Liberty Media Corp (LLYVA) 2019 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

And welcome to Liberty Media Corporation 2019 Q1 Earnings Call.

(Operator Instructions) As a reminder, this conference is being recorded, May 9.

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

Please go ahead.

Thank you.

Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995.

Actual events and results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent Forms 10-K and 10-Q filed with the SEC.

These forward-looking statements speak only as of the date of this call and Liberty Media and Liberty TripAdvisor expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media or Liberty TripAdvisor'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 and adjusted EBITDA.

The required definitions and reconciliations for Liberty Media and SiriusXM Schedules 1 and 2 can be found at the end of the earnings press release issued today, which is available on our website.

Now I'd like to turn the call over to Liberty's President and CEO, Greg Maffei.

Thank you, Courtnee.

Good morning to all of you.

Today speaking on the call we'll also have Liberty's CFO, Mark Carleton; and Formula One's Chairman and CEO, Chase Carey.

During the Q&A, we will also be available to answer questions related to Liberty TripAdvisor.

So beginning at Liberty SiriusXM.

We did continue our repurchases of Liberty SiriusXM's stock.

In the period of February 1 to April 30, we bought an additional $160 million.

If you take the effect of look-through price in which we're buying SiriusXM, it was up about $4.32 a share, which we find pretty attractive.

While the discount to NAV is off from its all-time high of around almost 35%, the discount between SiriusXM and LSXM remains stubbornly high.

And we will continue to take advantage of it.

Our ownership at SiriusXM today is about 68.6% as of April 22.

Looking at our iHeart investment for a second.

iHeart did emerge from bankruptcy May 1, and we received the following: 17 million CCO shares representing just under 5%, about 4.7% of the stock; 7 million iHeartMedia Class B shares and warrants, representing about 4.8% of the stock and 284 million of total par value of iHeart debt in a couple of tranches.

We have subsequently sold the iHeart debt at a slight premium to par.

We think this frees up some liquidity at SiriusXM, which will allow us to pay down margin debt or utilize it for other purposes.

We will evaluate our holding of the other remaining stakes and determine what we want to do, whether we're holders or raise cash for other purposes.

Looking at SiriusXM itself, solid Q1 results, which now include Pandora.

Made good progress on several fronts around Pandora's integration and continue to execute financially.

During the period up to April 22, SiriusXM also returned almost $900 million of capital to its shareholders mostly via buyback.

Looking at the Formula One Group.

I think we're continuing on the path of strategic objectives we outlined upon our purchase and Chase and team are doing a great job.

We're off to a promising start to business in 2019 and are benefiting from a couple of years of investment that we have made in several areas.

We continue to have positive fan reaction, both in viewership and attendance for the first 4 races this season.

The brand also continues to grow and resonate across many mediums.

I hope some of you have checked out the well-received Netflix series, Drive to Survive or looked at Will Smith's Bucket List.

And we launched the third installment of our Esports series.

First European race is this weekend in Barcelona and we're quite excited.

Turning to Live Nation.

Just another outstanding quarter.

Revenue up 17%.

Posted highest first quarter operating AOI ever.

Live Nation expects to deliver double-digit operating income and AOI growth for 2019 as a whole.

Looking at the Braves.

Braves were in '18 and '19, second in the very competitive NL East.

Recall that 2018 did include several positives that benefited the baseball side of the business, including a very favorable home game schedule, a competitive team that went into the end of the season, a postseason play and nongame day special events.

While year-to-date, attendance looks pretty good for the season, many of these drivers that I just mentioned will continue to play out and the lack of it may impact results.

We broke ground on the second phase of our Battery development in April.

Excluding that second phase, Battery development has been quite successful, is now fully leased through all segments except for the retail portion, which is 92% leased.

The expected NOI from Phase 1 of the Battery in 2019 we expect will be consistent with the stabilized NOI we provided to you at our November Investor Day.

We estimate that to be around $23 million, adjusted for our 50-50 JV on the hotel.

With that, I'll turn over to Liberty TripAdvisor.

Solid Q1 results and on track to deliver a full year double-digit consolidated adjusted EBITDA growth despite the continued investment in new areas like Experiences.

The market reaction to the first quarter results seems kind of odd to me, but we will let it play out over time.

Through increased hotel marketing efficiency, the expanded EBITDA margin -- the EBITDA margin was expanded by 1,100 points to 41% for the Hotel, Media and Platform segment.

Experiences in Dining segment grew revenue by about 29%.

TripAdvisor is very focused on rapidly increasing the bookable supply available in the Experiences and Dining areas.

TripAdvisor now has $760 million to use [in the opinions] and that's up about 20% from a year ago.

With that, I will turn it over to Mark for some discussion of our financial results.

Thank you, Greg.

At quarter end, Liberty SiriusXM Group had attributed cash and liquid investments of $36 million and that excludes $62 million of cash held at SiriusXM.

The value of the SiriusXM stock held at Liberty SiriusXM as of May 8 was $18 billion and we have $1.2 billion in debt against these holdings.

Total Liberty SiriusXM Group attributed principal amount of debt was $8.5 billion, which includes $7.3 billion of debt at SiriusXM.

At Formula One Group, we had attributed cash and liquid investments of $112 million, excluding the $260 million of cash at F1.

Our Q1 is typically a high watermark in cash for Formula One due to the timing and the receipt of advanced contract payments for the 2019 season.

Formula One Group has attributed public market securities for the market value of approximately $5 billion as of May 8, including the intergroup interest in the Braves Group and our stake in Live Nation, with $2.1 billion of attributable debt, excluding the debt at F1.

Total Formula One Group attributed principal amount of debt was $5 billion, which includes the $2.9 billion of debt at F1.

F1's total net debt to covenant OIBDA ratio as defined in their credit facilities was approximately 5.8x as of March 31 as compared to a maximum allowable leverage ratio of 8.25x.

This is a substantial reduction in net leverage ratio, but I would point out that the race calendar variances between 2018 and 2019 resulted in 22 races falling in the trailing 12 months' measure for the covenant calculations versus 21 the previous year.

We set a target total net leverage ratio for Formula One of 5x to 6x bank covenant OIBDA and please note these leverage ratios are for the Formula One business, not the Formula One Group.

Lastly, the Braves Group had attributed cash and liquid investments of $163 million and attributed principal amount of debt of $480 million.

Now we will turn it over to Chase Carey to talk about Formula One in more detail.

Thank you, Mark.

While it's still early in 2019, we feel good about the momentum of the business and believe we are beginning to take advantage of the foundation we've built in the last 2 years.

As noted before, we evaluate our business on an annual basis as variations in the quarterly race calendar make year-on-year comparisons difficult.

In the first quarter 2019, we had 2 races versus 1 a year ago.

Nonetheless, we were pleased with our first quarter results and we're on target with our goals for the year.

On the track, we are 4 races into the season.

The results in the track so far have not quite delivered the drama or surprises hoped with Mercedes for the first time ever finishing 1, 2 in all 4 races.

However, it is early in the season and we believe Ferrari and Red Bull have shown the potential to take Mercedes on and the competition in the midfield is tighter than ever with 6 teams battling each other week-to-week.

And the rivalry between Lewis Hamilton and Valtteri Bottas for the top spot has the potential for some interesting storylines.

A new dynamic introduced this season is the point for the fastest lap if that driver finishes in the top 10.

It has been well received by fans and created some new excitement.

This extra point is the reason Bottas leads Hamilton by 1 point season to date.

In spite of races that did not deliver hope for on-track drama, our TV audience through 4 races is up 3% and our attendance is up 6%.

In addition, we continue to drive strong growth on digital platforms.

For example, on social media, our video views year-to-date increased 55% and minutes watched increased 83% from a year ago.

That being said, we know we have to make our racing better and one of our top priorities continues to be improving the competition, action and unpredictability of our sport on the track.

We're increasingly enthusiastic about the changes planned for the next 2 years in regulations, car design, tracks and other areas.

This weekend we hold our first European race for the season in Barcelona.

While we still have 17 races to go in this year, much of our energy and focus is on future years.

We are in the process of finalizing our 2020 race calendar.

We have agreements in principle on 2 renewals and are actively engaged on 3 other renewals.

In addition, we've already announced our new race in Hanoi and the construction has begun on the track and facilities.

It will be a street course that is one of the most unique and challenging racetracks in the world with 22 corners and a couple long straight aways, the design with which we have been intimately involved.

I was in Hanoi a few weeks ago and the excitement was palpable.

To mark to 12-month countdown to the event, 13-time Grand Prix winner David Coulthard and Red Bull simulator driver Jake Dennis performed car runs, while DJ Armin van Buuren provided the soundtrack.

This event also marks the official launch of ticketing with 5,565 tickets being made available to represent the length of this 5,565-meter circuit.

In addition to Hanoi, we also have an agreement in principle to add another new circuit to our calendar in 2020.

We've not finalized the number of races in 2020, but currently expect it to be 21, the same as 2019.

Obviously, the math means that we will not be able to renew all our current races.

We value our partnership with our existing promoters.

However, we believe it is important for our fans and the growth of our sport and business that we both add exciting new locations and manage a limited level of churn.

We are in the fortunate position of having more demand than supply, but recognize we need to manage that dynamic in a thoughtful manner.

The factors we consider in deciding on a race include the quality of the track for great racing and the location is one that captures the world's imagination, the level of fan and broader support enthusiasm in the host city and country, the historic importance and future potential of the track and race, the global balance of our schedule and a number of other factors.

We clearly have demand for more than 21 races in 2020 and do expect that number of races in a year will increase slightly after 2020.

However, we want to make sure we're maximizing the opportunities for the sports and fans, not rush to decisions.

And we do believe the limited expansion of the calendar and churn are important for creating a fresh and exciting dynamic for fans and for our ongoing growth.

Regarding our other primary revenue streams, we recently signed distribution deals with MBC in the Middle East/North Africa region, DAZN in Japan, Sky Germany and Poland ELEVEN SPORTS.

This completed our global coverage for 2019 in time for the first race for the season.

In sponsorship, we announced partnerships with Puma and LIQUI MOLY, the latter of which will have a trackside presence at 11 Grand Prix.

We have designed innovative new partnerships to appeal to both Formula One aficionados and those not familiar with Formula One.

We announced a global auction collaboration with Sotheby's, which will feature collector cars and memorabilia and formed the Middle East's first ever major international collector car auction.

To focus on a wider audience, we are partnering with Westbrook Studios to create unique contact across multiple digital platform formats with top celebrities to align with the 2020 season.

We already debuted the premiere episode of Will Smith's Bucket List, which has garnered over 28 million views on Facebook.

We are also focused on fan engagement in many other forms.

Formula One held our 1,000th race in Shanghai in April, along with our first fan festival of the year sponsored by Heineken.

As part of the festival, there was a live car run with Formula Two rising star, [Jo Zhou] driving a Renault-powered car and renowned stunt driver, Jessica Hawkins, behind the wheel of a Sauber C30.

Our next fan festival will take place in Chicago just prior to the Montreal race on June 9, and we'll announce the additional details shortly.

The Netflix show Drive to Survive has been well received both by existing fans and those not familiar with Formula One.

It told the compelling stories behind our teams and drivers and made Gunther Steiner a household name.

Fans, both current and new, are even more invested this year as they see how Daniel Ricciardo fares at Renault, watch the season unfold for 2 legacy teams, Williams and McLaren, and will keep an eye on the ascent of Charles Leclerc who has already captured the fan's imagination and already won Driver of The Day twice this season.

Netflix has begun to film the first races of the current season and we're constructively talking with all the teams, including Ferrari and Mercedes, to produce season 2 of the show.

The Formula One TV over-the-top product had its full launch this year and we've been pleased with the response.

Unfortunately, we had a few technical issues, mainly on the occasion of the Azerbaijan Gran Prix, along the way as we work to provide the best viewing experience.

We're diligently testing and improving the product constantly as we evaluate content and distribution opportunities.

We kicked off the third installment of the Formula One New Balance Esports Series in April.

This season will be extended to include more racing and the prize money has more than doubled to $500,000.

We've again partnered with New Balance, Codemasters, Gfinity and Fanatic.

And new in 2019, we will bring F1 Esports to China for the first time through our partnership with Juss Intellisports.

The potential within Esports is exciting as commercial opportunity is a way for us to engage with next generation of motorsport fans.

The Formula Two championship started on a high with exciting events in Bahrain and Azerbaijan and a number of young talents who are attracting wider and diverse audience, like Mick Schumacher, the son of the 7-time Formula One world champion, Michael; the Chinese driver Jo Zhou ; and the first female driver in the category, Tatiana Calderón.

This weekend in Barcelona, there will be the debut of the new Formula Three championship, which will complete the racing ladder to Formula One.

If you become an F1 fan, we encourage you to check out the action at F2 and F3 as well.

We met with the teams and the governing body before the Bahrain Grand Prix and continued our discussions on a new agreement that addresses cost structures, revenue distribution, regulations and governance.

As I mentioned before, there are a lot of details to be agreed upon and I'm positive about the progress we've made as we look toward the 2021 season.

When the timing is right and we have details to announce, we will do so.

The outlook for 2019 remains positive and our previous investments across the business are paying off.

We remain firm in our commitment to growing this business and creating value for the long term for the teams, our partners, Formula One and our shareholders.

And I'll turn the call back over to Greg.

Thank you, Chase, and thank you to all our listeners out there.

With that, operator, I think we're ready for questions.

(Operator Instructions) We will hear first from Jeff Wlodarczak from Pivotal Research.

I had one for Chase and one for Greg.

Chase, you mentioned the F1 OTT product had some technical challenges.

How close do you think you are in terms of getting those issues solved?

And then have you all started to figure out ways you can differentiate the OTT product enough from what's available on broadcast and cable to get consumers interested -- more interested in that product?

I'll answer that and you can ask Greg's question.

Actually, I think -- we actually felt pretty good about the product.

The issue that rose in Azerbaijan really was sort of unexpected and that's the nature of these platforms.

So I think you have to deal with it.

But to some degree, the unexpected obviously is always troubling, but it was not sort of in the main stack of what we're trying to build there.

I think that probably the unexpected will occur occasionally, but I think we felt we've made pretty good headway.

We're not far enough along to ever sort of say there won't be another problem, but the problems before that had been probably quite manageable.

These things aren't perfect and it will probably still take us another year to get all the small bugs out of it.

But the significant glitch we had there was really something outside the core of what we've been building in the platform.

And so we need to make sure we're looking at it in a wider context.

But I think the core of what we expected to be in the platform, I think we actually feel is functioning pretty well, not perfect, but pretty well.

I think in terms of the content, I think we said before, I think getting the content experience and content includes video data expanded.

I think it probably realistically is a 2- to 3-year process and so we're 2 years in.

Some of that takes time to build on data in terms of building some of that and making it accessible to consumers.

Some of the expanded data that we think will be interesting and compelling to them is still a work in progress.

So we certainly have forms of our content those are broadly defined that we will be adding at the end of this season we're working on now.

We still clearly have not tapped in any -- really at all into things like the archives, where I think you want to have the great race of the '90s, great race of the '80s, great finishes, great passes, those sorts of things in a digestible form really isn't there.

So there is still a lot of work going on to expand and build the content and honestly, we'll probably never stop it.

But I think to get the content sort of where we want it to be and, I guess, what I call Phase 1, we've got a fair amount on -- that we're working on now and so it's probably between the beginning of next year and the beginning of the following year that we really get sort of to -- sort of the Phase 1 what we feel is the over-the-top product that we probably envisioned going into it.

And that timetable is probably one that's not -- that's largely maybe I think we initially probably thought we can get there in 2 years.

I think some of that -- obviously, last year we were a bit behind.

So probably what initially we thought we would get there in 2 is probably more likely in 3, starting with again we didn't get the platform launched to begin the 2018 season.

So I think we're getting there.

Dealing with problems always can set you back a little bit, but I think we actually feel we are making headway and we are getting to where we plan and hope to be.

And then Greg, I was hoping you could shed some light on why you, I guess, ultimately decided to walk from the Fox Regional SportsNet.

The market at least, based on what Sinclair stock has done since they made that deal, has seemed to think it was a pretty inexpensive price.

So if you could shed any light there that would be helpful?

Yes, Mr. Wlodarczak.

Look I think on those RSNs are very interesting properties.

They clearly have a lot of visibility and high-profile aspect.

They are also products that I think, I've said before, I have a view and always happy to let Chase comment as well as he has got a little experience with these, that they have risk and that they're among the most expensive programming [base] per engaged viewer basis that most MPVDs look at.

So unless you had confidence you could get sufficiently long contracts with MVPDs to ensure time and pay on rates that would be sufficient to ensure that, as there is potential cord cutting and cord shaving, you could get enough from your capital to protect it.

We weren't willing to go there.

I think Sinclair wanted to extend themselves further than we were.

They obviously have an asset in retrans.

It is to my mind a little bit of a perversion of public policy that we were trying to ensure that cable companies weren't charging for free broadcast is now being given leverage to somebody like Sinclair to create leverage to ensure carriage of RSNs.

But that's for greater minds in Washington, D.C. to worry about.

But that perversity has led to giving Sinclair probably an edge.

I do think the market reaction is way overdone.

These are interesting properties, ones we were interested in, but ones that are not without risk.

And we'll see how it plays.

We will move to the next caller in the queue, Amy Yong from Macquarie.

I guess 2 questions as well.

First on Formula One.

Chase, can you talk about some of the sponsorship and advertising activity that you're seeing?

Is there a healthy pipeline?

And can you talk about some of the conversations that you're having with interested parties?

I think a lot of us look at the Live Nation opportunity and we think about double-digit growth.

Should we expect a similar or even faster pace of growth for Formula One?

And then Greg, SiriusXM stock has been under pressure since the Pandora deal.

Are you surprised by the market reaction and what do you think investors are missing or looking for?

So let me address the sponsorship first and Greg can answer the second part.

I think the sponsorship, I guess, there is a positive -- a positive and negative in it.

I think -- actually, I think the pipeline and the interest, we feel great about.

I think in the last month, I have had -- and they were not first meetings, follow-on meetings with -- at very senior level with 3 different potential new sponsors, 4 major sponsorships.

So I think the interest, we actually feel great about.

We've got more media.

We've got an array -- a long list of meetings.

I think people are increasingly enthused as we tell the story around the sport.

So I think that the activity around it and the energy around it and the interest in it, I think we feel very positive.

I think the challenge, there is no question, the sponsorship world is probably tougher than it was a few years ago.

I guess, I said before, I think for anybody who is not Google or Facebook, the broader advertising world is probably more challenging.

I think we also probably needed to do -- underestimated the job of telling the story that Formula One, the story hadn't really been told about Formula One.

So we were probably starting from closer to a square one when we were reaching out to new sponsors of educating and forming and creating excitement around it.

So that's taken time to connect and tell the story and build that interest as we go forward.

And I think also, I guess, probably the third fact you have today is sponsors want much more uniquely tailored products.

They don't want to just buy signs on a wall.

They want to have a relationship that identifies their message and their product uniquely with the sport so that there is a real tie and part -- to do that, we need to create more capabilities.

So whether it's [technical KBs] like virtual advertising or Esports or conferences or fan events, all of those give us more ways to create unique offerings for those sponsorships.

So I think probably -- I think it's fair to say that sponsorship world has probably been more challenging than we would have looked at it when we would have expected it to be couple years ago for those reasons.

I actually feel good about the headway we're making and the level of interest.

So I think we feel the future is promising for us to continue to really get the sponsorship portfolio to where it should be because clearly we still have categories and opportunities that we can take advantage of.

And as we educate and meet with some of these, I think the interest again is encouraging to us.

So it's -- we certainly have room and expectations for some real growth there as we go through the next few years.

Great.

On the SXM stock, Amy, I think listening to your question is the idea that the market has unfairly punished SiriusXM for the purchase of Pandora and I would tend to agree.

If you look what's happened, we've moved from a condition where Pandora was losing money to where it is now cash and earnings positive.

The purchase of that, because we issued stock at about $7 a share and effective by this quarter or next quarter, we'll have bought back all that stock that we issued at more like $5 or $6 -- excuse me, $5.75 or $6 a share.

We pretty much cordoned off that cost of Pandora and the stock is down far more than the cost.

And it ignores what we believe is the strategic benefit that Pandora can offer the company in terms of leads on new customers, ways to provide new content across our limited channels that we have available on satellite, a whole host of flexibility to go between good, better, best, share content as I mentioned and expose new audiences to SiriusXM's content and vice-versa.

So we think there is a lot of strategic benefit and we've turned it from a potential money loser into a breakeven or better company already with lots of long-term upside.

The market was probably looking for its focus perspective on share repurchase only at SiriusXM, but I think it's a mistake.

They've made a good strategic move, in my judgment with relatively low risk, both in terms of what capital is outlaid and what is currently burning or not burning now and it gives them a lot of strategic upside.

We will move next to Vijay Jayant from Evercore ISI.

It's James Ratcliffe for Vijay.

Two if I could, one for Chase and one for Greg.

Sorry Mark.

For Chase, given your experience thus far with F1 TV, how is this, if at all, affected your decisions and thought process about whether it's better to keep digital media rights or license those to a third-party distributor?

And Greg, on iHeart, you've mentioned that you had sold off the iHeart debt, but you still have the iHeart and CCO equity.

How do you think about the criteria for deciding whether those are strategically valuable or does it make sense to monetize them?

Yes.

I guess, what I would say -- again, I'll go first since you asked my question first.

I think with F1 TV, I don’t think we're trying to make -- actually make that prejudgment.

I think it is important to have that vehicle and have some degree that direct control of our destiny and ability to develop that area of the business.

But I think the digital arena is changing so much and growing so much important.

I think you sort of want -- what we're really doing is meeting, trying to engage with everybody in the space and whether it's traditional broadcasters creating digital platforms or digital players coming into it with their own plans and our own initiatives and make sure we optimize it with both a short- and long-term view.

And I think having that flexibility to decide what is the right mix and match and to some degree, we've got to figure out whether those opportunities, drill down far enough and get into deep enough discussions to make sure we're really optimizing what we think is the value of the content we have.

So I think having it as a part of the portfolio, I think it's important.

How it mixes with the rest of the stuff, the rest of the elements in our portfolio, I think it's something that we have to analyze and evaluate as we continue to engage with again existing television partners and players in the digital space who are clearly wanting to be bigger players for content like ours.

We think that -- we think it's a great opportunity, but I think we don't want to again prejudge what's the right way.

But I think it's important for us to have, I guess, what I'd call again the flexibility to optimize it overall.

And James on the iHeart equity and the CCO equity, we both look at the fundamental valuations there and optionality and, in particular, in the case of iHeart, as you know, we previously thought that could be an interesting company to be more associated with, have a larger investment in.

So we will watch the progress.

We congratulate [Bob and Rick Fresler] on getting it out.

And we'll see how they do.

And we'll watch both the economics of the underlying equities and our potential to do something more.

David Karnovsky from JPMorgan.

Just on F1, Chase, the calendar potentially going over 21 races.

How do you balance that expansion against the potential team budget cap, which would limit spending?

And would more races require any adjustments to your promoter agreements in order to optimize the calendar?

And then just one for Mark, in the event Formula One post the key negotiations moved a greater portion of the prize fund payments to fixed as opposed to variable component, would that lead you at all to rethink your target leverage range?

I didn't quite understand the promoter aspect -- the promoter angle you were addressing on the question as it related to...

Yes, to expand the calendar at all, do you have to basically just get buy-in from the promoters in order to move races around and optimize the calendar?

Not really.

No, I mean we have a few races that clearly have places on the calendar.

Monaco, that's a place that is pretty established.

Abu Dhabi is the last race.

Australia is the first race.

So you have -- but you have those -- then you have a few that or weather and other reasons will be somewhere in the calendar, Bahrain is not going to be in the middle of the summer.

But we have enough flexibility there, and I think managing the promoters really not an issue.

I think as it relates to the teams, what we probably do is you can sort of do the math, it's not that complicated to do the math to probably make some adjustment for -- if you go above 21%, we haven't finalized this.

So we are discussing things like this, that's a pretty mechanical issue to address and ultimately is not -- there is freight and other things that come into incremental races.

But you can bracket those pretty easily.

So I think addressing those issues, I think, are pretty, from a team perspective and a cost cap perspective and alike, I think we're trying to be pragmatic about it, but I think they're manageable and pretty mechanical.

And in terms of the leverage, obviously we're very confident with where the Formula One Group is now on leverage and we pay close attention to the discussions and scenarios that may come about.

I want to remind everyone, a huge percent of our revenue is contractual and flows in.

So I think we're very comfortable with where it is and we're very comfortable that we'll be able to manage it within those range, within the balance of where we want to be.

Your last question today will come from John Tinker from Gabelli.

Two great questions.

Jim Meyer has extended his contract for another year or you extended his contract.

As the year goes by fast, how are you thinking is the kind of leadership or what kind of leadership will you want in Sirius?

And secondly, more of a technical question on the Braves, are you including in the $200 million investment the spring training facility?

I think it's costing $125 million.

I'm going to let Mark comment a little more on the Braves spring training facility, but I will note we've received quite a lot of capital from local authorities to help pay for that spring training facility, so our net number is less than that.

But I'll let Mark come with the full number.

On Jim Meyer, I think Jim Meyer who is doing an unbelievably good job and I want to keep as long as he can walk and talk and act sharp, which seems to be he has got many years ahead of him.

I think we're now in his fourth renewal and I am very confident that we will continue to ask Jim for a longer time, partly because Jim is totally engaged in [Braves and] Pandora and excited about the prospects.

He became as big an advocate for Pandora as anybody, if not the biggest.

And want to see that work and succeed and is on that path.

So I think we have more time with Jim than the 1-year extension would lead one to think.

And as I did note, I think we're on his fourth extension.

So I'm confident we'll have Jim for a longer period.

And I think, John, the $200 million you're talking about does not include the spring training facility.

That is just for the Battery.

But the spring training facility is net-ly, is not a huge number, net what we've received from the local authority, tens of millions.

Tens of millions, not big dollars.

I think that's it, operator, and thank you to all our listening audience and questioners today.

We look forward to speaking with you next quarter, if not before at some of the conferences ahead.

Thanks a lot.

That does conclude today's teleconference.

We thank you all for your participation.