Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Liberty Media Corporation 2018 Second Quarter Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduit a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded today, August 8th. I would now like to turn the conference over to Courtnee Chen, Senior Vice President of Investor Relations. Please go ahead.

Thank you. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about business strategies, market potential, new service and product launches, discussions involving iHeartCommunications, plans for the Battery Atlanta, matters relating to Formula One including digital initiatives, new races, new cost structures, potential governance changes, sponsorship opportunities, and distribution renewals, and others that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements including, without limitation, possible changes in market acceptance of new product or service, the ability of our businesses to attract and retain customers, competitive issues, regulatory issues, and the availability of capital on terms acceptable to Liberty Media. These forward-looking statements speak only as of the date of this call and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Liberty Media's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA of Liberty Media and adjusted EBITDA of SiriusXM. The required definitions and reconciliations of Schedules 1 through 3 can be found at the end of the earnings press release issued today, which is available on our website. This call also may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Liberty TripAdvisor Holdings. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These forward-looking statements speak only as of the date of this call and Liberty TripAdvisor Holdings expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty TripAdvisor Holdings' expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Now, I'd like to turn the call over to Greg Maffei, Liberty's President and CEO.

Thank you, Courtnee. Good morning or good afternoon to some of you on the East Coast today. Speaking on the call besides myself, we'll have Liberty CFO, Mark Carleton; and Formula One's Chairman and CEO, Chase Carey. During the Q&A, we'll also be available to answer questions related to Liberty TripAdvisor. So, starting with Liberty SiriusXM. We did continue our repurchases of the stock and bought an additional $161 million for a total purchase of $261 million through July 31st. We effectively bought those SiriusXM shares at $4.69 look-through price over the period to year-to-date. Regarding iHeartCommunications, some of you may have noted, we pulled our initial offer after reviewing the results in the projected balance sheet, which were below expectations and negatively impacted our estimated value. We do continue to own $660 million in aggregate principal amount of iHeart bond. Looking at SiriusXM itself, we had outstanding second quarter results. Revenue was up 6% to $1.4 billion. I think there's lots of good news in the quarter, two standouts, self-pay net adds of $483,000 and churned under 1.6%. Liberty Media ownership as of July 23rd stood at 70.5%. Turning to Formula One Group. Great 2018 season with more exciting outcomes, very podium finishers increased overtaking more drama and still the same glamour. In sponsorship, we signed a new technology provider in global sponsor in Amazon Web Services. We renewed key global sponsorships in multiyear agreements. We also extended the Belgian Grand Prix at Spa. I would take a word of caution as some of our more perspicacious analysts have noted, quarterly results will vary due to RevRec, timing of races, number of races and the nature of the business. We remain very positive about the long-term direction that we're headed in the right path. Live Nation had another fantastic…

Thank you, Greg and for your review as well. At the quarter end, Liberty SiriusXM Group had attributable cash of liquid investments of $110 million, excluding $64 million of cash held at SiriusXM. The value of the SiriusXM common stock held at Liberty SiriusXM as of August 7th was $22 billion and we have $850 million in debt against these holdings. We paid down $300 million in margin loans during the quarter. Formula One Group had attributed cash and liquid investments of over $109 million, excluding $89 million of cash at Formula One. Formula One Group had attributed to public markets creates a through the market value of approximately $4 billion as of August 7th and including the intergroup interest in the Braves Group and our stake in Live Nation. We had $2.1 billion of attributed debt, excluding the debt at F1. Debt decreased $354 million during the quarter as we paid an extraordinary additional distribution of $229 million on the exchange bonds due to AT&T's purchase of Time Warner. And Formula One paid -- repaid $125 million of their operating debt. Braves Group had attributed cash and liquid investments of $113 million. At quarter end, Liberty SiriusXM group had an attributed principal amount of debt of $7.4 billion, which includes $6.5 billion of debt at SiriusXM. Formula One Group had an attributed principal amount of debt of $5 billion, which includes $3 billion of debt at F1 and Braves Group had an attributed principal amount of debt of $629 million. F1's total net debt to covenant OIBDA ratio as defined in their credit facilities was approximately 7.3 times as of June 30 as compared to a maximum allowable leverage ratio of 8.75 times. Communicated a total net leverage ratio for Formula One of five to six times bank covenant OIBDA and please note that these leverage ratios are for the Formula One business, specifically and not the Formula One Group overall. And with that, I'll turn it over to Chase Carey to talk about Formula One.

Thanks Mark. We are just passed the halfway point of our 2018 season as we head in number [technical difficulty] Hello? And we're back. Hopefully, we're back. I guess, I was saying we're heading into our summer break a little over halfway into the season with our last race, the Hungarian Grand Ground Prix being the 12th race in our 21-race season. It's been a successful season on the track, as Greg said, with competition at the top among both drivers and teams as well as a number of exciting and dramatic races. We're also encouraged by the momentum in fan engagement as we begin to turn around the declining trends in the sport during the past five to six years. 44% of our active fans are more interested in the 2018 season than they were in 2017 versus only 7% a year ago. 66% of fans believe F1 has improved versus two years ago, while just 15% says it's worse and 67% of fans say F1 is in good hands with Liberty while 10% disagree. Live attendance in aggregate is up 4% year-on-year at the 10 tracks where we raced last year. And attendance of the two tracks we did not have in 2017, which were France and Germany, was well in excess of expectations. In Germany, the promoter even had to build new grandstands to meet demands. As importantly, fan reaction to our enhancements, like fan zones, merchandising, track tours, hot laps, product and that club changes and more, has been great. We're also encouraged by our momentum in television viewing. Rate day viewership year-on-year is down 4%, however, that is largely due to our move from free-to-pay television in Italy. Excluding Italy, our television viewership is up 3% year-on-year and our Saturday viewership for qualifying is up…

With that, let me thank Chase and Mark. And remind you all that we have -- I guess, some of you may already know, we'll be holding our Annual Investor Meeting on November 14th in New York. As we get closer to that day, please refer to our website for additional information. As always, we appreciate your continued interest in Liberty Media. And with that, operator, I'd like to open the line for calls.

Thank you. [Operator Instructions] And we'll go first to Jeff Wlodarczak with Pivotal Research Group.

Good morning. I had two on F1. On your second quarter F1 results, you're relatively high fee Russian race last year was in April, and with this year it was pushed in a September. So, you're effectively replaced that race for comp purposes in the second quarter, with the French race, which I assume is a far lower fee. How much of your 2Q revenue and EBITDA results were simply that specific sort of timing comp issue? And I assume that's going to reverse in the third quarter? And then I have a follow-up.

Yes. I guess we don't get the specific race fees but in general, fly races are higher than the European races and I'd say the biggest variant is -- in the quarter is the race calendar. I guess, the other factor in the quarter is because we amortized across last year and aggregate races in both years through June, but last year was dated 20 and this year, dated 21. So, I think that calendar factors are the primary issue.

Thank you. And then Chase, if you could talk about your level of optimism about getting a new Concorde agreement? At least at it relates to getting a deal for the engine in place relatively soon.

I actually feel good about the discussion. I mean are always in the details and we have details to work through. But I think there are people agree with the goals, people agree with the direction and I think the overall point in what we're trying to achieve and the vision for the sport. And so we just need -- I think I don't mean to jealous, but we need to find a what compromises as you get into the details. Nobody is going to get everything that they want, but everybody recognizes that. So, I -- you are not done till you're done, but I feel good about the discussions and good about where we're going and good about the engagement with the teams.

Jeff, if I can add something on that. I think Chase and the team Sean and Ross have done a great job of turning the dynamic at Formula One, which was usually fairly short-term and often fairly what's in it for me in the short-term into a more general recognition to have to build the sport to the benefit of all. And I think that it's going to play through on the Concorde agreement, where the spirit of compromise is likely to occur and beat the benefit of all the sporting, and first and foremost, the fans. So--

Thanks Greg.

We'll go next to Vijay Jayant with Evercore ISI.

Hi, its James Ratcliffe for Vijay. Two if I could, one will be on Liberty Sirius and one on Formula One. On Liberty Sirius, what's the thinking around the future of that iHeart debt position, given that seems like a deal is on the table at this point? And how does that affect liquidity for in a potential buyback going forward? And secondly, on F1. Chase, if you can give us any more color about the OTT launch, what you learned, what's going well, what hasn't, response or any color around the sub-trends that would be helpful? Thank you.

So, on iHeart first. We remain watchful. I think they're going through their process and while results there have been somewhat disappointing, we do see the potential for interesting partnerships or more. And we certainly recognize that we have an interesting position which I don't expect to grow right now and self-sustaining actually in the money against our cost. And I don't think it will impact our ability to repurchase shares. We previously went, and did that exchangeable against a series talk to raise capital and we're still spending that $400 million authorized. So, I think it's a standalone, self-sustained element. It has a strategic potential, but it's one that we're going to be judicious about and only execute if we can come up with the right transaction.

And I guess, on the OTT, I think our focus really actually, we've learned I mean what's going right and wrong probably not unexpectedly. We've had some of the issues a lot of people do. Some in buildings, tech stack supported. And that whether that led to the product not launching initially where we targeted and some bugs we have to work out of it. I think probably, we certainly expected and recognized that's a part of the reality. And this year is much more about getting the product to where we want to, both from the content and tech, now the content I mean -- I don't know the content is probably up an 18-month build, so we'll add content features this off-season and probably add content features next off-season. But I think it's really evidently about getting the platform right from a technology and content perspective and then really commercially launching it. Maybe when you're launching in mid-season, it really takes away a lot of the abilities to market and push it in the right way. So, I think our sort of in phases in this year's priority is to get the product to where we want it to at this point in time to really give it a proper commercial launch next season. I think in the positive, and I call it probably more anecdotal at this point because their focus is really more on getting the platform right is positive fan reaction in some of the specifics, the demographics behind it are great in terms of age, spread, and interest from various regions. We're not obviously in all countries, but I think we're encouraged by the interests, we're encouraged by the enthusiasm for product, the use of the product. Those using the products that the time they're spending on it, just the time we've had in the market and only went in Barcelona. It's up multiples, so the usage of it, the demographics the ability to tap into the young market I think all are encouraging to us particularly since we're still on the process of -- we probably have worked through most of the significant technological the bugs, but not all. And we still have some content components to add to it. But I think we feel good about where we're going and this was a product for us, the right thing was to, again, make sure we do it in a logical way and more important, to get it right, than to do it fast. And so I think for us this year is about getting the right product to the place we want it to be at this stage of this life, and then give it the proper commercial launch into next season.

Great. Thank you.

We'll go next to Amy Yong with Macquarie.

Thanks and good morning. I guess, one for Liberty SiriusXM and also one for F1. Liberty SiriusXM, Greg, now that the iHeart transaction has taken a pause, can you talk about how you plan to close the LSXMK spread and may be the optimal use of leverage for SiriusXM? And then Chase on F1, I know you prefer a shorter term broadcast agreements, I think you've done ESPN, CCTV. Any big negotiations coming up? And then I guess, with Miami and Vietnam getting pushed out, does this also pushed from a deleverage that you have out as well? Thanks.

So, Amy, we talked about some of the reasons why in the past, and the spread existed return to take advantage of that to the benefit of the SiriusXM shareholders by doing share repurchase at that level using the proceeds we raised from the convertible exchange -- the exchange [Indiscernible]. And we will continue to pursue that strategy. There's probably some limitations how much leverage we could put out at the tracking stock level. It does have the benefit of the dividends from SiriusXM, our shares roughly $140 million, so it's not nothing. But there's a limit as to how much leverage we can put at that. So, -- but we'll consider that and we always have other means to surprise people and eliminate the discount as pretty much we did on [Indiscernible]. As far as Sirius leverage, their leverage has come down a little because they frankly had so much cash flow and stocks has run through their grid at various times. But I think they're still targeting around a three to three and a half leverage and they're probably at the low end of that right now.

And on Formula One, the television agreements. I mean the calendar issue is really one of them. I mean, right now, we're largely done with our renewal. We've got a contract with our renewals, which would be for 2019. And so anything happening in the calendar doesn’t affect that and rightly what we'll be moving to at this point and we actually feel really good. I think we can actually see in the agreements some of the success we're having in the sport and the momentum in the sport, we're starting to see in agreements as we move forward. But we'll be moving to focus on renewals or agreement that would start with 2020 seasons but at the degree the race is moving to 2020 seasons, it's actually matching up with anybody we'd engaged with. We have a some important renewals next year, probably bigger renewals in 2020. We always have a some in every year, but we do have some important ones next year. And again, probably bigger ones, the year after. I think doing them short has served us well and because again I think the sport today is in a much better place than it was a year ago or even a six months ago as we went into season and I think you can see that when we engaged whether it's broadcasters, sponsors, there's an excitement about what they think is the direction of sport.

Thanks.

We'll go next to Brian Goldberg with Bank of America Merrill Lynch.

Thanks. I've got one on the Amazon deal and then another one on the race calendar expansion efforts. First, on Amazon. I'm just -- I want to clarify, on the economic impact of this relationship to F1 from a P&L standpoint, is this solely going to show up as a sponsorship revenue? Or is there a change in cost in F1 we should be thinking about given the services that they'll be providing you? And I just want to verify, this deal kicks beginning third quarter of 2018?

Yes, kicks in second half of this year. And it is and I guess there are two components, sponsorship components, recognized as sponsorship and there -- and we're getting tech services from them and services we need to build that digital capabilities. And I guess, it's just like other cost we incur in building out the digital platforms. Those costs need to be recognize. I mean it's clearly net revenue positive deal to us, but the services are important and obviously, the sponsorship relationship is important. But it shall be recognized for what it is. And in terms of -- what's the calendar question?

Yes. As you guys have been hard at work looking at new venues for the tour and also renewing with existing venues. And I was just curious, we've read some press around Miami, what that relationship might look like. And that you just sort of think about expanding the calendar in general, how would you characterize F1's appetite for entering into risk-sharing arrangements with local promoters as opposed to a fixed fee agreement? What are the puts and takes as you see them up from this lever in the model?

I think every -- realistically, every race is unique and I think each one we'd look at both on the specific terms and I think people are going to realize these events frequently have a lot more moving parts than just to pay their hospitality component, sponsorship components, the title and relationship components, other components around it. But if you look at each on the merits and what is it -- what are direct economic benefits and certainties and we're not afraid of risk. If we believe -- it's an upside to the risk. So, yes, and we obviously can afford that. And yes, I think we value -- we like having our promoters just getting in the game, so I think it's important to have that skin in the game to stand behind it. But if we think there are opportunities that have upside both within the event itself as well as upside to us on a much broader level, we'll be evaluated on the merits. And if the returns justify the risks, I think we're going to return the model upside down. But if the return justify the risks, I think we look at it -- I think we look at that conservatively. So, we'd want to be comfortable. And again, I think we're not looking to transform our model, but we'd look at each one in their own based on unique characteristics of that event.

Thank you.

We'll go next the Bryan Kraft with Deutsche Bank.

Hi. Thank you. Chase, at the beginning of this year, you talked about 2018 being an investment year with 2019 and 2020 being growth years. Now, we're about two-thirds of the way or almost two-thirds of the way in 2018, are you on track with your plans to begin realizing that growth potential -- the growth potential of the business in 2019? And I realized that you imagine the business for long-term growth rather than margin. But as you get beyond, say, 2020, do you think that the revenue growth will lead to natural operating leverage in the business as you do grow revenue? Or do you think it's more of a stable business margin -- stable margin business going forward, but with a better topline growth? thank you.

The -- I mean first, I actually think I feel we are on plan. I think we feel we actually pretty good about where we are and some of that -- I mean that's both financial as well as in reality confidence in the sport. I mean so it's not -- you can't just looking at the numbers, I think it's also the confidence in quality of the sport, fan engagement with the sport, so I gave some of the stats on that. But yes, I think we're actually -- I feel pretty good about where we are in terms of the goals we set out and the objectives we have set out to achieve that. In terms of leverage, I think it's a -- we're fairly unique business. I'm not sure -- I mean our biggest cost is up -- is a contract cost. I mean, by a large margin, the payment to the teams is not something obviously will have a new agreement in 2021. But that's a contract cost, so you can't manage that up or down. That can change in 2021, it changes per year based on what the contract says. But our operating cost below that are relatively small percentage of our overall revenue. It doesn't mean we don't pay attention to it, we obviously want to watch every dollar, but we are really up in many ways a revenue center. As we build out some capabilities, there are costs to build that hospitality there are cost -- I mean there are some just that the revenue to the bottom-line, we've got sponsorships, sponsorship organization. But in some places like hospitality, there's cost in providing hospitality and over-the-top, there's a cost to building out the capabilities to drive those. We've added overhead, so I think we're probably through the bulk of putting the organization in place to support it. So, I think there's -- if I look at the cost, it could grow some we have fairly significant cost for things like production for the television broadcast, freight that we provide to move the show around the world. And those things -- freight can move -- but freight cost but they should the scale as we grow revenue. So, there's some places like expanding hospitality have some cost associated with it as we build digital platform, there's probably some cost associated with that revenue. There are other costs that will be -- whether its overhead television productions, freight, that would not move at that -- would not have -- there should be leveraged on. But in aggregate, those costs realistically are still at relatively small percentage of our aggregate revenue, our biggest cost is the contract costs to the teams.

Okay. Thank you, Chase.

We'll go next to Ben Swinburne with Morgan Stanley.

Thanks. Chase, a couple of questions about your -- some of the comments in your prepared remarks. You mentioned that 2019 calendar, you think a look a lot like 2018, so should we assume same number of races. And then the second thing, as you mentioned, you are I think optimistic you can finalize the agreements in the coming months. I just want to make sure that is it your expectation or at least you hope that you can finalize sort of the entire Concorde agreement and so not just the engine design, but everything before the end of the year? Just wanted to ask for some clarification on those two.

So, we haven't announced 2019 calendars, so I'll provide more color than I did on the prepared comment. We will announce. Like I said before the end of the month and the next few weeks we will clearly put out say a preliminary calendar that needs to be approved by the FIA and go through other steps that they will come out, but we haven't announced it, so probably won't go further. In terms of what we're finalizing, well certainly -- we are looking to find the major components -- there'll always be components that are sort of moving, it's not like you're done. I mean particularly when you get issues like regulations and living, breathing process that will continue to evolve. So, you'll have a set of regulations in place whatever we put sporting regulations or others. Some change [Indiscernible] engine and obviously, that doesn't change that often. But other regulations will clearly change. And I think with the things we put in place, we'll probably continue to find ways hopefully whatever we put in place better, but what I'm talking about is more than just the engine regulations it's talking about a more holistically -- probably not completely, but more -- getting the major components in place. And now I can put out a specific deadline for one of the challenges that bringing it to completion it doesn't I mean in the actual obviously affect many of these things is 2021. And so there isn’t a natural deadline and made easier by having a deadline, you had to get it done by, so I think we all -- I think we and the teams have all recognized and no, it would be good for us to lock -- to get these things stabilize, so we can all plan for the future. So, I think there's a shared objective to get it done, but there isn't a sort of external forcing mechanism in the short-term, but I think our goal is to move this forward and trying to get it done in the coming months. That's it.

Great. And then just maybe a broader follow-up. I imagine you guys are relatively good visibility into the topline of this business. It's underpinned by some nice long-term contracts. I know there's are some moving pieces. But externally, we're dealing with a quarterly accounting, which as Greg mentioned, is challenging to extrapolate. When you look at the back half of the year or you look at this year, do you guys expect revenue to grow for Formula One because it's down first half. I know it's an investment year, but any help you could provide would be helpful.

Yes. I guess, I'll go back to the things we say. In the quarter, yes I think in particular with any year, what races fall where and to some degree, when you change a number of overall races and how they flow through have impacts. So, I'm not going to get into the project in the second half of the year. But we feel good about where we are though realistically and I've said it before, our focus is where are we going to be in 2020 not -- I mean yes, we care about the short-term but at the end of the day, our real objective is we think we can take this business to another place so that we think the opportunities there to do it. So, it's priority one, is really about getting this business to where we think it can be. And doesn't mean we can't take the eyes of the ball in the short-term, but the short-term quarter-to-quarter will move to the factors that we talked about earlier inside it. But this year, we feel good about the momentum in it. There are issues to deal with whether it's over-the-top or continuing to engage with parties and tell the story and to some degree, again, predict the right momentum in the business probably didn’t have the momentum one year ago.

Okay. Thank you.

We'll go next to Jason Bazinet with Citi.

Maybe just a question for Mr. Carey. This is before your time and it could be wrong, because it's based on press reports. When I look at those team payments, it looks like they were a much smaller percentage of the overall EBITDA than it is today, something in the 40s, and then it and with the 50s, and the 60s and now we're sort in the 70s range. Is that accurate if I go back 10 years that there has been that sort of steep rise? And then as we go forward, what would you like to see and can you just remind us, I think there's a time when you tried to issue some equity to the racing teams to sort of get everyone on the same page so the incentives were aligned. But what -- because the reason I ask you that's probably the biggest risk to everybody's model because I think everyone agrees that the topline can inflect to 2019, 2020 and those other costs you said it's a small, but the big cost is sort of -- it's a big one and it's a big unknown. So, any color that you can provide in terms of what you'd like to see.

Well, first, your statement on the long-term trend going back is accurate. I mean, I think actually if you go back into the early 2000s and I'm doing it at the top off my head so somebody ought had to check it, I think the percentage was, I don't know, 25% to 30%. And today, it's more in the high 60s. Sort closer to them that -- you're right, closer to 70. But the first for 2019 to 2020 it's locked in. So, realistically, it is what it is through 2019 and 2020. To the degree what the revenue distribution is both amongst the teams and between us and the teams is what part of those longer term discussions for 2021. But that's the first year we did. Since those discussions we're having with teams, again, I'm not going to -- I guess I think those are discussions at this point where best having the teams in private and then when we get to the place that -- I mean we finalize of that, we'd be happy to have discussed where we're at and what we think the opportunity is under that revised structure. But since those are live discussions in the teams, I'm not going to probably comment a lot on that. I think those are the best still had in a private room between us and the teams.

Understood. Okay. Thank you.

We'll go to our last question to John Tinker with Gabelli.

Thank you. Just to switch gears on Atlanta Braves, which had a very solid EBITDA number. The teams are generally valued on revenue. So, how do you sort of look at the team when you think about how to value it?

Well, I would say, in general, we look at some of the metrics that people talked about, the third-party evaluations. You're right, teams are often not valued on EBITDA. Probably because many baseball teams do not make significant, if any, money. We're in the position of actually having a profitable team, partly based on a [Indiscernible] run, partly by some of the things we've done around things like the Battery. And we'll see how that all plays out. I don't think there's an obvious answer, John, how to do it because they don't -- we are relatively rare item, obviously, only publicly-traded team with an unusual structure and an incremental asset in the Battery, so it's a little hard to look at apples-and-oranges.

And could you just -- given the new developments you've had with [Indiscernible] Aloft, so how much land has been developed and how much is left to develop?

We are everything that we can we have blocked and set out either been done or we've announced the plan. It's not [Indiscernible] supplier of the stuff out there -- pretty valuable location.

And the IRR of 22% that you're targeting for the sale of residential properties, is that something you think crosses over the rest of the Battery development or is that your sort of your most successful part so far?

We'll see. But clearly, if you just look at the market, residential is probably harder than something like retail, for example. The nature of the deal we cut and the nature of how it works, we're unlikely get that kind of return on the hotel portion. But those will be two -- that would be probably at the lesser end and residential at the higher end and there are others I think the office market is pretty good. That will be a range.

Thank you.

And that concludes today's conference call.

Thank you operator. Yes, I think we're done with the day. Thanks everyone for joining us and hopefully, we'll talk to you next quarter, if not before.

Thanks a lot, everybody.