10-QPeriod: Q1 FY2017

Liberty Media Corp Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 9, 2017For Securities:FWONKFWONAFWONB

Summary

Liberty Media Corporation's (FWONK) Q1 2017 report highlights significant changes driven by the acquisition of Formula 1. Consolidated revenue saw a substantial increase, primarily due to the inclusion of Formula 1's revenue and continued growth from SIRIUS XM. While the consolidation of Formula 1 introduced new revenue streams, it also led to a decrease in consolidated operating income year-over-year, largely offset by a one-time favorable settlement in the prior year's comparable period. Adjusted OIBDA, a key operational metric, showed improvement across all segments, demonstrating underlying business strength. Investors should note the strategic importance of the Formula 1 acquisition, which is now a consolidated segment and a significant contributor to the Formula One Group. The Liberty SiriusXM Group continues to perform well with steady revenue growth, while the Braves Group is undergoing significant investment in its new ballpark and mixed-use development. The company maintains a strong liquidity position, supported by cash balances across its various groups and operational cash flows, though debt levels have increased due to recent acquisitions and financing activities.

Financial Highlights

44 data points
Beta

Revenue

$1.40B

95.1% Gross Margin

Net Income

-$21.00M

-1.5% Net Margin

Total Assets

$41.00B

Cash & Equivalents

$1.07B

Free Cash Flow

$403.00M

Financial Statements
Beta
Revenue$1.40B
Cost of Revenue$68.00M
Gross Profit$1.33B
SG&A Expenses$239.00M
Operating Expenses$1.14B
Operating Income$259.00M
Interest Expense$140.00M
Net Income-$21.00M

Key Highlights

  • 1Consolidated revenue increased by $191 million to $1,395 million in Q1 2017 compared to Q1 2016, driven by the acquisition of Formula 1 ($96 million) and revenue growth at SIRIUS XM ($94 million).
  • 2Consolidated operating income decreased by $522 million to $259 million in Q1 2017, primarily due to a favorable $511 million one-time net settlement in the prior year's Vivendi lawsuit.
  • 3Adjusted OIBDA, a key performance indicator, improved by $76 million to $467 million, with positive contributions from all segments: Liberty SiriusXM Group ($57 million), Braves Group ($7 million), and Formula One Group ($12 million).
  • 4The acquisition of Formula 1 on January 23, 2017, marked a significant event, making it a consolidated subsidiary and a new reportable segment, contributing $96 million in revenue and $96 million in pro forma revenue for the quarter.
  • 5SIRIUS XM reported strong standalone performance, with total revenue increasing 6.7% to $1,294 million, driven by a 5% increase in subscribers and a 2% rise in average revenue per subscriber.
  • 6Braves Holdings incurred significant capital expenditures of approximately $102 million for the construction of its new ballpark and mixed-use development.
  • 7Consolidated interest expense increased by $56 million to $140 million due to increased corporate and subsidiary debt, including new debt related to the Formula 1 acquisition and the issuance of new debentures.

Frequently Asked Questions

The acquisition of Formula 1 on January 23, 2017, significantly impacted Liberty Media's financial results. It contributed $96 million in revenue and led to the formation of the Formula One Group as a new reportable segment. While it boosted overall consolidated revenue, the associated costs and acquisition accounting also influenced operating income and debt levels.

SIRIUS XM demonstrated strong performance with its standalone revenue increasing by 6.7% to $1,294 million. This growth was driven by a 5% increase in the average number of subscribers and a 2% rise in average revenue per subscriber due to rate increases implemented in 2016. The segment's Adjusted OIBDA also saw a notable improvement.

Liberty Media operates under a tracking stock structure, where the Liberty SiriusXM Group, Braves Group, and Formula One Group represent collections of businesses attributed to specific stock classes. It's important for investors to understand that these are not separate legal entities, and holders of tracking stock own shares of the parent corporation, not direct claims on the assets of any specific group. This structure is intended to track the economic performance of these distinct business segments.

Consolidated interest expense rose by $56 million due to an increase in the average amount of corporate and subsidiary debt outstanding. Key contributors include approximately $46 million of interest expense attributable to debt held at Formula 1, the private offering of $445 million in 2.25% exchangeable senior debentures, the issuance of $450 million in 1% convertible cash notes in connection with the Formula 1 acquisition, and a $350 million draw under the Live Nation Margin Loan.