Welcome to the Liberty Media Corporation and Atlanta Braves Holdings 2023 Year End Earnings Call. [Operator Instructions] As a reminder, this conference will be recorded. It is now my pleasure to introduce your host Shane Kleinstein, Senior Vice President of Investor Relations. Thank you, Shane. You may begin.

Thank you. Good morning. 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. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Forms 10-K filed by Liberty Media and Atlanta Braves Holdings with the SEC. These forward-looking statements speak only as of the date of this call, and Liberty Media and Atlanta Braves Holdings expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Media or Atlanta Braves Holdings 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 for Liberty Media, SiriusXM and Atlanta Braves Holdings, including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media, SiriusXM and Atlanta Braves Holdings Schedules one through three can be found at the end of the earnings press release issued today, which are available on Liberty Media and Atlanta Braves Holdings website. Now I'd like to turn the call over to Greg Maffei, Liberty's President and CEO.

Thank you, Shane, and good morning to all. Today, speaking on the call, we will also have Formula One's President and CEO, Stefano Domenicali; and Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling. Also during Q&A, we will be available to answer questions related to the Atlanta Braves Holdings and the Braves management will be available as well. So, beginning with Liberty SiriusXM. The LSXM and SIRI transaction is on schedule. We filed the preliminary proxy on the January 30th. We still expect to close by early Q3 and the NAV discount which was about 42% prior to announcement is now closed to about 25% as we had hoped and we expect it will continue to close. Looking at SiriusXM itself, the strong operating and financial performance that it had in 2023 showed the durability of the business. Self-pay net adds were up in the second half as expected boosted by streaming. The strong margins and free cash flow generation remained largely through cost discipline. Importantly, they rebuilt their tech stack and re launched their app in the fourth quarter and we are beginning to show positive early results from that with better personalization, promising engagement, and improved service quality. We believe these initiatives as well as the incremental content they added will continue to drive long term growth. Looking at the 2024 priorities of the business, first, increasing 360L adoption and boosting conversion and retention, continuing to deliver engaging content. Recently, they signed the quite popular SmartLess podcast with Jason Bateman, Will Arnett and Sean Hayes. We do expect self-pay net add improvement throughout the year and there is a focus on maintaining stable EBITDA margins and free cash flow. I look forward to remaining involved personally in the evolution of the business as Chairman and a shareholder.…

Thank you, Greg, and good morning, everyone. At year end, Liberty SiriusXM Group had attributed cash, liquid investments and monetizable public holdings of $90 million. This excludes $216 million of cash held directly at SiriusXM. During the quarter, Liberty SiriusXM repaid the remaining $199 SiriusXM outstanding principal of its 1.375 basket convertible notes using cash on hand. Also, during Q4, Liberty SiriusXM paid down $80 SiriusXM under the margin loan, $61 SiriusXM of which was from the monetization of its 1.8 million BATRK shares. At quarter end, there's $1.1 billion of undrawn margin loan capacity at the parent level related to our SiriusXM margin loan. As of February 27th, the value of our SiriusXM stock was $15 billion. We have $1.3 billion in principal amount of debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt is $11.1 billion which includes $9.3 billion of debt held directly at SiriusXM. Turning to the Formula One Group, at quarter end, Formula One Group had attributed cash and liquid investments of $1.4 billion which includes $1 billion of cash held directly at Formula One. Note the Quinn acquisition closed in January, which will be a use of Formula One Group cash. Total Formula One Group attributed principal amount of debt was $2.9 billion which includes $2.5 billion of debt at Formula One leaving $533 million at the corporate level. And F1's $500 million revolver remains undrawn and leverage at the end of the year was 1.9 times. As we've said in the past, the F1 business is best annualized on an annual basis, so we'll only be speaking to full year results. Total revenue grew 25% in 2023 with double digit growth across all primary streams. Year-over-year revenue increases include the significant revenue generation from self-promoting the Las Vegas Grand…

Thanks, Brian. The 2023 season delivered incredible racing and record financial results. On the track, we want to recognize Max Verstappen and once again their superb performance. The rest of the great battled until the end. The race for the second in the Constructor Championship came down to the final lap of the season between Mercedes and Ferrari. McLaren and Aston Martin battled for fourth with McLaren intensifying the competition after a solid mid-season upgrade. Oscar Piastri had a stellar rookie season, securing 97 points included two podiums and a sprint race victory and Albon fans had much to cheer about as he scored points in a number of races in 2023, helping Williams finish the 7th, showing good progress under James Doll's leaderships. Across the entire 2023 season, six teams were represented on the podium, a reflection of the talent up and down the grid. The new regulation are increasingly benefiting competition across the field and we believe this will continue in 2024 as the benefit of the cost cap and the technical regulation continue to mature. Financially, the business generated record revenue and adjusted OIBDA for the year. All primary revenue stream grew benefiting from new and renewed commercial agreement. Furthermore, our Paddock Club had an incredibly strong year with hospitality and experiences revenue growing nearly 100% year-on-year. This was driven by the expansive suite of hospitality and experience offerings at Las Vegas Grand Prix as well as growth in our core Paddock Club product, with the Paddock Club sell out at 10 of 19 events. Towards the end of the season, we had the spectacular inaugural Las Vegas Grand Prix. It was a formidable undertaking moving the project from startup planning to rate delivery in a little more than one year. We are incredibly proud of the…

Thank you, Stefano, and thank you, Brian. To the listening audience, we appreciate your continued interest in Liberty Media and the Atlanta Braves Holdings. And with that, operator, I'd like to open the line for questions.

Thank you [Operator Instructions]. Our first question comes from Benjamin Swinburne with Morgan. Please proceed with your question.

Thanks. Good morning. And congratulations to Renee and the Las Vegas team on a great race and outcome. That was a lot of work. Greg, I had a couple for you and maybe one for Brian, if he's willing to entertain it. You mentioned optimizing the cost structure in Las Vegas for year two. I just maybe could spend a minute on what the opportunities are and even if you're willing to tell us where in the P& L that might show up between kind of G&A at F1 versus direct costs. Any thoughts on a new Concord agreement that had been something you guys had talked about trying to execute last year? Just curious if you had any update there? And then Brian, I don't know if you had any guidance for us on CapEx at F1 in 2024 now that everything is sort of built, but you probably have some maintenance costs on all these new assets? So that was it. Thanks so much.

Ben, I'm going to touch on the optimizing the cost structure and then let Renee add to it. And on the Concorde agreement, I'll let Stefano cover where we stand. So on optimizing the cost structure, look, because we moved with real speed to try and get Las Vegas up in a record time. Many things were done to accommodate a great fan experience and make sure we got done on time. And with the benefit of more time, there are many things we can optimize. There, for example, there is a temporary structural bridge that was put over one of the roads that will become that was our cost that will not be reincurred. There was work that was done around ensuring great security. I think we'll learn how to do that in a more cost-effective manner. But I'll let Renee touch on other items that she thinks we might be able to save on.

Sure. Thanks, Greg. So, to Greg's point, we really did lean in on transportation planning and security. No one knew just how traffic would flow. We were hoping for the best and planning for the worst and it did turn out to be significantly better than anyone feared, that will hopefully allow us this year to start looking for areas that we can cut back in. We also have the benefit in year two of having a playbook. Again, we had to lean in on fan experience and other events that would allow us to create that inaugural race weekend that we needed for year one. But this year, we are looking very closely at every line item on the budget to see where can we maximize the fan experience and ensure safety, while also looking to really cut back on some of those costs.

Some of that will be I think most of that will be direct cost, some of that will be in G&A, but mostly in direct, Brian. I would think most of them yes -- most would be in the operating cost. Stefano, do you want to touch on the Concorde agreement?

Yes. Thank you, Greg. Yes, Ben, so we expect to address the renewal of the Concorde agreement with the teams very, very shortly. We have -- our view that is basically shared with the teams that basically the Concorde agreement will not need any substantial changes this time around. So we're going to start very, very soon. We have priority to finalize before the end of season talking about regulation and other staff with regard to other things that need to be sold before. So now we're getting close to the time where we're going to start this discussion very, very shortly as I said, Ben.

Got it.

And then lastly, Ben, on the CapEx, we're not going to disclose any specific numbers, but we would expect it to start to trend back to what our normal rate was in the past. Specifically on LVGP, the team might evaluate different opportunities where you could put stuff on the balance sheet versus having it as rentals in OpEx. So those opportunities might arise, but overall we wouldn't expect it to be overly material.

Our next question is from Bryan Kraft with Deutsche. Please proceed with your question.

Hi, good morning. I had one for Greg and Stefano and Brian. Greg, I was wondering if you could walk us through the steps that you still need to take in order to close the merge with SiriusXM. Stefano, I was wondering if you could just clarify, will the Madrid Grand Prix bring the race count to 25 in 2026 or will it substitute for Barcelona or another race? And then also Stefano, if you could just comment, I mean, just qualitatively on the media rights outlook, it seems like 2024 will be a lighter year from a media rights revenue growth standpoint based on the renewal schedule and then a stronger year in 2025. I just want to see if that was right. And then the last one I had was for Brian. Brian, I was wondering if you could just help us with some baseline numbers for events so that we could try to model that correctly. Any estimate of revenue and EBITDA from last year and any color on seasonality? Thanks.

So I'll touch on the first one. We received initial comments from the SEC on the proxy. I think those were relatively light. Credit the legal and accounting teams for answering those or having a proxy that was clear and transparent and we'll be able to answer those relatively quickly. So that will need to be cleared the final proxy by the SEC before we can go forward with a vote at the Liberty SIRI level. We also have a parallel process with the SEC that I think is relatively pro forma. We do not believe that will be the long pole in the tent. So we're still targeting early Q3. Some chance we may be able to get it done quicker, but we're trying to manage your expectations and ours. Next question -- next part of the questions.

It's I would say I think I can come in Greg to answer Brian to the point of Madrid. Madrid 26 and that is a year where there will be a lot of Grand Prix where mainly Europe, we have different option that we can take over. Therefore, I think Madrid shows one thing that was very important for us to see that the attention F1 is there also in the old continent where everyone was thinking, oh, we need to move out of Europe because there's not any more dangers, Madrid showed the opposite. I think in 26, you're going to see something interesting. We are discussing with other promoters in Europe to do something that will be announced as soon as we close for sure. But Madrid will be a big boost because the event will be organized in a place where, as Greg was mentioning at the beginning of his speech, it will be in a sort of track and a place where will be around the convention area to allow to give the opportunity to the fans to lead that event in incredible way. But of course, so far the focus in Spain is in Barcelona, there is a big commitment to do a Grand Prix there in the next couple of years. But with regard to the media rights, I would say there are two points that I think that we cannot consider light the 2024 because we just signed a very important deal, we'll be in for the next 10 years. And we do believe that also the F1 plus TV will be going very, very well this year. So, I think that for sure is a year where we're going to see another growth and of course we are getting ready for a very important year when in the future in two years' time there will be the media deal in U.S. That will be a very important deal we need to discuss in the right moment, where we believe this will be another step in terms of our growth in that landscape.

Yes. And then, Brian, on Quint, we're not going to give the 2024 numbers. But what we would say is that the acquisition should be accretive to the Formula One Group overall. So you can kind of do the math from there. It's not overly material to the Formula One business, but it should be accretive going forward.

And maybe just one follow-up for Greg. Just Greg, what's the amount of time you need between SEC approval for the proxy and the vote and the vote in closing the transaction?

Circa two months.

Our next question is from David Karnovsky with J.P. Morgan. Please proceed with your question.

Hi, thank you. For Greg or Renee, I think your Vegas hotel partners were consistent in their views on their earnings calls, but the rate should have a broader appeal and benefit some of the lower end or further properties on the strip. So interested in how you're thinking about potentially accommodating that and what it means for the race in terms of ticketing or operational adjustments. And then for Brian, F1 operating leverage for the year is a little better than we had, I think some investors had anticipated. In the release you called out a reduction in the team payout percentage as per the 2021 Concord. Just want to make sure that was the main driver and there weren't kind of any one-time adjustments to consider?

I'll let Renee touch on the Vegas partners.

Yes, thanks for the question. So, we will be going on sale pretty soon. And when we go on sale, you'll see that we have significantly higher number of general admission. We are actually creating a brand-new general admission only zone, which will have single day tickets and will be at the lowest price point that you will have seen for the Las Vegas Grand Prix. This is largely driven to accommodate the lower end properties and also to bring Downtown into the mix. We are also working in partnership with the LVCVA to actually engage Downtown, different types of activations, potentially watch parties, but really to spread this benefit of what was an incredible weekend throughout the entirety of the Valley.

And then on the F1 operating leverage, to your point, it primarily is the team fees. There's lots of ins and outs, but there's no material onetime items.

Our next question is from David Joyce with Seaport Research Partners. Please proceed with your question.

Thank you. Just wanted to try to get a finer point on the team payments there. Would Quint be excluded from team share payments or would some of those activities if they're only F1 related would be involved? I guess the same would go for any other acquisitions. Would any tuck-ins be outside of the Concord agreement? And related to that, how are you balancing reinvesting in the business versus thinking about capital returns from here?

So, I think Quint has an arm's length deal existing prior to our purchase with F1 and we would expect that arm's length deal to continue, but the Quint results are part of the F1 tracking stock not part of F1. And that would likely be the case for any other acquisitions. Can't say absolutely because it would depend on the company, but likely that would be outside the F1 group or the F1 operating statement shared with the teams. We continue to weigh opportunities like Vegas. Obviously, we look at lots of sporting properties. We think we have something to bring to the sporting world based on what we have been able to achieve at F1. And we think there are some things that we could bring forward to other sports properties, but we're judicious in that and people approach us because of those skills. Certainly, looking at continued share repurchase is an alternative as well. And we weigh third party alternatives that we might that might arise with that.

Thanks. And if I could add one on the Braves, if we could just get an update, please on where that the process is with the bankruptcy courts and the RSNs?

Derek, do you want to touch on that?

Sure. Thanks for your question. We're watching that closely and what we see is the bankruptcy presentation that was made is still being followed. Diamond Sports seems to have a plan for emerging from bankruptcy as you've probably read. We are watching and seeing that just like you are. For our purposes, we are still getting full payment and operating the agreement as normal. So, at this point in time, nothing is deviating from that. We don't expect that especially as they've laid out per their plan.

Our next question is from Barton Crockett with Rosenblatt Securities. Please proceed with your question.

I'm just wondering on the EBITDA growth year over year, I understand you're not going to break out Vegas in any specificity, but is there any comment you can make on whether or not Vegas provided any material impact on that EBITDA change? Did it up, down or was it no impact? Because that was very big kind of year-over-year growth and that was a new race that was obviously meaningful. So that's one. And then secondarily, following up on the Braves kind of questioning, I was wondering if you could comment on some of the discussion that Major League Baseball is interested potentially in rolling up sports local team rights or some kind of streaming service and that that could potentially be a roadblock or something to be resolved as you go through this Diamond restructuring. So, if you can talk about kind of your views, your support for that idea? Thank you.

So touching on LVGP, I can say that LVGP was a positive contributor to F1 earnings for 2023. And with the cost optimization measures we've discussed and frankly, improved interest in the race and improved potential price points, I think we will see a greater contribution in 2024. I think that's where we'll leave that. On MLB, I think I'm reluctant to comment. You've seen some of the public actions that MLB has was against some of the Diamond proposed restructurings. But other than that, I think, we'd leave it alone other than Derek, if you want to add anything?

No. The only other thing I might say, just point of clarification, if you're not aware, the current agreement with Diamond does not include streaming rights. So those streaming rights continue to be held at the league level. That's not necessarily the case for all teams, but in our case it is. And so, we are obviously deferential to what the league is going to do as a whole, but right now our streaming remains at the league wide level.

Our next question is from Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Two on Formula One, maybe for both Greg and Stefano. First on Paddock, could you maybe talk a little bit about where you see opportunity to grow hospitality revenues in 2024? I'm curious what any of the pricing increase front were for Paddock, it's been a pretty nice tailwind over the last few years. And then are there any areas across the slate in particular where you think there's opportunity to grow capacity? And then secondly on sponsorship, nice growth in 2023. Could you maybe just talk a little bit more about the opportunity in 2024? How much room do you feel like there still is to increase inventory without diluting the existing sponsorship value add? Stefano, I think you mentioned creating some new assets. Be curious if you could talk a little bit more about that and what verticals remain large opportunities? Thank you.

Stefano, do you want to start on Hospitality?

Yeah. Thank you, Greg. Thank you, Stephen. I think that what has been amazing is in the last couple of years the fact that our offer in terms of Paddock Club has been always appreciated by our customer. We did some adjustment on pricing, not everywhere, because of course we understand that -- of course the prices are very important and very sensitive things to do or to apply. And therefore, I think that what we have done this year that is basically already confirming an incredible request from our partners and teams and guests is try to maximize eventual potential of growth in the area that there is still availability of space. And the other thing that we are doing is to see if there is another kind of offer that we can put together. Of course, the fact that now we are together with Quint, we can exploit the maximum opportunity to make sure that the Paddock Club experience can grow also in the area of entertainment, because that's the other place where we are exploiting a different way the racing we can experience for our fans. And with regard to the sponsorship, I think that what we have seen in the last couple of years has been an incredible growth in term of quality and in term of quantity of our partners. That means that we need to keep having the right attention to what this kind of revenue stream, but that means that also we need to be ready to increase our possibility to having the right offer in terms of new opportunity. I think that one that is pretty clear that we are able to optimize and we've done already last year in a way has been the digital possibility to differentiate from area-to-area this different option for our partners. On the other side, of course, there are two main areas where we believe there is potential to do, but we need to have the right competencies and we need to find the right partners, consider the complexity. That is one area that is the gambling. And the other area is on the financial services that has been already taking a big step last year with Amex. But I think there is huge opportunity that we can take into the future. And that's really where I believe in the long term that the potential to even grow is still there and will be there.

Our next question is from Peter Supino with Wolfe Research. Please proceed with your question.

Hi, good morning. One for Stefano and one for Greg. Stefano, if you wouldn't mind, with Silverstone and Madrid and Sao Paulo and Suzuka all signed in the last quarter, I guess, we have seen contracts locked in for 5 or 10 years, in some cases. How should we be thinking about the trade-offs in terms of contract duration, escalators, step ups for promotion rights like this? Curious about the pros and cons and how we can think about that for muddling. And then Greg, if you could please comment on the bigger picture for sports rights. It's become very controversial this topic that was once only driven by optimists. And if you could let us know how you see sports rights values playing out over the next several years given the puts and takes of linear and streaming? Thank you.

Well, Peter, thank you. With regard to the first question, I think as always, when we take the decision with regard to the renewal, there are a lot of elements that we need to consider. First of all, of course, the financial aspect is relevant, no doubt. And the fact that we are able to stabilize with certain promoters, which we believe represent an incredible opportunity in terms of our stability on this market is a relevant element to consider. The fact that you have seen in the last couple of years that we were able to ratify incredible agreement with certain promoters means that there is from one side, of course, a very interesting financial package. But on the other side, an incredible opportunity to develop our business in other areas that are on top of the one that is related to the promotional fee. And that's really our approach. It is clear that if you see the development of our regionalization of the calendar, we have moved out from being European centric to a very worldwide basic development that needs to be kept into the future. I just want to confirm the fact that we believe 24 races is the right number and I think that we're going to play in the right way. I was mentioning just briefly before on the fact that we have certain opportunities that we want to bring into the market in the next couple of years starting from 2026 onwards.

So, if I could just add on what Stefano said, look, you weigh -- I think it's not unlike your sports rights question, which I'll get to in a sec. You weigh what's the appeal of the venue and what are the economic opportunities for us. And in general, if you see us cut a very long deal, you must think if we think it's a pretty good opportunity both on the fan basis and on the economic basis. You see a shorter-term deal, that's open to question and so we weigh all of those. On the sports rights, really the world has gotten more muddled as you suggested. In general, more people bidding, that's a positive. Also more sports, that may be a challenge. And then the issue of fragmentation and trying to find where your sport is for your fans and making it easy. We are always looking particularly given our big sponsorship business on the trade-off between reach and what we get paid. So, lots of factors there. Overall, on whether you're positive or negative, I would note -- I feel very positive about the sports properties we're involved with. Why? Both have incredible fan demand, have high ratings relative to what they paid, both have a passionate fan base as I suggested, look at the ratings for where the Braves are, look at who is watching F1 and where they're willing to get up and watch it early in the morning. Both of them are not hugely monetized relative to what some of their peers are monetized. And I think if you look at sports in general, you've seen renewals on properties that did not necessarily have massive growth and still get more money. So, I remain in general bullish on sports rights given the multiplicity of buyers and in particular bullish on the sports rights of the properties we're involved in.

That's a great answer. Thank you. And if I could pile on with one since my esteemed colleagues seem to be comfortable doing the same. I wanted to ask you on the U.S. Media rights for F1, the ESPN renewal. It's generally understood that ESPN doesn't earn much advertising revenue on that contract. And so how do you think about the case for them paying more?

I think the case and I obviously I have a little bit of bias for this. I think the case is pretty easy. You've got one of the cases where you have massive growth in fan interest and we can show statistically how much our fan interest has grown across all sorts of platforms. We have a very desirable upscale audience. We have a younger audience, a lot of factors that they would like to bring to the party, ESPN or anybody else, not limit to that. So, I think there are a lot of reasons why we can make the case that our media rights in the U.S. are more valuable and there will be likely a multiplicity of players and we will likely get a better number.

Our last question is from Jeffrey Wlodarczak with Pivotal Research Group. Please proceed with your question.

Good morning, guys. I had a follow-up on Vegas. Do you anticipate after your Vegas experience taking a promoter role in more races, I guess post 2025? And then specifically on your decision not to let in the 11th team, I assume you need a new -- I guess, can you provide color on that? And then do you need a new Concorde agreement to raise the entry fee to make more teams more palatable for the existing teams? Thanks.

Thanks, Jeff. I'll touch on the first part about promotion or co-promoting or what else you'll see my answer. And then Stefano maybe you will comment on the 11th team. So on promotion, look, I think we went in and promoted Vegas for a variety of reasons. We thought it was a unique opportunity to promote the sport. We thought it was a unique economic opportunity. We thought we would learn a lot about being a promoter and make us more credible with other promoters. I do not know that there are many opportunities out there like Vegas where we're going to say we absolutely want to do this. There may be opportunities in the future where we can partner with promoters. Some promoters are short on capital. Some promoters are short on some skills and there are things that we could bring to the table. But in many cases, our promoters bring local knowledge, local contacts, local strengths that are very valuable. And we wouldn't necessarily be able to supplant those. So, in some way to think about enhancing that and working together, I think that's the more likely path than thinking we're going to become a promoter of a bunch of races.

And, yes, Jeff, with regard to the second question, 11th team, for sure is a point related to the Concorde Agreement. It is a point of a joint work that has to be done between the FIA and FOM in regard to the different kind of evaluation that we need to do. So, I think that with regard to what has happened, I think that the process has been followed and we presented the result in the right way. For the future is a matter of discussion of course with the teams, with the right commercial and technical proposition that will be discussed accordingly within this year.

All right. Thank you. I believe that was our last question. Thank you again to the listening audience for both your interest in Liberty Media and the Braves. We look forward to speaking with you again next quarter, if not sooner.

This concludes today's conference. [Operator Closing Remarks].