Liberty Broadband Corp (LBRDK) 2017 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Liberty Media Corporation 2017 Third Quarter Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded, November 9, 2017.

I would now like to turn the conference over to Courtnee Chun, Senior Vice President of Investor Relations. Please go ahead.

Thanks, Hope. 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, including statements about business strategies; market potential; new service and product launches; the completion of the Braves mixed use development; the future financial performance of F1 business; future Formula One races; expansion of the Formula One brand, including international expansion; new opportunities for commercial partnerships, including sponsorships; increases in promotion and marketing; improvement of content distribution and expansion into new media; and other matters that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including without limitation, possible changes in market acceptance of new products or services, the ability of our businesses to attract and retain customers, competitive issues, regulatory issues and the availability of capital on terms acceptable to Liberty Media. These forward-looking statements speak only as of the date of this call, and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Media's 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, including adjusted OIBDA of Liberty Media and adjusted EBITDA of SiriusXM. The required definitions and reconciliations, Schedules 1, 2, 3, can be found at the end of the earnings press release issued today, which is available on our website.

This call also may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Liberty Broadband. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These forward-looking statements speak only as of the date of this call, and Liberty Broadband expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Broadband's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Now I'd like to introduce Greg Maffei, Liberty's President and CEO.

Thank you, Courtnee, and thank you, all of you out there in the listening audience. Today, on the call, speaking besides myself, we'll have Liberty's CFO, Mark Carleton; and Formula One's Chairman and CEO, Chase Carey. During Q&A, we will also be available to answer questions related to Liberty Broadband.

So first, looking at the Formula One Group. We had a wonderful competitive season. During the season we had multiple winning teams, multiple winning drivers and multiple championship leaders. Chase and his team are continuing to do excellent work invigorating the sport to favorable reviews, working now on longer-term discussions to build exciting, competitive races. I'd also note that we completed an additional secondary offering and currently have an exchange offer out for the remaining FWON.K exchangeable debt. If fully subscribed, we will complete the sale by all the original F1 selling shareholders.

Turning to Live Nation, which also delivered yet another strong earnings report, revenue up 12%. Concert tickets was solid in 2017. Shows are up 20% through October. Operating income is up 5%, and AOI was up 10% for the quarter. Michael and his team at Live Nation are doing an outstanding job.

SiriusXM also had a strong quarter. Third quarter revenue was up 8% to $1.4 billion. Third quarter net income rose 42% to $276 million, and adjusted EBITDA grew 12% to a quarterly record of $551 million. As of October 23, our ownership stood just below 69%.

The Braves finished a successful first season at SunTrust Park. We've had meaningful increases in ticket sales, concessions and retail revenues. The remaining Battery Atlanta development is on time and on budget. As you may have read, we are currently working through the process of hiring a new general manager. And there is an MLB investigation into certain alleged violations for the Braves that is ongoing. We won't be commenting any further on that investigation until it's complete.

Turning over to Liberty Broadband. Charter had a solid quarter. The initial market reaction was overdone in our view, but some of that has since abated. We knew when we invested and when the plan was set forth there would be inconsistent quarters working through the acquisitions of Time Warner and Bright House and the upgrade cycle to all digital at Time Warner Cable and the simplified pricing plans we're putting in place, just as it was when Charter was going through the same sort of similar upgrades. There are questions in the market about how the video market will evolve, but we remain confident in the service opportunities created by Charter's excellent broadband connections. I'd also note that during the quarter, Charter repurchased approximately $4 billion of stock and common units.

Now with that, let me turn it over to Mark for more on our financial results.

Thank you, Greg. At quarter end, Liberty SiriusXM grew at attributed cash and liquid investments of $160 million, excluding $74 million of cash held directly by SiriusXM. The value of the SiriusXM stock held at Liberty SiriusXM as of 11/8 was $17 billion approximately, and there is $250 million in debt against these holdings.

The Braves Group had attributed cash and liquid investments of $129 million. Formula One Group had attributed cash and liquid investments of $146 million, excluding $274 million of cash directly held by F1. Formula One Group holds public market securities with a market value of $3.8 billion as of 11/8, with $2.3 billion of attributed debt excluding the debt at F1.

At quarter end, Liberty SiriusXM Group had attributed principal amount of debt of $7 billion, which includes $6.8 billion of debt directly at SiriusXM. The Braves Group had attributed debt of $585 million, and Formula One Group had attributed principal amount of debt of $5.6 billion, which includes $3.3 billion directly at F1.

F1's total net debt to covenant OIBDA ratio as defined in their credit facilities was approximately 6.3x as of September 30 as compared to a maximum allowable leverage ratio at 8.5. We've spoken about it before, and we've set a target total net leverage ratio of around 5 to 6x covenant OIBDA. And pay attention that these leverage ratios are for the Formula One business itself, not the Formula One Group.

In the quarter, Formula One Group incurred $7 million of corporate-level SG&A expense, including stock comp, which excludes amounts allocated to each of the Liberty SiriusXM and Braves groups. For the quarter, approximately $13 million of SG&A expense, including stock-based comp, was allocated to the SiriusXM Group and approximately $1 million was allocated to the Braves Group.

Now I'll turn it back over to Chase Carey to discuss Formula One. Chase, sorry about your Yankees.

Thank you, Mark. We're winding down our first season under the new ownership and management team, and we really think our most important goal for this year was to give the sport some positive momentum and excitement about the future after a number of years of criticism and concern. It's still early days but we're off to a good start.

With our new organization largely in place, we have now begun to pursue the initiatives to enable us to build Formula One to its true potential. Among our key priorities are, first, improve the race. We have groups working with the teams, race teams and the FIA on costs, on the engine, on aerodynamics, tracks and rules. Our goal is to make the races more competitive, the action even better, the wow factor even bigger and the business model better for us and the teams.

There's broad agreement on the direction of these goals, so there will obviously be different opinions about the details. We do not plan to negotiate in public but to work with the teams to find the compromises that ultimately deliver a better sport to fans and benefits to all of us. We have the opportunity to take hundreds of millions out of the aggregate cost of this sport and actually deliver a more exciting and dramatic sport.

Second, we look to improve the events around the race. In 2018, we will take another step forward in expanding fan engagement at the track through fan zones, exhibitions, expanded hospitality options and other features while also engaging more host cities to deliver the spectacle of Formula One. Third, we're looking to enhance the race calendar. Our schedule is set for 2018, but we have some exciting potential changes for 2019 and 2020.

Fourth, expand our sponsorships by engaging with our sponsors on a larger and more diverse set of activation opportunities. Initiatives like regional TV feeds, virtual signage, the expanded array of activities at events, new digital products and other initiatives all provide more choices to engage sponsors. It will take a few years to get our sponsor portfolio to where it should be, but 2018 will be the first step forward.

Fifth, develop opportunities with digital platforms while continuing to partner with existing TV platforms. We will launch our initial over-the-top product next season, which will be a product targeted at our most passionate fans. We're also extremely excited about the potential for major digital platforms to become new competitors for our content in the next few years. Competition in the traditional television arena is a bit of a mixed bag around the world. However, the emergence of these huge digital platforms as competitors can transform the value of our content, particularly since our unique global event content is in their sweet spot.

Sixth, we're also pursuing a myriad of opportunities beyond our traditional tent poles. For example, we recently concluded agreements with Fanatics to expand our merchandising business. We're negotiating with ticket platforms to transform capabilities in that area. And in Abu Dhabi, we will conclude our inaugural E game season. We're also moving forward to build the untapped opportunities in the world's 2 biggest markets, the U.S. and China. Overall, we're still very much in the early stages of executing on our plans and investing and building the foundation, but we're increasingly excited about the opportunity to truly transform Formula One over the next 3 to 5 years.

And with that, I'll turn the call back to Greg.

Thanks, Chase and Mark. We appreciate your continued interest in Liberty Media and look forward to seeing many of you next week on November 16 at our Investor Day. If you need to register, please do not call Courtnee but do so via the link on our homepage.

And with that, operator, I'd like to open it up to questions.

(Operator Instructions) Your first question comes from the line of Vijay Jayant with Evercore ISI.

One for Chase and one for Greg. Obviously, Chase, you're doing a lot of things to improve the sport. And there's some legacy agreements, and I know you don't want to negotiate in the public forum. But I'm just trying to understand if you had a better level playing field and more competitive sport. There probably would be new entrants. There might be some folks leaving the ecosystem. When you start to think about it holistically, is that the way it plays out? Is, in your mind, that the best outcome for the sport and the monetization opportunity that follows? And then, for Greg, there's obviously been speculation about Sprint making some [overtures] to Charter, and Liberty seemed to be more engaged than Charter management. So the question really is, is there any philosophical differences in views between wireless as part of the strategy for a cable company longer term between the 2 companies? And just generally the long-term prospects on Liberty's mind on Charter.

Okay. I guess I'll answer the first one, and then let Greg answer the second. I guess -- okay, I guess, as I said in the opening comments, I think we -- I think there's a lot we can do to realistically improve the competition, improve the action on the track and, at the same time, make it a much better business for really both us and the teams. And there are a number of components. One of them is cost. I mean, right now, there are teams that simply spend amounts that don't realistically make sense, and realistically the spending doesn't improve the value for fans. We've got engines that are too complicated and expensive, and therefore, it creates too wide a difference in performance on the track. We still want the -- we want the cars to be unique. We want the cars to take advantage of state-of-the-art technology. But we don't want to -- that we want it to give you an edge. We want the competition on the track to be great. We can tackle these issues, like cost, the engine, revenue distribution and things like aerodynamics. When I hear the cars are not built for passing, we've got to pursue initiatives that passing is action. We've got to make it so that we create a more exciting and dramatic sport in the track. I think all of those of things will, at the end of the day, both create a much better consumer experience. I mean, you want sports to be dramatic and have underdogs have a chance to win and have unexpected results. And I think we can create that while still creating -- having each team have a unique car that is really at the pinnacle of motor sports. But at the same time, I think that will create a business model that, as you said, would both be -- first and foremost, be beneficial to the existing teams in it. But I think it's a healthier business model. It would also entice new teams to get into it. I mean, today, when non -- people who are on the outside look in, in some way they look at the challenges of the sport, what the top teams are spending, and that's a deterrent. And then they look at the competition on the track, which sort of ends up with, realistically now, about 6 cars competing at one level and the rest of the cars competing at a different level because of the spending differences and the engine differences and the like. So if you enhance the competition and created cost structures that gave more predictably to the business and in some ways, protected -- I mean like cost caps in the U.S. I mean what they do is protect them from themselves because competitive spirit overtakes and you just spend what it takes to win. So create a structure that makes it more about how well you spend your money, not how much you spend, and I think that will create, again, a better product for fans and better model for existing partners and a much more interesting proposition. And then from potential new entrants, we're obviously engaged with some of these new entrants. And it's pretty clear that the appeal of Formula One is unique, the benefits they get out of the identification with it. And if we can make it a better business -- a better sport for fans and a better business for everybody in it, I think it will raise -- it will benefit us all.

Thanks, Chase. So on to the question about Charter and Sprint. I don't think there is a fundamental disagreement about the ultimate role of wireless and also where the wireless business is likely to head between the Liberty management team and the Charter management team. We are capitalists out here in Englewood and also have a lot of capital. So if there's something interesting to be done, we're always available. We remain very bullish on cable prospects. As I said in my opening remarks, I think the video market is going to have lots of transitions, and we'll see if all of them are favorable to us. But the power of the broadband connection we have in the market and prospects and service opportunities that opens up, I think, are quite excellent. And I remain -- I think our whole management team remains very bullish on the prospects with Charter.

Your next question comes from the line of John Tinker with Gabelli.

Just following up on Formula One. Ferrari have come out pretty publicly and said they don't want to be like NASCAR. Could you talk a little about the new deal you signed with ESPN/ABC and how you see that helping, which obviously broadens your ability to promote and helps the kind of "win on Sunday, sell on Monday" approach, which -- and how do you reconcile that with Ferrari? What are the kind of puts and takes?

I mean, actually, I don't think we have a different view to Ferrari because we don't -- I mean I'm not trying to be derogatory towards NASCAR, but we don't plan to be NASCAR either. And I think what was meant by that is we don't want to standardize cars. I mean, we don't want sort of 20 identical cars going around the track, and the only difference is the driver. What we want -- Formula One is unique in that it marries up competitive sport to state-of-the-art technology. We want all the teams to have the ability to create -- to do what they do to create cars that are unique to them, unique engines to them and unique bodies to them. But we want to make it a little bit, as I said a couple of minutes ago, we want to make it -- success be dependent more about how well you spend that -- how well you spend your resources within some constraints versus how much you spend, and I think that's a healthier sport. And then those who can develop the technology and develop the capabilities that are better than others will enable them to succeed. But we want the cars to be unique. We want each team to have the ability to have a car that is unique to it. So I don't actually think -- we don't -- I don't really see it any differently. And certainly, in terms of win on Sunday, sell on Monday, the reality -- that's always going to be part of it. And we want teams to compete to win. We want -- but we want all the teams to have a chance. It's never going to be equal in each year. There's going to be favorites that evolve. But over time, we want the teams to feel they all have a fighting chance. And you want -- I mean, sports are built on the unexpected. So we do want a sport that can have the unexpected. And I think that benefit -- I mean, realistically, you don't -- if somebody wins every race every week, at the end of the day, the sport is going to suffer. So -- I mean sports are built on drama, uncertainty and unknowns. You need competition. You need the unknown. You need great finishes. You need great stories. You need great dramas. And it's -- we've got to create that. And I think that attracts more fans, and that, realistically, benefits all the teams in this sport. And our first priority here is to make this sport much better for us and the existing teams in it. They are a priority, so it's -- and I think we do that. There are a lot of benefits that will fall out of it. But you have to sort of -- and I understand an individual team wants to win every race, but realistically, from our perspective, what you want to make sure is you're creating a sport that has the -- has that basic appeal to consumers of great action, unexpected results and the uncertainty that comes with live sports.

If I can just ask a follow-up to Greg. In your new role as Chairman of Pandora, what are your initial views? Because, obviously, the stock's been drifting since the numbers came out a few days ago.

I think drifting is putting it generously, John.

It's the English understatement, believe me.

The -- can I just add to one point, I think, Chase made, which I thought were all excellent, and the comments of Ferrari. I think you also -- there's an implied element of overexposure. And the NASCAR is looking -- heading towards north of -- up to 40 races alone in the U.S. There's no sense of exclusivity, no sense of uniqueness. And everything that we're trying to do, that Chase and his team are trying to do is build on that exclusivity and build on that excitement. So I think we're far more aligned with the goals that some of the teams have expressed publicly than maybe they understand. But on the point about Pandora, look, I think we were pretty public about where we thought the prior management team was driving the business, it being an incorrect path. And you're seeing the results of that, [not] less traction on the ad business than we would hope, less reinvestment into making the free base -- free product exciting than we would hope and less traction on subscriptions than the prior management team was seeking. I think Roger Lynch and his team are very focused on improving the free experience, improving the ability for advertisers to self-serve, get on, reinvesting in the ad tech of the product. And I think they're headed on the right path. Will there be challenges along the way? Undoubtedly. In our judgment, this business was allowed for too long to drift from its core mission. But we fundamentally believe and put, at least with Liberty SiriusXM and the SiriusXM management team, put $480 million in the belief that it could be fixed.

Your next question comes from the line of David Karnovsky with JPMorgan.

I have 2 questions on Formula One. First, I believe you have GD contracts up at the end of the season in a few of your large Europe markets, some of which haven't been renewed yet. Can you just update us on your thoughts of how you're thinking about balancing pay, free-to-air and digital as those contracts come up? And then, separately would be, year-over-year decline in team payments in the quarter, should we attribute that entirely to one fewer race? Or are there other factors to consider, such as a change in variable or fixed payout or something with your own on forecasting?

So on the first -- we are engaged. I mean, in -- there's no rule of thumb realistically. Every market's different. And clearly, it's a balance. We value the reach of over-the-air. I mean, realistically, over-the-air is probably a sector that, I think, is struggling a bit to compete. Certainly, pay -- in the pay side of it, I think the business model is healthier. They're healthier though -- but the level of competition is always going to be a big factor there. And we want to grow digital. We've got to navigate through, obviously, the conflicts between all of those or differing views between different players. And the trade-offs really come out in the specifics. But they're important. Ideally, we'd like to find the right balance across it. But what that balance is in each market and what are the trade-offs of reach against money, against growth, I guess it's fair to say pay is probably the most lucrative short term. Free gives you the most benefit in reach short term, which is clearly important as we're in this investment phase of the business. And digital is, I think, a big opportunity for us down the road, but digital is always going to require some sacrifice upfront to have the opportunity down the road. How you -- realistically, that trade-off in each market is going to be different based on the players, the competitive dynamics and the like. So we are engaged in all those fronts. And really, I think -- I guess probably the one thing that I think is true in all of this is we are focused on having -- on trying to have our deals, our agreements all be short because I think we do believe we can take the sport -- while we're proud of the sport we have, we think, in the next couple of years, we can take it to a much better place, making the sport on the track better and making the events bigger and really creating a new sense of energy around it. So I think we would like to have the opportunity to take advantage of the things we will do. So probably the one common element of it is probably trying to retain reasonably short-term deals to be able to take advantage of what we think we could do with the sport, a sport that I think really has not been invested in and marketed in recent years. What was -- the second question was which? What is the second part of it?

Just what contributed to year-over-year decline in team payments.

Oh, the variance, yes. No, the variance -- I mean, part of it -- and there's a race -- and obviously, we're making -- we're investing. I mean we're doing things that weren't done before. We're marketing the sport. I mean, we're adding capabilities that we didn't have before, whether it's organizational capabilities. We are marketing the sport in ways we didn't before, whether it's at events in cities or events at tracks or the expanded -- as I said, we'll continue to ramp it up, but we are investing in the events. We're investing in energizing the broader marketplace. We're building digital capabilities. We're building an organization that can support the sport. We haven't -- in the past, we've had no research, we've had no marketing. We've had no digital. So as we do those things and take advantage of it, a lot of the things we're looking to -- as I said, I think we have some opportunities to add some exciting events. There's that -- particularly, some of the -- the most interesting events require leg work. They require studies. They require us do things to properly make sure -- and to us, we want to make sure, particularly when we're going into an event, that, that event can be everything we can. It's not just a deal that we go in and go out, that we want to make sure it delivers on all the things we hope. So really, almost on every -- but I think I ticked off, I don't know, 7 or 8 areas of things we're doing. Probably every one of those areas has some degree of investment going into to build and deliver on those capabilities, varying amounts. But we are very much, particularly, I think, this year and next year, in really an investment phase; to some degree, a turnaround phase for the business given directionally where, I think, it had gone the last half dozen years.

Your next question comes from the line of Barton Crockett with B. Riley, FBR.

I was curious about the comment that Chase made earlier that there's an opportunity for hundreds of millions of dollars of cost improvements for a Formula One business that's now doing $500 million-ish or so of EBITDA. I think you were talking about improvements that would fall mainly to the teams, maybe on what they spend on [indiscernible].

Yes. I mean -- after taking cost -- yes, I mean -- yes, I was talking about costs that the teams bear. Obviously, particularly, it's disproportionate, but teams bear in putting a racecar on the track.

But is there an opportunity, as you approach the Concorde Agreement in 2020, to leverage cost reductions and to improve terms with the teams so maybe you could share some of the upside from the improved efficiency?

I mean, in many ways, I'd say think about the sport as a whole -- I mean our biggest cost is what we pay the teams, which is indirectly tied to what does a team spend because they obviously have their own business models. So it sort of is an indirect cost of the business. And I think the teams that spend the most, we'll generally agree what they spend doesn't make sense. They're spending it because that's what they got to do to compete with a couple of other guys spending that much. So it is, to some degree, a, protect them from themselves and try to bring -- get it to a place that makes a great deal more sense. If you could take that cost out of it, our goal would be to figure out how do we restructure the business so everybody benefits. I mean, that's -- there are teams probably at the bottom that aren't as healthy as I'd like them to be. The question before about having a business that is interesting and enticing to new entrants, I'd like to get -- I think we'd like to get to that place. I think that making the business model healthier for teams -- now our first priority is to make it healthy -- as healthy as it can be and as valuable as it can be for our existing teams. I don't want to prioritize new teams over existing. But clearly, that's -- a secondary benefit is making it more enticing to other teams to come in. And obviously, I think we'd look for everybody to share the benefits including us. But I think if we can make the structure of the sport healthier for everybody, it's sort of a good problem to have, how do you share the benefits of a much healthier construct. And realistically, what makes this opportunity unique is you probably end up with -- I mean, not probably, you will end up with a better product from a fan perspective because you'll have a more competitive race with more interesting action. So you have this opportunity to create healthier business models that everybody -- and look, there'll be -- and there'll clearly be an arm wrestle how do you -- how do those benefits get shared. My goal would be that everybody comes out better. And -- but we'll deal with that in private with the players there. But I know it's a good problem to have, is how do you share the benefits of that at the same time that you're actually making the sport better for the fans, which is, at the end of the day, objective #1.

Okay, that's helpful. And one separate question for Greg. I think there was some commentary about, after GCI and Liberty merged, maybe -- Liberty Ventures, that maybe there's a Liberty Broadband combination at some point in the future that might make sense. There seems to be a [tweener] between this call and the previous call. Is that something -- can you give us a sense of...

We won't speak of that, Barton. You got -- you mentioned broadband so you get to ask that.

Yes, yes. I have -- I just slipped it in there before you cut me off. But the question I had is how long would you have to wait before that could be completed without risking some tax consequences?

Well, obviously, as I said on the prior call, we have no plan or intent. But the -- that would largely depend on the overlap in shareholders. If there were a sufficient overlap, it could be done more quickly. If there weren't, generally most people look at a year as a safe harbor for those kind of transactions.

Your next question comes from the line of Jeff Wlodarczak with Pivotal.

A couple for Chase. You recently renewed with a number of important tracks. Should we assume the fee that F1 is getting on these deals is materially different than on the old deals? And then by extension, part of the way you can create more passing opportunities is to make changes at the tracks. How important is that? And who's going to bear that cost? And then I've got a follow-up.

All right. I think on the renewals, I'm not going to comment on this specifically, but I think we generally have said that of our big revenue buckets, the promoter fees are probably more mature than the others. So I think that probably was reflected in the renewals. I think in terms of creating -- of investing and creating a bigger event around the track, I think in many ways it creates -- there is a cost to it, but there's revenue to it. I mean, realistically, what -- one of the things you want to do is engage a whole new generation of sponsors that want to create events that are exciting and interesting for fans that enable them to engage with fans. I talked about Heineken most recently as an example of one who's created Heineken Villages, that they're investing real resources in. It's great for them to engage a whole -- 100,000 fans at the track or to some degree, even put it in the city center. And for -- and they'll invest the money because it helps them engage in a different way than just putting signage on a track, and -- but it makes it a much better experience for fans. So we've got a lot of different players that would like to figure out how do they take advantage of the energy and the crowds and the excitement, whether it's in the city center or whether it's at a track, of the energy that comes around this. So for us, I think, there is a cost to it, but I think it can more than pay for itself by taking advantage of the excitement, the energy that comes with the event and the array of players who want to take advantage of that.

And then it seems like you're moving the spending caps inevitably. How comfortable do you feel sort of initially about being able to realistically sort of enforce those spending caps?

Again, I don't want to get too far into, again, I guess I said, negotiate in public. What I would say is we've obviously begun all this. I think, directionally, there's broad agreement of the direction we're talking about. I think we obviously have to get into the specifics and I'm sure that we'll clearly be -- in the details, there'll be differing views. And look, our job is to -- we're not going to get (inaudible) on the details so as to find the right compromises that everybody feels they're much better off. It's a fair proposal, and it makes the sport much healthier. And that's what we've got to do, is work through to find the right compromise and the trade-offs. But as a direction, I think we have broad-based support for the direction of all the initiatives we're talking about, the goals of those initiatives and the opportunity inherent in those initiatives. So we just need to now -- execution is always critical in this. We need to be able to work through the details, find the right compromises that everybody feels is fair and everybody's better off.

Your final question comes from the line of Brandon Ross with BTIG.

Just for Chase, a follow-up on David's question on the Formula One TV licensing deals. I know digital may not be the right route for you right now, but wondering kind of what you've seen in terms of digital platform's appetite to compete dollar for dollar with pay TV for those rights. And then just...

For the core rights, you mean?

Yes.

Yes. Compete more as a license, I mean, not an over-the-top product, which is obviously more direct to consumer?

Correct.

Look, I mean, we've obviously -- we're talking to all of them. I mean, I actually -- I think you're pretty close. I mean, I think probably you're a step early still. So look, they're bidding -- you see around the world, they are bidding on core rights. And I think they recognize -- I mean this content, in reality, [isn't] a real sweet spot for them because creating scripted entertainment is complicated in an uncertain world. I mean, here, you're buying unique, hit content. You know what you're getting. There aren't -- it's not going to get fragmented. There is going to be no other Formula One. You've got a unique fan base to it. They are clearly going into the content world, but I think they're probably still a step short of really taking on the core rights. And for us, probably realistically right now, that probably is also -- we'd have to wrestle with the leap of really putting core -- the heart of your content on a digital platform holistically. But we will do -- in the short term, we'll be doing more with the big digital players. So we are certainly engaging. A lot of it's creating product that sort of takes advantage of the sport but isn't necessarily the core live race, which will probably, in the short term, still reside on some form of traditional pay and free. But they do really feel like, as you talk to them, they're at the cusp of it. They say they want to engage. Obviously, words are easy, writing checks is harder. So -- but they got the capacity to write checks. And what they all say is they want to engage in this and it's where they're headed. And logic would say that's right. As they build out -- and it's all about video content, and you want differentiated unique video content. And I think we really are -- I think we're in a sweet spot. As -- I think in sort of the next couple of years, as they start to ramp up and become bigger players, and I think you're seeing that in other big sports when -- NFL talks about what these platforms mean to them. As they -- as you look out to -- say, look out a couple of years, I think these unique event sports are really going to be uniquely important places they try and build out those audiences.

And Greg, as you listen to Chase's response there and hear about the appetite from the digital players, does that give you any concern for Charter in the longer term?

I think I mentioned on our -- earlier that I think the video market's evolving and there will be changes. But we remain quite bullish on Charter, given the power of the broadband connection and its ability as aggregator to still profit and be an exciting player in the video market even as the bundle morphs.

I think we're done with our questions. Thank you all for your interest in Liberty. As I said, we'll see many of you next week in New York. And if not, for those we don't get to see, we'll hopefully get to speak with you next quarter on our earnings call.

Thanks a lot, guys.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.