Liberty Media First-Quarter Revenue Rises 17 Percent

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John Malone

The company, controlled by John Malone, posted its latest financials.

Liberty Media, the company controlled by billionaire mogul John Malone and that houses such assets as satellite radio company SiriusXM Radio, the Atlanta Braves baseball club and the Formula One racing circuit, on Tuesday reported mixed first-quarter financials.

The company posted a first-quarter loss of $21 million, compared with earnings of $364 million in the year-ago period. SiriusXM's $124 million profit was more than offset by a loss of $49 million at the Liberty Braves Group and a $96 million loss at Formula One.

First-quarter operating income declined from $781 million to $259 million, as SiriusXM recorded a 13 percent gain and losses for the Liberty Braves Group narrowed, but Formula One swung to an operating loss after a year-ago one-time gain. 

Liberty Media president and CEO Greg Maffei during an analyst call talked about the competitive pressures facing key assets like Live Nation and SiriusXM, especially from e-commerce giant Amazon.

"Amazon is a ridiculously scary company, a company that has an ability because of its scale to invest at incredibly low and in some cases negative rates of return because they can cross-subsidize and the market is willing to suspend disbelief and trade profitability for future profitability, and is effectively dominated or controlled by an incredibly smart and aggressive and long-term CEO and founder in Jeff [Bezos]," Maffei told the call.

Maffei also talked about cable, media and technology giants Comcast and Charter Communications announcing a deal on Monday to explore potential operational cooperation in their emerging wireless businesses. "I think Comcast and Charter working together is an natural as peanut butter and jelly. It will create meaningful synergies," Maffei told analysts.

"It sets the tone for other combinations and opportunities to work together," he added. At the same time, the wireless alliance between Charter and Comcast has stirred speculation about a possible merger, which Maffei downplayed, even as he pointed to likely interest from Malone.

"A Charter-Comcast merger ... I don't think anyone has proposed that. I'm not sure even in the best circumstances you can imagine that being achieved, but I think our chairman [Malone] imagines there could be some very powerful synergies. That's why he's the chairman," Maffei said.

The exec also spent much of the call talking about future business possibilities for Formula One, the grand prix racing giant that Liberty Media last year acquired for $4.4 billion. Maffei alluded to a planned offering of Liberty Formula One common stock to institutional investors, thought to be worth around $750 million in value.

"We have no update, but once we have some news, we will let you know," Maffei told analysts. Liberty Media closed the deal to acquire Formula One in January, and promptly replaced Bernie Ecclestone as CEO of the racing giant with former DirecTV boss and longtime Rupert Murdoch lieutenant Chase Carey.

The company added sporting and commercial expertise under former ESPN exec Sean Bratches, who was named as managing director for commercial operations at the U.K.-based motorsports giant. Carey said Liberty Media aimed to make events "bigger, broader and more exciting," not least with new video platforms.

Formula One will expand to 21 races in 2018. Carey also reiterated the goal of launching an eventual OTT service for Formula One down the road, while maintaining it remains a "work in progress."

Back on the results side, adjusted operating income before depreciation and amortization, another profitability metric, reached $467 million, compared with $391 million in the year-ago period. 

Liberty Media also reported a quarterly revenue gain of 17 percent from $1.20 billion to $1.40 billion. On the cable front, Maffei saw little reason to get alarmed over a MoffettNathanson report last week that estimated 762,000 subscribers canceled their cable or satellite TV service in the first quarter.

The exec said it was inevitable that younger consumers especially are migrating to new digital players like YouTube Red, DirecTV Now, Dish’s Sling TV and Sony’s PlayStation Vue to view video content on mobile phones and other digital platforms as the industry evolves. "Some of that is natural, and fits the diversity of the marketplace," Maffei said.

Brahm Eiley, an analyst with the Convergence Research Group, in his latest Battle for the North American Couch Potato report estimated 2016 saw a decline of 2.05 million U.S. TV subscribers against a 2015 decline of 1.16 million subscribers. He forecast a decline of 2.11 million American TV subscribers in 2017.

"For programmers there are many new players to sell to, then again not all of them offer advertising. And for cable, satellite and telco TV access providers, cord-cutters and cord nevers are becoming an increasing issue," Eiley said.

May 9, 1:30 p.m. Updated with comments by Maffei to analysts during the conference call.

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