Value Seeker: Investment Notes: SIRI LMCA LBTYA LILA LILAK LVNTA Atlanta Braves Maffei LYV

Liberty-company related notes: SiriusXM (SIRI), Liberty Media (LMCA), Liberty Ventures (LVTNA), Charter Communications (CHTR)

Citi Global Internet, Media and Telecommunication Conference

January 6, 2016

Liberty Media (LMCA)
Speaker: Greg Maffei (CEO)

Goals for 2016:

Businesses tied to economy?

Charter (CHTR):

When we originally invested we thought it was not as fully valued as we thought
Thought cable was well-positioned, CHTR in particular
Today, think radio has probably been discounted
Problem is they all have screwed up capital structures and there’s no way to invest in some

Linear video marketplace – market is bearish – is this rational?

Most of the time these cash flows last longer than people think – been our experience, see DirecTV (DTV)
Is there great growth prospects – less clear on this.

Liberty Media (LMCA)

Atlanta Braves:

Thought the presence of the stadium create unique opportunity for real estate to generate attractive RoR
Tenants have signed up, hotel, major office complex, number of retailers
New field will cost $650 - $670m, we are paying about $220m
Mixed-use facility - $550m in cost and paying 80% preleverage
Hope to see revenues and CF for Braves
Think investors will value the Braves in two ways – Braves team value + mixed-use real estate
S-4 – team generates about $250m revenues and very little net income
Revenues from Braves come from rights fees (TV is majority, less so radio), ticket sales and sponsorships
Redid the TV deal 14-15 months ago, has a series of escalating rate, real kicker is in 2027
In 2027 rates will likely be well below market, we inherited this contract when purchased Braves from Time Warner; in addition, we will own more of the parking and ancillary revenue streams, the SunTrust, etc.
Been many transactions lately where teams sold at valuations as multiples of revenues – look at the CF for the Braves, add it big bump in 2027
Teams have expanded dramatically in price - look at the Dodgers (note: sold for $2.15 billion in 2012-- Link)
If someone wanted to buy the Braves, for tax reasons, unlikely to sell for cash

Liberty Media (LMCA) – tracker

34% stake in Live Nation (LYV) + 20% Braves asset + venture portfolio assets like Tastemade, etc.
Put the 20% Braves assets to have a potential source of funding, to raise capital, can sell that stock on a tax-free basis
We like writing big checks, and having more capital is good (look at CHTR)
Not that many people that can write a $3b - $5b check into a non-control situation. Warren Buffett can do it, but he doesn’t play much in TMT.
Would want to inject a lot of capital if there’s another downturn, that’s the kind of deal we like to do

Live Nation (LYV)

34.4% stake in LYV
Very strong management team, built a true leadership position in the promotion business
Opportunities to, on the biggest global tours, to fill their portfolio where we may own the global tour, but we still need to outsource portions of it
Continue to buy either new promoters or buy new companies – concert co’s to help us in different markets
Bought a bunch of festivals last few years
Opportunities to use that scale and grow over time and increase stake in secondary market
Bunch of ancillary benefits that come from e-commerce and sponsorship
Goals: consolidate global concerts and festivals, consolidate global ticketing, organic growth in secondary ticketing and sponsorship, emerging content offers like Vice, Yahoo
Strength in global concert promotion is what enables us to have strength in ticketing
Key to other components is that LYV has strength in concerts
Don’t think the 2016 concert slate will be a disaster, but we have a long-term view
Added to LYV at price we thought was attractive at the time
Relationship with Vivendi is complicated; keep in mind we have a $1.1 billion judgment against them

Other Notes:

Continue to look to aim towards tax-efficiency I non-core assets like Viacom
We don’t like to pay taxes
If we saw an opportunity to utilize some cash in a better fashion, we might choke and generate cash and just pay the taxes
Think there are synergies between LYV and SIRI, but the rate probably won’t make me happy
Disruption of Expedia by Airbnb? Question is has Airbnb generated incremental demand – probably. But it’s some sort of substitution. Probably have some demand shifted to Airbnb, no doubt.
Hearing on Vivendi litigation – March 2016
We want to build some liquidity to write big checks
Businesses that we like, probably won’t change: subscription, free cash flow oriented businesses, try to stay away from ad-based businesses due to comfort
LYV is not a subscription business but there were other reasons we liked it

SiriusXM:

Tried to combine tracker and a company before and didn’t work, maybe will in the future
Ultimately, longer-term perspective is that it’s likely Sirius ends up being 100% controlled by Liberty; we are at 61% or so now
The connected car is actually a positive for SiriusXM, not a negative like the market thinks
Advantage could be the use of satellite, but could get reduced when cars get connected
Other advantages: content, exclusivity, differentiation, etc.
Also could be a hedge where is cars are connected and we don’t need the spectrum, could monetize it – so it’s a hedge on value
SIRI bought back about $2b in stock last year; had FCF for only about 60% of that, had to borrow remaining 40%
Leverage at <4.0x, looking to move it up slowly

Value Seeker: Investment Notes