10-KPeriod: FY2017

Liberty Media Corp Annual Report, Year Ended Dec 31, 2017

Filed March 1, 2018For Securities:FWONKFWONAFWONB

Summary

Liberty Media Corporation's (FWONK) 2017 10-K filing reveals a significant year marked by the full acquisition of Formula 1, strengthening its Formula One Group. The company continues to operate through distinct tracking stock groups: Liberty SiriusXM, Liberty Braves, and Liberty Formula One. Sirius XM remains a primary revenue driver, reporting substantial subscriber growth and revenue increases, despite facing increased competition and rising royalty rates. The Formula One Group saw substantial revenue contribution following Liberty's acquisition, and the company is focused on expanding its global reach and commercial appeal. The Braves Group continues to invest in its new ballpark and mixed-use development, which is expected to drive future revenue, although this also increases debt and operational complexity. The company's financial performance benefited from the Formula 1 acquisition and operational growth in Sirius XM, though it also faced increased interest expenses due to higher debt levels.

Financial Highlights

44 data points
Beta

Revenue

$7.59B

83.9% Gross Margin

Net Income

$1.35B

17.8% Net Margin

Total Assets

$42.00B

Cash & Equivalents

$1.03B

Free Cash Flow

$1.73B

Financial Statements
Beta
Revenue$7.59B
Cost of Revenue$1.22B
Gross Profit$6.38B
SG&A Expenses$1.15B
Operating Expenses$6.20B
Operating Income$1.39B
Interest Expense$591.00M
Net Income$1.35B

Key Highlights

  • 1Full acquisition of Formula 1 completed in January 2017, consolidating its results into the Formula One Group.
  • 2Sirius XM reported strong subscriber growth, ending 2017 with approximately 32.7 million subscribers, and saw significant revenue increases.
  • 3Liberty Media's consolidated revenue increased by over 44% in 2017, largely driven by the inclusion of Formula 1's revenue and growth at Sirius XM.
  • 4The company incurred substantial capital expenditures, particularly for the Braves' new ballpark and mixed-use development project, increasing debt levels.
  • 5Liberty Media's overall operating income decreased in 2017 compared to 2016, primarily due to one-time benefits in the prior year and the impact of increased expenses and integration costs related to Formula 1.
  • 6The company's debt levels increased significantly, largely due to the Formula 1 acquisition and ongoing capital expenditures, impacting interest expense.

Frequently Asked Questions

Liberty Media operates through three main tracking stock groups: Liberty SiriusXM, Liberty Braves, and Liberty Formula One. The Liberty SiriusXM Group is primarily comprised of Sirius XM Holdings Inc., a leading satellite radio provider. The Liberty Braves Group includes the Atlanta Braves baseball team and related assets. The Liberty Formula One Group consists of Liberty's interest in Formula 1, a global motorsports business, and Live Nation Entertainment.

Liberty Media acquired 100% of Formula 1 in January 2017 for approximately $4.7 billion, consisting of cash and stock. This significantly boosted the Formula One Group's revenue, contributing $1.78 billion in revenue for 2017. However, the acquisition also substantially increased Liberty Media's debt and operating expenses.

Sirius XM experienced a strong year in 2017, with revenue increasing by 7% to $5.4 billion and subscriber numbers growing to approximately 32.7 million. The company also saw improvements in its operating income and Adjusted OIBDA. However, it faces ongoing challenges from competition, rising royalty rates, and reliance on the automotive industry.

Key financial risks include significant debt levels, the potential for unfavorable outcomes in litigation (particularly with SoundExchange), reliance on the automotive industry for Sirius XM's subscriber growth, and the inherent cyclicality and competitive nature of the entertainment and sports industries in which its businesses operate. The tracking stock structure also introduces complexities and potential conflicts of interest among the different stock groups.