Earnings Call: Q1 2020

May 7, 2020

Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation twenty twenty Q1 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 today, May 7. I would now like to turn the conference over to Ms. Courtney Chun, Chief Portfolio Officer and Senior Vice President of Investor Relations. Please go ahead, ma'am. Thank you. 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 Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statement 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 made. 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, which is available on our Web site. Now I'd like to turn the call over to Greg Mose, Liberty's president and CEO. Thank you, and good morning. Today, speaking on the call, we will have Formula One's chairman and CEO, Chase Carey, and Liberty's chief accounting officer, Brian Lendly. First, let me say I hope you are all healthy and safe. Second, I'd like to thank and salute our employees and management team for some impressive job managing through this COVID crisis. Now on to Liberty Media. We completed the reattribution of live our Live Nation stake and other assets and liabilities between the Formula One Group and Liberty SiriusXM on April 22. We spoke with many of you since this announcement, and obviously, we had a conference call right after that. So I won't go into detail, but I'd like to reiterate why this was beneficial to both of shareholders. For the Formula One Group first, create a pure play, provided additional liquidity and reduced debt. And for Liberty SiriusXM, acquiring Formula One Group's Live Nation interest with the complimentary business to with us at the SiriusXM tracker at a compelling price. We saw ample liquidity. We are pleased with the stock market reaction since all stocks have outperformed the asset piece since we made the announcement. Turning to Liberty SiriusXM. Including the LSXM shares that we acquired as part of the reattribution, Liberty SiriusXM repurchased $98,000,000 of stock from February 1 through April 30 and effectively bought the SiriusXM shares at a $3.73 look through price over this period, the reattributed shares. Our ownership of SiriusXM as of April 24 stood at 72.2%. I note that we have stopped our repurchases prior to the reattribution, but I expect post close of the planned rights offering early June, we will look to start repurchasing LSXM stock again. The nagging discount to NAV is an opportunity and one we will continue to take advantage of. As SiriusXM continue to repurchase stock and we approach 80% ownership of SiriusXM, I expect the opportunity may wane. Now looking at SiriusXM itself, it continues to operate very well during the COVID crisis. It has launched innovative new program including a twenty four seven COVID nineteen focused channel and hotline, nine new limited run channels with iconic arc honest artists, including the Prince channel with music and exclusive content like a never before heard demo of a conceptual radio show Prince created for the SiriusXM channel back in 02/2005. Howard Stern has done great innovative interviews, including a two hour plus session with Tom Brady from Derek Jeter's house in Florida. The subscription based business model we have at SiriusXM has proved resilient. Self paying net adds grew 69,000 to nearly 34,800,000 total subscribers, and the very strong liquidity and cash flow of SiriusXM has shown through. We still have 1,750,000,000 available on our revolving credit facility, which has not been drawn. Turning to Formula One Group. I'm sure you have all missed as have I f one racing. Hopefully, you've gotten a little taste by watching or rewatching both seasons of Drive to Survive on Netflix. And we expect you, all of you, watched the virtual GP this past weekend. There was an epic battle between Alex Albon and Charles Leclerc. They passed and repassed each other several times with Albon finally taking the win. The final results highlighted the next generation of f one drivers, Albon, Russell, and Leclercrew. Exciting and gonna be thrilling us for years to come. The f one team has done a great job navigating the crisis and working on the 2020 calendar. They are planning an early July start in Austria, and Chase will talk more about that. We continue to evaluate the needs of the business, but definitely wanna be opportunistic and find synergistic assets that we can add, and we think we are well positioned to do so. Turning to Live Nation. Does not report until after the market today, so obviously won't comment on results, but I wanna say we are pleased with the announced actions they have taken to build liquidity. And on to the Braves, we are working closely with Major League Baseball to see how we can put a season together. We appreciate how the commissioner teams and players are working together towards that solution. Everyone is eager to see baseball return. The Braves players are eager too. They've been doing Zoom sessions with the trainers, medical staff, and manager Brian Snitker. They've also been in celebration of twenty five years since the Braves 1994 at World Series title. The '95 players joined a Zoom reunion while watching the final game six on Fox Sports Southeast. Fans were able to watch the Zoom live on YouTube as well. So with that, I'm gonna turn it over to Brian for more on our financial results. Thank you, Greg, and good morning, everyone. The earnings release has our cash and debt balances by tracker as of March 31. Since we completed the reattribution in April, as Greg discussed, and repaid the margin of the f one revolver today. I'll walk through liquidity and debt at Liberty SiriusXM and the Formula One Group as of March 31 on a pro form a basis for these two transactions. Liberty Media, SiriusXM, Formula One, Formula One, and the Braves are in compliance with all debt covenants as of March 31. Given the uncertain impact of COVID nineteen, f one and the Braves are monitoring their ability to comply with their debt covenants in future periods, and we are in positive discussions with their respective lenders. On a pro form a basis, Liberty SiriusXM Group had attributed cash, restricted cash, and liquid investments of a $139,000,000, excluding 52,000,000 of cash and restricted cash held directly at SiriusXM. And we have 870,000,000 of undrawn margin loan capacity at the corporate level. The value of the SiriusXM and Live Nation stock held at Liberty SiriusXM as of May 6 was 21,000,000,000, which excludes the value of the Live Nation call spread held at Formula One Group, which was valued at 165,000,000 at the time of the reattribution and will be mark to market quarterly. We have 2,100,000,000.0 in principal amount of debt against these holdings. Total Liberty SiriusXM Group debt is 11,100,000,000.0, which which includes 7,900,000,000.0 of debt at SiriusXM. This debt balance excludes the 750,000,000 intergroup loan owed to the Formula One Group, which is expected to be repaid with proceeds from the ICE offering, which we intend to launch on May 18. Today, f one will fully repay the balance under its revolving credit facility using cash on hand, storing its full capacity of 500,000,000. Pro form a for this repayment, Formula One Group had attributed cash and liquid investments of 1,400,000,000.0 at the corporate level. This excludes 536,000,000 of cash held directly at Formula One. Total Formula One Group attributed principal amount of debt was 3,600,000,000.0, which includes 2,900,000,000.0 of debt at Formula One, leaving 688,000,000 at the parent level. F one's total net debt to covenant OIBDA ratio as defined in f one's credit facility for covenant calculation was six times at the end of the quarter as compared to a maximum allowable leverage ratio of 8.25 times for both the term loan and the revolving credit facility. Please note these leverage ratios are for the Formula One operating business, not the Formula One group. The term loan financial covenant is in current space, not maintenance. We are having positive discussions with the RCF lenders to temporarily move this covenant from an EBITDA base to a liquidity base. Payment of the RCF combined with the reattribution gives us more flexibility in re in renegotiating the maintenance covenant on the revolver. Lastly, to the Braves, at quarter end, the Braves Group had attributed cash, liquid investments, and restricted cash of $343,000,000 and attributed principal amount of debt of $698,000,000 With that, I'll turn it over to Chase to discuss Formula One. Thank you, Brian. We entered 2019 with great momentum, and we're ready for our biggest season yet with 22 races. We were ready to race in Australia, but it was necessary to cancel the event at the last minute for reasons related to COVID-nineteen. This global pandemic has had a significant impact on Formula One and we're adjusting and responding in numerous ways that are in the best interests of our fans, employees, partners and constituents while focusing on the Formula One business for the long term. Let's walk through all the actions we've taken. One of the first actions we took as a sport was to move the team summer break up to March and April as we wanted to have ultimate flexibility to race during the normal summer break in August. On Tuesday, March 28, the FIA's World Motorsport Council approved a further extension of the shutdown period from thirty five to sixty three days to be taken during the months of March, April, May, and or June. During this break in the season, we were inspired to see several UK based Formula One teams come together for Project Pitlane. This is part of a larger UK industry wide focus to manufacture and deliver respiratory devices to support the national need. Formula One has the unique ability to rapidly respond to engineering and technological challenges, and is focused on its core skills of rapid design, prototype manufacture, test, and skilled assembly. These efforts have proven fruitful and the go ahead has been given for two of Project Pitlane's initiatives, including ventilators that are being produced by several teams, plus a breathing aid being manufactured by Mercedes. We're grateful for the team's efforts in supporting the national need. In further actions, F1, the FIA and all 10 teams unanimously agreed to delay the introduction of the 2021 technical regulations until 2022 and to keep the majority of their existing 2020 CARs into the 2021 season. This will reduce costs for all teams at this time when they would usually be investing and working on the CARs for the 2021 season. We have further been working with the FIA and teams to strengthen the long term future of Formula One with an array of new technical, sporting and financial regulations that will improve the competition and action on the track and make it a healthier business for all involved, particularly as we work through the issues created by COVID-nineteen. One of the key areas of focus has been the cost cap on team expenses. We previously implemented a cap of $175,000,000 for 2021, but now expect to move forward with a significantly lower cap. Just like our teams, Formula One has been evaluating our cost structure. We made some difficult decisions and furloughed over 50% of our workforce on April 1, with senior executives taking a voluntary cut in pay. We froze all hiring and pay review plans and also deferred a number of initiatives we plan to pursue this year. We recognize we may lose a bit of time in implementing some of these plans, however, we felt the current uncertainties warranted the actions. As Brian mentioned, we're actively engaged with lenders of our revolving credit facility to address potential issues related to our quarterly leverage covenant. They've been very supportive as we work together to identify potential changes to the covenant to enable us to navigate through the possible scenarios, including the remote possibility of no racing in 2020. And we expect to agree to necessary changes in due course. We've been working tirelessly since Australia, and we're actively engaged with our promoters in putting together a potential 2020 race calendar. We have two primary challenges, identifying locations where we can hold the race and determining how we transport all necessary parties and their equipment to that location for a race. We're in discussion with all of our promoters as well as some tracks that are not currently on our 2020 calendar to ensure we explore all options. Our goal is to launch the season on the weekend of July in Austria. It's likely that we race the weekend of July in Austria as well. We're in advanced stages of putting together a schedule of additional European races through early September, including races during the traditional August break. We will then plan to race in Eurasia, Asia and The Americas in September, October and November before finishing in The Gulf in Bahrain and Abu Dhabi in December. We hope to have a calendar with 15 to 18 races. We expect the early part of the calendar to be races without fans, but we hope to be able to allow fans to attend in the latter part of the year. We are working with the FIA, local authorities and other experts to determine the steps and procedures necessary to safely transport everyone to each RACE location and to enable those individuals to operate and be housed in a safe and secure manner. We feel increasingly positive about the number of locations that will be able and want to hold a RACE this year. Our work in the travel and other logistical issues related to each country are a work in progress. The economics of races, particularly ones with fans, will clearly vary from existing agreements and we're actively engaged on this front too. We've been working closely with the FIA with the consent of all the teams to change the calendar without a formal vote among the teams, and this was formally approved by the World Motorsport Council and Formula One. This will allow for a stream process as we reshuffle the calendar and appreciate the team's support. With the postponement of the season, we are pleased that our teams quickly pivoted and launched featuring a number of current Formula One drivers and celebrities. To date, Charles Leclerc, George Russell, Antonio Giovannisi, Lando Norris, Alex Albon, Carlos Sainz Junior, Nicholas Latifi have all been on the grid along with former f one drivers such as Jensen Button, Johnny Hebert, and Nico Polkenberg. They've been joined by England's Cricket World Cup winner Ben Stokes, musician Liam Payne, professional golfer Ian Poulter, and six time Olympic gold medalist Sir Chris Hoy to name a few. These races have run-in place of every postponed Grand Prix. The series utilizes the official Formula One 2019 PC video game developed by Codemasters and the visuals are impressive. The race is to provide a great racing and entertainment value with lively commentary. Charles Leclerc won his debut race after receiving the game just three weeks earlier. Then he won the next race as well, and we're excited to see new rivalries emerge. The broadcast is available on the official Formula One YouTube, Twitch, and Facebook channels, as well as marquee TV broadcasters such as Sky Sports in The UK and ESPN in The US. And we've experienced strong engagement. Through the first three races, digital cumulative views reached 12,900,000, and total viewership including TV estimates reached 16,300,000. The virtual Grand Prix even trended number one on YouTube UK. We will continue with these virtual GPs until we return to racing. We were also pleased with the response to the second season of Drive to Survive, which debuted on Netflix at the February. The season provided unprecedented access to the teams and drivers. We saw the drama of the driver switch from Gasly to Albon mid season at Red Bull, behind the scenes action of the wet rates in Germany and learned more about William's challenging season. We are in advanced discussions for season three and the team is ready to capture footage in 2020. In news that may have been overlooked due to COVID-nineteen, we welcomed Aramco as a long term global partner to Formula One. We announced this agreement on March 10 and Aramco as our sixth global partner alongside DHL, Emirates, Heineken, Pirelli and Rolex. We look forward to sharing our expertise to identify opportunities for the advancement of sustainable fuels, enhanced engine efficiencies and emerging mobility technology. This deal includes trackside branding at most races and title rights to three Grand Prixs in 2020 and exposure on our digital platforms. Further in this area, we welcome Ben Pinkus as our new Director of Commercial Partnerships at the February. Ben joins us from Heineken where he managed their worldwide sponsorship team in partnership with Formula One. On the distribution front, we announced a multiyear media rights deal extension in Canada with Bell Media's TSN and RDS, which goes through the end of the 2024 season. Our fan base continues to grow in Canada. The 2019 season audiences across TNN and RDS grew 19% year over year and coverage across the two networks reached nearly 5,300,000 Canadian viewers. We've been in regular contact with our commercial partners, broadcasters, sponsors and other partners. These partners have almost all been very supportive. Our conversations with them regarding the 2020 season are not as advanced as those with promoters as we need to determine our modified calendar to have more substantive conversations. A number of agreements have provisions related to the number of races, although that number of races is well below our originally planned 22. These are all valued long term partners, and we expect to resolve any potential contractual issues in a fair and straightforward manner. We had been in the final stages of completing the Concord agreement when the coronavirus crisis turned everything on its head. We decided to put the Concord on the back burner for the short term and prioritize addressing issues related to 2021. As we move forward with the 2020 calendar and finalize regulatory changes with the teams, we will once again return to completing the Concord agreement in the immediate future. Obviously, we're still dealing with a lot of uncertainty regarding the short term and the coronavirus. We're increasingly confident, although there are no guarantees, that we will have a 2020 championship season. Fan support has been great, and there seems to be an incredible pent up enthusiasm for racing to begin. At the same time, we're also looking beyond this year to a 2021 season. The long term contractual nature of Formula One helps provide long term stability at a time of uncertainty. We continue discussions for potential new races or race renewals for 2021 and are going well. We also continue discussions with other new or existing commercial partners. We expect the impact of the coronavirus crisis on the broader world will extend into the future, but we feel we're well positioned to return to the growth curve we were on a few months ago and look forward to the better future for all of us. I recognize everyone would like revised projections for 2020. At this point, all we have are sensitivities with a range of potential results based on many variables. What is clear is that 2020 results will be significantly below original expectations. But we believe it is equally clear that we can manage through 2020 with or without racing, and more importantly, that our business can quickly return to our prior expectations in 2021 and beyond. Now I'll turn it back to Greg. Thank you, Chase, and thank you, Brian. And to the listening audience, we appreciate your continued interest in Liberty Media and hope you all stay safe and healthy. And with that, operator, I'd like to open up for questions. Thank you, sir. We'll take our first question from Jeff Waldrichsk with Pivotal Research Group. Good morning, guys. I had one for Greg and one for Chase. After, you you had a a very strong result of Charter yet again, and they're they're obviously aggressively continuing to aggressively retire their shares. You know, I wanted to focus on your 25% ownership cap in Charter, which correct me if I'm wrong, you're sort of bumping up against. When you hit that cap, are you comfortable participating in Charter share retirement, or do you feel like you can work with Charter Management to potentially allow you to go over that cap? And then, Chase, if you could provide more color broadly on racing without fans, the effect on race promoter fees and sponsorship and advertising fees. And obviously, the race fees are going to decline materially. But are there benefits to racing on tracks to where the promoter fee is subsidized or paid by the government? Thanks. So I'll go first, Jeff. Thanks for the question. First, there's, since our holdings are really in two buckets, it's not clear that we're soon to be up against the cap. And then it's not clear what the buckets are both, how it's counted. Secondly, there is some time on that repurchase, till we come up against that. Third, we have had begun some discussions about how to adjust that because it's not necessarily in the interest of shareholders of Charter or Charter to have us selling. So we'll see how that goes. We are long term holders of Charter. We like Charter. We certainly don't want to be in a position of being required to sell Charter stock. And I guess on my front, I think clearly races without fans have a much more significant impact on the promoter side than the broadcasting and sponsorship side in many ways. I think racing without fans is first and foremost for the broadcast digital sponsorship side. The fans will all connect through various platforms. And in many ways, actually, when you watch RACE, even at a live RACE, many people watch it on television, on television screens anyway. I think in terms of the promoter side, clearly these are very different events without fans, and that'll be reflected. I mean, we've talked about these being week long spectacles, multi day events, the city involved, the track involved. Without fans at any of that, it's clearly a very different opportunity. It's a very different event, and we recognize that. So I think these are unprecedented situations. So I think with the promoters, there's a more significant change. Think with the broadcasters and sponsors, they do look at it as a season as a whole. As I said, there are contracts that have provisions tied to a number of races. It's below what we'd have, so we have some room there. But we feel we can deliver a quality event for those. We feel we can make a great event, but live fans won't be there. And so again, the impact's going to be more significant on the promoter side. Thanks. Next, we'll go to Brian Goldberg with Bank of America. Thanks. I had a couple for Chase. Just a follow-up on the promoter side of F1. I'm just curious, given all the complexities involved for promoters, either without fans or even when fans start to return, what are some of the measures, you know, that f one could potentially undertake to to work with promoters to ensure it's, you know, a a a good spectacle, a safe event? And do you expect any changes, long term changes to the race promoter revenue contract model as a result of this? And then secondly, just on sponsorship, I was wondering if you could give us some more color. I mean, you know, a lot of marketers have been in triage mode the last several weeks, but as the world starts to reopen and sports content looks to be more in demand than ever, just wondering if you could just update us or give us more color on the tone of the market right now around events such as yours. So I mean, first, on the long term impact, I mean, whether it's Reuters' responses, kind of look, we're planning to be business as we planned it in 2021. That's our expectation. In terms of managing through these events, Right now we expect the European events to largely be without fans. So that's how we're planning it, fans. We're obviously dealing with different issues we still have to deal with. How do we get the teams there? How do we get the necessary personnel there and secure their safe. We're working with the country host regulators. We're working with the appropriate authorities. We need testing procedures, transportation and procedures. Actually had a fairly long conference call this morning with an array of parties putting that in place, focusing first on Austria because it's the first race, talking through all our tentative European races. I think we feel we're making good headway on having races that can be secure and safe for everybody without fans, which, again, is what we expect in Europe. I think as you get to events with fans, that's probably we've probably made because it's a little further on the schedule, you know, we haven't made as much headway. To some degree, it's tough to have those discussions because we can't you don't really get guidelines yet. I think this issue has so little visibility and is so fluid, it's difficult to have discussions with authorities. Mean, we can sort of start to work through what we think may be possible in terms of spacing and other ways to manage traffic flows if we had them. But you're really not going to if you're trying to talk to people about what you can do in September and October right now that's September, October, November, those are more difficult discussions because they're trying to figure out what to do in June and July. So I think the issues in terms of how we'd manage the fan part of it are probably ones we'll have in the as we get closer to that races where that would be a realistic possibility. But since they're not in the again, they're not sort of the July, August, I think we're planning races that are, you know, races without fans and making sure we can go forward with those. And to some degree, nobody knows what the landscape, you know, is and you pick up different stories in different places. As you look at China today, they're opening up an array of places that have public gatherings. So I think we'll this is a situation where in terms of dealing with larger crowds, you clearly know, you know, more, you know, week to week as you go forward, and so it's it's very much managing up a real time process. In terms of the sponsors, they've been great. Okay, think in many ways sponsors, we've been in touch with them all. Until we know what the calendar is, it's tough to have a substantive conversation about how do we modify what races do they have title races at. They all have components to their agreements. So at this point, we've sort of mostly been keeping them up to speed. Again, we could not feel better about the support we've gotten, the enthusiasm from them. Think in many ways, like we're dealing with we're dealing with global companies, I think we'll clearly, our big sponsors are they're not when you think first and foremost, where is the real impact everybody talks about in the coronavirus, it's small business. Reality, we don't that's not our core sponsorship. Our relationship are big brands entities that, you know, know they have a future and just, you know, looking for how do they, you know, get back to get back to business as it was. So our sponsors are quite enthusiastic, quite supportive. And again, we look forward to advancing discussions with them as we know more about the specifics of our 2020 calendar. Thank you very much. All right. We'll take our next question from Brian Kraft with Deutsche Bank. Hi. I have two questions for Greg. I guess, first, is there a scenario where you'd consider an RMT of your Live Nation stake, particularly now that the value you have to make up to get to 50% pro form a ownership is smaller than it's been in a few years? Or is that strategically critical to keep inside of the or underneath the Liberty Media umbrella? And then the second question is on, Liberty Sirius. You mentioned that you suspect the NAV discount to narrow once you get to 80 percent. Is that because of tax consolidation or relative trading liquidity between the shares or that there might be a change in capital allocation at SiriusXM once you get to that 80% threshold? Thanks. So on the first one, Brian, thank you for the questions. To do an RMT, our shareholders would need to end up with 51% ownership of the spun company. And, you know, I don't think we would we would use our priority right now for the capital we would use in LSXM is to capture the discount, go after that. I don't think we would wanna use that to our end to the stock. And I think over the long term, one of the reasons why we did this reattribution is we think it's strategic, and there are things and ways that Live Nation and Sirius will be able to work together to benefit of both. So I I don't think well, for I an RMT is not is is you're right. Mathematically easier. It's still a reach and, would require us put up capital that we have other ideas for what we wanna do with it. On why the 80%? Yeah. I think you'll see a lot of potential for, all of the things you mentioned to drive the factor, including free flow of capital up to the LSXM will probably, on the margin, make us more willing to consider dividends and push for dividends at Sirius, particularly if the gap, sits where it is today. And you can look at the relative value of, which stock is more attractive to purchase SXM or LSXM. Great. Maybe just one follow-up. Can quantify what the tax rate would be on the dividends today, you know, with the dividends received exclusion that you're getting? Albert, are you on the line? I am. It's roughly, you know, it's roughly 7% to 8%, so it's pretty low. I was going to say that, but I want to get the authority to verify. Thank you, Albert. You always want Albert to bless it. Thank you. Albert blesses everything here. Thank goodness. Thanks, Greg. Thanks, Albert. Alright. Next, we'll go to Vijay Jayant with Evercore. Thanks. Chase, couple of questions. So obviously, you're targeting to get a a schedule for 2020. But, you know, is is is December 31 sort of the end of the race calendar, or could you move to January? I know that the new season typically starts in March. So are we sort of looking at, basically, December 31 to try and meet all your requirements on on on on contractual commitments also? And and second, obviously, there's been a lot more liquidity at Formula One post the reattribution. And at the same time, lots of your teams probably with no price fund or working capital, maybe in trouble. Have you been approached on subsidizing these teams or sort of bankrolling them till the season starts? And is that something that Formula One would do? Thank you. So on the first, I think we right now, our current targeted original plan, so sort of more like the thirteenth, December 14. But we, you know, are evaluating and will consider so certainly finishing in January is an option. We could do that. We can do that. I think if we can, we'd like to finish in December. We'd obviously have to take a fairly long break through the holidays. You're not going to race in the holiday weeks. But it is an option available to us that we'd again have to work through with our promoters and work through with an array of parties to get there. But it is something we've considered and talked about. But I'd say at this point, our goal is again to finish a couple of weeks later than our original date, but to finish in sort of mid December ahead of the holidays. I think in terms of the teams, obviously, as I said, 2020 for us and the teams is not going to be what we're not going have the results we're going to have through when we started the year or expected to have when we started the year. I think everybody is doing what they can to shore it up. I talked about the cost cutting initiatives. As we move forward and can solidify what we are doing and right now, there's too many moving parts. So, you know, we're not you gotta you know, there's so many what ifs. You know, I don't think you can, it's constructive to try to address parts of it. I think we need to get far enough along in these plans to know where we're at. We expect the teams to be taking the right initiatives to get them through it. I think all of us recognize, in many ways, priority one in many ways is to when we get to 2021, is to have the sport back on the track it was on at the beginning of the year for 2021. And that's our goal, you know, that's what we're committed to get to and certainly manage through this year as best as possible. You know, what we need there's been speculation at this point on to what degree do we need to help support select teams. You know, we care about the teams, but, you know, those are discussions, you know, we've not had to date. I think we'll see where things are as we go along. But I think there are too many moving parts right now to really engage with any specificity on that. Thank you. Now we'll take a question from Ben Swinburne with Morgan Stanley. Hi, good morning. Chase, just continuing this discussion, can you give us any sense for what the sponsorship revenues will look like this year with a 2015 to 2018 race calendar, at least relative to your original expectations? I assume it's lower, but I'm just wondering if there's any way to dimensionalize that. And on race promotion, if you have races with fans later this year, as you mentioned, is your goal, would there be any impact on race promotion fees for Liberty? It would seem like that's pretty close to what we used to consider normal. And then I just wanted to ask Greg. Greg, you made a comment on the call a couple of weeks ago about the cash at Liberty Formula One. I think you used the word potentially at the OpCo, seriously benefits liquidity at the HoldCo and potentially the OpCo. I didn't know if there's any restrictions on cash moving back and forth that we should be thinking about. Thanks. So on promotion, the promotion is probably more tied to sort of obligations, whether it's signage, time on screen, titles. Certainly, we have excess we've said before, we have excess capacity, material excess capacity at the 22 race level. We're erasing it. Obviously, as the number of races goes down, it puts some pressure on that capacity. Clearly, the margins, there's some issues we've to manage through, whether it's without races, hospitality that won't exist at some. But I think at its core, we feel we can we can go a long way towards, you know, I think our our plans are to go a long way towards meeting what, you know, what our sponsors would want to be gaining through the sport this year. I think we are working to achieve what we think would meet the expectations of our sponsors. But at the end of the day, these are relationships. These are term relationships. Most of our sponsors are long term. We'll sit down as partners and find a fair path forward. We want them to feel good about what we do. But equally, we have an obligation to deliver certain value. If we deliver it, we expect to receive fair value for it. But we will approach as partners. I think as you get to promoters with fans, certainly that does get much closer to the business at norm. There are different cases. Is it a race that was going to be held in the spring? It has moved to the fall. That obviously has implications in terms of selling tickets and the like. Right now, probably most of our promoters, even the ones on the schedule, aren't really selling tickets given the uncertainties. And probably nobody's buying a lot of tickets given the uncertainties. So it's not with everything that exists out there, it's not business as usual. But I think to the degree we have races with fans, I guess you also get the question, is it a race with fans as you know it, or is it race with fans with certain conditions around those fans? Mhmm. Yeah. I think all those things, you know, we have to, you know, we have to engage on. Yeah. But, yeah, I think the way, again, we approach 2020 is, you know, we you know, yes, we have agreements in place, but these are long term partners. We expect, you the great the deep. They've all been very supportive. We wanna be fair in addressing this. We wanna get fair value, but be fair to them. And first and foremost, make sure in 2021, we've got the business in 2020 looking like, you know, we expected it to look four months ago. Right. And, you know, and have the same future we expected to have four months ago. That really what we're managing through, you know, is a short one time event for us. We think the strength in this sport, the interest in the support, the support and interest we've got, whether it's from fans or partners, can enable us to get back there. I'm saying there won't be some lasting impacts, but I think the strength of events like ours, think fans will come back. I think events like ours will continue to rise in strength. And I think the type of partners we have seem to be more supportive than ever, even if you have a degree of a shakeout in the economy. So we will certainly expect to get fair value this year. But again, we're not not going going to play hardball. We're going deal with things as partners, but with a priority to making sure sort of kind of giveaways, it's the teams or promoters or sponsors, we're not going to be handing out candy to everybody. We're going to be expected to be treated fairly, but we're going to deal with it as adults and with the expectation that 2021 is going to, again, look like the business we all knew four months ago. Thank you. Greg, anything on that language? I'm sorry. Go I'm not sure what language you're you're oh, just about the up and down. Sorry. Because I think it's not language. There are no restrictions on Juan Holdco putting pushing money down to the OpCo. There are or can be restrictions under certain circumstances for the OpCo pushing money up to the Holdco. Got it. Thank you. Our next question comes from Zack Silver with B. Riley. Hi, great. Thanks for taking the question. The first one for Chase, you've talked about 2021 potentially being a big year for broadcast renewals. And and, certainly, the global pay TV ecosystem is not immune to COVID. So I guess what I'm curious about is whether you can give us a help the a sense of the help of some of those pay TV partners and their ability to renew deals, with you guys at attractive terms for both parties? Yes. I mean, we're obviously, a lot of discussions as as people are navigating through the short term has sort of gotten put a bit on a bit on the back burner, or everything sort of become very short term. I think the pay TV universe will come through this. I mean, in many ways, can talk about pay TV, which is really part of a wider digital universe, you know, one of the few winners in this period, you know, seems to be, you know, digital platforms. And, you know, that are, you know, the increased importance, increased value on, great content on these array of platforms. So we're continuing to have discussions with them. I think we feel good about that space. But I think everybody's I think in the very short term, which really means the last month, you know, whatever it is, six weeks since this really, you know, occurred. Clearly, everybody would like to have a little more, you know, a little more visibility towards, you know, what the what things are gonna look like in, you know, three months, six months, you know, what have you. But, you know, I think discussions and interest, you know, the themes we've had about the value of unique sports content, unique event content, sports content like ours of a global nature, seems to be realistically as strong as ever. What is the impact to the platforms we deal with you know, varies a bit, you know, around the world. But they're mostly big entities. We're not dealing with, you know, again, businesses. You know, we expect them, you know, to come through this. I think the subscriber side, certainly the advertising world seems to have been more impacted by the subscriber side, sports generally as sort of lean the businesses that buy sports have probably leaned more heavily on the subscriber descriptions to be supporting it than the ads. The ads matter. But I think advertising and sports will come back because I think, again, the type of entities that advertise in sports, I think, are ones that, you know, are are looking, you know, if anything, to come back and and support their product. Got it. That's helpful. And then, you know, for Chase Greg or for Brian, in the release, and apologies if we missed this with the reattribution announcement a couple weeks ago. But you guys disclosed that you're paying down the remaining revolver balance today. Is there anything that we should read into that regarding your confidence in managing cash burn while the reasons are going on and also any implications for talks you're having with the lenders? Yeah. I'm I'm happy to comment, and then we have Laura Baldy here as well as for that. Look. We have, obviously, a lot of confidence in our cash position at the Formula One Group. And we certainly, in the interim, didn't need the extra money that we had drawn under the revolver prior to the reattribution. We don't need that money today. We've drawn it in a surfeit of caution, and now, we're not in that need. So rather than run a negative, spread on the borrowings, we've paid that money down. We are in fruitful discussions with the lenders, likely to have covenants which are less or at least for some period of time based not on EBITDA but on liquidity. And, I think it's a measure of our confidence that we'll be successful with paying down the revolver. Laura, would you have anything? Got it. Thanks, Greg. Alright. Next question comes from John Tinker with Gabelli. Hey. Could you just talk a little about, baseball? I think they've actually started playing games already in Korea and Taiwan and how how you see that might go and the impact of not having spectators. And secondly, development revenue is up, the battery because of retail. Could you talk a little about where that's going now given that everything is closed down? Thanks. Yeah. On on baseball, I guess there are people now following the Korean leagues with no interest, and there are primers on, who to watch and how to watch the Korean league. I have not embraced it yet fully. I'm still waiting for, our our domestic league to come forward MLB. You know, I think they're looking, as I said, at a range of opportunities, most likely well, nothing's resolved. It appears most likely they'll be not the bubble concepts, which have their own things, but some, you know, late June starts spring training early July without fans. There are still issues to be resolved about, what the payments will be to the players. There there were agreements about, know, how paying a 170 and then sort of looking at pro rata with a creditor for the $1.70. But some of these things were based on the idea that fans would be attending. If fans are not attending and there are reduced revenue streams, there still need to be some negotiations about what the splits are. I obviously can't comment on any of that. I it's it's Chase. I my line went dead. Sorry. Sorry. I just called back in. Great. Talking about baseball for one sec. Then, so I think that's to be determined, John, and and work through. But I think there's a positive attitude on all parties to try and get some positive resolution. But that will obviously impact, you know, impact profitability even on a pro rata basis if we're on if we're not able to have fans present, which is certainly the expectation the early games will not have fans. I you've obviously had, you know, a major drop in activity at the battery. I don't know, Brian, if there's any commentary you wanna make in addition to that. No. I would just say we're, you know, we're trying to work with our tenants there. And, you know, we can't comment on specifics, but we're trying to work with them where where appropriate. To the extent we're having games, but we don't have fans, there could be some some impacts to their businesses and and and therefore how that translates through to us. Also, you know, we have parking revenue in there, which obviously would go down to the extent we don't have that showing up. But none of these are overly material, to Liberty Media as a whole and, and not really material to the brands either. Thanks. Alright. Next question comes from David Karnovsky with JPMorgan. Hi. Thanks for taking the questions. Just first for Chase. On the Concorde Agreement, is this something that has to be completed prior to the 2021 season? Or could Formula One move to instead maybe extend the existing agreement even for a short period? And then for Greg, I think in the prepared remarks, you mentioned looking at synergistic assets, I think, for Formula One Group. Just wondering if you could expand a little bit on this. Would this be focused mainly on motorsport, or could it extend into some other sports or other than categories? Guess on the Concord agreement, you know, the reality is once you get to twenty twenty twenty twenty one, I mean, I'm sorry. Yeah. We can we can with you actually, on the Concord, we can just unilaterally just say these are the, you know, these are the rules of, you know, rules of the road, or this is the structure that exists. So we don't have to extend anything. We can essentially, you know, implement and say that's if you're racing, that's the, you know, that's the terms on which you're you're racing. Obviously, that's not we're looking to, you know, to conclude it with the with the teams. But the conquered agreement, when we put it forth, will be the conquered agreement that goes into effect in 2021, and, you know, we are able to unilaterally do that. Alright. We'll move on to your Brandon Ross with I'm sorry. Go ahead. Wait a minute. Wait a minute. We we we lost the question there. Can you repeat just to make sure we got it? Yeah. No. The the question was just can you hear me? Am I still on the line? Yeah. Yep. We got you now. Yeah. No. The the yeah. The question was just, on the prepared remarks. I think you you mentioned looking at synergistic Synergistic or I just wanna make sure I heard. Yeah. I just wanted to know if this would yeah. Go ahead. Yeah. We'll we'll look. We there have been, assets in the motorsports space that have traded that we've looked at. We'll continue to look at ones that are around that. I I don't wanna you know, our goal was to create a focus at one. And if we saw some unbelievable opportunity that was synergistic outside of motorsports, would we look at it? Sure. You know? But our goal is to try and create things that are toward the Formula One, operating business, the Formula One, ecosystem, the things we have around Formula One where we can provide synergistic value. So that that would be our first priority. Thank you. Okay. Next, we'll go to Brandon Ross with LightShin Partners. Thanks. Good morning. For Greg, one of the rationales, for putting Live Nation in the LSXM tracker is it opens up opportunities for Syrian Live Nation to work more closely together. Can you just explain what you could do now that they're under the same umbrella that you couldn't do before and why the tracker structure influences what you can do operationally? And then just for Chase, is it reasonable now to assume that you you could be at 22 races in 2021? Thanks. Well, Brandon, I think you know the answer to that question that there's something structurally that was prohibited before that is now permitted. But I do think that putting them together and doing things like bringing, Michael Rapinoe onto the SiriusXM board, continued interactions, continued alignment, potential for further work working together is enhanced by being on the same tracker. Got it. Simple answer to 2021, I mean, we don't have a magic number, but the answer is yes. I mean, realistically, again, we expect 2020. Our goal is to have 2021 look like the 2021 we planned back in January. We have ultimately, we have renewals to put in place, and we have some ongoing discussions with a couple of potential new races that we think would be a positive enhancement to the business for fans and shareholders. But, yes, we expect 2020 as I said, we expect 2021 to look like the 2021 we were looking at in January. So certainly, if we plan on 2022 races, then again, don't have the magic number, but then we'd be planning on '22 we'd still be planning on '22 races. Thank you, guys. Alright. And we'll take our last question from Drew Borst with Goldman Sachs. Thank you. I had a couple of questions for Chase. Firstly, I wanted to ask about the the prize fund for this year. I think in normal course, it's usually variable to PTS EBITDA. Is the intention to keep it variable? Or are you intending to maybe have it be a little bit higher at some sort of fixed component because it would seem like PTS EBITDA is likely to be a lot lower? That's the first question. So again, the prize fund is a contractual formula. So the prize fund is what it is. We realistically we can't we couldn't unilaterally change it if we chose. So I think the question, which I guess was a part of the question earlier, would we do something? I guess to expand on that, since it's a percentage of profits, and profits will be down, means the prize fund will be down. The question is would we do something to support certain teams? Again, we're not in the business of handouts, but want but that being said, we I think we'll engage with all our partners and figure out how do we go forward in a way that makes sense for everybody. But the prize fund itself is defined by a contract that is a percentage of EBITDA. And as we know what that is, I don't think we really move to the next level until we know what that EBITDA is. Obviously, still have a lot of moving parts. As I thought before, we haven't settled the calendar. We don't know how many fans have races. So at this point, we have a wide range of potential outcomes on the ultimate prize fund. I think when we have a better handle on that, we'll see where we are and see if appropriate or right for us to, you know, to do anything, you know, whether it's, again, which with with the team or with, you know, or with any of our other partners. But we expect expect to be dealt with fairly and expect them to deal with us fairly. And then you mentioned earlier about the budget cap probably coming down a little bit more beyond the 175,000,000 Is the idea that that's just a sort of a onetime reduction, or is that something you think will be kind of the the new permanent on a go forward basis? And if it is permanent, is that creating some new tent some new tension between the the big and the small teams? I mean I mean, certainly, what we're putting in place is a is a is a cost cap, I'd call it, is a long term construct. So it's not it's not to bring it down and have it go right back up. It's it's a construct that, you know, is for the long term. And, you know, and I, you know, I don't think it creates tension. It creates, I think, respect the fact that there are, you know, a number of teams that spend significantly more and respect that, you know, they will obviously have to manage through challenges to get to the cap. I think we all 10 teams have agreed the intent of the cap was to improve the goals that were driven that drove the CAP, which were improved competition, better action and a healthier business for everybody in it. The cap helps achieve that. There have been different you know, as I said all along, there have been different thoughts about the specifics. It's a much more complicated sport to put a cap into than, you know, than sort of the team sports in The US, you know, well, where you just add up salaries. You've got all you know, here, you've got all sorts of the, you know, moving parts that come out of the technology of the sport and the engineering of the, you know, the sport. And so how you implement that cap has been probably more the discussion than does the cap make sense. And, again, I'm sure there'll be pressures on teams that have, you know, to make significant changes to get to the cap. But I think there's been unanimous agreement that the goal of the cap and those broad based goals are goals we all share, and that we have you know, that it will help make the sport better for fans and everybody in it. Thank you very much. Yep. So operator, I think we're done with our question today. Thank you to the listening audience and for your continued interest in Liberty Media, and we look forward to speaking with you again next quarter, if not sooner. Thanks very much. Thanks a lot. And that does conclude today's conference. We thank everyone again for their participation.