Liberty(FWONK) - 2022 Q2 - Quarterly Report

Part I – Financial Information This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls Item 1. Financial Statements This section presents Liberty Media Corporation's unaudited condensed consolidated financial statements, covering Balance Sheets, Statements of Operations, Cash Flows, and Equity, with detailed notes Condensed Consolidated Financial Statements The company's financial position as of June 30, 2022, shows total assets at $43.8 billion, with six-month revenue at $5.8 billion and net earnings at $970 million Condensed Consolidated Balance Sheet Summary (in millions) | Balance Sheet | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $43,760 | $44,351 | | Total Current Assets | $4,126 | $4,812 | | Goodwill | $19,341 | $19,248 | | Total Liabilities | $24,827 | $25,514 | | Total Current Liabilities | $4,709 | $6,610 | | Long-term Debt | $16,971 | $15,699 | | Total Equity | $18,357 | $18,262 | Condensed Consolidated Statement of Operations Summary (in millions) | Income Statement | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Total Revenue | $5,827 | $5,130 | | Sirius XM Holdings Revenue | $4,440 | $4,217 | | Formula 1 Revenue | $1,104 | $681 | | Operating Income | $1,019 | $764 | | Net Earnings | $970 | $514 | | Net Earnings Attributable to Liberty Stockholders | $862 | $301 | Condensed Consolidated Statement of Cash Flows Summary (in millions) | Cash Flow | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,221 | $1,235 | | Net cash used by investing activities | ($375) | ($754) | | Net cash (used) provided by financing activities | ($1,043) | $650 | | Net (decrease) increase in cash | ($205) | $1,129 | Notes to Condensed Consolidated Financial Statements These notes detail the company's tracking stock structure, accounting policies, significant stock-based compensation of $112 million, total debt of $17.9 billion, and segment performance - The company's primary businesses are media and entertainment, with significant subsidiaries including Sirius XM Holdings, Formula 1 (Delta Topco Limited), and Braves Holdings, LLC, and its most significant equity method investment is Live Nation Entertainment, Inc[45] - The company utilizes a tracking stock structure for its three groups: Liberty SiriusXM Group, Liberty Braves Group, and Liberty Formula One Group, which are not separate legal entities but reflect the economic performance of their attributed businesses, assets, and liabilities[56] - Total stock-based compensation expense was $112 million for the six months ended June 30, 2022, down from $123 million in the prior-year period, with total unrecognized compensation cost of approximately $44 million for Liberty awards and $418 million for Sirius XM Holdings awards as of June 30, 2022[68][77][79] - Total long-term debt stood at $17.9 billion as of June 30, 2022, with the Liberty SiriusXM Group accounting for $13.9 billion of the total[120] - The company consolidates Liberty Media Acquisition Corporation (LMAC), a SPAC, due to its control via Founder Shares, classifying LMAC's public shares as redeemable noncontrolling interests[158][161] - The reportable segments are Sirius XM Holdings and Formula 1, with Sirius XM Holdings generating $4.44 billion in revenue and Formula 1 generating $1.10 billion for the six months ended June 30, 2022[184][189] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's operating results, financial condition, and liquidity, highlighting $5.8 billion in consolidated revenue and $1.0 billion in operating income for the first half of 2022, driven by segment performance and COVID-19 recovery Overview This overview details Liberty Media's operations through its three tracking stock groups: Liberty SiriusXM, Liberty Braves, and Liberty Formula One, noting significant recovery from the COVID-19 pandemic - The Liberty SiriusXM Group's main assets are its interests in Sirius XM Holdings and Live Nation, along with various debt instruments, holding approximately $494 million in cash as of June 30, 2022[217] - The Braves Group is primarily comprised of Braves Holdings (Atlanta Braves MLB team and related development project), holding approximately $207 million in cash as of June 30, 2022[219] - The Formula One Group holds the Formula 1 business, an interest in Liberty Media Acquisition Corporation (LMAC), and an intergroup interest in the Braves Group, holding approximately $1.94 billion in cash as of June 30, 2022[221] - The company notes a significant recovery from the COVID-19 pandemic, with Formula 1 expecting 22 events and Braves Holdings a full 162-game schedule in 2022, and Live Nation seeing a meaningful restart of operations in the third quarter of 2021[222] Results of Operations—Consolidated Consolidated revenue increased by $697 million to $5.83 billion for the six months ended June 30, 2022, with operating income rising to $1.02 billion and Adjusted OIBDA to $1.65 billion Consolidated Revenue by Segment (in millions) | Segment | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Liberty SiriusXM Group | $4,440 | $4,217 | | Braves Group | $283 | $232 | | Formula One Group | $1,104 | $681 | | Consolidated Total | $5,827 | $5,130 | Consolidated Adjusted OIBDA by Segment (in millions) | Segment | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Liberty SiriusXM Group | $1,360 | $1,374 | | Braves Group | $36 | $31 | | Formula One Group | $258 | $122 | | Consolidated Total | $1,654 | $1,527 | - The increase in consolidated revenue for the six months ended June 30, 2022, was driven by increases at Formula 1, Sirius XM Holdings, and Braves Holdings[226] - The increase in operating income for the six months ended June 30, 2022, was primarily due to improvements of $168 million, $95 million, and $5 million in Formula 1, Sirius XM Holdings, and Braves Holdings operating results, respectively[227] Other Income and Expense Total other income for the six months ended June 30, 2022, was $235 million, a significant improvement from a $325 million loss, driven by $439 million in gains on financial instruments and improved affiliate earnings Components of Other Income (Expense) (in millions) | Category | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Interest expense | ($318) | ($316) | | Share of earnings (losses) of affiliates, net | $47 | ($143) | | Realized and unrealized gains (losses) on financial instruments, net | $439 | $106 | | Other, net | $67 | $28 | | Total Other Income (Expense) | $235 | ($325) | - The significant swing in 'Share of earnings (losses) of affiliates' from a $143 million loss to a $47 million gain was largely due to improved performance at Live Nation[235] - Realized and unrealized gains on financial instruments were primarily driven by changes in the fair value of debt measured at fair value ($646 million gain) and offset by losses on bond hedges ($269 million loss)[236] Material Changes in Financial Condition As of June 30, 2022, Liberty held $2.65 billion in cash, with primary uses including $1.3 billion for debt repayments and stock repurchases, supported by subsidiary dividends and available credit facilities Cash and Cash Equivalents by Group (as of June 30, 2022, in millions) | Group | Cash and Cash Equivalents | | :--- | :--- | | Liberty SiriusXM Group | $494 | | Braves Group | $207 | | Formula One Group | $1,944 | | Total | $2,645 | - Liberty's primary uses of cash during the first six months of 2022 were $1.3 billion for debt repayments, $241 million for land purchase in Las Vegas for the Grand Prix, and over $350 million for stock repurchases[252] - Sirius XM Holdings paid dividends of $1.16 billion in the first half of 2022, of which Liberty received $942 million[253] - Liquidity is supported by available borrowings of $875 million under the Sirius XM Holdings margin loan and $400 million under the Live Nation margin loan as of June 30, 2022[249] Results of Operations—Businesses This section reviews segment performance, with Sirius XM Holdings revenue at $4.44 billion, Formula 1 revenue up 62% to $1.10 billion, and Braves Holdings revenue up 9% to $283 million for the first half of 2022 Sirius XM Holdings Operating Results (in millions) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Total Revenue | $4,440 | $4,217 | | Adjusted OIBDA | $1,369 | $1,381 | | Operating Income | $972 | $877 | Formula 1 Operating Results (in millions) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Total Revenue | $1,104 | $681 | | Adjusted OIBDA | $276 | $132 | | Operating Income (Loss) | $99 | ($69) | Braves Holdings Operating Results (in millions) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Total Revenue | $283 | $232 | | Adjusted OIBDA | $40 | $34 | | Operating Income (Loss) | $0 | ($5) | Item 3. Quantitative and Qualitative Disclosures about Market Risk The company faces market risks from stock price volatility, impacting its $106 million equity portfolio and Live Nation investment, and interest rate fluctuations on its fixed and variable rate debt, including the LIBOR transition - The company is exposed to stock price volatility through its holdings of publicly traded securities, with a fair value of marketable equity securities at $106 million as of June 30, 2022, where a hypothetical 10% price drop would lower this value by $11 million[318] - The company's equity method investment in Live Nation is also subject to market risk, where a hypothetical 10% price drop at June 30, 2022, would have lowered its value by $575 million[318] - The company is managing the transition away from LIBOR for its variable rate debt at Liberty, Sirius XM Holdings, and Formula 1, expecting to incorporate alternative reference rates like SOFR into its debt agreements[316] Debt Composition by Interest Rate Type (as of June 30, 2022) | Group | Variable Rate Debt (Principal) | Weighted Avg Rate | Fixed Rate Debt (Principal) | Weighted Avg Rate | | :--- | :--- | :--- | :--- | :--- | | Liberty SiriusXM Group | $1,885 million | 3.4% | $11,836 million | 3.6% | | Braves Group | $167 million | 3.8% | $435 million | 3.8% | | Formula One Group | $832 million | 4.2% | $2,376 million | 3.4% | Item 4. Controls and Procedures The company's disclosure controls and procedures were deemed effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and principal financial officer, evaluated the company's disclosure controls and procedures and found them to be effective as of June 30, 2022[319] - No changes occurred during the three months ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[321] Part II — Other Information This section provides updates on legal proceedings, equity security sales, and lists exhibits filed with the quarterly report Legal Proceedings This section refers to Note 10 of the financial statements for updates on legal proceedings, including ongoing litigation against Pandora regarding pre-1972 sound recordings - For information on legal proceedings, the report directs readers to Note 10 in the financial statements, which provides updates to the disclosures made in the 2021 Annual Report on Form 10-K[322] Unregistered Sales of Equity Securities and Use of Proceeds The board authorized an additional $1 billion for common stock repurchases, with 2.8 million shares repurchased for $117 million in Q2 2022, leaving $1.14 billion available - In May 2022, the board of directors authorized an additional $1 billion for the repurchase of the Company's common stock[323] Share Repurchase Activity for Q2 2022 | Stock | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | Series A Liberty SiriusXM | 958,000 | - | | Series C Liberty SiriusXM | 1,850,867 | - | | Total | 2,808,867 | - | - As of June 30, 2022, approximately $1.139 billion remained available for future repurchases under the authorized program[324] Exhibits This section lists exhibits filed with the Quarterly Report, including CEO/CFO certifications, Section 1350 certification, unaudited attributed financial information, and XBRL data files - Key exhibits filed include Rule 13a-14(a)/15d-14(a) Certifications, Section 1350 Certification, and Unaudited Attributed Financial Information for Tracking Stock Groups[329] Signatures This section provides the official signatures for the report, confirming its submission - The report was signed on August 5, 2022, by Gregory B Maffei, President and Chief Executive Officer, and Brian J Wendling, Chief Accounting Officer and Principal Financial Officer[332]