Liberty Media Corp. 2026 Q3 Earnings Call - LIBERTY MEDIA CORP

Financial Performance:

• F1 year-to-date revenue remained flat despite 2 fewer races held (15 vs 17), with adjusted OIBDA down 5% due to calendar variance and one-time movie release revenue in the prior year; primary revenue declined driven by lower race promotion and media rights, partially offset by underlying contractual fee increases and strong sponsorship.
• MotoGP revenue decreased year-to-date driven by 2 fewer races (15 vs 17), reduced contract meteorite revenue, and a shift to net recognition on hospitality costs with partner Quint; adjusted OIBDA declined correlating with revenue and cost reductions from fewer flyaway races.
• Corporate and other segment reported $18 million revenue (Grand Prix Plaza rental) and a $36 million adjusted loss.
• Liberty Media held $2.3 billion in cash and liquid investments at quarter-end; total debt stood at $5.5 billion, with net leverage at 3.0x.
• Liberty issued $690 million in new convertible notes due 2032 to repay 2027 notes and fund general corporate purposes; F1 and MotoGP revolvers remain undrawn.
• F1 team payments as a percentage of adjusted EBITDA were 58.7% year-to-date, with expectations of a 200 basis point leverage improvement for the full year.

Guidance and Future Outlook:

• F1 expects a return to a full 24-race calendar in 2027, following a revised 23-race season for 2026.
• F1 growth strategy includes expanding the Sprint format to 10 races in 2027, launching "F1 Live" in Milan, and adding Portugal and Turkey to the 2027 calendar.
• Long-term goal to return to Africa with a new Grand Prix in Rwanda starting in the early 2030s, aiming to race on every inhabited continent.
• MotoGP 2027 calendar will introduce new events in Argentina and Adelaide, with a focus on renewals for approximately 75% of the existing calendar.
• Management expects MotoGP to accelerate growth in 2027, leveraging a stable teams' agreement extended through 2031 and a new executive leadership structure.
• Both franchises target continued revenue growth in hospitality, licensing, and media rights, with a focus on expanding geographic footprints in the US, Asia (China, India), and Africa.

Business Segments and Product Lines:

• Formula One: Successfully staged 7 races in Q3 2026 (including Bahrain in Malaysia); announced new partnership with Leica (BISSPO 401 edition) and extended Disney partnership through 2028; launched new hospitality concepts like "The Outlap" with LVMH and expanded Paddock Club capacity by 15% in key venues.
• MotoGP: Announced new race weekend format for 2027 with standalone sprint qualifying; launched "F1 Live" crossover event in Austin reaching 467,000 F1 fans and 50M+ digital impressions; strengthened executive team with hires in strategy, operations, commercial, and media.
• Licensing & Media: Expanded F1 flagship stores and digital hubs; renewed media rights with DAZN (Spain/Portugal) and Foxtel (Australia); gaming collaboration with Mattel for Hot Wheels Infinity Rush.
• Hospitality: Strong demand for premium experiences; Paddock Club sales for 2027 beginning November; Las Vegas GP sponsorship pace ahead of 2025 levels.

Market and Competitive Landscape:

• F1 achieved 18 consecutive sold-out events with 11 races setting attendance records; global TV audiences saw double-digit growth at key races like Italy and the Netherlands.
• F1 digital metrics show 129M social media followers (+16% YoY) and 1.7B YouTube views (+30% YoY).
• MotoGP recorded 63M total social followers with TikTok engagement up 60%; sport maintains benchmark status for competitive racing.
• F1 and MotoGP are positioned to leverage cross-promotion opportunities, utilizing shared fan bases to expand reach in key markets.
• Management highlights significant untapped potential in Asia and Africa, citing high youth demographics and affinity for premium sports/entertainment.

Risks and Challenges:

• Calendar volatility due to geopolitical instability, specifically requiring the rescheduling of the Bahrain Grand Prix to Malaysia and ongoing monitoring of Middle East security for future races.
• Foreign exchange exposure on MotoGP, which is Euro-denominated, creating translational impacts on reported results.
• One-time revenue distortions affecting year-over-year comparisons (e.g., "Up One" movie release in 2025, F3 engine cycle changes).
• Execution risks associated with expanding the calendar and launching new events in unproven markets (e.g., Rwanda, potential future Asia expansions).

Management Commentary and Tone:

• Management expressed high confidence in the underlying strength of both franchises, describing the Q3 performance as "incredible" and the businesses as performing ahead of supply.
• Derek Chang highlighted the strategic success of the transaction with Dr. John Malone, noting improved voting alignment and capital structure simplification.
• Tone was optimistic regarding long-term growth, citing "resilience" in the business model and "tremendous potential" in MotoGP following new leadership appointments.
• Emphasis placed on transforming events into holistic cultural experiences that drive economic impact for host cities.

Analyst Questions and Answers:

• Capital Structure: In response to inquiries about collapsing Series A/C shares, management stated they are evaluating optimal capital structures but the current transaction was specifically designed for Dr. Malone's exit without a broader structural overhaul immediately.
• VIP/Hospitality: Confirmed that Paddock Club capacity is nearly sold out for 2027 at major venues; management declined to break out VIP revenue separately at this time unless SEC thresholds are met but confirmed it is a primary growth driver.
• Monetization Gap: Stated that MotoGP's revenue gap with F1 will close via promoter fees first, followed by media and sponsorship over a 5-year horizon, leveraging Liberty's credibility.
• Media Rights: Confirmed Apple TV's strong performance in the US and potential interest in bidding for other markets, though the strategy remains multi-partner globally.
• Calendar Logistics: Reiterated that safety is paramount regarding Middle East events; confirmed contingency plans exist for the end of the 2026 season and the 2027 calendar.

Other Key Points:

• Completed transaction with Dr. John Malone exchanging Series B high-vote shares for Series A/C low/vote shares, reducing his voting power to ~3%.
• Kimi Antonelli won the F1 Driver's Championship; Marc Marquez is on track for another MotoGP title.
• Las Vegas Grand Prix projected to generate significant economic impact and revenue, with the city's community partnership viewed as a key long-term asset.
• MotoGP introduced new riders for 2027, including World Superbike champion Nicolo Bulela, highlighting a strong talent pipeline.