Liberty(US:FWONK)2021-11-04 20:25markdown Part I – Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Liberty Media Corporation and its subsidiaries for the period ended September 30, 2021, including Balance Sheets, Statements of Operations, Comprehensive Earnings, Cash Flows, and Equity, along with detailed Notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=LIBERTY%20MEDIA%20CORPORATION%20AND%20SUBSIDIARIES%20Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) The balance sheet details the company's financial position as of September 30, 2021, highlighting total assets, liabilities, and equity, with significant goodwill from key segments Consolidated Balance Sheet Summary (in millions) | Balance Sheet Item | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$44,419** | **$44,004** | | Goodwill | $19,247 | $19,218 | | Total Current Assets | $4,590 | $4,030 | | **Total Liabilities** | **$24,950** | **$24,403** | | Long-term Debt | $15,525 | $16,686 | | Total Current Liabilities | $6,188 | $4,490 | | **Total Equity** | **$18,894** | **$19,601** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=LIBERTY%20MEDIA%20CORPORATION%20AND%20SUBSIDIARIES%20Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)) The statements of operations show significant revenue and operating income growth for Q3 and the nine-month period ended September 30, 2021, driven by improved segment performance and a turnaround in net earnings Key Operating Results (in millions, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$3,100** | **$2,732** | **$8,230** | **$6,654** | | Sirius XM Holdings Revenue | $2,198 | $2,025 | $6,415 | $5,851 | | Formula 1 Revenue | $668 | $597 | $1,349 | $660 | | **Operating Income** | **$702** | **$320** | **$1,466** | **$780** | | **Net Earnings (Loss) to Stockholders** | **$328** | **($114)** | **$629** | **($516)** | Diluted EPS Attributable to Liberty Stockholders | Stock Group | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Liberty SiriusXM | $1.02 | $0.03 | $1.98 | $0.31 | | Liberty Braves | $0.39 | ($0.61) | $0.04 | ($1.57) | | Liberty Formula One | ($0.22) | ($0.41) | ($0.18) | ($2.75) | [Condensed Consolidated Statements of Comprehensive Earnings (Loss)](index=7&type=section&id=LIBERTY%20MEDIA%20CORPORATION%20AND%20SUBSIDIARIES%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Earnings%20(Loss)%20(unaudited)) Comprehensive earnings for Q3 and the nine-month period ended September 30, 2021, reflect a positive shift from prior-year losses, influenced by net earnings and other comprehensive income/loss components Comprehensive Earnings (Loss) Summary (in millions) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Earnings (Loss) | $400 | ($43) | $914 | ($303) | | Other Comprehensive Earnings (Loss) | ($53) | ($134) | ($91) | $49 | | **Comprehensive Earnings (Loss) to Stockholders** | **$277** | **($251)** | **$537** | **($464)** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=LIBERTY%20MEDIA%20CORPORATION%20AND%20SUBSIDIARIES%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Cash flow statements for the nine months ended September 30, 2021, indicate strong operating cash generation, with significant cash utilization in investing and financing activities, including share repurchases and debt management Cash Flow Summary for Nine Months Ended Sep 30 (in millions) | Cash Flow Category | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $1,673 | $1,056 | | Net Cash from Investing Activities | ($615) | ($309) | | Net Cash from Financing Activities | ($981) | ($78) | | **Net Increase in Cash** | **$72** | **$668** | [Condensed Consolidated Statements of Equity](index=10&type=section&id=LIBERTY%20MEDIA%20CORPORATION%20AND%20SUBSIDIARIES%20Condensed%20Consolidated%20Statements%20of%20Equity%20(unaudited)) Total equity decreased during the nine months ended September 30, 2021, primarily due to significant share repurchases by both the company and its subsidiaries, partially offset by net earnings Changes in Total Equity for Nine Months Ended Sep 30, 2021 (in millions) | Component | Amount | | :--- | :--- | | **Balance at January 1, 2021** | **$19,601** | | Net Earnings | $863 | | Other Comprehensive Loss | ($91) | | Liberty Stock Repurchases | ($398) | | Subsidiary Shares Repurchased | ($1,168) | | **Balance at September 30, 2021** | **$18,894** | [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=LIBERTY%20MEDIA%20CORPORATION%20AND%20SUBSIDIARIES%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section details accounting policies, financial statement components, and significant events, including the tracking stock structure, debt instruments, segment performance, and the SXM-7 satellite impairment - The company's primary businesses are conducted through its significant subsidiaries: Sirius XM Holdings Inc., Delta Topco Limited (Formula 1), and Braves Holdings, LLC[44](index=44&type=chunk) - The company utilizes a tracking stock structure for three groups: Liberty SiriusXM Group, Braves Group, and Formula One Group. These are not separate legal entities but are intended to track the economic performance of attributed businesses, assets, and liabilities[59](index=59&type=chunk) - Sirius XM Holdings' SXM-7 satellite was determined to be a total loss, resulting in a **$220 million** impairment charge, which was offset by **$225 million** in insurance recoveries collected during the nine months ended September 30, 2021[176](index=176&type=chunk)[177](index=177&type=chunk) Total Debt by Group (Principal, in millions) | Group | Sep 30, 2021 | | :--- | :--- | | Liberty SiriusXM Group | $13,127 | | Braves Group | $721 | | Formula One Group | $3,448 | | **Total Debt** | **$17,296** | [Management's Discussion and Analysis (MD&A)](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operational results, covering business segments, tracking stock structure, consolidated performance, liquidity, and capital resources, emphasizing COVID-19 recovery and key drivers [Overview](index=49&type=section&id=MD%26A%20Overview) The company's media and entertainment businesses, structured into three tracking stock groups, experienced significant operational recovery in 2021 following COVID-19 impacts on Formula 1, MLB, and Live Nation events - The company's largest operating subsidiary is Sirius XM Holdings, which operates two complementary audio entertainment businesses, Sirius XM and Pandora[224](index=224&type=chunk) - The business operations of Formula 1, the Atlanta Braves, and Live Nation were significantly impacted by COVID-19 in 2020. In 2021, operations have been recovering, with the MLB season returning to a normal length and Formula 1 expecting to hold **22 events**, though some fan attendance limitations remained[236](index=236&type=chunk) [Consolidated Operating Results](index=52&type=section&id=MD%26A%20Consolidated%20Operating%20Results) Consolidated revenue, operating income, and Adjusted OIBDA significantly increased in Q3 and the nine-month period of 2021, driven by strong performance across all key business segments Consolidated Operating Results Summary (in millions) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$3,100** | **$2,732** | **$8,230** | **$6,654** | | **Operating Income** | **$702** | **$320** | **$1,466** | **$780** | | **Adjusted OIBDA** | **$946** | **$667** | **$2,473** | **$1,780** | - The increase in operating income for the nine months ended Sep 30, 2021 was driven by improvements of **$374 million**, **$177 million**, and **$118 million** in Formula 1, Sirius XM Holdings, and Braves Holdings operating results, respectively[241](index=241&type=chunk) [Other Income and Expense](index=54&type=section&id=MD%26A%20Other%20Income%20and%20Expense) Other expense decreased significantly in Q3 2021, primarily due to a positive shift in affiliate earnings, notably from Live Nation's recovery, and a gain on investment dilution Components of Other Income (Expense) (in millions) | Component | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Interest expense | ($168) | ($153) | | Share of earnings (losses) of affiliates, net | $9 | ($187) | | Realized and unrealized gains (losses) on financial instruments, net | ($40) | $16 | | Gains on dilution of investment in affiliate | $142 | $— | | Other, net | ($72) | ($32) | | **Total Other Income (Expense)** | **($129)** | **($356)** | - The improvement in share of earnings from affiliates was primarily due to Live Nation's performance, which was reattributed to the Liberty SiriusXM Group from the Formula One Group in April 2020[250](index=250&type=chunk) [Material Changes in Financial Condition](index=56&type=section&id=MD%26A%20Material%20Changes%20in%20Financial%20Condition) The company's liquidity is derived from diverse sources, with cash balances primarily held at group levels, and cash utilized for share repurchases and debt service, noting potential subsidiary cash access restrictions - Potential sources of liquidity include available cash, cash from subsidiary operations, asset sales, monetization of public investments, debt borrowings, and equity issuances[260](index=260&type=chunk) Cash and Cash Equivalents by Group (as of Sep 30, 2021, in millions) | Group | Cash Balance | | :--- | :--- | | Liberty SiriusXM Group | $529 | | Braves Group | $134 | | Formula One Group | $2,195 | - Primary uses of cash in the first nine months of 2021 included **$351 million** for Liberty SiriusXM stock repurchases and **$191 million** for debt repayments, funded by borrowings, dividends from Sirius XM, and cash on hand[265](index=265&type=chunk) [Results of Operations—Businesses](index=59&type=section&id=MD%26A%20Results%20of%20Operations%E2%80%94Businesses) This section details the strong operational performance of key business segments, including Sirius XM Holdings, Formula 1, and Braves Holdings, driven by revenue growth and a return to normalized operations [Sirius XM Holdings](index=59&type=section&id=Sirius%20XM%20Holdings) Sirius XM Holdings reported strong Q3 2021 revenue growth, driven by increased Sirius XM subscriber revenue and a significant surge in Pandora advertising revenue, leading to higher Adjusted OIBDA Sirius XM Holdings Operating Results (in millions) | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | **Total Revenue** | **$2,198** | **$2,025** | | Sirius XM Revenue | $1,660 | $1,587 | | Pandora Revenue | $538 | $438 | | **Adjusted OIBDA** | **$720** | **$661** | | **Operating Income** | **$610** | **$461** | - Sirius XM subscriber revenue increased **5%** in Q3 2021 due to growth in its self-pay subscriber base[286](index=286&type=chunk) - Pandora advertising revenue increased **32%** in Q3 2021 due to growth in owned-and-operated revenue from higher sell-through, increased ad pricing, and contributions from Stitcher and AdsWizz[292](index=292&type=chunk) [Formula 1](index=64&type=section&id=Formula%201) Formula 1's Q3 2021 revenue and Adjusted OIBDA significantly increased due to higher race promotion fees from increased fan attendance, despite some offsets from media rights and sponsorship revenue recognition Formula 1 Operating Results (in millions) | Metric | Q3 2021 (7 Events) | Q3 2020 (10 Events) | | :--- | :--- | :--- | | **Total Revenue** | **$668** | **$597** | | Primary Revenue | $612 | $558 | | **Adjusted OIBDA** | **$180** | **$14** | | **Operating Income (Loss)** | **$80** | **($104)** | - Race promotion revenue increased in Q3 2021 as limitations on fan attendance in the prior year were reduced, leading to fewer one-time changes in contractual terms[309](index=309&type=chunk) - Other Formula 1 revenue increased due to the operation of the Paddock Club, which did not operate in the prior year due to COVID-19 restrictions[312](index=312&type=chunk) [Braves Holdings](index=67&type=section&id=Braves%20Holdings) Braves Holdings experienced a substantial revenue increase in Q3 2021, driven by the return of fans to home baseball games, leading to significantly improved Adjusted OIBDA and a return to normalized operations Braves Holdings Operating Results (in millions) | Metric | Q3 2021 (34 Home Games) | Q3 2020 (30 Home Games) | | :--- | :--- | :--- | | **Total Revenue** | **$234** | **$110** | | Baseball Revenue | $222 | $102 | | Development Revenue | $12 | $8 | | **Adjusted OIBDA** | **$58** | **$6** | | **Operating Income (Loss)** | **$35** | **($15)** | - The increase in baseball revenue was driven by home games being played with fans in 2021, leading to higher revenue from ballpark operations, broadcast rights, and other MLB revenue streams[323](index=323&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces market risks from stock price fluctuations on its equity portfolio and interest rate changes on its debt, actively managing the transition from LIBOR for variable rate borrowings Debt Composition by Interest Rate Type (as of Sep 30, 2021, in millions) | Group | Variable Rate Debt | Fixed Rate Debt | | :--- | :--- | :--- | | Liberty SiriusXM Group | $875 | $12,252 | | Braves Group | $282 | $439 | | Formula One Group | $832 | $2,616 | - The company is exposed to stock price risk on its **$393 million** of marketable equity securities. A hypothetical **10%** decline in market price would result in a **$39 million** loss in value[332](index=332&type=chunk) - The company is managing the transition away from LIBOR for its variable rate debt by planning to incorporate alternative reference rates, such as SOFR, into its debt agreements[330](index=330&type=chunk) [Controls and Procedures](index=69&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[333](index=333&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[334](index=334&type=chunk) Part II — Other Information [Legal Proceedings](index=70&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the Annual Report on Form 10-K for legal proceedings, with updates available in Note 10 of the condensed consolidated financial statements - For updates on legal proceedings, the report refers to Note 10 in the notes to the condensed consolidated financial statements[336](index=336&type=chunk) [Risk Factors](index=70&type=section&id=Item%201A.%20Risk%20Factors) A new material risk factor highlights the global semiconductor supply shortage, which could negatively impact Sirius XM Holdings' subscriber acquisition due to delays in securing chipsets for radios and new vehicles - A new risk factor was disclosed: The global semiconductor supply shortage is impacting Sirius XM Holdings' business by causing delays in securing chipsets for its satellite radios and affecting new vehicle production by automakers, which may harm subscriber acquisition[338](index=338&type=chunk) [Share Repurchases and Use of Proceeds](index=70&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2021, the company repurchased shares of Liberty SiriusXM and Liberty Formula One common stock, with approximately $653 million remaining available for future repurchases under the buyback program Share Repurchase Activity for Q3 2021 | Stock Series | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | Series A Liberty SiriusXM | 437,411 | N/A | | Series C Liberty SiriusXM | 1,859,486 | N/A | | Series A Liberty Formula One | 1,044,000 | N/A | | **Total** | **3,340,897** | **N/A** | - As of September 30, 2021, approximately **$653 million** remained available for repurchases under the company's share buyback programs[340](index=340&type=chunk) [Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications, attributed financial information for tracking stock groups, and Inline XBRL data files - Exhibits filed with the report include CEO and CFO certifications, unaudited attributed financial information for tracking stock groups, and Inline XBRL data files[344](index=344&type=chunk)