positive. And I think for us, I think the fact that we were probably different, I guess baseball was the one sport like us. Mean, the other sports got interrupted in the middle came back with a condensed sort of conclusion to the season. The virus affected us literally three days before our season started in Australia. I mean, we're on the ground in Australia. So we didn't start. You know, we, you know, we came back with them. We put together a season that we thought, you know, could engage and excite fans. I think we did a good job of keeping fans engaged with social media and other vehicles, you know, you know, going going into it so we could build some momentum. I think we benefited from bringing, you know, some bringing momentum into the season. But I think in a nutshell, I think the broader question is do I worry about popularity of unique live events? I actually, I really feel quite strongly the world misses them, the world really wants to reengage with them, and I think the passion for whether it's events like ours or other sports events. I think if anything, I think people is pent up and there's demand that people want to get. I think it's people have talked about what are the long term changes coming out of the virus era. And one of them I couldn't believe more strongly is that will not impact the popularity of live events. Think if anything, there's an absence of it that people are longing for. I think we see that in our partners too, that are increasingly looking for ways to reengage with fans and with the type of events that we put on. I'll add. I think I agree with a lot of Chase's observations, which I've seen delighted observations. He went from no sports to too much sports, out of season, politics, distracting both potentially on court and off court with the national election, you know, lot of factors. How much of that's secular and how much of that's cyclical? How much of these ratings declines are secular or cyclical? Hard to know. I would note, you won't You guys have quoted our chairman about sports being the bundle, the glue that holds the bundle. I think that's largely right, and I think sports is probably gonna have somewhat of a rebound How much is secular versus cyclical? Hard to know. I would note both of our, you know, our particular sports products did pretty well. Formula one had particularly growth early when it probably was less competitive just in terms of how much sports was out there. And the Braves had good numbers pretty much all season partly because we had a good team. And it's a you know, we've had a over the last several years, I think, 44% growth in in TV audience over the last three years. Part of that, driven by a good team and a new stadium and the like. The longer term question of how much direct to consumer changes the mix is to be seen. We have the benefit, at Formula One to think of being under monetized on our product compared to men's sports. And we have the benefit of the Braves of being in a very large territory relative to most. So you certainly want to think about the impact of those changes, but in both cases I feel pretty good about our situation. Great. And just because you you guys have access to the data and follow international markets probably a little more closely, have you seen similar trends internationally to what we're seeing in The US with sports viewership? Chase, I'll let you go first, but then I'll get my sense. So I guess, I mean, for us, you know, there are probably other factors that are bigger. I mean, you know, actually, then the trends, it's a little tough to sort of differentiate what impact. So just a question, Ferrari struggling this year has a significant impact in markets. I I guess, Italy, first and foremost, but realistically, a uniquely important team. Mean, as I said in the comments, think probably one of the things I felt best about is achieving these results with a competition that lacked the drama at the top, if you would like, and lacked an iconic team being as competitive as they have been. And I think to some degree, it's why you need to continue to freshen and find different energy when there's new tracks or other things to excite. So I think for us it's tough to, you know, I think we, you know, went through all that pretty well. I, you know, in some degree, because we don't really compete in the same way, you know, inside the markets, I don't I'm not close enough to sort of track what does the Bundeslig do in Germany and what does Serie A do in Italy and does La Liga do in Spain. So the international market gets so big, broad and diverse. You know, I'd probably The US is little easier to track just, you know, the sports have, you know, more data. You know, it's, you know, to some degree, we're a it's not as directly relevant for us, you given that we're a global global platform. Yeah. I I agree with Stacy's comment. So I note, you know, in much the same way you noted that the lack of Ferrari being as competitive as they we might like, you've probably heard us in Italy and from other places, it's also the case, you know, when when Alonso was hot, Spain was good. When Max Verstappen is hot, and when he's there, you get, you know, ratings in The Netherlands and the like accelerate. So a lot of this is not only team specific, but driver nationality specific as well. Got it. Thank you, guys. Yep. Thank you. And now we take our next question from Zack Silver from B. Riley. Great. Thanks for taking the question. Okay. The first is just on I think one of the IndyCar teams, Myers Schenk and how some guys made an investment in their team. Just wondering if you can talk about the rationale for that investment and whether you see an opportunity to work more broadly with the other racing leagues. Yeah. We did make a relatively small investment in Meier Schenck. We did that because we are interested in motorsport. We are lucky enough to own the pinnacle of motorsport, but we think there's a lot of opportunity, particularly in The US, to grow both Formula One and other sports and to get a better view, a better understanding of how some of that operates to become a player at one level in IndyCar was attractive to us. And we got an opportunity to invest with a group we respect. And again, not a huge amount of money, but we'll learn something and we'll get better insights. Got it. And then one more if I could. Some of the broadcast deals that you did this year, you either retained or clawed back some of the streaming rights. And for others, there's a right to sit with the broadcast partners. Can you update us on how you think about the importance of owning those digital rights and why you own them in some markets versus others? Yeah. I wouldn't say the broadcast. I mean, Broadcasters own them. Probably in more places, you know, we own them. It's a matter of to what degree the way we exploit them requires agreements with the broadcaster. So they get more I think it's always an issue to the broadcasters looking for protection from what they consider competing products. I think in some places it's more a partnership where we have to work with the broadcaster to develop it. And it really is deal by deal. The over the top platform, we've said before, for us is really a way to monetize the most passionate fans who want the deepest and richest experience. We think that's actually good for us and good for the broadcasters, but they're different for us. That's why it takes time to work through those sorts of things. Some progressors are more relaxed. I think our core relationships are certainly priority one. So I think if we can find a way to do it and expand and build the digital platform, we do it. If it becomes a real impediment, we'll look for other ways. Some of it ends up being how big is the deal? What are the variances? Are there moving parts to it? So I think it really becomes a part of the larger relationship directionally. I think we continue to want to believe it's an important long term dimension to our business. Again, for a sport that has such passionate fans like ours to be able to tap into them, I think we have continued to make headway. So we don't want to go to war with broadcasters over it. And I'd say, in general, with the renewals we've done, we find we get increasing flexibility. And so I think that's more is how do we continue to get more flexibility to exploit this in a way that we can do in a way that works with broadcasters are comfortable with as they grow into a recognition of the digital world is going be a bigger part of it. To the degree we can monetize it there, it benefits all of us in terms of optimizing the value of a consumer out there. Directionally, I think we feel very good. The number of the deals we've done this year, I think we get increasing flexibility to exploit on, you know, in better terms, that whether it's us doing it alone or advanced discussions with broadcasters or we do it in partnership with them. So it's not one where we ought to try and change the world in twelve months, but I think over time, it'll continue to give us more flexibility to exploit all these avenues, traditional and digital platforms for our product. Got it. Thanks, Shay. Thanks, Greg. So I think this is our last question, operator. Thank you. Yes, sir. We're taking the last question from John Tinker from Gabelli. Hi. Thank you. Congratulations on good financials for BATRA. Could you just talk a little about how the the CBA wage agreement discussion might go and how that might affect you going forward? Well, I'm not sure they were great financials because we, like, you know, many others in the baseball world, suffered a lot from the lack of, in, in person fans at events. But I think credit to our management team for making the great adjustments that they did to sustain the business and keep fan interest up. I think the reality is baseball lost a lot of money this year. And unless fans are in the seats next year, it will be a challenging business as well. I'm not really gonna comment on CBA negotiations, but the long term reality must be that if there is not, you know, as much revenue coming in, it is likely to put pressure on what teams can pay for players. It just seems like an economic fact. And beyond that, you know, and I'm sure that will cause, tensions because players wanna get paid as much as they can, understandably, but teams are only gonna have x amount of resources. So I think there'll be challenges around that, and we'll see what happens. Good luck. Thanks. Thank you, John. Thanks to you all for joining, and we look forward to your continued interest in Liberty Media. Thanks, guys. Stay safe. This concludes today's call. 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