Liberty Media Corporation ("Liberty Media" or “Liberty”)
(NASDAQ: LSXMA, LSXMB, LSXMK, FWONA, FWONK, BATRA, BATRK) today
reported third quarter 2018 results. Highlights include(1):
- Attributed to Liberty SiriusXM Group
- SiriusXM reported strong third quarter
2018 results
- SiriusXM added 298,000 net new self-pay
subscribers in the quarter
- Third quarter revenue of $1.5 billion,
a new quarterly record
- Net income grew 24% to $343 million in
the quarter; diluted EPS climbed to $0.07
- Record adjusted EBITDA(2) of $589
million for the quarter drove adjusted EBITDA margin(2) over 40%
for first time
- SiriusXM increased 2018 guidance on
October 24th for self-pay subscribers, revenue and adjusted
EBITDA(2)
- Liberty Media’s ownership of SiriusXM
stood at 71.2% as of October 22nd
- From August 1st
through October 31st, Liberty repurchased 2.9 million LSXMK
shares at an average price per share of $45.76 and total cash
consideration of $134 million
- Attributed to Formula One Group
- Announced new deal for race in Vietnam
beginning 2020
- Renewed Japanese and German race
contracts
- Announced sponsorship and data rights
deal with ISG to produce live F1 betting offering
- Attributed to Braves Group
- Braves clinched 2018 NL East division
title; advanced to playoffs for first time since 2013
- Sold residential portion of Battery
Atlanta for $156 million of proceeds
“SiriusXM posted yet another outstanding quarter and again
increased guidance on October 24th, while Live Nation had its best
quarter ever with all divisions delivering their strongest
quarterly AOI results,” said Greg Maffei, Liberty Media President
and CEO. “F1 announced the 2019 race calendar, which includes the
renewals of the Japanese and German race contracts, and just
announced that a new race in Vietnam will join the F1 race calendar
beginning in 2020. We were thrilled that the Braves clinched the
2018 NL East division title and completed the sale of the
residential portion of Battery Atlanta.”
Unless otherwise noted, the following discussion compares
financial information for the three months ended September 30, 2018
to the same period in 2017.
LIBERTY SIRIUSXM GROUP – The following table provides the
financial results attributed to Liberty SiriusXM Group for the
third quarter of 2018. In the third quarter, approximately $10
million of corporate level selling, general and administrative
expense (including stock-based compensation expense) was allocated
to the Liberty SiriusXM Group.
3Q17
3Q18 % Change amounts in millions
Liberty SiriusXM
Group Revenue SiriusXM $ 1,379 $ 1,468
6 % Total Liberty SiriusXM Group $ 1,379 $ 1,468
6 %
Operating Income (Loss) SiriusXM 421 466
11 % Corporate and other (13 ) (11 ) 15 %
Total Liberty SiriusXM Group $ 408 $ 455 12 %
Adjusted OIBDA SiriusXM 549 587 7 % Corporate and other
(6 ) (4 ) 33 % Total Liberty SiriusXM Group $
543 $ 583 7 %
The increases in Liberty SiriusXM Group revenue, operating
income and adjusted OIBDA(2) were primarily driven by an increase
in SiriusXM’s daily weighted average number of subscribers. Revenue
growth at Liberty SiriusXM Group was partially offset by the impact
of the adoption of a new revenue recognition accounting standard,
as described in detail in Liberty Media’s Form 10-Q for the quarter
ended September 30, 2018.
SiriusXM is a separate publicly traded company and additional
information about SiriusXM can be obtained through its website and
filings with the Securities and Exchange Commission. SiriusXM
reported its stand-alone third quarter results on October 24, 2018.
For additional detail on SiriusXM’s financial results for the third
quarter, please see SiriusXM’s earnings release posted to their
Investor Relations website. For presentation purposes on page one
of this release, we include the results of SiriusXM, as reported by
SiriusXM, without regard to the purchase accounting adjustments
applied by us for purposes of our financial statements. Liberty
Media believes the presentation of financial results as reported by
SiriusXM is useful to investors as the comparability of those
results is best understood in the context of SiriusXM's historical
financial presentation.
The businesses and assets attributed to Liberty SiriusXM Group
consist primarily of Liberty Media’s interest in SiriusXM.
FORMULA ONE GROUP – The following table provides the
financial results attributed to the Formula One Group for the third
quarter of 2018. In the third quarter, the Formula One Group
incurred approximately $6 million of corporate level selling,
general and administrative expense (including stock-based
compensation expense).
“Lewis Hamilton secured his 5th World Championship in Mexico
City after a competitive 2018 season, and we expect continued
action at our final two races in Brazil and Abu Dhabi,” said Chase
Carey, Formula 1 Chairman and CEO. “Formula 1 hosted our first
U.S.-based fan festival in Miami and attracted an estimated 80,000
spectators for a live car run down Biscayne Boulevard, and
excitement around the sport grows with the announcement that Hanoi
will host a race from 2020. Our F1 New Balance Esports Pro Series
got underway in October and has attracted over 13 million views on
social media across all events this year.”
3Q17 3Q18 amounts in millions
Formula One Group Revenue Formula 1 $ 501 $
647 Total Formula One Group $ 501 $ 647
Operating Income (Loss) Formula 1 $ (10 ) $ 39 Corporate and
other (7 ) (8 ) Total Formula One Group $ (17 ) $ 31
Adjusted OIBDA Formula 1 $ 106 $ 158 Corporate and
other (2 ) (2 ) Total Formula One Group $ 104
$ 156
The following table provides the operating results of Formula 1
(“F1”).
Pro Forma F1
Operating Results
3Q17 3Q18 %
Change amounts in millions Primary Formula 1 revenue $ 430 $
560 30 % Other Formula 1 revenue 71 87
23 % Total Formula 1 revenue $ 501 $ 647 29 % Operating expenses
(excluding stock-based compensation included below): Team payments
(273 ) (344 ) (26 )% Other cost of Formula 1 revenue (81 )
(107 ) (32 )% Cost of Formula 1 revenue $ (354 ) $ (451 )
(27 )% Selling, general and administrative expenses (36 )
(38 ) (6 )% Adjusted OIBDA $ 111((1 )) $ 158 42 %
Stock-based compensation (7 ) (4 ) 43 % Depreciation and
Amortization (114 ) (115 ) (1 )% Operating income $
(10 ) $ 39 490 % Number of races in period 6
8 (1) Pro-forma adjusted OIBDA in the
third quarter of 2017 excludes $5 million of transaction expenses
related to the F1 acquisition recognized during the quarter.
Primary F1 revenue is comprised of (i) race promotion fees, (ii)
broadcasting fees and (iii) advertising and sponsorship fees.
Results in the third quarter of 2018 were favorably impacted by the
timing of the 2018 race calendar, with 2 additional races taking
place in the third quarter of 2018 compared to the third quarter of
2017.
Race promotion revenue increased primarily due to the two
additional races held in the third quarter of 2018, as well as
contractual increases in race promotion fees. Broadcast revenue
increased due to the higher proportionate recognition of
season-based income during the quarter (8/21 races took place in
the third quarter of 2018 compared to 6/20 races in the third
quarter of 2017) as well as favorable foreign currency movements.
Advertising and sponsorship revenue increased due to the two
additional races in the third quarter of 2018 and revenue from new
sponsorship agreements, partially offset by the impact of the
adoption of the new revenue recognition accounting standard (ASC
606) on recognizing fees from F1’s Global Partner and Official
Supplier contracts. These fee elements were previously recognized
pro-rata with the race calendar, but certain elements are now being
recognized evenly over the calendar year and others over a smaller
number of specific events. This change provided a modest headwind
to reported advertising and sponsorship revenue in the third
quarter of 2018 but will be neutral on a full calendar year
basis.
Other F1 revenue increased in the third quarter primarily due to
higher logistical and travel services revenue, higher digital media
and TV production related revenue, increased revenue from various
fan engagement activities and higher spare part sales for the F2
and GP3 support series.
Operating income and adjusted OIBDA(2) increased in the third
quarter as revenue growth driven by the additional races more than
offset elevated costs. Cost of F1 revenue increased primarily due
to higher team payments driven by the pro rata recognition of such
payments across the race season, as well as increased costs
associated with providing component parts to F2 and GP3 teams, fan
engagement activities, freight, technical activities and digital
media. Selling, general and administrative expense increased
primarily as a result of increased marketing and research
costs.
F1’s total net debt to covenant OIBDA ratio, as defined in F1’s
credit facilities for covenant calculations, was approximately 6.5x
as of September 30, 2018, as compared to a maximum allowable
leverage ratio of 8.75x. The race calendar variances between 2017
and 2018 resulted in income from 22 races falling in the trailing
twelve months measured for F1’s covenant calculations as of
September 30, 2018. Income from only 21 races will be captured in
the trailing twelve months to be measured at year-end, and we
expect the reported leverage ratio will increase accordingly.
The businesses and assets attributed to the Formula One Group
consist of Liberty Media’s subsidiary F1, its interest in Live
Nation, minority equity investments and an intergroup interest in
the Braves Group. There are approximately 9.1 million notional
shares of the Braves Group underlying the Formula One Group’s 15.1%
intergroup interest as of October 31, 2018.
BRAVES GROUP - The following table provides the financial
results attributed to the Braves Group for the third quarter of
2018. In the third quarter, approximately $2 million of corporate
level selling, general and administrative expense (including
stock-based compensation expense) was allocated to the Braves
Group.
3Q17 3Q18 amounts in millions
Braves Group Revenue Corporate and other $ 185
$ 200 Total Braves Group $ 185 $ 200
Operating Income
(Loss) Corporate and other (9 ) 45 Total Braves
Group $ (9 ) $ 45
Adjusted OIBDA Corporate and other
48 72 Total Braves Group $ 48 $ 72
The following table provides the operating results of Braves
Holdings, LLC (“Braves”).
3Q17 3Q18 % Change
amounts in millions Baseball revenue $ 181 $ 190 5 % Development
revenue 4 10 150 % Total revenue
185 200 8 % Operating expenses (excluding stock-based compensation
included below): Other operating expenses (109 ) (98 ) 10 %
Selling, general and administrative expenses (27 )
(28 ) (4 ) % Adjusted OIBDA $ 49 $ 74 51 % Stock-based compensation
(33 ) (4 ) 88 % Depreciation and Amortization (24 )
(24 ) — % Operating income (loss) $ (8 ) $ 46 675
% Number of home game openings in period 41 41
Baseball revenue per home game $ 4.4 $ 4.6
Baseball revenue is comprised of (i) ballpark operations, (ii)
local and national broadcast rights and (iii) licensing and other
shared MLB revenue streams. Development revenue is derived from the
Battery Atlanta mixed-use facilities and primarily includes rental
income.
Baseball revenue and baseball revenue per home game grew due to
increased ticket prices, higher attendance and increased
concessions per turnstile. Development revenue was modest in the
third quarter of 2017 as the project was still ramping.
Operating income and adjusted OIBDA(2) increased, primarily
driven by higher revenue and reduced operating expense from lower
player salaries due to the acceleration of player salary expense in
previous quarters as a result of released and injured players.
The Formula One Group holds an approximate 15.1% intergroup
interest in the Braves Group as of October 31, 2018. Assuming the
issuance of the shares underlying the intergroup interest held by
the Formula One Group, the Braves Group outstanding share count as
of October 31, 2018 would have been 60 million.
The businesses and assets attributed to the Braves Group consist
primarily of Liberty Media’s subsidiary the Braves, which
indirectly owns the Atlanta Braves Major League Baseball Club, six
minor league baseball clubs and certain assets and liabilities
associated with the Braves’ ballpark and mixed-use development
project.
Share Repurchases
From August 1, 2018 through October 31, 2018, Liberty Media
repurchased approximately 2.9 million Series C Liberty SiriusXM
shares (Nasdaq: LSXMK) at an average cost per share of $45.76 for
total cash consideration of $134.0 million. The total remaining
repurchase authorization for Liberty Media is approximately $882
million and can be applied to repurchases of Series A and Series C
shares of any of the Liberty Media Corporation tracking stocks.
FOOTNOTES 1) Liberty Media's President and CEO, Greg Maffei,
will discuss these highlights and other matters on Liberty Media's
earnings conference call which will begin at 11:00 a.m. (E.S.T.) on
November 8, 2018. For information regarding how to access the call,
please see “Important Notice” later in this document. 2) For
definitions of adjusted OIBDA (as defined by Liberty Media),
adjusted EBITDA and adjusted EBITDA margin (as defined by SiriusXM)
and applicable reconciliations see the accompanying schedules.
NOTES
The following financial information with respect to Liberty
Media's equity affiliates and available for sale securities is
intended to supplement Liberty Media's condensed consolidated
balance sheet and statement of operations to be included in its
Form 10-Q for the period ended September 30, 2018.
Fair Value of Corporate Public
Holdings
(amounts in millions) 6/30/2018
9/30/2018 Liberty SiriusXM Group iHeart Debt(1) $ 505 $ 496 Total
Liberty SiriusXM Group(2) $ 505 $ 496 Formula One Group Live Nation
Investment(3) $ 3,383 3,794 Other Public Holdings(4) 259
275 Total Formula One Group $ 3,642 $ 4,069 Braves Group
N/A N/A
Total Liberty Media $
4,147 $ 4,565 (1) Liberty has purchased
$660 million in aggregate principal amount of iHeart bonds to-date.
(2) SiriusXM’s investment in Pandora excluded from public holdings
presented above. (3) Represents the fair value of the equity
investment attributed to Formula One Group. In accordance with
GAAP, Liberty Media accounts for its investment in the equity of
Live Nation using the equity method of accounting and includes it
in its condensed consolidated balance sheet at $751 million and
$801 million as of June 30, 2018 and September 30, 2018,
respectively. (4) Represents the carrying value of other public
holdings which are accounted for at fair value. Excludes Braves
Group intergroup interest.
Cash and Debt
The following presentation is provided to separately identify
cash and liquid investments and debt information.
(amounts in millions) 6/30/2018 9/30/2018
Cash and Cash Equivalents Attributable to: Liberty
SiriusXM Group(1) $ 174 $ 126 Formula One Group(2) 198 151 Braves
Group 113 78
Total Liberty
Consolidated Cash and Cash Equivalents (GAAP) $
485 $ 355 Debt:
SiriusXM senior notes(3) $ 6,500 $ 6,500 2.125% exchangeable senior
debentures due 2048(4) 400 400 Margin loans 450 550 Other
subsidiary debt(5) 8 125
Total
Attributed Liberty SiriusXM Group Debt $ 7,358
$ 7,575 Unamortized discount, fair
market value adjustment and deferred loan costs (66 )
(64 )
Total Attributed Liberty SiriusXM Group Debt (GAAP)
$ 7,292 $ 7,511
1.375% cash convertible notes due 2023(4) 1,000 1,000 1% cash
convertible notes due 2023(4) 450 450 2.25% exchangeable senior
debentures due 2046(4) 216 215 Live Nation margin loan 350 350
Formula 1 bank loan 2,977 2,902 Other corporate level debt
34 34
Total Attributed Formula One Group
Debt $ 5,027 $ 4,951
Fair market value adjustment 326 314
Total Attributed Formula One Group Debt (GAAP) $
5,353 $ 5,265 Formula 1
leverage(6) 7.3x 6.5x Atlanta Braves debt 629
626
Total Attributed Braves Group Debt
$ 629 $ 626 Deferred loan
costs (4 ) (4 )
Total Attributed Braves Group Debt
(GAAP) $ 625 $ 622
Total Liberty Media Corporation Debt
(GAAP) $ 13,270 $ 13,398
(1) Includes $64 million and $46 million of cash and
liquid investments held at SiriusXM as of June 30, 2018 and
September 30, 2018, respectively. (2) Includes $89 million and $45
million of cash and liquid investments held at Formula 1 as of June
30, 2018 and September 30, 2018, respectively. (3) Outstanding
principal amount of Senior Notes with no reduction for the net
unamortized discount. (4) Face amount of the cash convertible notes
and exchangeable debentures with no fair market value adjustment.
(5) Includes SiriusXM revolving credit facility and capital leases.
(6) Net debt to covenant OIBDA ratio of F1 operating business as
defined in F1’s credit facilities for covenant calculations. There
were 22 races in the trailing twelve months measured for F1’s
covenant calculations as of September 30, 2018; the reported
leverage ratio is expected to increase at year-end when the
measured period will capture the 21 races of the 2018 season.
Total cash and liquid investments attributed to Liberty SiriusXM
Group decreased $48 million during the quarter. Cash from
operations at SiriusXM and additional borrowings were more than
offset by return of capital at both Liberty SiriusXM Group and
SiriusXM. Included in the cash and liquid investments balance
attributed to Liberty SiriusXM Group at September 30, 2018 is $46
million held at SiriusXM. Although SiriusXM is a consolidated
subsidiary, it is a separate public company with a significant
non-controlling interest, therefore Liberty Media does not have
ready access to SiriusXM’s cash balances.
Total debt attributed to Liberty SiriusXM Group increased $217
million during the quarter primarily due to increased borrowings
under SiriusXM’s revolving credit facility and Liberty SiriusXM’s
margin loan.
Total cash and liquid investments attributed to the Formula One
Group decreased $47 million during the quarter, primarily as a
result of F1’s repayment of $75 million under its revolving credit
facility, which was partially offset by cash from operations. As a
result of the repayment, total debt attributed to Formula One Group
decreased $76 million during the quarter.
Total cash and liquid investments attributed to the Braves Group
decreased $35 million during the quarter as increased cash from
operations was more than offset by timing of working capital needs.
Total debt attributed to the Braves Group was flat in the third
quarter.
Important Notice: Liberty Media Corporation (Nasdaq:
LSXMA, LSXMB, LSXMK, FWONA, FWONK, BATRA, BATRK) President and CEO,
Greg Maffei, will discuss Liberty Media's earnings release on a
conference call which will begin at 11:00 a.m. (E.S.T.) on November
8, 2018. The call can be accessed by dialing (800) 239-9838 or
(323) 794-2551, passcode 7731840 at least 10 minutes prior to the
start time. The call will also be broadcast live across the
Internet and archived on our website. To access the webcast go to
http://www.libertymedia.com/events. Links to this press release
will also be available on the Liberty Media website.
This press release includes certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements about business strategies, market
potential, future financial prospects, Formula 1’s race calendar
and new races, the reported Formula 1 leverage ratio, the
continuation of our stock repurchase plan and other matters that
are not historical facts. These forward-looking statements involve
many risks and uncertainties that could cause actual results to
differ materially from those expressed or implied by such
statements, including, without limitation, possible changes in
market acceptance of new products or services, regulatory matters
affecting our businesses, the unfavorable outcome of pending or
future litigation, the failure to realize benefits of acquisitions,
rapid technological and industry change, failure of third parties
to perform, changes in consumer protection laws and their
enforcement, continued access to capital on terms acceptable to
Liberty Media, and changes in law and market conditions conducive
to stock repurchases. These forward-looking statements speak only
as of the date of this press release, 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 based. Please refer to the publicly
filed documents of Liberty Media, including the most recent Forms
10-K and 10-Q, for additional information about Liberty Media and
about the risks and uncertainties related to Liberty Media's
business which may affect the statements made in this press
release.
LIBERTY MEDIA CORPORATIONBALANCE
SHEET INFORMATIONSeptember 30, 2018 (unaudited)
Attributed
Liberty Formula SiriusXM Braves
One Intergroup Consolidated Group
Group Group Eliminations Liberty
amounts in millions Assets Current assets: Cash and cash
equivalents $ 126 78 151 — 355 Trade and other receivables, net 246
41 153 — 440 Other current assets 202 140 104
— 446 Total current assets 574
259 408 — 1,241 Intergroup interest in
the Braves Group — — 248 (248 ) — Investments in debt and equity
securities 1,050 8 348 — 1,406 Investments in affiliates, accounted
for using the equity method 661 97 972 — 1,730 Property and
equipment, at cost 2,404 1,238 179 — 3,821 Accumulated depreciation
(1,065 ) (93 ) (87 ) — (1,245 ) 1,339
1,145 92 — 2,576 Intangible
assets not subject to amortization Goodwill 14,250 180 3,956 —
18,386 FCC licenses 8,600 — — — 8,600 Other 931 143
— — 1,074 23,781 323
3,956 — 28,060 Intangible assets
subject to amortization, net 947 38 4,845 — 5,830 Other assets
124 43 614 — 781 Total
assets $ 28,476 1,913 11,483 (248 ) 41,624
Liabilities and Equity Current liabilities:
Intergroup payable (receivable) $ 17 (56 ) 39 — — Accounts payable
and accrued liabilities 842 31 224 — 1,097 Current portion of debt
4 14 — — 18 Deferred revenue 1,955 45 235 — 2,235 Other current
liabilities 17 9 3 — 29
Total current liabilities 2,835 43 501
— 3,379 Long-term debt 7,507 608 5,265 — 13,380
Deferred income tax liabilities 1,607 73 (70 ) — 1,610 Redeemable
intergroup interest — 248 — (248 ) — Other liabilities 266
519 101 — 886 Total liabilities
12,215 1,491 5,797 (248 ) 19,255
Equity / Attributed net assets 10,759 417 5,684 — 16,860
Noncontrolling interests in equity of subsidiaries 5,502
5 2 — 5,509 Total liabilities
and equity $ 28,476 1,913 11,483 (248 ) 41,624
LIBERTY MEDIA
CORPORATIONSTATEMENT OF OPERATIONSThree months ended
September 30, 2018 (unaudited)
Attributed
Liberty Formula SiriusXM Braves
One Consolidated Group Group
Group Liberty amounts in millions Revenue: Subscriber
revenue $ 1,163 — — 1,163 Formula 1 revenue — — 647 647 Other
revenue 305 200 — 505 Total
revenue 1,468 200 647 2,315 Operating costs and expenses, including
stock-based compensation: Cost of subscriber services (exclusive of
depreciation shown separately below): Revenue share and royalties
343 — — 343 Programming and content(1) 97 — — 97 Customer service
and billing(1) 95 — — 95 Other(1) 30 — — 30 Cost of Formula 1
revenue — — 450 450 Subscriber acquisition costs 110 — — 110 Other
operating expenses(1) 31 99 — 130 Selling, general and
administrative(1) 214 33 48 295 Depreciation and amortization
93 23 118 234 1,013
155 616 1,784 Operating income (loss)
455 45 31 531 Other income (expense): Interest expense (95 ) (6 )
(49 ) (150 ) Share of earnings (losses) of affiliates, net (2 ) 2
58 58 Realized and unrealized gains (losses) on financial
instruments, net (51 ) 1 19 (31 ) Unrealized gains (losses) on
intergroup interest — (13 ) 13 — Other, net 6 —
4 10 (142 ) (16 ) 45 (113 )
Earnings (loss) from continuing operations before income taxes 313
29 76 418 Income tax (expense) benefit (30 ) 12 (34 )
(52 ) Net earnings (loss) 283 41 42 366 Less net earnings (loss)
attributable to the noncontrolling interests 98 —
— 98 Net earnings (loss) attributable to
Liberty stockholders $ 185 41 42 268
(1) Includes stock-based compensation expense as follows:
Programming and content 3 — — 3 Customer service and billing 1 — —
1 Other 1 — — 1 Other operating expenses 5 — — 5 Selling, general
and administrative 25 4 7 36
Stock compensation expense $ 35 4 7 46
LIBERTY MEDIA
CORPORATIONSTATEMENT OF OPERATIONSThree months ended
September 30, 2017 (unaudited)
Attributed
Liberty Formula SiriusXM Braves
One Consolidated Group Group
Group Liberty amounts in millions Revenue: Subscriber
revenue $ 1,136 — — 1,136 Formula 1 revenue — — 501 501 Other
revenue 243 185 — 428 Total
revenue 1,379 185 501 2,065 Operating costs and expenses, including
stock-based compensation: Cost of subscriber services (exclusive of
depreciation shown separately below): Revenue share and royalties
297 — — 297 Programming and content(1) 98 — — 98 Customer service
and billing(1) 95 — — 95 Other(1) 29 — — 29 Cost of Formula 1
revenue — — 354 354 Subscriber acquisition costs 119 — — 119 Other
operating expenses(1) 30 109 — 139 Selling, general and
administrative(1) 210 61 53 324 Depreciation and amortization
93 24 111 228 971
194 518 1,683 Operating income (loss) 408 (9 )
(17 ) 382 Other income (expense): Interest expense (95 ) (7 ) (57 )
(159 ) Share of earnings (losses) of affiliates, net 34 68 53 155
Realized and unrealized gains (losses) on financial instruments,
net 62 — (44 ) 18 Unrealized gains (losses) on intergroup interest
— (12 ) 12 — Other, net (19 ) 1 7 (11 )
(18 ) 50 (29 ) 3 Earnings (loss) from continuing
operations before income taxes 390 41 (46 ) 385 Income tax
(expense) benefit (116 ) (19 ) 11 (124 ) Net earnings
(loss) 274 22 (35 ) 261 Less net earnings (loss) attributable to
the noncontrolling interests 91 — 2 93
Net earnings (loss) attributable to Liberty stockholders $
183 22 (37 ) 168 (1) Includes
stock-based compensation expense as follows: Programming and
content 7 — — 7 Customer service and billing 1 — — 1 Other 2 — — 2
Other operating expenses 4 — — 4 Selling, general and
administrative 28 33 10 71 Stock
compensation expense $ 42 33 10 85
LIBERTY MEDIA
CORPORATIONSTATEMENT OF CASH FLOWS INFORMATIONNine
months ended September 30, 2018 (unaudited)
Attributed Liberty
Formula SiriusXM Braves One
Consolidated Group Group Group
Liberty amounts in millions Cash flows from operating
activities: Net earnings (loss) $ 813 (14 ) 35 834 Adjustments to
reconcile net earnings to net cash provided by operating
activities: Depreciation and amortization 274 62 345 681
Stock-based compensation 117 9 19 145 Share of (earnings) loss of
affiliates, net 2 (8 ) (66 ) (72 ) Unrealized (gains) losses on
intergroup interest, net — 46 (46 ) — Realized and unrealized
(gains) losses on financial instruments, net (69 ) (1 ) (110 ) (180
) Noncash interest expense (benefit) (9 ) 4 (1 ) (6 ) Deferred
income tax expense (benefit) 159 3 (30 ) 132 Intergroup tax
allocation 21 (14 ) (7 ) — Other charges (credits), net 2 9 2 13
Changes in operating assets and liabilities Current and other
assets (33 ) (3 ) (83 ) (119 ) Payables and other liabilities
14 (30 ) 223 207 Net cash provided
(used) by operating activities 1,291 63 281
1,635 Cash flows from investing activities:
Investments in equity method affiliates and debt and equity
securities (397 ) — (6 ) (403 ) Cash proceeds from sale of
investments — — 244 244 Capital expended for property and equipment
(239 ) (15 ) (11 ) (265 ) Other investing activities, net 4
33 5 42 Net cash provided (used) by
investing activities (632 ) 18 232 (382 ) Cash
flows from financing activities: Borrowings of debt 1,899 123 288
2,310 Repayments of debt (1,902 ) (185 ) (927 ) (3,014 ) Series C
Liberty SiriusXM stock repurchases (368 ) — — (368 ) Subsidiary
shares repurchased by subsidiary (662 ) — — (662 ) Cash dividends
paid by subsidiary (44 ) — — (44 ) Taxes paid in lieu of shares
issued for stock-based compensation (120 ) — (2 ) (122 ) Other
financing activities, net 50 — 1 51
Net cash provided (used) by financing activities
(1,147 ) (62 ) (640 ) (1,849 ) Net increase (decrease) in cash,
cash equivalents and restricted cash (488 ) 19 (127 ) (596 ) Cash,
cash equivalents and restricted cash at beginning of period
625 140 282 1,047 Cash, cash
equivalents and restricted cash at end of period $ 137 159
155 451
LIBERTY MEDIA
CORPORATIONSTATEMENT OF CASH FLOWS INFORMATIONNine
months ended September 30, 2017 (unaudited)
Attributed
Liberty Formula SiriusXM Braves
One Consolidated Group Group
Group Liberty amounts in millions Cash flows from
operating activities: Net earnings (loss) $ 648 (29 ) (158 ) 461
Adjustments to reconcile net earnings to net cash provided by
operating activities: Depreciation and amortization 270 50 295 615
Stock-based compensation 113 41 28 182 Share of (earnings) loss of
affiliates, net (32 ) (72 ) (63 ) (167 ) Unrealized (gains) losses
on intergroup interest, net — 43 (43 ) — Realized and unrealized
(gains) losses on financial instruments, net (62 ) — 105 43 Noncash
interest expense (benefit) 4 1 4 9 Deferred income tax expense
(benefit) 321 28 (63 ) 286 Intergroup tax allocation (11 ) (18 ) 29
— Intergroup tax payments 4 15 (19 ) — Other charges (credits), net
36 — 6 42 Changes in operating assets and liabilities Current and
other assets 19 (41 ) 28 6 Payables and other liabilities 1
(59 ) (105 ) (163 ) Net cash provided (used) by operating
activities 1,311 (41 ) 44 1,314 Cash
flows from investing activities: Investments in equity affiliates
and debt and equity securities (750 ) (2 ) (8 ) (760 ) Cash
proceeds from the sale of investments — 5 15 20 Net cash paid for
the acquisition of Formula 1 — — (1,647 ) (1,647 ) Capital expended
for property and equipment (207 ) (190 ) (10 ) (407 ) Other
investing activities, net (115 ) 4 (9 ) (120 ) Net
cash provided (used) by investing activities (1,072 ) (183 )
(1,659 ) (2,914 ) Cash flows from financing activities: — — — —
Borrowings of debt 3,933 288 1,599 5,820 Repayments of debt (3,103
) (42 ) (1,674 ) (4,819 ) Proceeds from issuance of Series C
Liberty Formula One common stock — — 1,938 1,938 Subsidiary shares
repurchased by subsidiary (996 ) — — (996 ) Cash dividends paid by
subsidiary (45 ) — — (45 ) Taxes paid in lieu of shares issued for
stock-based compensation (91 ) — (4 ) (95 ) Other financing
activities, net 11 — 1 12 Net
cash provided (used) by financing activities (291 ) 246
1,860 1,815 Effect of foreign exchange rates
on cash, cash equivalents and restricted cash — — 7 7 Net increase
(decrease) in cash, cash equivalents and restricted cash (52 ) 22
252 222 Cash, cash equivalents and restricted cash at beginning of
period 297 107 168 572 Cash,
cash equivalents and restricted cash at end of period $ 245
129 420 794
NON-GAAP FINANCIAL MEASURES
SCHEDULE 1
This press release includes a presentation of adjusted OIBDA,
which is a non-GAAP financial measure, for the Liberty SiriusXM
Group, the Braves Group and the Formula One Group, together with
reconciliations to operating income, as determined under GAAP.
Liberty Media defines adjusted OIBDA as revenue less operating
expenses, and selling, general and administrative expenses,
excluding all stock based compensation, and excludes from that
definition depreciation and amortization, restructuring and
impairment charges and separately reported legal settlements that
are included in the measurement of operating income pursuant to
GAAP.
Liberty Media believes adjusted OIBDA is an important indicator
of the operational strength and performance of its businesses,
including each business' ability to service debt and fund capital
expenditures. In addition, this measure allows management to view
operating results and perform analytical comparisons and
benchmarking between businesses and identify strategies to improve
performance. Because adjusted OIBDA is used as a measure of
operating performance, Liberty Media views operating income as the
most directly comparable GAAP measure. Adjusted OIBDA is not meant
to replace or supersede operating income or any other GAAP measure,
but rather to supplement such GAAP measures in order to present
investors with the same information that Liberty Media's management
considers in assessing the results of operations and performance of
its assets.
The following table provides a reconciliation of adjusted OIBDA
for Liberty Media to operating income calculated in accordance with
GAAP for the three months ended September 30, 2017 and September
30, 2018, respectively.
QUARTERLY SUMMARY
(amounts in millions) 3Q17 3Q18
Liberty
SiriusXM Group Revenue $ 1,379 $ 1,468 Adjusted OIBDA
543 583 Depreciation and amortization (93 ) (93 ) Stock
compensation expense (42 ) (35 )
Operating
Income $ 408 $ 455
Formula One
Group Revenue $ 501 $ 647
Adjusted OIBDA 104 156 Depreciation and amortization (111 ) (118 )
Stock compensation expense
(10 ) (7 )
Operating Income (Loss) $ (17 ) $
31
Braves Group Revenue $ 185 $ 200
Adjusted OIBDA 48 72 Depreciation and amortization (24 ) (23 )
Stock compensation expense (33 ) (4 )
Operating
Income (Loss) $ (9 ) $ 45
Liberty Media
Corporation (Consolidated) Revenue $ 2,065 $ 2,315
Adjusted OIBDA 695 811 Depreciation and amortization (228 ) (234 )
Stock compensation expense (85 ) (46 )
Operating
Income $ 382 $ 531
SCHEDULE 2
This press release also includes a presentation of adjusted
EBITDA and adjusted EBITDA margin of SiriusXM, which are non-GAAP
financial measures used by SiriusXM, together with a reconciliation
to SiriusXM's stand-alone net income, as determined under GAAP.
SiriusXM defines adjusted EBITDA as follows: EBITDA is defined as
net income before interest expense, income tax expense and
depreciation and amortization. SiriusXM adjusts EBITDA to exclude
the impact of other income as well as certain other charges
discussed below. Adjusted EBITDA is a Non-GAAP financial measure
that excludes (if applicable): (i) certain adjustments as a result
of the purchase price accounting for the merger of Sirius and XM,
(ii) share-based payment expense and (iii) other significant
operating expense (income) that do not relate to the on-going
performance of SiriusXM’s business. SiriusXM believes adjusted
EBITDA is a useful measure of the underlying trend of its operating
performance, which provides useful information about its business
apart from the costs associated with its capital structure and
purchase price accounting. SiriusXM believes investors find this
Non-GAAP financial measure useful when analyzing past operating
performance with current performance and comparing its operating
performance to the performance of other communications,
entertainment and media companies. SiriusXM believes investors use
adjusted EBITDA to estimate its current enterprise value and to
make investment decisions. As a result of large capital investments
in SiriusXM’s satellite radio system, its results of operations
reflect significant charges for depreciation expense. SiriusXM
believes the exclusion of share-based payment expense is useful as
it is not directly related to the operational conditions of its
business. SiriusXM also believes the exclusion of the legal
settlements and reserves related to the historical use of sound
recordings, acquisition related costs, loss on extinguishment of
debt and loss on disposal of assets, to the extent they occur
during the period, is useful as they are significant expenses not
incurred as part of normal operations for the period. Adjusted
EBITDA margin is defined as adjusted EBITDA divided by revenue.
Adjusted EBITDA has certain limitations in that it does not take
into account the impact to SiriusXM’s statements of comprehensive
income of certain expenses, including share-based payment expense
and certain purchase price accounting for the merger of Sirius and
XM. SiriusXM endeavors to compensate for the limitations of the
Non-GAAP measure presented by also providing the comparable GAAP
measure with equal or greater prominence and descriptions of the
reconciling items, including quantifying such items, to derive the
Non-GAAP measure. Investors that wish to compare and evaluate
operating results after giving effect for these costs, should refer
to net income as disclosed in SiriusXM’s unaudited consolidated
statements of comprehensive income. Since adjusted EBITDA is a
Non-GAAP financial performance measure, SiriusXM’s calculation of
adjusted EBITDA may be susceptible to varying calculations; may not
be comparable to other similarly titled measures of other
companies; and should not be considered in isolation, as a
substitute for, or superior to measures of financial performance
prepared in accordance with GAAP. The reconciliation of net income
to the adjusted EBITDA is calculated as follows:
Unaudited For the Three Months Ended September
30, 2017 2018 ($ in thousands) Net income: $ 275,722 $
343,048 Add back items excluded from Adjusted EBITDA: Purchase
price accounting adjustments: Revenues 1,813 1,813 Share-based
payment expense 34,891 29,405 Depreciation and amortization 79,913
75,510 Interest expense 92,634 86,218 Loss on extinguishment of
debt 43,679 — Other (income) expense (86,971 ) 41,766 Income tax
expense 108,901 11,525 Adjusted EBITDA $
550,582 $ 589,285
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