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Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation 2019 Q2 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded, August 8. I would now like to turn the conference over to Courtnee Chun, Chief Portfolio Officer and 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 the 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 one and two can be found at the end of the earnings press release issued today, which is available on our website.

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

Thank you, Courtnee. Good morning. Today speaking on the call, we'll also have Formula One's Chairman and CEO, Chase Carey; and introducing Liberty's new Principal Financial Officer, Brian Wendling. During Q&A, we'll also be available to answer questions related to Liberty TripAdvisor.

So beginning at Liberty SiriusXM, we continued our repurchases of Liberty SiriusXM stock, and we bought an additional $85 million of stock from the period of May 1 to July 31. We effectively bought this at a look-through price of the SiriusXM shares at about $4.11 per share. We think that's pretty attractive.

While the discount to NAV remains stubbornly high, it is lower than its all-time high. And we will continue to take advantage of it if you continue to give us the stock of SiriusXM at a discount at the look-through price. Our ownership of SiriusXM today stands - or as of July 26 rather stood at 71.1%.

Looking at iHeart just for a moment, I'll recall, you may recall that we - when it emerged from bankruptcy, we reserved some iHeart debt, which we sold at a slight premium to market. Some iHeart shares - or excuse, premium interface, IHeart shares and warrant which we continually hold and 17 million CCO shares.

During the quarter, we sold that CCO stake for $87 million, that was priced at $5.10 per share. That's pretty favorably at the $2.27 that the CCO shares closed at yesterday. We used the proceeds from those shares sales to repay a portion of the SIRI margin loan.

Looking at SiriusXM itself had solid quarterly results, including record SiriusXM ARPU and strong growth and Pandora add monetization. The company increased its guidance for revenue and EBITDA during the quarter, and returned capital of $1.9 billion year-to-date, having repurchased all the shares issued in the Pandora acquisition.

The issue price for SIRI during the Pandora deal was $6.98 per share and SIRI effectively bought back all those shares at an average price of $5.90 per share, dramatically lowering the cost of the acquisition.

Now the Formula One Group, looking at that, had very strong financial results as well, showing the benefits of our investment despite unfavorable variance in the calendar with ask rate included in current quarter and Bahrain included in the last year's Q2.

There's some very exciting races headed into the summer break, including the first victory for Red Bull in their home GP in Austria, a fantastic performance from Sebastian Vettel in Germany, moving up in the back of the grid to finishing second, and the battle at the end of Hungarian GP, with Hamilton passing or stopping for the win with just three laps to go for stop and having secured his first pole position.

Attendance continued to grow through the German GP. We are building out the calendar for next year, including the return of the Dutch GP and renewals with Silverstone and Zandvoort circuits. And lastly, we're very excited for Season 2 of the Netflix series Drive to Survive, which will include all of the teams participating.

Live Nation had another very strong quarter with double-digit revenue and AI growth. And during the quarter, announced the acquisition of a controlling interest in OCESA, Mexico's largest promoter. The Braves, 68-48 in the NL East, seven games ahead of the NAB. We had three relievers to the roaster just prior to the trade deadline.

We announced that SunTrust Park will host the 2021 MLB All-Star game, and we are proceeding Phase II of the battery, which is going well. We started the vertical construction on Block C, which has an expected completion in the summer of 2020. The [indiscernible] development is also at degrading stage, with the expected completion fall of 2021.

You may recall that the 2018 season year included several positives that benefited the baseball side of the business, including a very favorable home game schedule, a competitive team that wins the end of season, including the postseason, and nongame day special events.

While the attendance looks good so far this season, aided by strong on-field performance, many other of the above factors will continue to play out during the rest of this season. Over at Liberty TripAdvisor, we rolled our existing trip margin loan into a new margin loan with additional capacity and the lower interest rate.

Trip announced their earnings this morning, and market is responding well. They expanded their hotel, media and platform adjusted EBITDA margin to its highest level since 2015 through marketing efficiencies.

We expect that the hotel, media and platform segment revenue can get back to growth in the fourth quarter this year, and that's despite Google aggressively pushing their own metasearch and travel products.

We are excited for areas of growth in hotel, media and platform segment, which includes scaling media and advertising revenue, driving consumer product enhancements that grow membership and cultivate loyalty, executing on impactful brand advertising and expanding our hotel B2B product offerings.

During the quarter, experiences in dining revenue also grew 28%. And the total number of reviews and opinions on the site grew to 795 million. With that, I'll turn it over to Brian for more on our financial results..

Thanks, Greg, and good morning, everyone. At quarter end, Liberty SiriusXM Group net attributed cash and liquid investments is $21 million, excluding $215 million of cash held at SiriusXM. The value of the SiriusXM common stock held at Liberty SiriusXM as of August 7 was $19 billion, and we had $875 million debt against these holdings.

Total Liberty SiriusXM group attributed principal amount of debt was $8.8 billion, which includes $7.9 billion of debt at SiriusXM. Formula 1 group had attributed cash and liquid investments of $58 million, which excludes $276 million of cash at F1.

Formula One Group has attributed public market securities with a market value of appropriately $5.5 billion as of yesterday's close, including the intergroup's interest in the Braves Group and our stake in Live Nation.

Total Formula One Group attributed principal amount of debt was $5 billion, which includes $2.9 billion of debt at F1, leaving $2.1 billion in debt of corporate level.

F-1's total net debt to covenant OIBDA ratio, as defined in F-1's credit facilities for covenant calculations, was approximately 5.6 as of the end of the quarter, as compared to a maximum allowable leverage ratio of 8.25.

We would note that the race calendar variances between 2018 and 2019 resulted in income from 22 races falling in the trailing 12-months ended June 30. We had set a target total net leverage ratio for Formula One Group or for Formula 1 of 5.6x bank covenant OIBDA.

Please note that these leverage ratios are for the Formula 1 business, not the Formula One Group. Lastly, with the Braves. We had attributed cash and liquid investments of $127 million and attributed principal amount of debt of $470 million. With that, I will turn it over to Chase Carey to discuss Formula 1..

Thank you, Brian. We are now 12 races into the season and pleased to see Formula 1 living up to its promise with some phenomenal racing. Even with Lewis Hamilton and Mercedes in the lead, every Grand Prix offers plenty of action, both on Saturdays in qualifying and on Sundays in the races.

The races in Austria, Great Britain and Germany have been called the unforgettable trilogy. The heat in Austria produced a thrilling battle with Max Verstappen overtaking Charles Leclerc with two laps to go. This battle and a strong performance of other young drivers bodes well for the exciting future of Formula 1 racing.

Over 140,000 fans came to Silverstone on race day to see Lewis Hamilton win a record sixth British Grand Prix victory. Again, the rivalry emerged between Verstappen and Leclerc, but in the end, this was overshadowed by Sebastian Vettel driving into the back of the Red Bull, causing them both to tumble off the track.

The German GP has been referred to as the race for the ages. If you missed it, be sure to watch it on F1 TV. The varying track conditions resulted in 7 cars not finishing the race and 78 pitstops. Max Verstappen won the day, while Sebastian Vettel, who started in 28th, finished second. And Daniil Kvyat secured third for Toro Rosso.

This was only the second podium for Toro Rosso and a great milestone for Honda as the last time two different Honda power teams were on the podium occurred in 1992. Red Bull set a record for fastest pitstop of 1.88 seconds, beating the record they had just set in Austria two weeks earlier.

Also, the Hungarian GP confirmed the attractiveness of the sport, featuring an intense battle for the victory between Hamilton and Verstappen, which kept the 92,000 spectators at the Hungaroring breathless until the last few laps. When the five-time world champion took the lead of the race, thanks to a master stroke strategy implemented by Mercedes.

Through July 31, attendance is up for the season, and on the digital media front, our video views on social media year-to-date increased 67%, minutes watched increased 87%, while page views on digital products more than doubled.

The Formula 2 and Formula 3 championships have provided great displays on track at every event, with a number of young talents shining like China's Guangzhou in Formula 2 and Russia's Robert Shwartzman in Formula 3.

Mick Schumacher won his first Formula 2 race in Hungary and generated huge media buzz 15 years after his father Michael last won at the Hungaroring.

These two feeder series are a great addition to Grand Prix experience as there are other fan-oriented initiatives, like the Bond in Motion exhibition to attract more than 80,000 visitors over the last four Grand Prix's.

F1 TV has steadily improved throughout the first half of the season, and we're getting closer to our targets, both in terms of content and reliability. We were thrilled to announce that Season 2 of the Netflix series, Drive to Survive, will air in 2020. For the first time, all 10 teams will feature in the 9-part docuseries.

Given all the drama we've seen on the track, we can't wait to see the storylines developing behind the scenes. One of which is the speculation already building around which drivers will secure seats for the 2020 season. And we look forward to seeing who'll beat the Guenther Steiner of season 2.

The 2020 race calendar continues to evolve, and we were excited to announce our return design for Formula 1 Heineken Dutch Grand Prix, which will run for at least three years. Demand for tickets already far exceeds the capacity of 315,000, and we expect to see seas of orange out to support hometown favorite, Max Verstappen.

This is our second new location for 2020 in addition to the previously announced race in Vietnam. Additionally, we were delighted to extend the British Grand Prix at Silverstone until 2024. We are focused to preserving Formula 1's historic venues and Silverstone, which posted the very first Grand Prix certainly fits the bill.

On the other side of the globe, Formula 1 will race in Melbourne until at least 2025. And again, the season - launched the season on March 12 through 15 of 2020. With Formula 1 celebrating our 70th anniversary and our 25th visit to Albert Park next year, the Formula 1 Rolex Australian Grand Prix promises to be a spectacle unlike any other.

Clearly, we remain in the fortunate position of demand outweighing supply of races, and we are thoughtful about how we will manage the calendar for 2020 and beyond. We value our partnership with our existing promoters, to balance that against growth opportunities of our sport and business to add exciting new locations.

We expect to announce the 2020 race calendar in the coming weeks. In sponsorship, we announced Marelli as the official telemetry services supplier for Formula 1.

This will enable our ability to transfer more live data from the Formula 1 cars to the broadcast center and improve the quality and quantity of race information that can be shared with our audiences worldwide. Off the track, the 2019 Formula 1 New Balance Esports Series continues to attract their next generation of motorsport fans.

Over 109,000 participants took part in the qualifying from across 156 territories. Of the participants, 79% were under the age of 34, with half below the age of 24. For the first time ever, all 10 teams involved in the Pro series selected their drivers at the Pro draft on July 17.

These drivers will now join their official teams to prepare for the Pro series comprised of 12 races contested over four live events and we look forward to a thrilling championship. We also launched the F1 Esports series, China Championship, the first regional competition of the series.

The champion and runner up of the China championship will join the 2020 F1 Esports Pro draft. We are glad to nurture the passion for racing in China through F1 Esports and identify the next wave of Chinese talents in racing F1 Esports and potentially Formula 1 in the future.

Following discussions in June between the FIA, Formula 1 team principles and technical directors from the 10 teams probably give a number of drivers, it was unanimously decided to defer the final presentation of the technical, sporting and financial regulations for 2021 and beyond until the end of October.

We made substantial progress to date, and believe the core objectives have been defined, but decided to take additional time to further refine the regulations. As stressed before that there are many deals to be addressed.

We want to ensure we think through the impacts of changes we make with the goal of improving the competition, action and unpredictability of our sport, on the track and a sustainable and attractive situation for the teams and participants in Formula 1. We look forward to providing these regulations later this year.

In summary, we're pleased with our second quarter results and the momentum in our business and are set to meet our targets for 2019. Now I'll turn it back to Greg..

Thanks, Chase and Brian. All-in-all, it was great quarter for Liberty Media. As a reminder, we will be holding our annual investor meeting on November 21 in New York. The link to register is on our homepage of our website. We appreciate your continued interest in Liberty Media. And with that, operator, I would love to open it up for questions..

[Operator Instructions] We will now take our first question from Bryan Kraft with Deutsche Bank. Please go ahead..

I had a few, if you don't mind. Chase, wondering if you could give some color on the $175 million budget cap for team that's been reported.

Just wanted to understand, is that an all-in budget for every aspect of a team's F1 activities or there are some carve-outs? And is the cap for teams that design and make their engines versus those that don't? Also I wanted to see if you had any update on the race calendar in terms of the number of races you expect at this point? I know you talked a bit about some of the changes and renewals, but I don't know if you have a sense on the account if you still expect it to be 21? And then separately, Greg, just wanted to ask you, you have strategically avoided any new traditional television-focused media investments for several years now.

Just curious, if there are any pockets of traditional television-focused media that you think might be of interest at this point, whether it's from a valuation perspective or if you're thinking about the opportunity differently?.

I guess on the two things, the budget cap and the calendar, I'll address and then I'll let Greg go. I won't say too much about the budget cap just essentially because we're not through. So I think probably we'll provide for insights to it once we finalized and signed it and it's implemented.

I think in - I mean, like I guess, a couple of general comments, there are carve-outs, probably most obvious ones would be something like marketing, I mean what we're really looking to do is to make the racing on the track more about how well you invest your money, not - how well you spend your money and not how much you spend to the degree.

There are marketing initiatives. There are other efforts like that, but I don't think they affect the competition on the track and the focus on the cost competition.

The focus on the cost cap is really to make the competition, the action on the track and the unpredictability and the drama of the sport much better to make it healthier business for the teams. So it is focused on those elements.

There are few other carve-outs that - there are a number of other carve-outs that we think, again, to make the cost cap implementable to make sense. But maybe probably let's leave it at that. It is consistent cost cap across the board for the teams. It's not a difference cost cap.

Now the engine manufacturing, and there are four entities that provide engines that is - this is really cost cap against the car. So the cost of acquiring an engines - there's cost of acquiring engine but those - the four teams that manufacture engines that we're addressing in a different way.

In terms of the calendar, we do expect - I don't want to probably get ahead of ourselves, we expect to announce in the 2020 calendar in the next few weeks. And so it will probably wait till we have that out there. We are fine - we're close to finally - I think it's largely finalized now.

In general, what I would say about the calendar is, I think, we expect the number of races over the next few years to increase a bit. I think there's a limit to how much but I think we expect - do expect to go up marginally. And as we announce the calendar, we'll provide more insights to when and where that occurs..

Brian, I think we addressed some of our general fears about traditional linear cable networks, and particularly those that are unscripted, which feel like a war zone, rising costs and rising competition, including new entrants who have different business models, which are more efficient and allow them, in many cases, to price the content at very low or no cost because they're being up monetizing somewhere else, either through a prime service or something like that.

So a very scary space, linear in total and scripted in particular. And you've seen us both with our feet on some of the things like R&D assets that we either didn't bid on or that we disposed of. There are niches that could be attractive reported that we had bid on some of those.

Those will be very much valuation-dependent or something where we think we have an angle, which is different. That's got to be really different though because we don't bring any synergies to the table. We don't have any existing content asset like that to share.

We have to say different kinds of content that we're very enthused about, including music and things like Formula 1, but we don't have scripted or those kind of traditional linear content plays. I think it's very much going to be situations-specific.

I would point out, in some cases, we have found opportunities with things that we knew would eventually decline, but there was a period where we could capitalize on that. And if we found something along those lines, we will do it.

But it's got to be where we have a very defined story, something we can add to the picture and why it's going to be right or succeed in spite of a lot of headwinds..

We will now take our next question from Ben Swinburne from Morgan Stanley. Please go ahead..

Chase, I know you talked about announcing the calendar coming up in a few weeks. But there's obviously been a lot of activity on the race promotion front. There's been some press written about maybe some price reductions, fee reductions.

I'm just wondering if you can help us think about the trajectory of race promotion revenue growth over time if you take the changes in terms and mix plus the calendar quantity if you expect this to be a growth driver for Formula 1, sorry, I guess unintended, on the revenue front. That would be helpful.

And then for Greg, maybe a similar question to Brian's, but on the music side, we've seen more investment, more capital going after just sort of like catalog rights, publishing rights. So the big machine deal.

So I'm just wondering if you think that's an interesting area to look around given sort of the rise in consumption across platforms for Liberty..

Sure. So I guess on the calendar, I guess first, we do think - we do view this as an area of revenue growth for us. So just to put it simply and it's probably - it's not steady, it's not consistent with every event. Some events are different. I think in some places, the events are more mature.

But I think we do have and do expect and do look for just to actually and probably increasingly be in every area of opportunity for us, and I guess I'd say it's driving obviously adding a number - adding a couple of races is a factor.

I think we actually are very excited about the demand interest, the number of places that want to host the race and obviously supply and demand. And I touched on it in the opening comments. It is important.

And therefore, we value our historic relationships, but it is important to carve out opportunities to add a new race when the demand is there and the appetite is there for stepping up for that.

And I think there's some places where and I have touched on before, we inherited situations where we were not receiving what we should be receiving when we came in.

So I think, I guess, it sort of between the supply and demand being in our favor, the increase in the race calendar and address a couple of the places we are not perceiving what we think we can and should be. We do expect this to be an area of growth for us..

And on publishing, I would say that's obviously been a very - an area where have been great businesses and valuations have responded accordingly.

If we had gotten in the publishing 5, 7 years ago and we had a vehicle, which will allow us to buy incremental assets at something looks like a revenue line rather than the cost line or recognizing the lack of cost because you've got those synergies, we might be in a position to do that. But these things have been pushed up unbelievably.

It's hard from where we stand where we don't bring synergies to the table. We've been lucky to be in some of the best parts of the music business, including, obviously, performance, live performance through Live Nation and probably the best part of the distribution business through SIRI.

Shame on us, maybe we should have gotten to publishing a while ago. But I think it's aware that some person we don't have as much to offer today, and those values have been pushed up a lot..

We'll now take our next question from Vijay Jayant from Evercore. Please go ahead..

For Chase, you talked about the reliability and the user interface on the F1 TV product, sort of approaching your expectation.

But just sort of broadly, do you think that the product had enough tonnage at the price point that you have to really scale globally? Are there any alternatives you are sort of considering on how to repackage that, to really drive that to be a big free cash flow generator for Formula 1?.

Yes. I guess in a nutshell, I'd say the for Formula 1 TV deal top product certainly still a work in progress and certainly, I think probably improving and expanding and enhancing the content component of it. It's certainly a part of that.

I mean, as we think about it, there's sort of three steps you have to get through to really build this, and they have to sort of happen in sequence. First, which has really been - we've been working on. I think we've made headway, as I touched on. First is get a platform that is reliable.

And I think you get frustrated customers, and clearly, we had some issues in the last year, earlier this year, I think we've made good strides. So I think the platform has to be reliable. Then we need you to find the content experience because somebody's going to buy it. And then you need to sell and market it.

I think we do have to sort of get those things done in order or you can't be selling - trying to sell or market something aggressively if you have the product is going to not meet the thresholds that it needs to be for consumers. So I think we are making strides. And I think on the content side, clearly, there are enhancements to come.

We still are scratching the surface in terms of things like archivable product. I touched on sort of enhanced data and information. I think that is an important area for us. And working on a number of ways to cover the sport more broadly, what goes around it, goes on around it more broadly.

But I think the content experience - and we have talked about it. I think we viewed the building of the content experience is something that really was going to occur over a couple of years. So we had a foundation, but it's clearly a foundation to be enhanced.

And I think what we've expect we'll have there, I think as something that does, can and will appeal to the passionate fans we have in the sport, which are significant around the world. And again, I think we believe it's an important opportunity for us to continue to build on, but it is a work in progress..

We will now take our next question from Jeff Wlodarczak from Pivotal. Please go ahead..

One for Greg, and a couple for Chase. Greg, could you comment specifically on Liberty's potential interest in Univision? And then for Chase, a couple of follow-ups on the budget cap.

How comfortable are you those cost caps can be properly enforced? And then if you can get the cost caps in place, how significant of an opportunity is there to expand automakers producing engines and/or fielding F 1 teams?.

So Jeff, I think my comments a minute ago to Bryan about what kind of things we'd be interested in, address some of that, not - and I prefer not to comment on what we might do specifically.

But I would say that we need - I'd reiterate, we need to have an angle, a thesis on why we provide some value or why we have a different way to go at it and others buyers might. That being said, for a lot of assets out there today in this space, there appear to be a lot more sellers than buyers.

So we'll take those factors into account and see what we can come up with..

In terms of the cost cap, yes, I mean, actually one of that real positives is, I think, the evolving attitude towards it. We feel quite positive about where we are with the cost cap. In many ways, teams that I think some of whom had concerns or issues going in are increasingly supportive.

I mean, I think by and large, right now the support is really quite broad, and I think everybody believes it's an important part, an important element to the future of the sport. So I do think the sport is built and the teams really are behind it as being an important cornerstone to building the sport going forward.

And we wouldn't have done it if we didn't think it was enforceable. There's no reason to head down a path, I mean, and clearly for anything, which really to make sure you have access to the right information to do the accounting, and that's just about us being disciplined and firm about what we need, and we've addressed that. We are going to use 2020.

All the teams will participate and actually, I am almost certain, I guess it effectively a dry run because the cost cap won't be eventually enforced with consequences until 2021. But in 2020, what we actually are really going to go through is shaking out the bugs of accounting for the cost.

And clearly, one of the goals in terms of the cost cap is to create a healthier - I mean I talked about the competitive goals, but it is equally important. We create the cost cap supports, a business model that is healthy and growing and positive for our existing teams and potential new teams coming into it.

And that has been enforced as we've had discussions with potential new teams, all have looked at certain steps in terms of cost discipline and probably more balanced revenue distribution as being cornerstones to creating what they think is an exciting opportunity. So certainly that's a part of it..

We'll now take our next question from David Karnovsky with JPMorgan. Please go ahead..

Just one for Chase. Would be interested to get your updated thoughts on F1's media rights. I think your TV contract with ESPN expires after this season. And at some markets, you moved to distribute races through sport streaming services, like DAZN. So wondering if that is something you would entertain in the U.S.

And then maybe as a follow-on to a prior question, how are you thinking about the F1 TV product as part of this process? Is it a priority to keep live races on its service in the U.S.? Or would you be willing to give that exclusively to a video partner?.

Every market is different. And clearly, there are players coming into this space that have more multicountry aspirations as opposed to historically, most of our historical players look at in a more single country, while a lot of digital players especially interested to come in and are looking at it on a broader basis.

But that being said, I think at its core, the situations do differ in each country going to. In many ways, F1 TV is now a part of the portfolio, but we have to figure out how to optimize the opportunity in a market. And that's looking at all the players.

It's free to play, digital platforms that are a multi-content platforms or a more dedicated content platform like F1 TV and what's the best way to maximize the opportunity for us, working with whatever that partner is in a country, we will do. And it in some places, it all depends on the partner we have.

I mean, clearly and certainly in the short term, we're going to have the traditional television world is going to continue to be the biggest part of our television universe with growing importance from digital in some places.

But then we've got agreements where the traditional, I'll call it, the traditional television partner, is partnering us in distributing and growing F1 TV and the like. So there are places where we're partnering with traditional television, there are places to grow F1 TV, there are places we are doing it more on our own.

And I think that certainly will continue to be the business model of having this portfolio, which I think is the reality of world of content today. And figuring out how to optimize new short- and long-term opportunities in each market and more broadly..

We will now take our next question from Zack Silver with B. Riley FBR. Please go ahead..

First for Chase. I don't think we've touched on sponsorship. Are you guys into big deals in the back of this year with AWS and ISG? I was just curious on how the current pipeline is looking.

And maybe how much of these sponsors - these partners care about just firming up the new concord agreement before entering into new partnerships?.

Sure. I think the sponsorship arena actually sort of again right like right now, we actually feel great about the level of interest. I think clearly, it's been an area where I'd say the time required to grow this area of our business has probably been a bit longer than we would've anticipated a couple of years ago, and that is probably understanding.

It's a more complicated sell and a deeper sell and a more unique sale. So we need to build more capabilities to deal with potential sponsors. And also probably understanding the degree to which for not really been marketed or sold to the universal sponsors.

So it's been both educating potential sponsors on the opportunity where we're going, what we're doing and as well as creating products that enable us to do that. And to which sponsorship, we all did it clearly has, from everybody much of an advertising, is clearly an area that - the broad area that has challenges.

But what I think we actually feel good about, it's not [indiscernible] good about the level of interest, the level of enthusiasm for the product, we've got to sign the deals. We've got some more activity today than we have in any point in time across more categories than we've had at any point in time.

It does take longer to - takes longer to sell a client and longer to potential sponsor and longer to close the potential sponsor. But we've got a lot of activity going on. And certainly, it's our goal to turn that in the coming months, to turn some of that activity into dollars.

And we feel we're getting there even if it's taking a bit longer than we would've hoped a couple of years ago. And I think that's going on. I think the sponsorship, I mean, concord agreement is a nonfactor, but I think there's a general - I think concord agreement, I think there's a general understanding that we're in pretty good place with the teams.

That doesn't mean there are things resolved. But we're dealing more with not that they're not important, detail issues like broad conceptual directional issues. I'm sure there will always be noise just because that's the nature of these.

But I think there is a growing confidence that we'll get to a place that is everybody can agree to and is much better for the sport and therefore for partners like sponsors..

And then maybe one for Greg. It's been a rocky few months for terrestrial radio.

And with that, interesting to hear your updated perspective on iHeart and longer-term plans for that stake?.

Well, I think a lot of that rockiness is a function of looking at the stock price and the fact that they emerged from bankruptcy to the market conditions, and perceptions above the leverage level. They were unable to complete the primary offering. They were going to do to reduce debt.

And they have a bunch of - probably some of that natural holders’ long term on natural holders of the stock. So a lot of that has created pressure on the stock. But I think the business is probably doing okay.

They've got headwinds against kind of new entrants, but they also have a lot of strengths on some of the things that they're trying to do and the scale that they have. So we'll watch the business with interest, and we'll watch how its operating performance is.

And I would not necessarily think all the things that are happening in the stock necessarily reflect sort of operating results on a longer term..

We will now take our next question from Kannan Venkateshwar. Please go ahead..

Greg, two if I may. First on iHeart, just a follow-up on that question. Given the amount of cash coming out of the SIRI, obviously, it's been a source of interest on where that cash is deployed and buyback sort of big source.

But at some point, given the ownership of Pandora, does it make sense to get bigger on the advertising side with iHeart being a part of that? And secondly, when you think about the distribution side of the business, in the past, I think you guys have spoken about potentially partnering with Comcast getting into wireless in a bigger way, not just on the back office stuff, but also more actively in owning a network.

Could you just update our thoughts just given the backdrop of this spin to T-mobile transaction on the way it's going? How were you thinking about that space right now?.

Well, on SIRI, cash - it does generate quite a lot of cash. We used quite a lot of it this quarter to repurchase stock and they obviously have a continuing dividend, which they've increased several times over the last few years.

As far as scale and add distribution, I think that's a very - something that they are really trying to do and I wouldn't, obviously, factor in an evaluation of iHeart.

I would point out that they have been increasing their scale dramatically by things like the growth of the Pandora CPMs, RPMs, but also the partnership they have through add people like SoundCloud, where we are doing a lot of monetization. All those are helping increased scale. But we'll take all that in mind as we look at incremental opportunities.

You switch a little bit gear there on the distribution side to Charter, and I'd say Charter and Comcast, my observation will be Charter and Comcast are looking to partner every day to every way that they can, because there naturally a lot of potential synergies around the areas like wireless.

Other than that, would ultimately lead to something larger, including potentially an acquisition, we'll see how time will tell. Both are growing their MVNO relationships dramatically, the Verizon relationship and their MVNO, their subs in the wireless side.

So as to get that scale, we'll continue to looking at opportunities whether it will be producing spectrum and doing more on their own or perhaps more down the road, some kind of an acquisition, this is really not today's, I think, today's agenda.

I think they are more focused right now on growing their MVNO subs and see how the business performs and really how it drives some of the other products and how it fits with some the other products that they sell on their things that they have..

We will now take our next question from John Tinker from Gabelli. Please go ahead..

I noticed this is a portion of the Mercedes now signed up with Formula E. They are obviously having to move to counter some of that negative press they'd had on emissions.

Can you just remind us what your relationship is with them? Is it purely Liberty Global that has an ownership position?.

It's just Liberty Global and then actually Discovery, so I guess two entities. But in the past, had more connection to the Liberty Home that are shareholders in Formula E. We do not - We and Liberty are not engaged with Formula E or Liberty Media..

Do you think that it would be a good hedge on your position?.

Look, I think our real upside is growing Formula 1. One of our priorities and we are going to do more in the fall is really an untold story in Formula 1 is the strides we have made to date in terms of sustainability.

In the hybrid engine that was launched a few years ago, it was an incredible step forward in terms of fuel efficiency, while retaining power. And we are working aggressively on things like synthetic fuels, actually working with the oil industry as a whole on synthetic fuels, biofuels, hydrogen fuels.

And I think you will see us between now and year-end, this sustainability issue becoming a much more front and center part of our story and something actually we think we've talked in private with a number of our partners.

They're quite excited about an economic recognition, environmental issue is important to everybody in a big part of making strides forward in that is how do you reduce carbon emissions from the combustion engine. And I think that could be as important as anything out there.

We'll also have other initiatives in terms of environmental steps around our live events, creating things to events.

So it's a multidimensional story around it, but I think part energy is the degree to which we will reduce and the targets we will have to reduce carbon emissions with the combustion engine and I think that has more upside for us than anything..

We will now take our next question from Bryan Goldberg with Bank of America Merrill Lynch. Please go ahead..

I had a couple on F1. I was curious, with respect to the U.S. market opportunity for F1, I mean engagement seems to be up in the market. You've done a few fan festivals now. What updates can you provide on potentially getting a U.S. race on a calendar in a market like Miami or elsewhere? And then I have a follow-up..

It's important to us. We've been quite public about our goal to, but I mean, first, the opportunity in the U.S. and actually our television rate has grown well this year.

When you look at digital, it actually, I think, has been a positive surprise because we didn't - a few years ago, we weren't doing anything in digital, so we stopped the measure, the engagement we had in the U.S. digitally. There are a lot more fans here than I think people believe there are. So I think we're excited about those opportunities.

We have talked about the adding races in we call destination cities like Las Vegas and Miami. We've been engaged for the last year there. I think we've made good headway. We're continuing to be, I think next week with parties there. And meetings a month ago there. So I think we feel it's important. We feel we're making steps down the road.

We are talking to people, to the new team entrants. As we solidify, as we firm up the business model, the team ownership, we'd love to have a - we have half as the U.S. team, we'd love to add now with a high-profile U.S. team down the road, you'd love to have U.S. driver that probably takes longer.

But we recognize there are multiple elements to continuing to grow and build this sport, engage the fan base here and it continues to be a priority. And I think we're making good headway on it. And I think we love to potentially add that, and probably the first step would be adding that race in a city like Miami or Las Vegas..

And then, I guess, one on capital allocation. I guess, with the leverage ratio now, I think at 5.6x, and I think an implied value of F1 operating at the tracker level, maybe in an $8.5 billion range.

I'm just curious, how are you thinking about capital allocation priorities? More deleveraging versus reinvestment or acquisition or returns to shareholders? Any updates there would be appreciated..

Yes. There were some - Okay. Chase, you take a shot, go ahead..

No I was actually just going to say at least from my perspective, again, probably our focus has been getting the business to where it is. I think that will become a bigger topic for us in the short term.

But I was probably going to - like Greg add his comments into it, but I think, capital allocation, we were more focused on sort of probably to date getting the leverage ratio to where we want it. We're obviously getting there. So I think it becomes something that probably the higher priority and the higher focus as we go forward from here..

Yes. And I think there are some anomalies that caused this to be a little more favorable looking this quarter than the longer. I think over the time, we will expect that keeping the 5x to 6x range as we targeted at the opco level, and we'll see what opportunities arise.

At that point, we also have in the form and the form tracker some assets which ultimately may prove to be noncore, which provide incremental cash. So we'll see how that all goes. But we have made some decisions on what our plans are beyond getting that 5x and 6x range and staying there..

We will now take our next questions from Drew Borst with Goldman Sachs. Please go ahead..

I wanted to ask about Formula 1 TV viewership season to date. I was wondering if you could share some statistics on how that's been tracking. Obviously, I understand the shift in the U.K. market.

But any sort of statistics or sort of general thoughts about how TV viewership decision has been going?.

Sure. I guess I'll call it's okay. We are actually down on sort of, I mean as we look at it first and foremost, Saturday, Sunday qualifying race, we are down a couple of percent, a few percentage points.

The biggest factor in that has been some anomalies in Brazil, where last year, with the World Cup going through Brazil, a couple of our qualifying races got sort of stuck, got put for positive results, either right before or after a meaningful World Cup event that had an impact.

So may be taking Brazil out, look out our - so we have core 24 countries, look at - you look at 23 ex Brazil, we were actually up a couple percent, a few percent year-to-date. And I think with the season that probably hasn't competitive for the last three races have been great.

And all honestly, you go back before that, we had some races that would not call great, which is why we got to continue to improve it. And clearly, the competition at the top, Lewis to this credit, just got pretty good lead.

So I don't think in terms of generating, I think we hope that as we go forward that we have more competition, and we got to improve the races, working on improving the tracks and I think initiatives, too. So with that some good graces usually, but I think overall for the 12 races to date, I'd say, it's been okay.

So I think with those races in place, and looking at some of the other factors like you talked about, like the shift in the U.K., that those will have an impact, end up saying ex the impact of the World Cup in Brazil, we're up, I think we feel pretty good about them..

And I want to follow up on the same topic.

Chase, how do you think about balancing sort of broad distribution over broadcast versus maybe an opportunity to earn higher fees on pay platforms? Is the old man's sort of tended toward grabbing the pay platform, fees, but how do you think about balancing long-term, short-term objectives of the sport?.

There's not sort of reach versus dollars coming. There's no question. That's an ongoing dynamic. They both are important. We don't have a formula to look at it. There are too many factors to try to sort of put a formula in place that lays over each markets different. They have penetrated as a pay platform.

But what's the quality of the pay platform, in the U.K., Scott did a great job, certain market-leading sports broadcaster. So there are too many factors to put formula, those trade-offs are important.

I think when it is, generally, there's been true in sort of all sports content, probably content in general, the trend continues to certainly be towards paid platforms. And I don't think that's going to change the free over the years, the reach is great, but it's clearly a mature business that I think continues to exist to take more mature.

So they are valued partners in many places, the optimum is the sort of have a mix, that's not all are one, but that isn't always possible. So I think we look at each on the merits, but as I said, generally, we do try to I think the world - I think we will continue to move towards pay platforms, because that's where the rules are going.

I think we look forward, people had to realize and get educated the reach is going to take in a very different meaning, historically, event over the year, realistically, if you want to reach a 20-year-old today, it's in a device you hold in your hand, it's not a 60-inch screen you put on the wall.

So we are doing a lot to end up, to making sure that reach, that connection is as much coming through these digital platforms as well as not just the historic platforms. There's no question getting a race, an over the air broadcaster is still got a great experience.

But you are connecting with both new and old fans in ways you never did before, whether that's Richard can't experience social media, Netflix series. So I think that view, that definition of reach as you balance reach and dollars is continuing to evolve..

We'll now take our last question from Jason Bazinet from Citi. Please go ahead..

I don't know if this is for Mr. Carey, but I would think when you're selling the rights, it would be - your TV rights, it would be a pretty rational market.

And when I look at what the WWE step up was, I didn't know if you interpreted that as sort of an aberration because their old deal was too low or they split the rights between around smacked down between two buyers, or is there any bigger implication that has to do some with some of the challenges Mr.

Maffei was talking about with scripted being saturated and the lot of the programmers trying to lean towards live programming in a linear world that wouldn't have very positive implications for the long-term trajectory of Formula 1's TV rights. So any sort of comment on that front would be helpful..

I'll give you my two cents, and Greg can give you his two. Look, like guess, I think it's - it all - it comes down to competition. And this year, whether it's WWE or Formula 1, they are unique content, unlike scripted, there isn't, there's not really a comparable alternative, but the value gets driven by the competition for the rights.

WWE ended up in a place where you had more than the one player that really want those rates, and sometimes competition only requires two. I think it is the driving force.

And I think that one of the big - obviously, one of the core questions for us is how big - what is the competition the future for rights like this? Probably at the center of that, how does the digital world, which seems to be moving increasingly into the content arena become bigger and bigger players in different shapes and forms for this content? But I think it's really just at its core, it's competition for unique rights..

I think I agree with what Chase said. I'd only say that I think if you also look, the buyers are not completely irrational even when there's competition. And the underlying value of how much viewership there is and what the perception, the fan base and fan affinity and fan activity is all very positive. And I think trend well for Formula 1.

We look undermonetized with a very strong fan base. So we hope to see lots of competition, but we think underlying product is something that will merit our attention..

Thank you very much..

Thank you to all. I appreciate your interest in Liberty Media, and look forward to speaking with you next quarter, if not, beforehand..

Thanks a lot..