Liberty(FWONK) - 2018 Q4 - Annual Report

Financial Condition and Debt - As of December 31, 2018, the company had approximately $3.1 billion in corporate-level debt outstanding, including $1 billion in 1.375% cash convertible senior notes due 2023 and $450 million in 1% cash convertible senior notes due 2023[149]. - SIRIUS XM had an aggregate principal amount of approximately $6.9 billion of indebtedness outstanding as of December 31, 2018, with $439 million under a $1.75 billion Senior Secured Revolving Credit Facility[199]. - The company may experience challenges in retaining subscribers, particularly those on discounted pricing plans, which could adversely affect financial performance[161]. - The company's ability to obtain additional financing may be limited, affecting its capacity to develop businesses or complete acquisitions[148]. - Braves Holdings has approximately $317 million outstanding under various debt instruments for stadium construction and related costs as of December 31, 2018[271]. - Braves Holdings has a combined borrowing capacity of $185 million through two credit facilities, with $17 million outstanding under its operating credit facilities as of December 31, 2018[270]. - As of December 31, 2018, approximately $160 million is outstanding under various credit facilities and loans for the Development Project, with $56 million of capacity remaining available[271]. Revenue and Economic Factors - A substantial portion of the company's revenue is derived from discretionary spending, which may decline during weak economic conditions, adversely affecting subscriber churn and overall revenue[153]. - General economic conditions can negatively impact SIRIUS XM's business, affecting subscriber churn and vehicle sales[183]. - The financial performance of the Braves Group may be adversely affected by fluctuations in viewership and interest in baseball[267]. - Decreases in broadcasting revenue from local and national rights could adversely affect financial results, particularly if television ratings decline[269]. Competition and Market Risks - SIRIUS XM faces substantial competition from other audio service providers, which could impact its ability to attract and retain subscribers[158]. - The emergence of rival motor racing series could diminish Formula 1's competitive position, potentially leading to a decline in the value of its commercial contracts[236]. - Changes in consumer viewing habits and the rise of new content distribution platforms may negatively impact Formula 1's profitability and effectiveness of its licensing practices[237]. - The potential for credit-related losses exists if counterparties to Formula 1's key commercial contracts fail to perform, which could adversely impact cash flows and results of operations[223]. Operational and Strategic Risks - The success of acquisitions and strategic investments is uncertain and depends on effective integration and management of acquired businesses[152]. - The integration of the Pandora acquisition poses risks, including potential difficulties in combining operations and retaining key employees[173]. - The company regularly evaluates its business plans, which may lead to material changes affecting its financial condition and operations[198]. - The company is exposed to potential liabilities associated with the design, manufacture, and distribution of satellite radios, which could impact its financial condition[194]. Regulatory and Compliance Risks - The company faces risks related to compliance with FCC requirements, which could result in fines or license revocation if not adhered to[196]. - The market for music rights is changing, which may lead to increased licensing costs and reduced availability of certain music for SIRIUS XM's services[177]. - Formula 1's business is subject to various laws and regulations, including advertising and environmental laws, which could materially affect profitability if new restrictions are introduced[229]. Management and Governance - The company has overlapping directors and management with other entities, which may lead to potential conflicts of interest in pursuing business opportunities[155]. - The board of directors has the discretion to change management and allocation policies without stockholder approval, which could disadvantage one or more groups[294]. - The Teams have governance rights that may limit Liberty's ability to influence Formula 1's operations, including consent rights related to the number of Events in a season and the introduction of new regulations[250]. Subscriber and Customer Dynamics - SIRIUS XM's subscriber acquisition efforts may attract more price-sensitive consumers, potentially leading to lower conversion rates from trial to self-paying subscribers[164]. - SIRIUS XM's marketing efforts are crucial for attracting and retaining subscribers, and any decline in effectiveness could materially impact operations[170]. - The company's ability to access cash flow from subsidiaries like SIRIUS XM is limited due to its status as a separate public company and the presence of significant non-controlling interests[148]. Risks Related to Events and External Factors - SIRIUS XM's operations could be significantly impacted by natural disasters or terrorist activities damaging its facilities[201]. - Formula 1's revenue is significantly impacted by the cancellation or postponement of events due to factors beyond its control, which could lead to a loss of revenue under commercial contracts[231]. - The last cancellation of an event occurred in 2011 due to civil unrest, highlighting the potential for significant revenue loss in similar future scenarios[232]. Intellectual Property and Security Risks - The company may face challenges related to intellectual property rights, which could result in substantial legal costs and affect its ability to develop and market its systems[204]. - SIRIUS XM's data security measures are in place, but the company may struggle to anticipate evolving techniques used by unauthorized parties[166]. - Confidential information leaks could harm relationships with counterparties and result in less favorable commercial contracts, adversely affecting Formula 1's business[238]. Shareholder and Stockholder Considerations - The company does not currently intend to pay cash dividends on Liberty SiriusXM common stock, Liberty Braves common stock, or Liberty Formula One common stock for the foreseeable future[289]. - Insider transactions in the company's common stock could depress market prices due to perceived adverse trends[307]. - Liberty's Chairman, John C. Malone, holds approximately 47.7% of the aggregate voting power due to his beneficial ownership of about 96.3% of the outstanding shares of Series B common stock across multiple groups[312].