Liberty(FWONA) - 2025 Q1 - Quarterly Report

Part I — Financial Information Financial Statements This section presents the unaudited condensed consolidated financial statements for Liberty Media Corporation and its subsidiaries for the quarterly period ended March 31, 2025, including balance sheets, statements of operations, comprehensive earnings, cash flows, and equity, along with notes detailing accounting policies and significant events like the Liberty Sirius XM Holdings discontinued operation presentation Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased to $13.285 billion from $12.948 billion at year-end 2024, primarily driven by increases in cash and cash equivalents and deferred revenue, while total liabilities rose to $6.226 billion from $5.897 billion, and total equity remained relatively stable at $7.059 billion Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $13,285 | $12,948 | | Cash and cash equivalents | $3,147 | $2,956 | | Total current assets | $3,667 | $3,347 | | Goodwill | $4,134 | $4,134 | | Total Liabilities | $6,226 | $5,897 | | Deferred revenue | $1,009 | $267 | | Long-term debt | $4,534 | $4,522 | | Total Equity | $7,059 | $7,051 | Condensed Consolidated Statements of Operations For the three months ended March 31, 2025, total revenue significantly decreased to $447 million from $587 million in the prior-year period, primarily due to lower Formula 1 revenue, resulting in an operating loss of $71 million, a reversal from an operating income of $93 million in Q1 2024, with net earnings from continuing operations at $5 million, comparable to $4 million in the prior year, aided by gains on financial instruments Q1 2025 vs Q1 2024 Statement of Operations (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $447 | $587 | | Operating Income (Loss) | $(71) | $93 | | Net Earnings (Loss) from Continuing Operations | $5 | $4 | | Net Earnings (Loss) Attributable to Liberty Stockholders | $5 | $203 | Diluted EPS from Continuing Operations | Stock Group | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Liberty Formula One | $0.05 | $0.32 | | Liberty Live | $(0.18) | $(0.79) | Condensed Consolidated Statements of Comprehensive Earnings (Loss) Comprehensive earnings attributable to Liberty stockholders for Q1 2025 was $10 million, a decrease from $133 million in Q1 2024, comprising $5 million in net earnings and $5 million in other comprehensive earnings, primarily from foreign currency translation adjustments and share of affiliate's OCI, offset by losses on credit risk for fair value debt Comprehensive Earnings (Loss) (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Earnings (Loss) | $5 | $245 | | Other Comprehensive Earnings (Loss) from Continuing Operations | $5 | $(30) | | Comprehensive Earnings (Loss) Attributable to Liberty Stockholders | $10 | $133 | Condensed Consolidated Statements of Cash Flows For the first three months of 2025, net cash provided by operating activities was $381 million, a significant increase from $131 million in the prior-year period, while net cash used in investing activities was $181 million, mainly for acquisitions, and net cash used in financing activities was $13 million, resulting in a net increase in cash of $191 million for the period Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $381 | $131 | | Net Cash from Investing Activities | $(181) | $(296) | | Net Cash from Financing Activities | $(13) | $(9) | | Net Increase (Decrease) in Cash | $191 | $(337) | Condensed Consolidated Statements of Equity Total equity increased slightly from $7.051 billion at the start of the year to $7.059 billion as of March 31, 2025, primarily driven by $5 million in net earnings and $5 million in other comprehensive earnings, with minor impacts from stock-based compensation and other adjustments Reconciliation of Total Equity (in millions) | Description | Amount | | :--- | :--- | | Balance at January 1, 2025 | $7,051 | | Net earnings (loss) | $5 | | Other comprehensive earnings (loss) | $5 | | Stock-based compensation & other | $(2) | | Balance at March 31, 2025 | $7,059 | Notes to Condensed Consolidated Financial Statements The notes detail the basis of presentation, significant accounting policies, and key corporate events, including the accounting for the Liberty Sirius XM Holdings Split-Off as a discontinued operation, the structure of the Formula One and Liberty Live tracking stocks, a planned split-off of the Liberty Live Group, and the pending acquisition of Dorna Sports, along with detailed breakdowns of debt, financial instruments, segment performance, and commitments like the Formula 1 Concorde Agreement - The company is primarily engaged in the media and entertainment industries, with its most significant subsidiary being Formula 1 and its most significant equity method investment being Live Nation Entertainment, Inc[32] - On September 9, 2024, the company completed the split-off of Liberty Sirius XM Holdings, which is now presented as a discontinued operation[33][45] - The company has agreed to acquire approximately 86% of Dorna Sports, S.L. for about €3.0 billion, with the closing date extended to June 30, 2025, to accommodate a Phase II regulatory investigation[37] - The company announced a plan to split-off the Liberty Live Group, which would make Liberty Live Holdings, Inc. a separate public company and the remaining Liberty Formula One common stock would no longer be a tracking stock[59][61] - In March 2025, Formula 1 paid a one-time incentive of $50 million to the 10 competing teams for signing the 2026 Concorde Commercial Agreement, which covers the 2026-2030 seasons[111] Reconciliation of Adjusted OIBDA to Pre-Tax Earnings (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Adjusted OIBDA | $69 | $201 | | Concorde incentive payments | $(50) | — | | Acquisition costs | $(11) | $(9) | | Stock-based compensation | $(2) | $(13) | | Depreciation and amortization | $(77) | $(86) | | Operating income (loss) | $(71) | $93 | | Interest expense | $(55) | $(62) | | Share of earnings (losses) of affiliates, net | $1 | $(24) | | Realized and unrealized gains (losses) on financial instruments, net | $65 | $(21) | | Other, net | $36 | $21 | | Earnings (loss) from continuing operations before income taxes | $(24) | $7 | Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial results and condition, detailing the performance of its operating segments, primarily Formula 1, attributing the decline in Q1 revenue and profitability to the timing of races, and covering the company's tracking stock structure, recent and planned corporate actions, liquidity, capital resources, and an analysis of other income and expense items Overview Management provides an overview of the company's structure, which includes the Formula One Group and the Liberty Live Group tracking stocks following the 2024 split-off of Liberty SiriusXM, with the Formula One Group holding the Formula 1 business and QuintEvents, and the Liberty Live Group holding the investment in Live Nation, while key strategic initiatives include the pending acquisition of Dorna and a planned split-off of the Liberty Live Group - The Formula One Group, as of March 31, 2025, includes Formula 1, QuintEvents, and had cash of approximately $2.833 billion[140] - The Liberty Live Group, as of March 31, 2025, is primarily comprised of the interest in Live Nation and had cash of approximately $314 million[141] - The company is pursuing a split-off of the Liberty Live Group, which would result in two separate publicly traded companies: Liberty Media Corporation (holding Formula One) and Liberty Live Holdings, Inc[145] Results of Operations—Consolidated Consolidated revenue for Q1 2025 decreased by $140 million year-over-year, driven by lower revenue at Formula 1, leading to a consolidated operating loss of $71 million compared to a $93 million income in the prior year, and consolidated Adjusted OIBDA fell to $69 million from $201 million, also primarily due to Formula 1's results Consolidated Revenue by Group (in millions) | Group | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Formula One Group | $447 | $587 | | Consolidated Liberty | $447 | $587 | Consolidated Adjusted OIBDA by Group (in millions) | Group | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Formula One Group | $73 | $202 | | Liberty Live Group | $(4) | $(1) | | Consolidated Liberty | $69 | $201 | Reconciliation of Operating Income (Loss) to Adjusted OIBDA (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating income (loss) | $(71) | $93 | | Depreciation and amortization | $77 | $86 | | Stock-based compensation | $2 | $13 | | Acquisition costs | $11 | $9 | | Concorde incentive payments | $50 | — | | Adjusted OIBDA | $69 | $201 | Other Income and Expense Total other income was $47 million in Q1 2025, a significant shift from an $86 million expense in Q1 2024, driven by a $65 million net gain on financial instruments, compared to a $21 million loss previously, primarily from foreign currency forward contracts and changes in fair value of debt, with share of earnings from affiliates also improving, contributing $1 million versus a $24 million loss in the prior year Components of Other Income (Expense) (in millions) | Component | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Interest expense | $(55) | $(62) | | Share of earnings (losses) of affiliates, net | $1 | $(24) | | Realized and unrealized gains (losses) on financial instruments, net | $65 | $(21) | | Other, net | $36 | $21 | | Total Other Income (Expense) | $47 | $(86) | - The gain on financial instruments was primarily driven by a $108 million gain on foreign currency forward contracts, partially offset by a $35 million loss on interest rate swaps[156] Material Changes in Financial Condition As of March 31, 2025, the company held $2.833 billion in cash at the Formula One Group and $314 million at the Liberty Live Group, with cash from operations being a primary source of liquidity during the quarter, and the main use of cash being a $131 million extension payment for the Dorna acquisition, while the company remains in compliance with all debt covenants and believes it has sufficient liquidity for future needs Cash and Cash Equivalents by Group as of March 31, 2025 (in millions) | Group | Cash and Cash Equivalents | | :--- | :--- | | Formula One Group | $2,833 | | Formula 1 | $1,547 | | Corporate and other | $1,286 | | Liberty Live Group | $314 | - During Q1 2025, Formula 1 distributed $131 million to Liberty, and as of March 31, 2025, Liberty had $400 million available under its margin loan secured by Live Nation shares[163] Cash Flow by Group (in millions) | Cash Flow Activity | Formula One Group | Liberty Live Group | | :--- | :--- | :--- | | Operating Activities | $391 | $(10) | | Investing Activities | $(180) | $(1) | | Financing Activities | $(13) | $— | Results of Operations—Businesses (Formula 1) Formula 1's financial performance declined in Q1 2025 compared to Q1 2024, primarily because there were only two races held in the quarter versus three in the prior-year period, with total revenue falling to $403 million from $553 million, Adjusted OIBDA decreasing to $85 million from $208 million, and the business posting an operating loss of $28 million, which includes a $50 million Concorde incentive payment, compared to an operating income of $136 million in Q1 2024 Formula 1 Operating Results (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Formula 1 revenue | $403 | $553 | | Adjusted OIBDA | $85 | $208 | | Operating income (loss) | $(28) | $136 | | Number of Events | 2 | 3 | - Primary Formula 1 revenue decreased by $144 million due to recognizing revenue from one less event and a different mix of events compared to the prior year[173] - Cost of Formula 1 revenue decreased by $44 million, mainly due to lower team payments which are recognized pro-rata across the events on the calendar[176][177] - Selling, general and administrative expenses increased by $17 million, primarily due to higher marketing costs for the 75th season launch event and increased personnel costs[179] Quantitative and Qualitative Disclosures about Market Risk The company is exposed to market risk from changes in stock prices and interest rates, with interest rate risk managed through a mix of fixed and variable rate debt and the use of interest rate swaps, and as of March 31, 2025, the majority of the company's debt was fixed rate, while stock price risk arises from significant holdings in publicly traded securities, including its equity method investment in Live Nation, which is not carried at fair value on the balance sheet Debt Structure as of March 31, 2025 (Principal in millions) | Group | Variable Rate Debt | Fixed Rate Debt | | :--- | :--- | :--- | | Formula One Group | $176 | $2,726 | | Liberty Live Group | NA | $1,150 | - The company is exposed to stock price volatility through its investment in Live Nation, where a hypothetical 10% decrease in Live Nation's stock price at March 31, 2025 would have reduced its aggregate value by $909 million[184] Controls and Procedures Management, including the CEO and principal financial officer, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025, with no material changes occurring during the quarter that affected, or are reasonably likely to materially affect, the company's internal control over financial reporting - Based on an evaluation as of the end of the reporting period, the CEO and principal financial officer concluded that the company's disclosure controls and procedures were effective[185] - There were no material changes to the company's internal control over financial reporting during the first quarter of 2025[186] Part II — Other Information Legal Proceedings This section refers to the company's Annual Report on Form 10-K for the year ended December 31, 2024, for a description of legal proceedings and directs the reader to Note 9 of the condensed consolidated financial statements in this report for any updates - For information on legal proceedings, the report refers to the 2024 Form 10-K and Note 9 of the current financial statements for any changes[187] Risk Factors The company states that there have been no material changes to its risk factors from the 2024 Annual Report, except for two specific risk factors that have been replaced, relating to the adverse effects of foreign currency fluctuations on Formula 1's profitability and the potential for weak economic conditions to reduce consumer discretionary spending on the company's products and events - The risk factor concerning fluctuations in the U.S. dollar against other currencies has been updated, highlighting that an appreciation of the dollar could increase costs for Formula 1's counterparties and affect profitability[190] - The risk factor regarding weak economic conditions has been updated to include the impacts of inflation, higher interest rates, and trade tariffs, which could reduce discretionary consumer spending on live-entertainment and sporting events[191] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity, noting that no shares of Liberty Formula One or Liberty Live common stock were repurchased during the three months ended March 31, 2025, and approximately $1.1 billion remains available under its authorized share repurchase program - No repurchases of Liberty Formula One or Liberty Live common stock were made during the first quarter of 2025[193] - As of March 31, 2025, approximately $1.1 billion was available for future share repurchases under the existing program[193] Other Information The company reports that none of its directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended March 31, 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025[195] Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including a 3rd Amendment Agreement, officer certifications, and XBRL data files List of Filed Exhibits | Exhibit No. | Name | | :--- | :--- | | 10.1 | 3rd Amendment Agreement, dated March 29, 2025... | | 31.1 | Rule 13a-14(a)/15d-14(a) Certification | | 31.2 | Rule 13a-14(a)/15d-14(a) Certification | | 32 | Section 1350 Certification | | 99.1 | Unaudited Attributed Financial Information for Tracking Stock Groups | | 101 | Inline XBRL Documents |