Certain statements in this Quarterly Report on Form 10-Q constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including statements regarding our projected
sources and uses of cash; the payment of dividends by Sirius XM Holdings Inc.
("Sirius XM Holdings"); fluctuations in interest rates and stock prices; the
impacts of COVID-19 (as defined below); the impact of accounting policies and
pronouncements; and the anticipated non-material impact of certain contingent
liabilities related to legal and tax proceedings and other matters arising in
the ordinary course of business. Where, in any forward-looking statement, we
express an expectation or belief as to future results or events, such
expectation or belief is expressed in good faith and believed to have a
reasonable basis, but there can be no assurance that the expectation or belief
will result or be achieved or accomplished. The following include some but not
all of the factors (as they relate to our consolidated subsidiaries and equity
affiliates) that could cause actual results or events to differ materially from
those anticipated:
the impact of the COVID-19 (as defined below) pandemic and local, state and
? federal governmental responses to the pandemic on the economy, our customers,
our vendors and our businesses generally;
? our ability to obtain additional financing on acceptable terms and cash in
amounts sufficient to service debt and other financial obligations;
our and our subsidiaries' indebtedness could adversely affect operations and
? could limit the ability of our subsidiaries to react to changes in the economy
or our industry;
? the success of businesses attributed to each of our tracking stock groups;
? our and Sirius XM Holdings' ability to realize the benefits of acquisitions or
other strategic investments;
the impact of weak economic conditions on consumer demand for products,
? services and events offered by our businesses attributed to each of our
tracking stock groups;
? the outcome of pending or future litigation;
? the operational risks of our subsidiaries and business affiliates with
operations outside of the United States;
? our ability to use net operating loss, disallowed business interest and tax
credit carryforwards to reduce future tax payments;
the ability of our subsidiaries and business affiliates to comply with
? government regulations, including, without limitation, Federal Communications
Commission requirements, consumer protection laws and competition laws, and
adverse outcomes from regulatory proceedings;
? the regulatory and competitive environment of the industries in which we, and
the entities in which we have interests, operate;
? changes in the nature of key strategic relationships with partners, vendors and
joint venturers;
? competition faced by Sirius XM Holdings;
? the ability of Sirius XM Holdings to attract and retain subscribers and
listeners;
? the ability of Sirius XM Holdings to market its services and sell advertising;
? the ability of Sirius XM Holdings to maintain revenue growth from its
advertising products;
? the ability of Sirius XM Holdings to protect the security of personal
information about its customers;
? the interruption or failure of Sirius XM Holdings' information technology and
communication systems;
? the impact of the market for music rights on Sirius XM Holdings and the rates
Sirius XM Holdings must pay for rights to use musical works;
? the impact of certain supply chain issues on Sirius XM Holdings;
the impact of our equity method investment in Live Nation Entertainment, Inc.
? ("Live Nation") on our net earnings and the net earnings of the Liberty
SiriusXM Group;
? challenges by tax authorities in the jurisdictions where Formula 1 operates;
? changes in tax laws that affect Formula 1 and the Formula One Group (as defined
below);
? the ability of Formula 1 to expand into new markets;
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? the relationship between the U.K. and the E.U. following Brexit;
? the establishment of rival motorsports events or other circumstances that
impact the competitive position of Formula 1;
? changes in consumer viewing habits and the emergence of new content
distribution platforms;
? the impact of organized labor on the Braves Group;
? the impact of an expansion of Major League Baseball ("MLB");
? the level of broadcasting revenue that Braves Holdings (as defined below)
receives;
? the impact of the Development Project (as defined below) on the Braves Group
(as defined below) and its ability to manage the project;
? the risks associated with the Company as a whole, even if a holder does not own
shares of common stock of all of our groups;
? market confusion that results from misunderstandings about our capital
structure;
geopolitical incidents, accidents, terrorist acts, armed conflicts or other
? events that cause one or more events to be cancelled or postponed, are not
covered by insurance, or cause reputational damage to our subsidiaries and
business affiliates; and
? challenges related to assessing the future prospects of tracking stock groups
based on past performance.
For additional risk factors, please see Part I, Item 1A. Risk Factors of our
Annual Report on Form 10-K for the year ended December 31, 2021, as well as Part
II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q. Any
forward-looking statements and such risks, uncertainties and other factors speak
only as of the date of this Quarterly Report, and we expressly disclaim any
obligation or undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein, to reflect any change in our
expectations with regard thereto, or any other change in events, conditions or
circumstances on which any such statement is based.
The following discussion and analysis provides information concerning our
results of operations and financial condition. This discussion should be read in
conjunction with our accompanying condensed consolidated financial statements
and the notes thereto and our Annual Report on Form 10-K for the year ended
December 31, 2021.
The information contained herein relates to Liberty Media Corporation and its
controlled subsidiaries ("Liberty," the "Company," "we," "us," or "our" unless
the context otherwise requires).
Overview
We own controlling and non-controlling interests in a broad range of media and
entertainment companies. Our largest operating subsidiary, which is also a
reportable segment, is Sirius XM Holdings. Sirius XM Holdings operates two
complementary audio entertainment businesses, Sirius XM and Pandora and
Off-platform. Sirius XM features music, sports, entertainment, comedy, talk,
news, traffic and weather channels and other content, as well as podcasts and
infotainment services, in the United States on a subscription fee basis. Sirius
XM packages include live, curated and certain exclusive and on demand
programming. Sirius XM is distributed through its two proprietary satellite
radio systems and streamed via applications for mobile devices, home devices and
other consumer electronic equipment. Sirius XM also provides connected vehicle
services and a suite of in-vehicle data services. Pandora operates a music and
podcast streaming discovery platform. Pandora is available as an ad-supported
radio service, a radio subscription service (Pandora Plus), and an on-demand
subscription service (Pandora Premium). Through Sirius XM Holdings, we have
investments in Sirius XM Canada Holdings, Inc. ("Sirius XM Canada") and
SoundCloud Holdings, LLC ("SoundCloud"), which we account for as equity method
investments.
Formula 1 is a wholly-owned consolidated subsidiary and is also a reportable
segment. Formula 1 is a global motorsports business that holds exclusive
commercial rights with respect to the World Championship, an annual,
approximately nine-month long, motor race-based competition in which teams
compete for the Constructors' Championship and drivers compete for the Drivers'
Championship. The World Championship takes place on various circuits with a
varying number of events ("Events") taking place in different countries around
the world each
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season. Formula 1 is responsible for the commercial exploitation and development
of the World Championship as well as various aspects of its management and
administration.
We hold an ownership interest in Live Nation, which is accounted for as an
equity method investment at March 31, 2022. Live Nation is considered the
world's leading live entertainment company. As of December 31, 2021, Live Nation
met the Company's reportable segment threshold for equity method affiliates due
to significant losses driven by COVID-19.
Our "Corporate and Other" category includes our consolidated subsidiary, Braves
Holdings, LLC ("Braves Holdings") and corporate expenses. Braves Holdings owns
the Atlanta Braves Major League Baseball Club ("ANLBC") and certain assets and
liabilities associated with ANLBC's stadium and mixed use development project
(the "Development Project"). "Corporate and Other" also includes investments and
related financial instruments in public companies, which are accounted for at
their respective fair market values.
A tracking stock is a type of common stock that the issuing company intends to
reflect or "track" the economic performance of a particular business or "group,"
rather than the economic performance of the company as a whole. While the
Liberty SiriusXM Group, the Liberty Braves Group (the "Braves Group") and the
Liberty Formula One Group (the "Formula One Group") have separate collections of
businesses, assets and liabilities attributed to them, no group is a separate
legal entity and therefore cannot own assets, issue securities or enter into
legally binding agreements. Therefore, the Liberty SiriusXM Group, Braves Group
and Formula One Group do not represent separate legal entities, but rather
represent those businesses, assets and liabilities that have been attributed to
each respective group. Holders of tracking stock have no direct claim to the
group's stock or assets and therefore, do not own, by virtue of their ownership
of a Liberty tracking stock, any equity or voting interest in a public company,
such as Sirius XM Holdings or Live Nation, in which Liberty holds an interest
that is attributed to a Liberty tracking stock group, such as the Liberty
SiriusXM Group. Holders of tracking stock are also not represented by separate
boards of directors. Instead, holders of tracking stock are stockholders of the
parent corporation, with a single board of directors and subject to all of the
risks and liabilities of the parent corporation.
The term "Liberty SiriusXM Group" does not represent a separate legal entity,
rather it represents those businesses, assets and liabilities that have been
attributed to that group. As of March 31, 2022, the Liberty SiriusXM Group is
primarily comprised of Liberty's interests in Sirius XM Holdings and Live
Nation, corporate cash, Liberty's 1.375% Cash Convertible Senior Notes due 2023
and related financial instruments, Liberty's 2.125% Exchangeable Senior
Debentures due 2048, Liberty's 2.75% Exchangeable Senior Debentures due 2049,
Liberty's 0.5% Exchangeable Senior Debentures due 2050 and margin loan
obligations incurred by wholly-owned special purpose subsidiaries of Liberty.
The Liberty SiriusXM Group retains an approximate 3.7% intergroup interest in
the Braves Group and an approximate 2.2% intergroup interest in the Formula One
Group as of March 31, 2022. As of March 31, 2022, the Liberty SiriusXM Group has
cash and cash equivalents of approximately $710 million, which includes
approximately $76 million of subsidiary cash.
Sirius XM Holdings is the only operating subsidiary attributed to the Liberty
SiriusXM Group. In the event Sirius XM Holdings were to become insolvent or file
for bankruptcy, Liberty's management would evaluate the circumstances at such
time and take appropriate steps in the best interest of all of its stockholders,
which may not be in the best interest of a particular group or groups when
considered independently. In such a situation, Liberty's management and its
board of directors would have several approaches at their disposal, including,
but not limited to, the conversion of the Liberty SiriusXM common stock into
another tracking stock of Liberty, the reattribution of assets and liabilities
among Liberty's tracking stock groups or the restructuring of Liberty's tracking
stocks to either create a new tracking stock structure or eliminate it
altogether.
The term "Braves Group" does not represent a separate legal entity, rather it
represents those businesses, assets and liabilities that have been attributed to
that group. As of March 31, 2022, the Braves Group is primarily comprised of
Braves Holdings, which indirectly owns ANLBC and certain assets and liabilities
associated with ANLBC's stadium and the Development Project, and corporate cash.
Additionally, the Liberty SiriusXM Group and the Formula One Group retain
approximate 3.7% and 11.0% intergroup interests, respectively, in the Braves
Group as of March 31, 2022. As of March 31, 2022, the Braves Group has cash and
cash equivalents of approximately $311 million.
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The term "Formula One Group" does not represent a separate legal entity, rather
it represents those businesses, assets and liabilities that have been attributed
to that group. As of March 31, 2022, the Formula One Group is primarily
comprised of all of the businesses, assets and liabilities of Liberty, other
than those specifically attributed to the Liberty SiriusXM Group or the Braves
Group, including Liberty's interests in Formula 1 and Liberty Media Acquisition
Corporation, an approximate 11.0% intergroup interest in the Braves Group and
Liberty's 1% Cash Convertible Notes due 2023. The Liberty SiriusXM Group retains
an approximate 2.2% intergroup interest in the Formula One Group as of March 31,
2022. The Formula One Group has cash and cash equivalents of approximately
$2,265 million as of March 31, 2022, which includes $835 million of subsidiary
cash.
In December 2019, Chinese officials reported a novel coronavirus outbreak
("COVID-19"). COVID-19 has since spread internationally. On March 11, 2020, the
World Health Organization assessed COVID-19 as a global pandemic, causing many
countries throughout the world to take aggressive actions, including imposing
travel restrictions and stay-at-home orders, closing public attractions and
restaurants, and mandating social distancing practices. As a result, the start
of the 2020 Formula 1 race calendar, comprised of 17 Events, and the Major
League Baseball season, comprised of 60 regular season games, were delayed until
the beginning of July 2020 and end of July 2020, respectively. In addition, in
mid-March 2020, Live Nation suspended all large-scale live entertainment events
due to COVID-19. The 2021 regular baseball season was comprised of 160 games,
which is the same number of regular season games held in years prior to the
COVID-19 pandemic. Formula 1 originally scheduled 23 Events in 2021, and after a
number of Events were cancelled and/or replaced, a record 22 Events took place.
Braves Holdings and Formula 1 had limitations on the number of fans in
attendance at certain games and Events in 2021, thereby reducing revenue
associated with fan attendance. Starting in the third quarter of 2021, Live
Nation saw a meaningful restart of its operations, with growth in ticket sales,
new sponsor partners and the resumption of shows, primarily in the United States
and United Kingdom. It is unclear, as restrictions are lifted in many
jurisdictions, whether and to what extent COVID-19 concerns will continue to
impact the use of and/or demand for the entertainment, events and services
provided by these businesses and demand for sponsorship and advertising assets.
If these businesses continue to face cancelled events, closed venues and reduced
attendance, the impact may substantially decrease our revenue. Due to the
revenue reductions caused by COVID-19 to date, these businesses have looked to
reduce expenses, but should such impacts continue, the businesses may not be
able to reduce expenses to the same degree as any decline in revenue, which may
adversely affect our results of operations and cash flow.
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