Liberty Media Corporation — Q1 2024 Form 10-Q Summary
Business context and reporting period
Liberty Media reported unaudited consolidated results for the three months ended March 31, 2024, compared with the three months ended March 31, 2023. Principal businesses are Sirius XM Holdings, Formula 1, QuintEvents and an equity-method investment in Live Nation. Results are presented across the Liberty SiriusXM, Liberty Formula One and Liberty Live tracking stock groups. Tracking stocks are securities of Liberty Media Corporation, not separate legal entities, and holders remain subject to the liabilities and risks of the parent company.
Formula 1 results are seasonal, with the majority of events and related revenue and expenses occurring after the first quarter. QuintEvents was acquired on January 2, 2024. The Braves business was split off in July 2023 and is not included in current-period operations.
Key financial metrics
| Amounts in millions, except margins and per-share data | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Total revenue | $2,749 | $2,556 | +$193, or 8% |
| Operating income | $502 | $340 | +$162, or 48% |
| Adjusted OIBDA | $826 | $688 | +$138, or 20% |
| Net earnings | $245 | $52 | +$193 |
| Net earnings attributable to Liberty stockholders | $203 | $15 | +$188 |
| Earnings per share — Liberty SiriusXM, basic | $0.61 | $0.56 | +$0.05 |
| Earnings per share — Liberty Formula One, basic | $0.33 | $(0.47) | Improved |
| Earnings per share — Liberty Live, basic | $(0.79) | Not applicable | New tracking stock |
- Revenue margin was approximately 18.3%, compared with 13.3% in the prior-year quarter. Adjusted OIBDA margin was approximately 30.0%, compared with 26.9%.
- Sirius XM Holdings revenue increased to $2.162 billion from $2.144 billion; Adjusted OIBDA increased to $635 million from $625 million and operating income increased to $422 million from $387 million.
- Formula 1 revenue increased to $553 million from $381 million; Adjusted OIBDA increased to $208 million from $117 million and operating income increased to $136 million from $35 million. Three events occurred in Q1 2024 versus two in Q1 2023.
- Live Nation generated $3.800 billion of revenue and $367 million of Adjusted OIBDA in its own operations, but is accounted for as an equity-method investment and therefore is not consolidated into Liberty’s revenue or operating income.
- Interest expense was $191 million, compared with $196 million. Share of losses of affiliates was $19 million, compared with $10 million. Net losses on financial instruments were $3 million, compared with $46 million.
Cash flow, liquidity and debt
| Amounts in millions | Q1 2024 | Q1 2023 |
|---|---|---|
| Cash provided by operating activities | $395 | $661 |
| Cash used in investing activities | $(650) | $(415) |
| Cash used in financing activities | $(82) | $(257) |
| Capital expenditures | $201 | $281 |
| Cash and cash equivalents at March 31 | $1,666 | $2,019 at December 31, 2023 |
| Total debt principal | $15,211 | $15,360 at December 31, 2023 |
| Total liabilities | $22,760 | $21,723 at December 31, 2023 |
- Cash, cash equivalents and restricted cash declined by $337 million during the quarter to $1.691 billion, primarily reflecting $650 million of investing outflows, including $205 million of net acquisition payments, and $201 million of capital expenditures.
- Cash attributed to the Liberty SiriusXM Group was approximately $135 million, Formula One Group $1.233 billion and Liberty Live Group $298 million. Formula 1 distributed $150 million to Liberty during the quarter.
- Available borrowing capacity included $1.075 billion under the Sirius XM Holdings margin loan, $400 million under the Live Nation margin loan and $1.720 billion under Sirius XM Holdings’ secured revolving credit facility.
- Liberty reported compliance with applicable debt covenants as of March 31, 2024. Formula 1’s senior facilities are non-recourse to Liberty. Liberty itself does not have a debt rating.
- Current liabilities included $1.185 billion of current debt. The 2.75% exchangeable debentures due 2049 and 0.5% exchangeable debentures due 2050 are puttable or redeemable in 2024 and are classified as current liabilities.
Material changes versus the prior comparable period
- Consolidated revenue growth was driven primarily by a $172 million increase in Formula 1 revenue, an $18 million increase in Sirius XM Holdings revenue and the addition of QuintEvents, partly offset by the Braves split-off.
- Formula 1 benefited from one additional event, contractual fee increases, higher sponsorship and media-rights revenue, F1 TV growth, and QuintEvents-related activity. Cost of Formula 1 revenue increased $80 million, but Adjusted OIBDA increased $91 million.
- SiriusXM subscriber revenue declined 1% because of lower average subscribers and lower automaker promotional rates, partly offset by higher average monthly revenue per subscriber. Pandora and Off-platform advertising revenue increased 8%.
- SiriusXM had approximately 33.4 million subscribers; Pandora had approximately 45.0 million monthly active users and 5.9 million subscribers as of March 31, 2024.
- Operating cash flow decreased $266 million, mainly because of unfavorable changes in payables and other liabilities and lower earnings-related cash generation compared with the prior year.
- Financial instrument losses improved from $46 million to $3 million. The prior-year period included a $110 million loss on bond hedges; those hedges expired in October 2023.
- Restructuring, impairment and acquisition costs declined to $22 million from $32 million. Sirius XM Holdings recorded $12 million of severance and related costs in Q1 2024, compared with $23 million of severance and other costs plus $9 million of primarily office-related charges in Q1 2023.
Guidance, outlook, commentary and risks
- The filing does not provide a clear consolidated revenue or earnings guidance range.
- Liberty expects to complete the proposed Liberty SiriusXM split-off and related Sirius XM Holdings merger in early Q3 2024, subject to conditions including tax opinions and other required approvals. The estimated exchange ratio is approximately 8.4 shares of the new Liberty Sirius XM Holdings common stock for each Liberty SiriusXM common share.
- On March 29, 2024, Liberty agreed to acquire approximately 86% of Dorna Sports for approximately €3.0 billion, funded with cash and Series C Liberty Formula One shares. Completion remains subject to conditions.
- Management states that available cash, operating cash flows, subsidiary dividends and distributions, margin-loan capacity, asset monetizations and potential debt or equity financing are expected to be sufficient for projected uses of cash, including Dorna-related funding, debt service, investments, capital expenditures and possible share repurchases.
- Key risks include high leverage and variable interest rates, share-price and collateral-value volatility, limited access to subsidiary cash, Sirius XM subscriber and advertising trends, music royalty costs, Formula 1 event cancellations and seasonality, Live Nation valuation exposure, regulatory and consumer-protection matters, litigation, tax contingencies, cybersecurity and technology failures, foreign-exchange movements and execution risk related to the proposed transactions.
- Notable legal matters include the approved Sirius XM stockholder litigation settlement, for which Liberty paid $7 million into escrow in Q1 2024, the New York Attorney General’s action concerning Sirius XM cancellation practices, and class actions and mass arbitrations concerning Sirius XM’s U.S. Music Royalty Fee.
- Liberty had approximately $1.1 billion remaining under its authorized share-repurchase program and made no repurchases of Liberty SiriusXM, Liberty Formula One or Liberty Live shares during the quarter.
Facts investors should verify
- Conditions, timing, financing and final exchange ratio for the Liberty SiriusXM split-off and Sirius XM Holdings merger.
- Purchase price funding, share issuance, closing conditions and integration prospects for the Dorna Sports acquisition.
- Refinancing or repayment plans for the $1.185 billion of current debt, including exchangeable debentures with 2024 holder put rights.
- Sirius XM subscriber trends, churn, promotional subscriber economics and the sustainability of Pandora advertising growth.
- Formula 1’s event calendar, contractual revenue growth, team-payment obligations and seasonality in subsequent quarters.
- Potential outcomes and financial exposure from the New York Attorney General proceeding, U.S. Music Royalty Fee claims and other contingencies.
- Liquidity restrictions on subsidiary cash, margin-loan collateral requirements and sensitivity to Sirius XM, Live Nation and Liberty tracking-stock prices.