Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Liberty Formula One Group announced the acquisition of MotoGP, expanding its portfolio and enhancing its global sports presence.
- Formula One Group reported strong attendance at races, with significant increases compared to previous years, indicating growing popularity and fan engagement.
- The company highlighted successful financial metrics such as increased revenue from race promotions and solid performance in team payments.
- Liberty Formula One Group's strategic initiatives, like the integration of commercial and marketing functions across its brands, are expected to drive cost efficiencies and aligned sponsorship efforts.
- The introduction of new technical regulations in Formula One is anticipated to enhance race competitiveness and fan experience starting from 2027.
Negative Points
- The regulatory process for the MotoGP acquisition is ongoing, indicating potential delays or challenges in finalizing the acquisition.
- Despite overall growth, there are concerns about the variability of team payments and their impact on financial stability as indicated by the detailed financial discussions during the call.
- Liberty Formula One Group faces challenges in adapting to consumer feedback and technological updates, as seen with the new app developments in SiriusXM.
- There are uncertainties in media rights renewals and sponsorship revenue streams, which could affect future revenue growth.
- Operational costs, such as those associated with race promotions and team logistics, continue to be significant and could impact profit margins.
Q & A Highlights
Q: Can you talk about the trajectory of team payments as a percentage of pre-team EBITDA? Over the last couple of years, that's sort of declined about 300 basis points.
A: Brian Wendling, Liberty Media Corp - Principal Financial Officer, Chief Accounting Officer: Yes, Vijay, this is Brian. I'll take the team payment one. We'll try to give you the most information we can here without giving you the full model. But over the past few years, as F1 has grown free team share EBITDA and EBIT under the current Concorde agreement, we've moved through various brand bands of pre-team share EBITDA, where the payout to the teams has decreased as a percentage for each band. We're now at a point where the percentage to the teams is fixed for incremental EBITDA and EBIT through the end of this current Concorde agreement. We do expect to continue to have leverage in the team payments as a percent of pre-team share EBIT this year or adjusted OIBDA on our reported results, but not at that incremental rate that you noted that we saw from 2022 to 2023.
Q: Greg, on Live Nation, you comment on the pending antitrust case against Live Nation? And then also, Greg, you mentioned the car app and seeing some sort of early positive signs when are we going to know if that was successful? Is that sort of a second half thing we should be looking for? And then looking forward, do you feel comfortable, I guess, all else being equal economically that SIRI can get back to positive subscriber growth?
A: Gregory Maffei, Liberty Media Corp - President, Chief Executive Officer, Director: App and economic growth. So look, I think on the discussion around Live Nation antitrust issues, the management team led by Joe summarized it well on their call last Thursday. The DOJ investigation appears focused on specific business practices within divisions of the company, not the merger or the business structure. Live doesn't believe the breakup of Live Nation Ticketmaster would be legally defensible remedy. And beyond that, we're kind of limited to what was said on that live earnings call if you listen to that.
Turning to SIRI. Look, I think it's early days. We certainly would hope during the balance of this year to see a positive impact and greater learnings from the new app. The way the app is being rolled because of the app as a platform, you'll see us continue to roll out, at SIRI, new modules and new opportunities, which will help us get benefit. So I think you'll see some learnings early and hopefully more growing over time. But the exact timing of those and how the consumer â both how we release them and how the consumer takes them up are still open to question. On economic growth, I do believe that we can start driving. We'll see better numbers in 2024 versus 2023 on SP&A. And I do think, over time, this app will be critical to helping us grow and getting back to a growth path at Sirius.
Q: For Stefano or Greg, can you talk to F1 TV and how we should think of this as a possible growth driver for media rights this year. I wanted to understand better how the price increases have been received so far along with the new user experience? And then on Quint, I appreciate the commentary and the strategic value to F1, but maybe you can also discuss Quint on a stand-alone basis, the market for premium hospitality? What's the kind of growth drivers over the long-term? And just for Brian, on this, anything to note on the seasonality for Quint with revenue or margin?
A: Gregory Maffei, Liberty Media Corp - President, Chief Executive Officer, Director: All right. Stefano, do you want to start.
Stefano Domenicali, Formula One Group - President and Chief Executive Officer: Yes, Greg, if it's fine for you. Absolutely. I would say, first of all, F1 TV, as we always said, is an additional element to our fans and offer to fans that some of them are very, very expert. They can analyze all the data we're putting on the screen. And the good thing is that the numbers that we have seen so far are very encouraging because actually, even in Miami, there has been almost a record subscribers that we see. So it's a very, very important element that is related to the future of the immediate evolution that we want to offer to our customers.
We didn't receive any negative comment on price increase. You may say maybe because it was too low before, that would be a good point, but so far, no one has said anything. And I would say for us, it's really relevant to keep up in terms of quality of the product, in terms of content of the product, and this is something that we'll develop even further with the artificial intelligence that will be â that will play a very important part of our development with our future.
Gregory Maffei, Liberty Media Corp - President, Chief Executive Officer, Director: Great. Thank you, Stefano. And I'll touch briefly on the Quint business drivers and let Brian, as you now, to touch on some seasonality, which I expect his comments will be fairly limited, but I don't want to cut down. Look, on the drivers of the business, I think there are several. One is, and we mentioned â I mentioned one already. The opportunity to help us be a better sales arm and be more effective for Formula One itself, particularly around LVGP. And you've seen us do more integration of that sales arm and utilize their customer knowledge, their customer strengths, the things that they do well to help us sell better, particularly at the high end at LVGP.
Another driver of the business, though, is their ability to help other F1 promoters and elements sell their products. So they work with both teams and promoters, for example, Qatar to help sell tickets to their events, not just our event and to help sell out the things that they do and do ancillary services and ancillary events around the GPs.
Third driver is obviously adding new sports and new events. And you've seen them grow that and expect that they will continue to do that over time. And hopefully, that's a place where Liberty may be able to help them open the door to new sports.
Brian Wendling, Liberty Media Corp - Principal Financial Officer, Chief Accounting Officer: David, on seasonality, we can't give you the very specific details, but what I'll say is that Q1 is probably the lowest quarter for Quint, followed by Q3. Q2 and Q4 really ramp up because you have the Kentucky Derby and you have a lot more of the larger F1 events that Quint participates in. So you'll see that Q2 and Q4 definitely vary materially from what you see in Q1.
Q: Thanks. Good morning. Greg, now that you've had at least
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
