Liberty Media Corp (LSXMA)·Q3 2023 Earnings Summary

Executive Summary

• Q3 2023 was resilient: consolidated revenue was $3.207B (down 1.2% YoY; flat QoQ), operating income rose to $629M, and net earnings to Liberty stockholders were $385M .
• SiriusXM posted stable revenue ($2.27B), a sharp net income increase (+47% YoY to $363M), and higher adjusted EBITDA ($747M), while free cash flow dipped on higher capital expenditures; the company reiterated 2023 guidance and previewed a November 8 next‑gen product event .
• Formula 1 revenue grew 24% YoY to $887M on an additional race and stronger race promotion, media rights, and sponsorship; LVGP planning costs and hospitality/freight inflation weighed on costs, but operating income rose to $132M .
• Corporate actions were a positive catalyst: Liberty retired $199M of 1.375% converts (Oct), F1 repriced $1.7B Term Loan B (margin 3.00%→2.25%), and Liberty Live issued $1.15B exchangeables and repurchased $858M of the 0.5% debentures .

What Went Well and What Went Wrong

• What Went Well
  • Formula 1 top‑line strength: Total F1 revenue rose to $887M (+24% YoY) with growth across race promotion, media rights, and sponsorship, aided by one additional race and higher fees/new sponsors .
  • SiriusXM profitability: Net income jumped 47% YoY to $363M; adjusted EBITDA increased to $747M (+4% YoY) .
  • Capital structure wins: F1 cut term loan margin to 2.25% (Oct), and Liberty retired remaining $199M 1.375% cash converts—improving interest expense trajectory and simplifying the structure .
  • Management tone: “We are confident that rationalizing this structure into a single, simplified equity will create value for all shareholders…SiriusXM drove strong adjusted EBITDA growth…” — Greg Maffei (CEO) .
• What Went Wrong
  • Cost headwinds at F1: Hospitality cost inflation, higher freight costs due to more races outside Europe, and LVGP early‑stage costs increased Other cost of F1 revenue; $8M of LVGP costs were in SG&A .
  • SiriusXM free cash flow: FCF declined to $291M (from $329M) on higher satellite and non‑satellite capex despite solid operating cash flow .
  • Corporate SG&A: Liberty SiriusXM Group corporate SG&A allocation increased to $22M in Q3 (+120% YoY), modestly offsetting segment strength .

Financial Results

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are confident that rationalizing this structure into a single, simplified equity will create value for all shareholders…SiriusXM drove strong adjusted EBITDA growth in the third quarter and we look forward to the reveal of their new streaming app and in‑car innovations next week…” — Greg Maffei, President & CEO .
• “Formula 1 continues to experience sell‑out crowds, record race attendance and strong growth across our social and digital platforms…We are making material progress on our sustainability initiatives…” — Stefano Domenicali, F1 President & CEO .

Q&A Highlights

• Analysts probed LVGP cost cadence and hospitality/freight inflation; management specified $8M LVGP SG&A in Q3 and highlighted event mix outside Europe driving freight and hospitality costs .
• Clarifications on SiriusXM guidance and product timing: revenue ~$9.0B, adjusted EBITDA ~$2.75B, FCF ~$1.15B reiterated; next‑gen launch slated for Nov 8 .
• Capital structure questions covered F1 term loan repricing (margin 2.25%) and Liberty’s October retirement of remaining $199M converts .

Estimates Context

• S&P Global consensus estimates for LSXMA (tracking stock) were not retrievable via our S&P Global tool due to missing CIQ mapping; therefore, quarter‑over‑quarter “vs estimates” comparisons for consolidated LSXMA are unavailable at this time.
• SiriusXM’s Q3 2023 guidance (revenue ~$9.0B, adjusted EBITDA ~$2.75B, FCF ~$1.15B) was reiterated by the company; the FCF target was raised on Aug 1 to ~$1.15B and maintained in Q3 .

Key Takeaways for Investors

• Formula 1’s revenue momentum and an extra race drove a strong Q3; near‑term cost inflation and LVGP prep spend are transitory headwinds ahead of the November event, with long‑term commercial benefits expected .
• SiriusXM is a steady cash generator: net income up 47% YoY and adjusted EBITDA gains, with near‑term FCF pressure from capex tied to satellites and digital investment; the Nov 8 next‑gen launch is a potential sentiment catalyst .
• Capital structure actions improve flexibility: F1’s loan repricing reduces interest costs; Liberty’s retirement of converts and Liberty Live exchangeable refinancing simplify the stack and mitigate refinancing risk .
• Tracking stock simplification proposal (Liberty SiriusXM + Sirius) could unlock value by collapsing discounts and improving transparency; monitor updates and shareholder reaction .
• With $1.1B repurchase authorization and segment strength, buybacks remain an optional lever, subject to capital needs across trackers .
• Near‑term trading: watch LVGP execution/costs and the SiriusXM product event for catalysts; medium‑term thesis hinges on F1’s commercial expansion, SiriusXM’s digital upgrade/retention, and ongoing structure rationalization .

Sources: Liberty Media Q3 2023 Form 8‑K and Exhibit 99.1 press release ; Q2 2023 Form 8‑K press release ; Q1 2023 Form 8‑K press release ; SiriusXM Q3 2023 earnings release and guidance ; Liberty Media IR events page .