Liberty Media: Formula 1 produced exceptional financial results

Formula 1 owners Liberty Media have reported encouraging figure for the sport as reported in the fourth quarter and year-end 2019 results, a period in which the sport grew on several fronts.

The Corporation reported the following attributed to Formula One Group (FWONA):

  • Audience figures increased across TV and digital platforms in 2019 for third consecutive year
  • Cumulative TV viewers up 9% to 1.9 billion
  • Social media followers increased 33% to 24.9 million
  • Aggregate attendance at races grew 2% to 4.2 million in 2019
  • Average attendance per race weekend increased 2% to over 200,000
  • 2020 season marks F1’s 70th anniversary and begins March 15th in Melbourne
  • From November 1st through January 31st, Formula One Group purchased 1.1 million LSXMA/K shares for total cash consideration of $52 million
  • Attributed to Braves Group
  • Baseball revenue grew 8% to $438 million in 2019
  • Regular season tickets sold increased to 2.7 million in 2019

Greg Maffei, Liberty Media (LMDIA) President and CEO reported: “2019 was a strong year for our companies. SiriusXM marked ten consecutive years of adding one million plus self-pay net subscribers and returned capital of nearly $2.4 billion in 2019. Formula 1 produced exceptional financial results, added viewers and grew race attendance. The Braves also had the highest ticket sales since 2007.”

Chase Carey, Formula 1 Chairman and CEO added: “Formula 1 continues to benefit from the investments made in the business over the past few years. We see this in the strong financial results, viewership, attendance and engagement. 2020 marks the 70th anniversary of the sport, which will provide further momentum.

“We are excited to welcome two new Grands Prix to the calendar in Vietnam and the Netherlands and look forward to the debut of the second season of the Netflix series ‘Formula 1: Drive to Survive’ on February 28th.”

The financial report revealed that the primary F1 revenue is derived from race promotion fees, broadcasting fees and advertising and sponsorship fees. For the year ended December 31, 2019, these revenue streams comprised 30%, 38% and 15%, respectively, of total F1 revenue.

Primary F1 revenue grew in both the fourth-quarter and full-year 2019. Broadcast revenue increased in the fourth quarter and full-year due to contractual rate increases, partially offset by the impact of weaker foreign exchange rates.

Advertising and sponsorship revenue was relatively flat in the fourth quarter, and advertising and sponsorship revenue grew in the full year due to revenue from new sponsorship agreements. Growth in these revenue streams was partially offset by a decline in race promotion revenue in both the fourth quarter and full year.

The fourth-quarter decline in race promotion revenue was primarily due to the renewal terms of one contract, and the full-year decline was driven by the impact of renewal terms of two contracts and weaker prevailing foreign exchange rates.

Other F1 revenue increased in the fourth quarter and full-year 2019 driven by increases in digital media revenue, higher Paddock Club attendance, increased revenue from other event-based activities and higher sales of equipment, parts and maintenance to F2 and F3 teams.

Operating income grew in the fourth quarter and full-year 2019. Adjusted OIBDA increased in the fourth quarter and full-year due to the aforementioned revenue growth, partially offset by elevated costs. Team payments increased in the fourth quarter and full-year driven by the growth in F1 revenue and the associated impact on variable elements of team payments.

Other costs of F1 revenue increased in the fourth quarter and full year due to various technical initiatives, the continued further development and delivery of digital and social media products and platforms, increased costs related to the sale of equipment, parts, maintenance and other services provided to F2 and F3 teams and higher FIA fees.

Selling, general and administrative expense decreased in the fourth quarter and full-year driven by lower bad debt expense and foreign exchange gains, partially offset by higher personnel and information technology costs.

F1’s total net debt to covenant OIBDA ratio, as defined in F1’s credit facilities for covenant calculations, was approximately 5.1x as of December 31, 2019, as compared to a maximum allowable leverage ratio of 8.25x.

The businesses and assets attributed to the Formula One Group consist of Liberty Media’s subsidiary F1, its interest in Live Nation, minority equity investments and intergroup interests in the Braves Group and Liberty SiriusXM Group.

There are approximately 9.1 million notional shares underlying the Formula One Group’s 15.1% intergroup interest in the Braves Group and approximately 1.1 million notional shares underlying the Formula One Group’s 0.3% intergroup interest in the Liberty SiriusXM Group as of January 31, 2020.

Full Liberty Media Financial Report and Figures here>>>>