Liberty(LSXMK) - 2023 Q4 - Annual Results

Executive Summary & 2023 Highlights This section highlights Liberty Media's 2023 performance, including SiriusXM's financials, Formula 1's growth, and key strategic developments Liberty SiriusXM Group Highlights SiriusXM reported full year 2023 revenue of $8.95 billion, net income of $1.26 billion, and diluted EPS of $0.32, while the group reduced its debt by $782 million and expects to complete its combination with SiriusXM in early Q3 2024 SiriusXM 2023 Full Year Financials | Metric | Value | | :----- | :---- | | Revenue | $8.95 billion | | Net Income | $1.26 billion | | Diluted EPS | $0.32 | | Adjusted EBITDA | $2.79 billion | | Free Cash Flow | $1.20 billion | - Planned combination of Liberty SiriusXM Group and SiriusXM expected early Q3 2024[1] - Reduced Liberty SiriusXM Group debt by $782 million in full year 2023[1] - Liberty Media's ownership of SiriusXM was 83.4% as of January 30, 2024[1] Formula One Group Highlights Formula 1 saw significant growth in 2023, with fan attendance up 5% to 6 million and strong social media engagement, alongside key developments like the inaugural Las Vegas Grand Prix and new multi-year race promotion deals - 2023 F1 fan attendance reached 6 million, a 5% increase YoY[1] - Inaugural Las Vegas Grand Prix generated over 16 billion global social media impressions during race week[1] - F1 announced new multi-year race promotion deals, including Madrid (from 2026) and renewals for British, Japanese, and Brazilian Grands Prix[1] - Closed Quint acquisition on January 3, 2024[1] Liberty Live Group Highlights The fair value of Liberty Live Group's investment in Live Nation was $6.5 billion as of December 31, 2023 Live Nation Investment Fair Value | Date | Fair Value | | :--- | :--------- | | Dec 31, 2023 | $6.5 billion | CEO Commentary CEO Greg Maffei highlighted a productive 2023, including the Braves split-off, creation of Liberty Live Group, and the announced combination of Liberty SiriusXM and SiriusXM, noting Formula 1's double-digit revenue growth and Live Nation's strong performance - Key strategic achievements in 2023 included the split-off of Atlanta Braves, creation of Liberty Live Group tracking stock, and announcement of Liberty SiriusXM Group and SiriusXM combination[3] - Formula 1 experienced double-digit growth across all revenue streams in 2023[3] - Live Nation is capitalizing on the globalization of the music industry, with 2024 expected to surpass record 2023 performance[3] Discussion of Results by Group This section provides a detailed financial discussion of the performance of Liberty SiriusXM Group, Formula One Group, and Liberty Live Group for the reporting period Liberty SiriusXM Group Financials For the full year 2023, Liberty SiriusXM Group's revenue was $8,953 million, a 1% decrease YoY, with operating income decreasing by 6% to $1,808 million and Adjusted OIBDA decreasing by 3% to $2,732 million, as the group's assets primarily consist of its interest in SiriusXM, including Pandora Liberty SiriusXM Group Financial Performance (Full Year) | Metric | 2022 (millions) | 2023 (millions) | % Change | | :----- | :-------------- | :-------------- | :------- | | Revenue | $9,003 | $8,953 | (1)% | | Operating Income | $1,919 | $1,808 | (6)% | | Adjusted OIBDA | $2,807 | $2,732 | (3)% | Liberty SiriusXM Group Financial Performance (Q4) | Metric | 2022 (millions) | 2023 (millions) | % Change | | :----- | :-------------- | :-------------- | :------- | | Revenue | $2,283 | $2,288 | — % | | Operating Income | $529 | $455 | (14)% | | Adjusted OIBDA | $734 | $688 | (6)% | - Liberty SiriusXM Group's businesses and assets primarily consist of Liberty Media's interest in SiriusXM, which includes its subsidiary Pandora[8] Formula One Group Financials Formula One Group reported a strong 2023, with full year revenue increasing 25% to $3,222 million and operating income surging 64% to $392 million, while Adjusted OIBDA grew 22% to $725 million, driven by increases across all revenue streams, particularly from the inaugural Las Vegas Grand Prix Formula One Group Financial Performance (Full Year) | Metric | 2022 (millions) | 2023 (millions) | % Change | | :----- | :-------------- | :-------------- | :------- | | Revenue | $2,573 | $3,222 | 25% | | Operating Income | $239 | $392 | 64% | | Adjusted OIBDA | $593 | $725 | 22% | Formula One Group Financial Performance (Q4) | Metric | 2022 (millions) | 2023 (millions) | % Change | | :----- | :-------------- | :-------------- | :------- | | Revenue | $754 | $1,230 | 63% | | Operating Income | $58 | $153 | 164% | | Adjusted OIBDA | $147 | $238 | 62% | - F1 maintained its position as the fastest-growing league on social media for the fourth consecutive year, with continued fan growth, especially in the US market and among younger, more female audiences[10] F1 Operating Results Breakdown This subsection details Formula 1's operating results, including revenue, costs, and operating income for the full year and fourth quarter F1 Operating Results (Full Year) | Metric | 2022 (millions) | 2023 (millions) | % Change | | :----- | :-------------- | :-------------- | :------- | | Primary F1 revenue | $2,107 | $2,560 | 21% | | Other F1 revenue | $466 | $662 | 42% | | Total F1 revenue | $2,573 | $3,222 | 25% | | Cost of F1 revenue | $(1,750) | $(2,256) | (29)% | | Selling, general & admin | $(230) | $(241) | (5)% | | Operating income | $239 | $392 | 64% | F1 Operating Results (Q4) | Metric | 2022 (millions) | 2023 (millions) | % Change | | :----- | :-------------- | :-------------- | :------- | | Primary F1 revenue | $568 | $838 | 48% | | Other F1 revenue | $186 | $392 | 111% | | Total F1 revenue | $754 | $1,230 | 63% | | Cost of F1 revenue | $(527) | $(916) | (74)% | | Selling, general & admin | $(80) | $(76) | 5% | | Operating income | $58 | $153 | 164% | Revenue Drivers This subsection identifies the key factors driving Formula 1's revenue growth across race promotion, media rights, and sponsorship - Primary F1 revenue streams (race promotion, media rights, sponsorship) all grew in 2023[14] - Race promotion revenue growth was primarily driven by ticketing from the inaugural Las Vegas Grand Prix and contractual fee increases[14][15] - Sponsorship revenue increased due to the Las Vegas Grand Prix, new sponsors, and growth from existing sponsors[15] - Media rights revenue grew from increased fees under new/renewed agreements and F1 TV subscription growth[15] - Other F1 revenue increased due to higher hospitality revenue from the Las Vegas Grand Prix and Paddock Club growth[15] Operating Expenses and Profitability This subsection analyzes Formula 1's operating expenses, including team payments and other costs, and their impact on profitability - Team payments increased due to F1 revenue growth, but decreased as a percentage of pre-team payment adjusted OIBDA from 66% (2022) to 63% (2023)[16] - Other cost of F1 revenue increased significantly, primarily driven by costs of promoting, organizing, and delivering the Las Vegas Grand Prix, and higher hospitality costs[16] - Selling, general and administrative expense increased for the full year due to higher personnel, IT, and marketing costs, and Las Vegas Grand Prix planning, partially offset by lower legal fees and foreign exchange favorability[16] Business Description This subsection outlines the primary assets and business components attributed to the Formula One Group - Formula One Group's assets include Liberty Media's subsidiary F1 and other minority investments[17] - Quint acquisition closed on January 3, 2024, adding to Formula One Group's assets[1][17] Liberty Live Group Overview Liberty Live Group's attributed businesses and assets primarily consist of Liberty Media's interest in Live Nation and other minority investments, with the group allocated $11 million in corporate level SG&A for the full year 2023 - Liberty Live Group's assets primarily consist of Liberty Media's interest in Live Nation and other minority investments[19] Corporate SG&A Allocation to Liberty Live Group | Period | Amount (millions) | | :----- | :---------------- | | Q4 2023 | $6 | | Full Year 2023 | $11 | Corporate Financial Information This section presents Liberty Media's corporate financial details, including share repurchases, public holdings, and a comprehensive analysis of cash and debt Share Repurchases There were no repurchases of Liberty Media's common stock from November 1, 2023, through January 31, 2024, with the remaining repurchase authorization as of February 1, 2024, being $1.1 billion, applicable to any Liberty Media tracking stocks - No share repurchases from Nov 1, 2023, to Jan 31, 2024[20] - Remaining repurchase authorization of $1.1 billion as of Feb 1, 2024[20] Fair Value of Corporate Public Holdings As of December 31, 2023, the total fair value of Liberty Media's corporate public holdings was $6,632 million, primarily driven by the Live Nation investment valued at $6,519 million, while Atlanta Braves Holdings shares were exchanged to satisfy debt obligations Fair Value of Corporate Public Holdings (Dec 31, 2023) | Group | Holding | Fair Value (millions) | | :---- | :------ | :-------------------- | | Liberty Live Group | Live Nation Investment | $6,519 | | Liberty Live Group | Other Monetizable Public Holdings | $113 | | Total Liberty Media | | $6,632 | - Atlanta Braves Holdings shares previously held by Liberty SiriusXM Group were exchanged in Q4 2023 to satisfy debt obligations[22] Cash and Debt Analysis As of December 31, 2023, Liberty Media's total consolidated cash and cash equivalents were $2,019 million, and total consolidated debt was $15,360 million, with all consolidated subsidiaries in compliance with their debt covenants Total Consolidated Cash and Debt (Dec 31, 2023) | Metric | Amount (millions) | | :----- | :---------------- | | Total Consolidated Cash and Cash Equivalents (GAAP) | $2,019 | | Total Liberty Media Corporation Debt (GAAP) | $15,360 | - Liberty Media and its consolidated subsidiaries were in compliance with their debt covenants as of December 31, 2023[26] Cash and Cash Equivalents This subsection details the cash and cash equivalents held by each Liberty Media group at quarter and year-end Cash and Cash Equivalents by Group | Group | Sep 30, 2023 (millions) | Dec 31, 2023 (millions) | | :---- | :---------------------- | :---------------------- | | Liberty SiriusXM Group | $327 | $306 | | Formula One Group | $1,470 | $1,408 | | Liberty Live Group | $315 | $305 | | Total Consolidated | $2,112 | $2,019 | Debt Overview This subsection provides a GAAP-based overview of debt levels for each Liberty Media group Debt by Group (GAAP) | Group | Sep 30, 2023 (millions) | Dec 31, 2023 (millions) | | :---- | :---------------------- | :---------------------- | | Liberty SiriusXM Group | $11,540 | $11,137 | | Formula One Group | $2,897 | $2,906 | | Liberty Live Group | $1,226 | $1,317 | | Total Liberty Media | $15,663 | $15,360 | - Formula 1's net debt to covenant OIBDA ratio improved from 2.2x to 1.9x[24][26] Liberty SiriusXM Group Cash & Debt Changes This subsection analyzes the quarterly changes in cash and debt for the Liberty SiriusXM Group, including dividend receipts and debt repayments - Liberty SiriusXM Group cash decreased by $21 million in Q4 2023 due to debt repayment and return of capital at SiriusXM[27] - Liberty SiriusXM Group received $85 million in dividends from SiriusXM in Q4 2023 and $318 million for the full year[28] - Liberty SiriusXM Group debt decreased by $434 million in Q4 2023, including retirement of $199 million convertible notes and $80 million SiriusXM margin loan[29] - Debt repayment was partly funded by $61 million from a debt-for-equity exchange of Atlanta Braves Holdings Series C common stock[29] Formula One Group Cash & Debt Changes This subsection details the quarterly changes in cash and debt for the Formula One Group, highlighting capital expenditures - Formula One Group cash decreased by $62 million in Q4 2023, primarily due to capital expenditures related to the Las Vegas Grand Prix[30] - Formula One Group debt was relatively flat in Q4 2023[30] Liberty Live Group Cash & Debt Changes This subsection outlines the quarterly changes in cash and debt for the Liberty Live Group, primarily due to interest payments - Liberty Live Group cash decreased by $10 million in Q4 2023, primarily due to interest payments[31] - Liberty Live Group debt was flat in Q4 2023[31] Consolidated Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements, including the balance sheet, statements of operations, and cash flows for Liberty Media Corporation Balance Sheet (December 31, 2023) As of December 31, 2023, Liberty Media Corporation reported total assets of $41,168 million, total liabilities of $21,723 million, and total equity/attributed net assets of $16,396 million, with goodwill and FCC licenses as significant intangible assets Consolidated Balance Sheet Highlights (Dec 31, 2023) | Metric | Amount (millions) | | :----- | :---------------- | | Total Current Assets | $3,377 | | Investments in affiliates | $1,089 | | Property and equipment, net | $2,083 | | Goodwill | $19,165 | | FCC licenses | $8,600 | | Total Assets | $41,168 | | Total Current Liabilities | $4,743 | | Long-term debt | $14,180 | | Total Liabilities | $21,723 | | Equity / Attributed net assets | $16,396 | | Noncontrolling interests | $3,049 | Statement of Operations (Twelve months ended December 31, 2023) For the twelve months ended December 31, 2023, Liberty Media reported total revenue of $12,525 million, operating income of $2,063 million, and net earnings attributable to Liberty stockholders of $761 million, with interest expense as a significant deduction at $782 million Consolidated Statement of Operations Highlights (FY2023) | Metric | Amount (millions) | | :----- | :---------------- | | Total Revenue | $12,525 | | Operating Income (Loss) | $2,063 | | Interest Expense | $(782) | | Earnings (loss) before income taxes | $1,185 | | Net earnings (loss) attributable to Liberty stockholders | $761 | Revenue Breakdown by Group (FY2023) | Group | Revenue (millions) | | :---- | :----------------- | | Sirius XM Holdings | $8,953 | | Formula 1 | $3,222 | | Other | $350 | Statement of Operations (Twelve months ended December 31, 2022) For the twelve months ended December 31, 2022, Liberty Media reported total revenue of $12,164 million, operating income of $2,064 million, and net earnings attributable to Liberty stockholders of $1,815 million Consolidated Statement of Operations Highlights (FY2022) | Metric | Amount (millions) | | :----- | :---------------- | | Total Revenue | $12,164 | | Operating Income (Loss) | $2,064 | | Interest Expense | $(689) | | Earnings (loss) before income taxes | $2,193 | | Net earnings (loss) attributable to Liberty stockholders | $1,815 | Revenue Breakdown by Group (FY2022) | Group | Revenue (millions) | | :---- | :----------------- | | Sirius XM Holdings | $9,003 | | Formula 1 | $2,573 | | Other | $588 | Statement of Cash Flows (Twelve months ended December 31, 2023) For the twelve months ended December 31, 2023, net cash provided by operating activities was $2,464 million, net cash used in investing activities was $1,240 million, and net cash used by financing activities was $1,473 million, resulting in a net decrease in cash of $248 million Consolidated Statement of Cash Flows Highlights (FY2023) | Activity | Amount (millions) | | :------- | :---------------- | | Net cash provided by operating activities | $2,464 | | Net cash used by investing activities | $(1,240) | | Net cash used by financing activities | $(1,473) | | Net decrease in cash, cash equivalents and restricted cash | $(248) | | Cash, cash equivalents and restricted cash at end of period | $2,028 | Statement of Cash Flows (Twelve months ended December 31, 2022) For the twelve months ended December 31, 2022, net cash provided by operating activities was $2,546 million, net cash used in investing activities was $46 million, and net cash used by financing activities was $3,148 million, resulting in a net decrease in cash of $648 million Consolidated Statement of Cash Flows Highlights (FY2022) | Activity | Amount (millions) | | :------- | :---------------- | | Net cash provided by operating activities | $2,546 | | Net cash used by investing activities | $(46) | | Net cash used by financing activities | $(3,148) | | Net decrease in cash, cash equivalents and restricted cash | $(648) | | Cash, cash equivalents and restricted cash at end of period | $2,276 | Non-GAAP Financial Measures This section defines and reconciles key non-GAAP financial measures, including Adjusted OIBDA for Liberty Media and Adjusted EBITDA and Free Cash Flow for SiriusXM Adjusted OIBDA Definition and Reconciliation Adjusted OIBDA is a non-GAAP measure defined as operating income (loss) plus depreciation and amortization, stock-based compensation, litigation settlements, restructuring, acquisition and other related costs, and impairment charges, used to assess operational strength and performance, providing insights into ongoing business trends - Adjusted OIBDA is defined as operating income (loss) plus depreciation and amortization, stock-based compensation, separately reported litigation settlements, restructuring, acquisition and other related costs and impairment charges[47] - Liberty Media uses Adjusted OIBDA to identify items not directly reflecting business performance or ongoing trends, and for analytical comparisons and benchmarking[48] Consolidated Adjusted OIBDA Reconciliation | Metric | 2022 (millions) | 2023 (millions) | | :----- | :-------------- | :-------------- | | Operating income (loss) | $2,064 | $2,063 | | Depreciation and amortization | $1,044 | $1,030 | | Stock compensation expense | $237 | $232 | | Impairment, restructuring and acquisition costs, net | $74 | $67 | | Litigation settlements, net | $0 | $31 | | Adjusted OIBDA | $3,419 | $3,423 | SiriusXM Adjusted EBITDA Definition and Reconciliation SiriusXM's Adjusted EBITDA is a non-GAAP measure defined as net income before interest expense, income tax expense, depreciation and amortization, and adjusted for specific non-recurring or non-operational items, helping evaluate underlying operating performance apart from capital structure and purchase price accounting - SiriusXM Adjusted EBITDA is net income before interest expense, income tax expense, depreciation and amortization, and excludes loss on extinguishment of debt, share-based payment expense, impairment, restructuring and acquisition costs, legal settlements/reserves, and other significant operating expense (income)[52][53] - SiriusXM uses Adjusted EBITDA to measure underlying operating performance, compare to other companies, estimate enterprise value, and make investment decisions[53] SiriusXM Adjusted EBITDA Reconciliation (Full Year) | Metric | 2022 (millions) | 2023 (millions) | | :----- | :-------------- | :-------------- | | Net income | $1,213 | $1,258 | | Legal settlements and reserves | $0 | $24 | | Impairment, restructuring and acquisition costs | $64 | $82 | | Share-based payment expense | $197 | $184 | | Depreciation and amortization | $536 | $554 | | Interest expense | $422 | $423 | | Other expense (income) | $9 | $5 | | Income tax (benefit) expense | $392 | $260 | | Adjusted EBITDA | $2,833 | $2,790 | SiriusXM Free Cash Flow Definition and Reconciliation SiriusXM's Free Cash Flow is a non-GAAP measure derived from cash flow provided by operating activities, plus insurance recoveries on satellites, net of additions to property and equipment and purchases of other investments, evaluating cash generated by operations available for future investments, debt management, acquisitions, and capital returns to stockholders - SiriusXM Free Cash Flow is derived from cash flow provided by operating activities plus insurance recoveries on satellites, net of additions to property and equipment and purchases of other investments[55] - Management uses Free Cash Flow to evaluate cash available for subscriber acquisition, capital expenditures, debt management, acquisitions, and return of capital to stockholders[55] SiriusXM Free Cash Flow Reconciliation (Full Year) | Metric | 2022 (millions) | 2023 (millions) | | :----- | :-------------- | :-------------- | | Net cash provided by operating activities | $1,976 | $1,850 | | Additions to property and equipment | $(426) | $(650) | | Sales of other investments | $1 | $3 | | Free cash flow | $1,551 | $1,203 | Important Notices & Forward-Looking Statements This section provides important notices regarding the earnings call and outlines the nature and risks associated with forward-looking statements in the report Important Notices and Forward-Looking Statements Details The report includes an important notice regarding the earnings conference call on February 28, 2024, and contains forward-looking statements about business strategies, market potential, and future financial performance, which are subject to various risks and uncertainties, and Liberty Media disclaims any obligation to update them - Earnings conference call scheduled for February 28, 2024, at 10:00 a.m. (E.T.)[32] - The press release contains forward-looking statements subject to risks and uncertainties, including market acceptance, regulatory matters, litigation, and capital access[33] - Liberty Media disclaims any obligation to update or revise forward-looking statements[33]