Qurate Retail Meeting Investor Meeting Teleconference QRTEA US 2018-11-14 20:58:53.422 GMT
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Qurate Retail Meeting Investor Meeting Teleconference QRTEA US 2018-11-14 20:58:53.422 GMT Event Date: 11/14/2018 Company Name: Qurate Retail Event Description:Investor Meeting Source: Qurate Retail Version: Final For more event information and transcripts, visit <a href="bloomberg:EVTS%20%2FD%3AF%2D6463580%3CGO%3E">EVTS</a> Investor Meeting MANAGEMENT DISCUSSION SECTION Unverified Participant: This presentation includes certain forward-looking statements regarding Liberty Media Corporation within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about business strategies, market potential, future financial performance, stock repurchases, new service and product launches, Formula 1 tax considerations and expected leverage, Formula 1 race calendar expansion, SiriusXM's proposed acquisition of Pandora, the Atlanta Braves mixed-use facility, and other matters that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These forward-looking statements speak only as of the date of this presentation, and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any such statements to reflect any change in its expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based. Please refer to Liberty Media's publicly filed documents, including the most recent forms 10-Q and 10-K for additional information. At today's meeting, we will discuss certain non-GAAP financial measures. Please refer to the Appendix at the end of this presentation for definitions and applicable GAAP reconciliations. The Appendix will be available on Liberty Media's website throughout this meeting. Courtnee Alice Chun: Good morning and welcome to another Liberty Investor Day. We have a great day planned for you. I'm Courtnee Chun. I think I know most of you by now. We hope that you are enjoying the experience downstairs. We did something a little bit different this year. Hopefully, we've got more seating down there as well for you guys. This is our morning agenda, so we'll be doing Liberty Media and then Liberty TripAdvisor. Just some useful information. Here is the Wi-Fi password. Write it down, take a photo, get on it. We also have - we have our hashtag, so Liberty Investor Day. So, we'd love to see you guys posting on that. Hopefully, Phil Maffei is here. The slides will be posted on the respective websites after we do the necessary filings. So, it will take us a little bit of time, so just be patient, please. Hopefully, you saw our little giveaway this year. One of the benefits of having so many companies is, we were able to do a Rubik's Cube. So, make sure that you get one of those. I want to just thank the team that put this together: Mindy, Shane, and Kelsey. A lot of work goes into this, so we hope you guys enjoy it. And now, of course, the moment you've all been waiting for; we will have those kind of sprinkled throughout the day. Luckily, for Chase and Michael Rapino, we did not require their participation this year. [Music] (00:09:26-00:09:40) Gregory B. Maffei: Good morning. The bar has been set very high unfortunately for Liberty in many areas perhaps no more than in the video context, so we're working on it. Some of you may follow me on Twitter and know that this is my Twitter handle or goal; making the world safe for media investing. I'll talk about that a little more in a sec. First, I want to remind you some of the things we've done in the last year. All have had exciting years, all the companies at Liberty Media. Formula 1 announced the Vietnam race to begin next year - in 2020. We added Amazon Web Services as our official tech provider and an important sponsor. Some have suggested that that's not a cash-positive deal; it's a very cash-positive deal. We had ISG as a sponsor and they're going to have a data rights agreement as well to produce an F1 betting offering. We've renewed many broadcast arrangements including CCTV in China, Portugal, Nordic. And importantly, we've successfully lowered the cost of debt at Formula 1, $22.5 million dollars, $22 million-plus last year, but over $114 million a year since we bought F1. Mark Carleton will talk about it a little more. The Braves, too many accolades to name, but a few include three Gold Club, one airs recently. That's the highest in the National League matched only by [ph] three (00:11:13) by the Red Sox on the AL side; Snitker as manager of the year, Acua as rookie of the year. A great year for the Braves and continued success off the field with SunTrust Park and the Battery both continue to perform very well. SiriusXM, another outstanding performance in 2018. The EBITDA margin topped 40% for the first time. The SAC fell again. Used car penetration grew and churn remained below 1.8%. I remember when used to think churn of 1.8% was a great churn for a wireless provider. Now, we have a provider, a satellite radio, we churned below 1.8%. It's stunning. We're excited to announce the acquisition of Pandora, which we expect to close in the first quarter. And notably, we started buying back LSXM shares. We bought $395 million worth at an average price of $4.77. That compares pretty favorably to the look-through price of SIRI, which is about $6.15 today, the actual price. We do note and care about the discount. We have been trying to take advantage of it, first, as we noted by buying back stock to recognize that discount. You might expect more actions like that. Potential end factors influencing this; we've talked about some of them before, the supply-demand difference between SIRI and XM - LSXM, the difference in public float compared to their buyback, the large public float we have compared to the relatively more modest buyback, speculation that we'll do something with the LSXM stock that might be dilutive. I wouldn't count on it. And then, generally tracking stock discounts having spread for a bunch of factors run arbitrage. Carl Icahn has noted the unhappiness in some corners with how Dell has treated VMware, they're tracking stock. I won't comment on this much to say, but we're in the tracking stock business. We expect to be in the tracking stock business, we're going to be in the tracking stock business, and we're going to mistreat tracking stock shareholders, full stop. That being in that tracking stock business has worked pretty well and you can see our returns since we spun Liberty Media away and created a separate Liberty Interactive and Liberty Media in May of 2006. We've definitely outpaced both the S&P and the Nasdaq with pretty good results. To refresh your minds what we look like today, three tracking stocks, three groups with SiriusXM, F1 and the Braves as major components, also Formula - excuse me Live Nation, which you'll hear from today. So, we started out in the media business. We've been in the media business a long time. And there was a time when traditional media was a great business, but those times are changing. [indiscernible] (00:14:21). Some of you in the audience old enough to remember Hill Street Blues; iconic show of the 1980s, and this was the iconic entrance to every show that we were in a very dangerous world of Hill Street Blues. Well, the media business has been a very dangerous world for a while. If you look at the compression, that's going on in multiples and the resulting valuation of many stocks. As many of you noticed, it has not been an easy place. Why? Well, you can come up with your own reasons, but surely among them is the fact that we've - despite the fact we have tons more time being spent on media. There are a lot of platforms vying for that attention. How much time can you allocate across all those platforms just for video when you're competing with social media, Fortnite? Here's a screenshot of a typical - we have twin 15-year-olds. This could be their screen and how much time they spent online, but obviously the amount of time spent on Instagram or Snapchat or Facebook is massive, and video competition is right in the midst. And while that video competition is going on for traditional media, more content is exploding, absolutely kicking off, massive growth in original series. If you just look at online content alone over the last 12 - since 2012, up 680%. That massive competition for audience competes, with the only limited 24 hours in a day. And I don't care how many times you run multiple screens. There are only 24 hours in a day. The number of streaming platforms has gone out of hand, and they estimate that there are over 200 OTT services today. I lost count somewhere between PlayStation Vue and Sony Crackle. Some may remember a few years ago, we showed an RIP, rest in peace, for music platforms. I have a full expectation in the few years, we're going to show an RIP for video platforms. 68% of Americans, 68% of adults over the age of 18 already subscribe to a streaming service.