Liberty Media SiriusXM Group (Series A) (LSXMA) Q4 2018 Earnings Conference Call Transcript

LSXMA earnings call for the period ending December 31, 2018.

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SiriusXM (Series A) (NASDAQ:LSXMA)
Q4 2018 Earnings Conference Call
Feb. 28, 2019 10:00 a.m. ET

Contents:

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation 2018 Q4 earnings call. [Operator instructions] As a reminder, this conference is being recorded, February 28. I would now like to turn the conference over to Courtnee Chun, senior vice president of investor relations.

Please go ahead.

Courtnee Chun -- Senior Vice President of Investor Relations

Thank you. Before we begin, we would 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 Form 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 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 and 2 can be found on the end of the earnings press release issued today, which is available on our website. This call also includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Liberty TripAdvisor Holdings. Actual events and results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent Form 10-K and 10-Q filed with the SEC.

These forward-looking statements speak only as of the date of this call, and Liberty TripAdvisor Holdings 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 TripAdvisor Holdings' expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Now I'd like to turn the call over to Greg Maffei, Liberty's president and CEO.

Greg Maffei -- President and Chief Executive Officer

Thank you, Courtnee. Good morning. Today, speaking on the call besides myself, we'll have Liberty's CFO, Mark Carleton; and Formula One's chairman and CEO, Chase Carey. During the Q&A, we'll also be available to answer questions related to Liberty TripAdvisor.

So starting with Liberty SiriusXM. During the quarter, we've continued our repurchases of Liberty SiriusXM stock, and from the period of November 1 through January 31, we bought additional $159 million worth. When you look through the discount, we effectively bought SiriusXM stock at a price of $4.09 so that is pretty attractive. I would note that the discount to NAV between Liberty SiriusXM and SiriusXM, the underlying stock has tightened a few points but remains stubbornly high.

We will continue to take advantage of it. Pro forma for the Pandora transaction and Sirius' actions are ownership of SiriusXM stands at about 67%. Just a moment on iHeartCommunications, the bankruptcy plan is -- has been confirmed by the courts and we expect it will emerge in the second quarter. Once that happens, Liberty is expected to own just under 5% of the iHeartRADIO equity, about $284 million of iHeartRADIO debt, which is designed to trade the at face.

And just a little less, Clear Channel Outdoor equity as there's already a public stub in the Clear Channel Outdoor equity, so that much dilution. Looking at the underlying SiriusXM's operating results, it had strong full-year results. Record revenue of $5.8 billion, adjusted EBITDA up 6% to $2.2 billion despite a number of catch-up payments for content and other issues, and we completed the Pandora transaction on February 1. Turning to Formula One Group.

We continued to make great progress in 2018 with fans and other constituents. 490 million unique visitors saw the product across all forms of Formula One programming. We had 4.1 million total spectators at races physically, and we are the fastest-growing major sports brand on social media for the second consecutive year. Note, as we've mentioned several times, this business is hard to compare on a quarterly basis.

In the fourth-quarter of 2018, we had five races versus six races in a similar period in 2017. We are very excited to the start of the 2019 season in Melbourne on March 17. Turning, for a moment, on Live Nation, we're going to not talk about it yet on this call because they report later today so I encourage you to listen to that call. Looking at the Braves.

We continued financial strength in our second season at SunTrust Park in the Battery Atlanta. I would note that 2018 included several big positives that benefited our results on the baseball side. That includes a very favorable home-game schedule with attractive teams scheduled in in Atlanta, a competitive team with meaningful games into the last month of the season, nongame day special events in the ballparks that trended up, including concerts. And importantly, winning the NL East, great team performance brought as post-season revenue, which we certainly hope will continue in 2019 but we don't necessarily budget for.

Battery Atlanta is close to full occupancy in driving very solid returns. Looking at the performance ahead, we're super excited with the signing of Josh Donaldson along with the return of the Brian McCann to the Braves. And looking -- we are very much looking forward to start of the season on March 28. We want our team to win the World Series and believe our team has the potential and is on the right path to do so.

The management team has our full backing to do what they believe is right to win. Over Liberty TripAdvisor, I'd note we finished a strong 2018 with great results in the fourth-quarter. We achieved strong net income and adjusted EBITDA growth. We continued our focus on hotel marketing efficiency, which drove a 700 basis point expansion in the hotel segment in the adjusted EBITDA margin.

We grew revenue and experiences in restaurants by 40% and remain very excited about this market opportunity. We are projecting double-digit consolidated adjusted EBITDA growth for 2019. With that quick set of comments, I'll turn it over to Mark for more on our financial results.

Mark Carleton -- Chief Financial Officer

Thank you, Greg. At quarter-end Liberty SiriusXM Group had attributed cash and liquid investments of $37 million, excluding $54 million of cash held directly at SiriusXM. The value of the SiriusXM common stock held at Liberty SiriusXM as of February 27 was $19 billion and we have $1 billion of debt against these holdings as of year-end. Total Liberty SiriusXM Group attributed principal amount of debt was $7.9 billion, which includes $6.9 billion of debt at SiriusXM.

Formula One Group had attributed cash and liquid investments of $130 million, excluding $30 million of cash at F1. Formula One Group has attributed public market securities with the market value of approximately $4.4 billion as of February 27, including the intergroup interest in the Braves Group and our stake in Live Nation, with $2 billion of attributed debt, excluding the debt at F1. Total Formula One Group attributed principal amount of debt was $5 billion, which includes $2.9 billion of debt at F1. F1's total net debt to covenant OIBDA ratio, as defined in F1's credit facilities, was approximately 7.35 times as of December 31 as compared to a maximum allowable leverage ratio of 8.7 times.

Again, as Greg pointed out, with the race calendar income from 21 races, it was captured in the trailing 12 months ended December 31, 2018, versus 22 races for the period ended September 30, 2018, and the leverage ratio increased accordingly. We set a target total net leverage ratio for Formula One of 5 to 6 times bank covenant OIBDA. Please note these leverage ratios are for the Formula One business, not the Formula One Group. At the Braves Group, we had attributed cash and liquid investments of $107 million and attributed principal amount of debt of $494 million.

And now I'll turn it over to Chase Carey to discuss Formula One.

Chase Carey -- Formula One's Chairman and Chief Executive Officer

Thanks, Mark. I'll briefly discuss our results in 2018 and then focus on our plans for 2019 and beyond. As we've mentioned numerous times, we look at this business on an annual basis, and for the full year, revenue was up 2%. Our primary revenue streams were essentially flat for the year.

There were a number of one-off items that impacted these results. In particular, we had two rights holders experienced financial issues and there were also changes in the race calendar. We also had one contract amendment that provided for an increase in promotion revenue, which is fully offset by a reduction in advertising and sponsorship revenue related to a particular event. Overall, this amendment was neutral to primary revenue.

And looking at adjusted OIBDA, we knew that 2018 would be a year of investment. However, we now have the right organizational structure in place and expect that the majority of future invest will be revenue generating. Now on to the fan. Over 4 million fans attended the 21 Grands Prix in 2018, an average of 195,000 spectators for each weekend with race days averaging over 80,000.

To put this into context, 70,000 fans were in attendance at the Super Bowl in Atlanta. Not to be outdone, viewers at home also increased engagement with unique global viewers up 10% to 490.2 million. Note that we changed our viewership methodology to align with industry standard, which measures three consecutive minutes of viewing. The viewership stats were provided for the 2018 season reflect this new methodology, including restating 2017 results for an apples-to-apples comparison.

And for the second year in a row, we were the fastest-growing major sport on social media platforms. We're pleased with this heightened engagement across all platforms. Now onto 2019. The teams are about to finish testing at Barcelona and this month was filled with exciting reveals and new cars and referees.

Driver lineups have changed significantly, which should make for exciting drama on and off the track. The first winter testing session, together with the daily review show, was available on F1 TV, along with the second testing session. Additionally, the first-ever documentary produced by Formula One entitled Michael Schumacher, The Making Of a Legend, is available exclusively to all F1 TV subscribers. Further, on the content front, our Netflix show entitled Formula 1: Drive to Survive, we'll air on March 8.

Be sure to check out the trailer which is online now. With respect to our F1 TV over the top platform, 2019 will, in many ways, be the true commercial launch of the product. After using 2018 as our beta test, we strengthened the platform and we'll have a more fulsome marketing launch as we kick off the F1 season next month. F1 TV is a long-term strategic priority.

We will continue to evolve the platform, enhance the content and build on distribution opportunities in the coming years. On the distribution front, we most recently signed agreements in the Netherlands and Germany, both markets in which F1 TV is available. 2019 marks the start of our new deal with Sky UK, the leading subscription sports channel in the U.K. Highlights from Saturday and Sunday race weekends, along with the Silverstone Grand Prix, will be shown on Channel 4 in the U.K.

Over the past two years, we've signed distribution deals in many of our largest markets and global coverage is largely set for 2019. The race calendar in 2019 matches that of 2018 in number and location of races. Though there still will be quarterly variations in the race count. As already announced, Vietnam will join the calendar in 2020, and we're in discussions with numerous other locations that both answer demand in certain markets while attracting new fans and sponsors.

Again, this January, we brought all the promoters to London to meet and share best practices. We continue to believe this is a group that can work collaboratively for the betterment of the brand and fan experience. We plan to hold four fan festivals this year, the first of which will be in Shanghai which coincides with Formula One's 1000th race. We will celebrate this milestone in many ways, so stay tuned.

We also plan to hold fan festivals in Chicago, Los Angeles and Brazil. We're excited that we exposed other audiences in the U.S. to Formula One after a very successful fan festival in Miami last October, that drew 80,000 spectators. In Australia, we will host our first-ever launch event on March 13 in Melbourne to include all 20 drivers and 10 principals.

Our global partners, Rolex, Emirates, Heineken, DHL and Pirelli, are all supporting the event through a variety of activities. In further partnership with our sponsors, we will also host special events around races with both AWS and MIT, which will draw in a diverse audience and expose them to the many facets of Formula One. We were also pleased to extend our partnership with Pirelli as the sole global tyre partner through 2023 at the end of last year and signed a 5-year agreement with Cyber one earlier this year as the official cybersecurity provider for Formula One. We continue to focus on the product, which is the race and making it the greatest racing spectacle on the planet.

As mentioned earlier, the 2019 season will bring in new drivers, new pairs to the teams and many seasoned veterans. Three drivers were pulled up from Formula 2, Alexander Albon, Lando Norris and George Russell, which proves this is a furtle-testing bed for Formula One drivers. And we're excited for the 2019 F2 driver -- Formula 2 driver slate, which includes drivers from China, the U.S., Brazil and from Germany, Mick Schumacher. As it relates to the race, we're focused on technology and regulations that will prove competition.

This includes reducing loss of performance when cars are in a close proximity, designing circuits with more opportunities for overtaking and reviewing how penalties are enforced. We continue to have discussions to make progress with the teams on a new Concorde Agreement that addresses cost structures, revenue distribution, regulations and governance. Recall this new agreement will impact the 2021 season and beyond and we are in constructive discussions with all 10 teams to finalize the details and improve the sustainability of the model. We understand that public markets would like to have all the terms as soon as possible.

We're going to take the time necessary and make sure that we get this right or are in alignment with our partners. When Liberty bought Formula One a little over two years ago, we knew that Formula One was a fundamentally strong product and brand, but we knew there would be hard work ahead to turn this into an efficient business. We now feel we have the right organizational structure and a fortified to core business and can now focus on how we amplify our strengths. For 2019, the drivers and revenue are clear, cost growth will abate, and we expect leverage to decline significantly.

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

Greg Maffei -- President and Chief Executive Officer

Thank you, Chase, and thank you, Mark. I'd like to finish by reiterating the point that Chase just made. We are very pleased with the progress that Formula One has made over the last two years. We are confident the tremendous potential still exists.

We realize the hard work and dedication that Chase and his team have put into building up this organization and look forward to seeing the payoff soon. We are committed to the F1 business. Another news, we have scheduled our annual investor meeting in New York on Thursday, November 21, so please mark the date. Finishing, we continue -- we appreciate your continued interest in Liberty Media.

And with that, I'd like to open it up for questions. Operator?

Operator

[Operator instructions] We will now take our first question from Vijay Jayant of Evercore. Please go ahead, sir. Your line is now open.

Vijay Jayant -- Evercore ISI -- Analyst

Thank you. For Chase. Chase, just some clarification. Obviously, there's some dollars moving from our sponsorship to race promotion.

If that didn't happen, what was, sort of, the growth in sponsorship, obviously, we expect in that to continue to improve in '19? And then on the price front, as percentage of revenue that seem it improved -- increased by about 200 basis points to 69.5% in 2018 from 2017. Obviously, we thought it was more, sort of, fixed in some ways. I'm assuming there's some bonus payments and the like. If you could help us understand that.

And if I could, one final one is on what I understand as the FIA International Sporting Codes mandate a major technical and sporting regulations to be determined as part of the Concorde Agreement by the middle of this year. So how -- if that is the case, do we expect to get all the commercial and the budget caps and all the other things we're working on also come together at that time.

Chase Carey -- Formula One's Chairman and Chief Executive Officer

So I guess on the first one as it relates to promotion and sponsorship, yes, I think probably, the impact of what was moved around and again, I think I've said on the call, it was in aggregate, sort of, net neutral and it took down a bit sponsorship revenue and increased promotion and decreased the sponsorship revenue. So without that, the sponsorship revenue would've been certainly a few percentage points higher than it was otherwise. And again, it's not uncommon in our agreements where we have sponsorship components, we have hospitality components, we have fee components, so quite frequently, we are working with sponsors to figure out how do we optimize for both of us the revenue opportunities, but we're pretty revenue-neutral on it in aggregate across those. On the prize fund, it's not a bonus.

The primary effect when 2018 was really how the specifics of the prize fund computation, dealers and things like withholding taxes, so we had a long-term dispute with the country that actually benefited us but we account for it in one way but it flows through the prize fund, so it actually doesn't flow through our operating profit to us, we get the cash benefit of it but because it gets computed into -- because it gets factored into the prize fund computation. The prize fund reflects the benefit of that, so it's a difference between how that which was essentially the resolution in our favor of a past withholding tax issue went up in a country and how that flows differently through our P&L than through the team's P&L, through the teams prize  fund and that was a primary thing. They took it out of -- made the prize fund higher than it would otherwise be on a pro rata basis against the profit. And there are, sort of, structures that lead us to -- want to have things in place by June.

I'm not going to put in place, I'm not going to elaborate on specific deadlines for the discussions with teams. They're active. I mean I've had a number of meetings this week with teams. So they are quite active.

We are trying to -- as I said in the opening comments, we want to resolve these things, they are for 2021. So clearly, you don't -- there is still time there. But I think all of us would like to have a clear visibility to the future. So we are looking to conclude those as quickly as we can but it is true that certainly, there are components of it that we would look to have in place by June, although we certainly expect to advance things before then.

Vijay Jayant -- Evercore ISI -- Analyst

Thanks so much.

Operator

We will now take our next question from Amy Yong of Macquarie. Please go ahead. Your line is now open.

Amy Yong -- Macquarie Group -- Analyst

Thanks and good morning. I guess now that you've closed -- or SiriusXM has closed on Pandora, can you talk about some of the cross-collaborative efforts between SiriusXM and Live Nation? And do you think it makes sense to combine these? And I guess lastly, how do you think of LSXMA as an acquisition currency?

Greg Maffei -- President and Chief Executive Officer

I'll -- Amy, I'll take the latter first. I think it's a very poor acquisition currency, given that it trades it a discount to the underlying source of 99.999% of its value or 90 -- I guess, not quite that high, 97% of its value, something like that. So it would be a very set -- unusual set of circumstances which would cause us to use LSXMA as a acquisition currency. On the Sirius and Pandora combinations -- combination and the opportunities, I think they're in a host of areas.

The opportunity to cross-promote, the offer to have a good-better-best strategy, the opportunity to use Pandora's strength in digital advertising to enhance the offerings of Sirius' on the advertising side, the opportunity to move subscribers from one set whether it be in the home or in the car or elsewhere on mobile to another, the opportunity to share content, in part or in whole, is a teaser or a more completely, the opportunity to have rationalization on the cost side in several areas, in digital in particular but just in general in G&A, there are places. So I think they are a range of them and frankly, we are only getting a handle on those. Jim Myer has been spending and Dave Frear has been spending a lot of time in Oakland. The whole senior management team had an off-site yesterday at SiriusXM and topic one is all the things that can be done together and all sets of managements were there, and those sets of management are increasingly integrated.

So I think some of the things you've suggested about bringing them forward together are happening and will happen increasingly through '19, and I think you'll see a series of initiatives in '19 demonstrating how we can work together.

Amy Yong -- Macquarie Group -- Analyst

Thank you.

Greg Maffei -- President and Chief Executive Officer

Thank you. 

Questions and Answers:

Operator

We will now take our next question from Benjamin Swinburne of Morgan Stanley. Please go ahead. Your line is now open.

Benjamin Swinburne -- Morgan Stanley -- Analyst

Thank you. Good morning. Chase, you said in your prepared remarks, the growth drivers are clear, I think you're talking about 2019, maybe 2019 and beyond for Formula One and cost pressure should abate. I don't know if you want to go thus far, but should we expect revenue across all the three major streams for primary F1 race promotion ad and sponsorship and broadcast to all grow this year? And given your point on cost, should we also expect margins to go up?

Chase Carey -- Formula One's Chairman and Chief Executive Officer

First, on revenue, we do expect -- there are obviously, other categories that matter too, so those, I mean, the three big drivers. But certainly, areas like hospitality are important but we expect growth across all, not equal, by largest growth in television. The race calendars, yes, pretty stable so I think probably the growth will be more modest there. Clearly, Vietnam, coming on a year later, ads on the promotion front and the sponsorship area, we expect ongoing solid growth, got a lot of interest in the sponsorship area.

The sponsorship probably takes a little longer to close the deals than we would've expected a year or 2. You got to create more tailored packages and tell the story better and create the research to sell it. But along with the way of saying yes, we do expect growth across -- really all primary areas, not equal growth, television growth will be the largest. And certainly, growth in some of the secondary areas too, like hospitality and events.

And on the cost side, I mean it's only a little complicated, our biggest cost is the team payments, so -- which are more a percentage. So you don't really get any margin. You don't get margin improvement off of the team payments since it's a percentage of profits. And so we -- if you -- so the other costs are so small against the team payments.

The margin and movement is smaller. We do expect some improvement but there are number of areas where cost relate to revenues to take the hospitality area or freight which are areas where we have revenue that's attached to cost, to the degree freight costs go up, freight costs were up significantly in 2018. We -- a lot of our freights for third parties that we build through. So there is sort of a -- it is a revenue-generating cost increase.

It's not a profit center, but it's a revenue-generating cost increase. Hospitality, again, is an area where we have cost against revenue. So revenue will have to costs go up. So there are some places where -- in television promotion and the, sort of, core areas that primarily straight through.

Some of the other areas of growth, we are having more events this year, the MIT events. Again, they will be -- we'll make money on them, but there is a cost to create them. So we have some costs that are not large in the context of the overall business. Certainly, the events are -- freight's a sizable cost.

But in aggregate, our costs that are not attached -- or costs like operating costs and some of the basic costs, we'll certainly have margin improvement against. But we won't against the team payments and we will have some in the areas like hospitality and freight that have some costs against them.

Benjamin Swinburne -- Morgan Stanley -- Analyst

Got it. And I don't know if you and Mark could comment, but when do you expect or when should we expect you to get to your leverage target or get to that 6 times or below if you look out over the next couple of years? I think your visibility is very helpful.

Mark Carleton -- Chief Financial Officer

Yes. I think, we're certainly -- go ahead, Chase.

Chase Carey -- Formula One's Chairman and Chief Executive Officer

No, go ahead, Mark.

Mark Carleton -- Chief Financial Officer

No. I think we're certainly aiming toward getting that down under 6 times this year. We think there is a realistic opportunity to do that. And as we look at the numbers, we -- that's certainly what our target has been and we think we'll get there.

Benjamin Swinburne -- Morgan Stanley -- Analyst

Great. Just lastly to Greg, any thoughts or interest in spinning the investments out of the Flonk's tracker. Obviously, investors looking at Flonk today, there's a lot of investment -- there is more investment equity in there than there is F1, which is I'm sure sub-optimally, you'll probably agree. Any interest in, sort of, revisiting the structure here?

Greg Maffei -- President and Chief Executive Officer

Well, I'd first note that that it's a high-quality problem caused mostly by the increase in the value of Live Nation that has caused this to be the case. And moving it across, as we've talked about, the most obvious way would be to -- more properly aligned with SIRI over time might be the movement there, but given where LSXM is trading, it's probably not attractive. There is debt against it which would reduce the net equity value. But the moment I would describe that is probably a worthy goal but not worth the cost or the friction to get it done at the moment, may change but not at the moment.

Benjamin Swinburne -- Morgan Stanley -- Analyst

Got it. Thanks, everybody.

Operator

We will now take our next question from Jeffrey Wlodarczak of Pivotal. Please go ahead. Your line is now open.

Jeffrey Wlodarczak -- Pivotal Research Group -- Analyst

Good morning. One for Greg and one for Chase. Greg, can you comment on your potential interest in taking a stake in Universal Music? Do you need an ultimate path to control and will that be done through Liberty or SIRI? And then, I guess, the same question on Fox Sports Net and do you think those assets actually get sold or Disney Sports to send them out?

Greg Maffei -- President and Chief Executive Officer

Look, Universal Music, if you look at SIRI, one of the largest, if not the largest cost they have is to the content suppliers and understanding how you might hedge some of those costs is interesting, an ownership stake in Universal Music could be interesting. That's really only going to be true on the right terms and conditions. We were asked, I was asked, would you look at it? Of course. We are a -- it's a huge supplier to us, an important constituent in the music space and we would look.

So when Vivendi announced that they were going to potentially seek partners, we certainly would express interest. It would have to obviously, unspoken, don't need to say it but we'll anyway on the right terms and conditions, and would we prefer path to control? Usually in light, we do but we're also -- it would depend on what else is available and what else is offered and whether that's attractive in the total. That probably would be done at SIRI but I can't guarantee that. We would look and say, is it attractive for SIRI, is it attractive for LSXMA, what are alternatives.

You've seen where we've been putting our money in LSXMA. I don't want to note that. And you should -- just to further on the LSXMA's investment priorities, I think I told you, we're going to get three components of iHeart spun-out to us, the CCL equity, the radio debt and the radio equity. The first two are probably not big so we're going to hold for the long term, if at all.

They're just not in our investment portfolio. CCL may be a great company for the future, it probably doesn't fit well with our portfolio so you might expect us to utilize some of that cash to do things like shrink the LSXM discount or take advantage of it. And as far as the RSNs, it's a set of assets we know well. We understand both their strengths and their weaknesses which are manifest.

And you have a seller who is -- a force seller. My understanding is by the terms of their consent decree which could be modified, they're going to be a seller, not a spinner. But the current consent decree does not allow them, as I understand it, to spin, could change. You've got several large players, including Fox, suggested they're not interested and walked away.

It's, kind of, situation we would look at, and if we've been rumored to look at and it would be logical that we would look at it. But we're going to look at it only on the basis that it's attractive for us for the long term and that we can see reasonable upside, given what our clear risks in the distribution of these and then changing MVPD world. Where that investment would get done, whether it'd be done at BATR or would it be done in LBRD or somewhere else, really depends on the scope and size and who our partners are and how that turns out. But we are approaching them with appropriate caution and appropriate wide-eyed certainty and understanding that we formed a lot of these things with Fox a long time ago.

We have a lot of history with them and understand those businesses as well.

Jeffrey Wlodarczak -- Pivotal Research Group -- Analyst

And then one for Chase. Chase, Is it fair to say under the new potential Concorde Agreement that the revenue share payment percentage for teams are probably going to be about the same as they are today, but if you can grow the revenue materially, you'll get a larger share of future revenue?

Chase Carey -- Formula One's Chairman and Chief Executive Officer

I don't think at this point I don't want to get into, sort of, speculating on things that are still in active discussion. We certainly expect to grow the business and there's no question. And then we've talked, like I can go back to the last two years, we talked that '17 and '18 being, sort of, building foundations. We expect growth to really start to flow through the business in '19 and more so in '20.

We talked about 2020 being the target. So certainly, we are focused on growing the business. We believe there's lot of growth in it and we expect to start to recognize that, but I don't want to get speculating on things that I think -- as it's also said many times, I think we're best off having those discussions private with our partners and when we resolve it, we'll address it.

Jeffrey Wlodarczak -- Pivotal Research Group -- Analyst

Fair enough. Thank you.

Operator

We will now take our next question from David Karnovsky of JP Morgan. Please go ahead. Your line is now open.

David Karnovsky -- J.P. Morgan -- Analyst

Thank you. Just one for Chase. Regarding the contract with the sale of broadcast rights broker, can you just say what regions discovered? And then can you walk through what happened when the contract terminated? Did you move to agreements directly with your TV partners and then do those deals restart in 2019 or in 2020?

Chase Carey -- Formula One's Chairman and Chief Executive Officer

Yes, so I'm not going to elaborate too much on by design. I did not identify the specifics of the -- probably Turner people can guess and essentially with a broker, a middleman that control our rights to be sold it on. So when the broker went broke, the agreements were eliminated as part of the process. So yes, what we did is go back and it was -- there was a large region a number of smaller ones, so we were back engaged directly with the parties that had been buying through the broker, given the timing through which it happened in some of the circumstances for 2018, it clearly created the consequences and timing of it made it adverse to us.

We expect in 2019 while the season is imminent, we're still addressing it. We expect to get to a constructive place that works for us in a better way for 2019 forward and are actively finalizing, some of it's finalized, but we're actually finalizing it now and -- but when we have the deal with it live, with -- a week's notice or what have you. Clearly, there was a consequence to us in '18, but we believe we are in a path to address it in a constructive way for us for the '19 season.

David Karnovsky -- J.P. Morgan -- Analyst

OK. And I think Formula One has a few race promotion contracts that are coming up in 2019. Is there any even high-level commentary you can give us and how are you thinking about those races? And then is there any update you can provide on Miami?

Chase Carey -- Formula One's Chairman and Chief Executive Officer

Yes. I mean up in '19, which means for the '20 season. Obviously, our '19 -- the 21 races we have for '19 are all contracted. So it's -- we have contracts for '19 if the last season, and we have to either create a new agreement more partner separate -- go separate ways.

And there's nothing really unique to this that wasn't true last year. We had a number of renewals last year just we had a number of renewals the year before. There are different issues in each one. I think the most positive aspect of that is we have -- we're increasingly encouraged by the breadth of interest of new parties who want to come in and that really is -- the dynamic that's important for us is more of the supply and demand.

We value some of our -- some of our races are long-term partners, some not quite as long. I think our first approach is if we can get to a place that works for both of us, is to renew races. We haven't -- we're not necessarily always going to be able to get there, but to make sure we're getting fair value, it's important that we have alternatives in places that provide not just attractive finances but attractive races, example being Vietnam. We think it's going to be an exciting new place to go, it's also an objective for growing in Asia.

And it's a win-win for both of us so it really ticks all the boxes. We have places really around the world that we like to add races, including not just new markets but some traditional markets like Western Europe. So I think it is engaging with partners, seeing if we can get a place -- get to a place that works for us and trying to judge that against the opportunities we have in other markets. And that is a process we're engaged in now with the renewals for 2020 which won't be different than every year.

We always have some 3, 4, what have you, negotiations we have to go through. And I think as we've gotten a few years under our belt, I think we increasingly feel pretty good about the trajectory of that and the ability to continue to have a healthy business there. And we are looking to, we've talked about it and we think there's room to add a bit to the race calendar.

David Karnovsky -- J.P. Morgan -- Analyst

Thank you.

Operator

And we will now take our next question from John Tinker of Gabelli. Please go ahead. Your line is now open.

John Tinker -- Gabelli and Company -- Analyst

Hi. Thank you. Just following up on Jeff's question on the Fox Sports Net. One thing I saw little confusing is can the MLB bid on them? And would it -- how likely possible is it that they could be split up and that the Braves can just pick up FOX Sports South rather than the whole package.

Greg Maffei -- President and Chief Executive Officer

Well, I -- this is a Greg. I don't know -- thank you, John, for the question. I don't know why MLB could not bid on them. There's no reason, I don't -- I wouldn't understand why they would not bid on them.

And there has been certainly rumored that they are a bidder. And I can see why MLB would find it attractive to try and reconsolidate those rights to give them more flexibility into the future in dealing with over the top and other kinds of bidders. In that vein, I think there are a couple of reasons why -- while these might be cut up that's unlikely. There are bunch of MFNs in these things that make it very hard to unwind the pieces.

And secondly, while you can't say for sure, look the power comes from having multiple and giving you leverage vis-à-vis the MVPDs and to degree that you only had one region as attractive as the Fox South region is and it may be the most attractive regions. It's among the largest with relatively low rights. In general, having one region, gives you less leverage and is a less appealing opportunity. You don't want to take definitively no to anything but in principle more is a better.

John Tinker -- Gabelli and Company -- Analyst

And so a quick follow-up on the -- you've now, sort of, set up your -- you're going to spend another couple of hundred million completing out -- completing the development, what time does revenue start to kick in from that in the second phase?

Greg Maffei -- President and Chief Executive Officer

Of the Battery?

John Tinker -- Gabelli and Company -- Analyst

Yes.

Greg Maffei -- President and Chief Executive Officer

I think there are some units leased up. I think we'll see beginnings of it in '19 and more meaningfully in '20. We could ask Chase to comment on the RSNs. We probably put him into a difficult situation.

He has a lot of knowledge but we probably put him on the spot.

Chase Carey -- Formula One's Chairman and Chief Executive Officer

I'll pass.

John Tinker -- Gabelli and Company -- Analyst

Thank you.

Operator

We will now take our next question from Barton Crocus of DCS Fox.

Unkown speaker

It's Barton Crockett. I guess, a couple of things. One is, your business at Formula One having some substantial, kind of, obvious European and international exposure. A lot of companies with that type of footprint are seeing impacts from the economy, perhaps in the U.K.

and weakness in some other places. You don't seem to be seeing that, but I just want to double check. I mean, does your business seem to be economically resilient? And if so, if you explain that as just, kind of, the affluent nature of people going to your races and some of the improvements you're making. How do you feel about the economy in terms of what it means for you there?

Chase Carey -- Formula One's Chairman and Chief Executive Officer

Yes, I guess, I'd say the economic issues, we -- I do think we feel pretty immune to them. I mean, in Brexit, we've got some logistical issues that are more, sort of, if you end up with no deal Brexit, how do we get in and out of Britain with various equipment but it's not a financial issue, it's more logistics. So we're -- contingency planning for things like that. I think we are immune.

I guess, I'd say the reasons I think being global, while certainly we're European base for a global business and we're unique. I think those that probably feel at the most are ones that are more commoditized and we're not -- I think it also helps that we're largely a contract business. So we're not ones if you look at our revenue streams. So there are some that are more ongoing hospitality, something like that but the vast majority of it is long-term.

And so I think people the less -- parties are less consumed. We are a fairly high -- we're certainly high-demo sports, so I think that probably helps we've got quality sponsors and the like. So I think the combination of unique events, long-term agreements, strong demographics and those we deal with and I think to some degree, upside to our story. And we really do feel that we've got some wind on our back.

And our focus in the last 24 months has really been building interest in fans, creating momentum in the business, creating momentum in the sport. And then as we now move to monetize that, we, sort of, get the story told, create some momentum. And I think we're seeing the interest that we experience. There are some places not really as much of the economy.

I mean, certainly the sponsorship area, again, is -- if you're not Google or Facebook, it's probably harder than it was. But actually, we're pretty encouraged by the interest. It's -- but you've got to tell a better story. You've got to have a meat in the bones, and the story, you can't just sell signage in the wall anymore and you've got to find ways to create unique relationships with them and have the research and data that proves the story out.

I think we're doing all those things. So again, I don't -- the economic issues, we really aren't -- while we're based in the U.K., we're certainly not a U.K. company, so that for the U.K.-specific issues. I wouldn't expect it to, but I think certainly Europe is meaningful to us.

But I think we feel we're writing above whatever that noise is for the reasons I said.

Unkown speaker

That's great. And if I could just switch gears for Greg. You pointed out that you guys will have your positions in iHeart plus bankruptcy. I was wondering if you could update us on your feeling currently strategically about traditional radio? Is that iHeart stake a strategic one or something that we can characterize as may be a flyer that didn't work and not so strategic now? And if radio is strategic, why -- is it safe to think that iHeart's really the only play for you there? Or is there a possibility that you would look at others, the space did seem to have a better, kind of, revenue trajectory in the fourth-quarter and into the first quarter, so I don't know fair factors into your thinking.

Greg Maffei -- President and Chief Executive Officer

Well, I'd like to think that back into our thinking why we got into -- in the first place, not after the fact. But look, I would not characterize it as a flyer that didn't work. That's a little -- we took a position. We made some proposals that could've been interesting to have an investment.

We have a smaller investment now. We'll watch what's going on. The terrestrial radio space is still a scale space. There are clearly challenges for them but also opportunities, and iHeart is doing a good job there compared to most radio companies about -- thinking about how to attack that, and I give credit to Bob Pittman and Rich Bressler for their thinking in that way.

The opportunities for us to have synergies across the Sirius/Pandora footprint with iHeart, I think, are still very interesting. We're very focused at SIRI today on managing the Pandora integration, but both SIRI and Liberty, we'll watch closely what's happening at iHeart and we'll see. You -- I think being an interested shareholder will be a good thing. And sorry, just as other radio, I can't say categorically no, but iHeart is the largest scale play and in some ways not only is a leader in scale but the leader in technology and what they're -- and where they're going, so that makes them probably, if not the only choice, the first choice.

Unkown speaker

OK. That's very helpful. Thank you.

Operator

We will now take our next question from James Ratcliffe of Evercore. Please go ahead. Your line is now open.

James Ratcliffe -- Evercore ISI -- Analyst

Thanks. One for Greg on Liberty Trip, if I could. Based on the filings, it looks like representative of Liberty Expedia was willing to collapse that structure into Expedia, essentially at par and maybe a very slight premium? I'm wondering if any comment about just that there any readthroughs to your views on the appropriate relative valuation of Liberty Trip versus Trip.

Greg Maffei -- President and Chief Executive Officer

Yes. I don't think it speaks to that so much. If you look at the Liberty Expedia situation, that's largely about -- we have a relatively pure play there with -- at Liberty Expedia of Expedia stock and a large embedded corporate gain that the consummation of that merger, if it occurs, would eliminate and would allow our Liberty Expedia shareholders access to the underlying Expedia stock and a premium to the marketplace that they're experiencing today. It sounds like a good transaction.

It does not require anybody to sell their Expedia stock instead gives them a more liquid stock at a slightly higher price. It sounds pretty good and eliminates potential future liabilities. For Expedia, lots of good things eliminate the uncertainty around the overhang, eliminate the uncertainty around the ownership somewhat being shared today between Barry Diller's control and John Malone's control, also eliminates the condition where you go from a hard control situation to a influenced situation where Barry would not have as much voting control as Liberty has today. So all that to say the reasons why that transactions should get done that have little read through or look through on what you think about Trip.

We remain very bullish on Trip on its own accord and the things they're doing but probably not influenced by that transaction.

James Ratcliffe -- Evercore ISI -- Analyst

Great. Thank you.

Operator

We will now take our next question from Bryan Kraft of Deutsche Bank. Please go ahead. Your line is now open.

Bryan Kraft -- Deutsche Bank -- Analyst

Good morning. Chase, just I have one for you on advertising and sponsorship. Can you help us to understand, I guess, how the revenue growth in 2019 and 2020 will be driven? I'm just curious, is it by adding additional sponsors or is it increasing the spend among existing sponsors by providing the more inventory and opportunities to engage with fans? Just trying to get a little more color and better understanding their if you would.

Chase Carey -- Formula One's Chairman and Chief Executive Officer

I think more of it comes from adding. I mean, we've been successful in -- with some of our renewals in adding some expansion to it and as we have more opportunities for them to support things like fan festivals or MIT conferences or e-sports, some of them have stepped up. So there is some expansion with existing, but I'd say the bigger -- I think we still feel we have a lot of the portfolio to fill out. So I think we expect that to be the bigger component and offer a more opportunity.

So we brought on a regional sponsor, significant regional sponsor. We're going to have regional feeds this year. We don't have regional feeds to sell before. So I think as we create more opportunities for more sponsors to step in and sponsor more things, we expect all of that whether it's filling up the portfolio and untapped opportunities, unsold title sponsors on races, unsold global sponsored slots, more opportunities for sponsors to step in.

We expect that growth to come from additional sponsors although we -- that doesn't mean we're not looking for ways to add to -- add to the -- add opportunities with the existing guys.

Bryan Kraft -- Deutsche Bank -- Analyst

And is there a lot of room to add sponsors -- large sponsors from here? Or are you filled out for now given the amount of inventory?

Chase Carey -- Formula One's Chairman and Chief Executive Officer

No, we have a room, but it's not infinite but certainly, whether it's a global, sort of, entitlement in there. There are three basic -- three primary tiers and then you can create a lot more crafted ones as we create again more capabilities, we can create more unique propositions. But certainly, we have -- we're not capacity constrained, at some point, we may be, but right now we have the opportunity -- we have untapped opportunities. And we won't run out certainly in the short -- that we won't run out in the short term.

Bryan Kraft -- Deutsche Bank -- Analyst

Thanks.

Operator

We will now take our last question from Jason Bazinet of Citi. Please go ahead. Your line is now open.

Jason Bazinet -- Citi -- Analyst

I just have two questions. I know Mr. Carey's encouraged us not to look at the quarterly results, this indicative of the health of the business, So I apologize for asking a quarterly question. If you have a race that occurs on the first or the las day of a quarter in any given year, does that have any bearing on revenues because I think we're all modeling it as if it the race occurs day one of the quarter, it all shows up in that quarter.

Greg Maffei -- President and Chief Executive Officer

Chase, you might let Brian Wendling talk about the accounting recognition because...

Chase Carey -- Formula One's Chairman and Chief Executive Officer

Let me tell you, in the technical accounting, there's probably somebody better than me to answer it so...

Greg Maffei -- President and Chief Executive Officer

Brian?

Chase Carey -- Formula One's Chairman and Chief Executive Officer

I'll let Brian.

Brian Wendling -- Chief Financial Officer and Senior Vice President, Liberty TripAdvisor Holdings, Inc.

Yes, I mean, it's pretty simple answer but the answer is that if the race occurs on a Sunday, and if that Sunday falls into the next quarter, we recognize it in the next quarter. So we recognize all the revenue based on the day of the race.

Jason Bazinet -- Citi -- Analyst

OK, very good. And then just a follow-up question.

Brian Wendling -- Chief Financial Officer and Senior Vice President, Liberty TripAdvisor Holdings, Inc.

We have some race-related revenue, we have some season-related revenue. But those the race-related revenue gets recognized when the race happens.

Greg Maffei -- President and Chief Executive Officer

Yes.

Jason Bazinet -- Citi -- Analyst

OK. And then just a follow-up for Mr. Maffei. I think the core was it is not worth that friction of moving their live stake and some debt over to another tracker.

Can you just elaborate on what friction you see?

Greg Maffei -- President and Chief Executive Officer

Yes, Jason. We -- I think I talked earlier about the discount in LSXMA. The most obvious way would be to compensate the Flonk shareholders for the stake. The net of the debt is associated with it for the life holding by issuing Flonk stock to them -- excuse me, by issuing LXSMA stock to the Flonk shareholders.

But given the discount that LSXMA trades at to the underlying SXM, I don't think that's a very attractive way or appealing to the LSXMA shareholders.

Jason Bazinet -- Citi -- Analyst

You couldn't do it just -- you just couldn't do it NAV-neutral or the equity stake in Live plus the debt is sort of NAV neutral and moved across? Why does it happen [Inaudible] equity issuance?

Greg Maffei -- President and Chief Executive Officer

I'm not sure how you did that. You've got to compensate Flonk or the Flonk shareholders in one or two ways that I can think of, either you pay them cash or give them equity. And the equity that would be available will be LSXMA or the other choice would be levering up LSXMA and giving them cash. And I think at the moment, we think there are other things that are attractive for LSXMA to do with its firepower.

Jason Bazinet -- Citi -- Analyst

So the third option of the LSXMA equity value married up against some debt that sits at the Formula One Group is not an option, so zero NAV transfer.

Greg Maffei -- President and Chief Executive Officer

I guess, I'm not following because -- yes, there is this debt the exchange that we would do but that still has net equity value. So let's look at the net equity value of the Live stake. How am I paying for it? You're proposing to pay for it with a look through-value of SIRI or are you proposing to pay with market value? If I'm a Flonk shareholder, I probably don't find look-through value to be attractive. And if I'm an LSXMA shareholder, I probably don't find market to be very attractive.

So I don't know somebody's actually going to get gourd until those numbers balanced out better. I don't want to disadvantage either side of shareholders.

Jason Bazinet -- Citi -- Analyst

I'm just saying if you mark-to-market the Live Nation stake, whatever that's worth is equity value and you married up with like amount of debt.

Greg Maffei -- President and Chief Executive Officer

Again, that has a net equity value. The Live Nation stake is worth -- yes, the Live Nation stake is worth three something and the debt is $1 billion something. So there's net equity value of two plus sitting inside of Flonk. I got to pay for it somehow if I move it across.

And I only pay cash for stock, so I don't know how it is going somebody's -- unfair even to the Flunk side or the LSXMA side.

Jason Bazinet -- Citi -- Analyst

Understood. You're smarter than I am so I'll trust you. Thank you.

Greg Maffei -- President and Chief Executive Officer

I don't know about that, but I think I got those numbers roughly right. Thank you today for the questions and the interest in Liberty Media, and we look forward to speaking with you next quarter if not sooner.

Chase Carey -- Formula One's Chairman and Chief Executive Officer

Thanks a lot.

Operator

[Operator signoff]

Duration: 59 minutes

Call Participants:

Courtnee Chun -- Senior Vice President of Investor Relations

Greg Maffei -- President and Chief Executive Officer

Mark Carleton -- Chief Financial Officer

Chase Carey -- Formula One's Chairman and Chief Executive Officer

Vijay Jayant -- Evercore ISI -- Analyst

Amy Yong -- Macquarie Group -- Analyst

Benjamin Swinburne -- Morgan Stanley -- Analyst

Jeffrey Wlodarczak -- Pivotal Research Group -- Analyst

David Karnovsky -- J.P. Morgan -- Analyst

John Tinker -- Gabelli and Company -- Analyst

Unkown speaker

James Ratcliffe -- Evercore ISI -- Analyst

Bryan Kraft -- Deutsche Bank -- Analyst

Jason Bazinet -- Citi -- Analyst

Brian Wendling -- Chief Financial Officer and Senior Vice President, Liberty TripAdvisor Holdings, Inc.

More LSXMA analysis

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