Liberty(LSXMK) - 2021 Q3 - Quarterly Report

Part I – Financial Information Item 1. Financial Statements This section presents Liberty Media Corporation's unaudited condensed consolidated financial statements and detailed notes Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, tracking stock structure, debt instruments, investments, segment information, and contingencies - The company's capital structure consists of three tracking stocks: Liberty SiriusXM Group, Braves Group, and Formula One Group, with notes detailing specific assets, liabilities, and intergroup interests attributed to each group[59][61][62] - In January 2021, Liberty Media Acquisition Corporation (LMAC), a sponsored SPAC, completed its IPO, raising $575 million, consolidated by Liberty and attributed to the Formula One Group[165][167] - The SXM-7 satellite was declared a total loss, resulting in a $220 million impairment charge for the nine months ended September 30, 2021, offset by $225 million in insurance recoveries collected during the same period[177][178] Total Debt Summary (as of September 30, 2021) | Group | Principal Outstanding (in millions) | | :--- | :--- | | Liberty SiriusXM Group | $13,127 | | Braves Group | $721 | | Formula One Group | $3,448 | | Total Debt | $17,296 | Consolidated Balance Sheet Highlights (as of September 30, 2021) | Metric | Amount (in millions) | | :--- | :--- | | Total Current Assets | $4,590 | | Total Assets | $44,419 | | Total Current Liabilities | $6,188 | | Total Liabilities | $24,950 | | Total Equity | $18,894 | Consolidated Statement of Operations Highlights | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Total Revenue | $3,100 million | $2,732 million | | Operating Income | $702 million | $320 million | | Net Earnings (Loss) Attributable to Liberty Stockholders | $328 million | $(114) million | | Diluted EPS (Liberty SiriusXM) | $1.02 | $0.03 | Consolidated Cash Flow Highlights (Nine Months Ended Sep 30, 2021) | Metric | Amount (in millions) | | :--- | :--- | | Net Cash Provided by Operating Activities | $1,673 | | Net Cash Used by Investing Activities | $(615) | | Net Cash Used by Financing Activities | $(981) | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's financial condition, operating results, liquidity, and capital resources, highlighting strong recovery and growth Results of Operations—Consolidated This section provides a consolidated view of the company's revenue, operating income, and Adjusted OIBDA, highlighting significant increases Consolidated Revenue by Quarter | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Total Revenue | $3,100 million | $2,732 million | Consolidated Operating Income & Adjusted OIBDA by Quarter | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Operating Income | $702 million | $320 million | | Adjusted OIBDA | $946 million | $667 million | - The share of earnings from affiliates improved to a gain of $9 million in Q3 2021 from a loss of $187 million in Q3 2020, primarily due to Live Nation's business recovery and meaningful restart of operations[250][252] Results of Operations—Businesses This section reviews the operational and financial performance of Sirius XM, Formula 1, and Braves Holdings, detailing revenue growth Segment Adjusted OIBDA (Q3 2021 vs Q3 2020) | Segment | Q3 2021 Adjusted OIBDA | Q3 2020 Adjusted OIBDA | Change | | :--- | :--- | :--- | :--- | | Sirius XM Holdings | $720 million | $661 million | +$59 million | | Formula 1 | $180 million | $14 million | +$166 million | | Braves Holdings | $58 million | $6 million | +$52 million | - Sirius XM revenue growth was driven by a 5% increase in self-pay subscribers and a 32% increase in Pandora advertising revenue[287][293] - Formula 1 revenue increased despite holding fewer events in Q3 2021 (7 vs 10) due to higher race promotion fees as fan attendance limitations eased compared to the prior year[308][310] - Braves Holdings revenue surged primarily due to home baseball games being played with fans in 2021, compared to no fans in attendance during the 2020 regular season[322][324] Material Changes in Financial Condition This section details the company's liquidity and capital resources, including cash holdings, primary cash uses, and key funding sources Cash and Cash Equivalents by Group (as of Sep 30, 2021) | Group | Cash & Cash Equivalents (in millions) | | :--- | :--- | | Liberty SiriusXM Group | $529 | | Braves Group | $134 | | Formula One Group | $2,195 | - Primary uses of cash during the first nine months of 2021 included $351 million for Liberty SiriusXM stock repurchases and $47 million for Liberty Formula One stock repurchases[266] - Key liquidity sources include cash on hand, operating cash flow from subsidiaries, and available borrowings under margin loans ($875 million secured by Sirius XM stock and $200 million secured by Live Nation stock)[261][264] Quantitative and Qualitative Disclosures about Market Risk The company manages market risks from interest rate fluctuations and stock price volatility, addressing the LIBOR transition - The company is exposed to interest rate risk through its variable rate debt, including margin loans and credit facilities at Sirius XM, Formula 1, and Braves Holdings, and is preparing for the phase-out of LIBOR and transition to alternative rates like SOFR[330][331] - The company is exposed to stock price risk from its $393 million portfolio of marketable equity securities; a hypothetical 10% decline in price would lower the portfolio's value by approximately $39 million[333] - The company's investment in Live Nation is also subject to market risk; a hypothetical 10% decline in Live Nation's stock price at September 30, 2021, would have represented a $635 million decrease in value[333] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Based on an evaluation, the CEO and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of September 30, 2021[334] - There were no changes in the Company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, its internal controls[335] Part II — Other Information Legal Proceedings This section refers to Note 10 for details on legal proceedings, primarily the pre-1972 sound recording litigation involving Pandora - The report references Note 10 for details on legal proceedings, which primarily discusses the ongoing litigation against Pandora concerning pre-1972 sound recordings[337][185] - A Ninth Circuit Court of Appeals opinion issued on August 23, 2021, in a related case against Sirius XM is believed to be precedential and substantially narrows the claims Flo & Eddie may continue to assert against Pandora[188][189] Risk Factors This section highlights a material change to risk factors, specifically the supply chain risk for Sirius XM Holdings due to semiconductor shortage - A new risk factor was added concerning the global semiconductor supply shortage, which is affecting Sirius XM Holdings' ability to secure chipsets for its satellite radios and impacting new vehicle production by automakers[339] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity for Q3 2021, including specific stock series and remaining authorization Share Repurchases (Q3 2021) | Stock Series | Total Shares Purchased | | :--- | :--- | | Series A Liberty SiriusXM | 437,411 | | Series C Liberty SiriusXM | 1,859,486 | | Series A Liberty Formula One | 1,044,000 | | Total | 3,340,897 | - As of September 30, 2021, approximately $653 million remained available for future repurchases under the existing program[341] Exhibits This section lists exhibits filed with the 10-Q report, including certifications and unaudited attributed financial information - Key exhibits filed include Rule 13a-14(a)/15d-14(a) Certifications, Section 1350 Certification, and Unaudited Attributed Financial Information for Tracking Stock Groups[345]