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Liberty Media Corporation (LSXMA) Q2 2019 Earnings Call Transcript

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Liberty Media Corporation (NASDAQ: LSXMA)
Q2 2019 Earnings Call
Aug 8, 2019, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Media Corporation 2019 Q2 Earnings Call. [Operator Instructions] Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, August 8th. I would now like to turn the conference over to Courtnee Chun Chief portfolio Officer and Senior Vice President of Investor Relations. Please go ahead.

Courtnee Chun -- Chief portfolio Officer and Senior Vice President of Investor Relations

Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 . Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent Forms 10-K and 10-Q filed with the SEC. These forward-looking statements speak only as of the date of this call and Liberty Media and Liberty TripAdvisor expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media or by turn expectations with regard thereto, or any change in events, conditions or circumstances on which any such statement is based.

On today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA and adjusted EBITDA. The required definitions and reconciliations for Liberty Media and SiriusXM schedules 1 and 2 can be found at the end of the earnings press release issued today, which is available on our website.

Now I'd like to introduce Liberty President and CEO, Greg Maffei.

Greg Maffei -- President and CEO

Thank you, Courtnee. Good morning. Today speaking on the call, we will also have Formula One's Chairman and CEO, Chase Carey and introducing Liberty -- Liberty's new Principal Financial Officer, Brian Wendling. During Q&A, we'll also be available to answer questions related to Liberty TripAdvisor .

So beginning at Liberty SiriusXM, we continued our repurchases of Liberty SiriusXM stock and we bought an additional $85 million of stock from the period of May 1st to July 31st. We effectively bought this at a look through price of the SiriusXM shares at about $4.11 per share, I think that's pretty attractive. While the discount to NAV remains stubbornly high, it is lower than its all-time high. And we will continue to take advantage of it if you continue to give us the stock of SiriusXM at a discount at the look through price. Our ownership of SiriusXM today stands or as of July 26 rather stood at 71.1%. Looking at iHeart just for a moment, I would call, you may recall that when it emerged from bankruptcy, we received some iHeart debt, which we sold at a slight premium to market. Some iHeart shares or should be premium to face. iHeart shares and warrant, which we continue to hold and 17 million CCO shares.

During the quarter, we sold that CCO stay for $87 million that was a price of $5.10 per share. There is pretty favorably to the $2.27 that the CCO closed at yesterday. We use the proceeds from those shares -- sales to repay a portion of the Siri margin loan. Looking at SiriusXM itself and solid quarterly results including record SiriusXM ARPU and strong growth in Pandora ad monetization. The company increased its guidance for revenue and EBITDA during the quarter and it returned capital of $1.9 billion year-to-date. Having repurchased all the shares issued in the Pandora acquisition. The issue price for Siri during the Pandora deal was $6.98 per share and Siri effectively bought back all of those shares at an average price of $5.90 per share, dramatically lowering the cost of the acquisition.

The Formula One Group, looking at that had very strong financial results as well. Showing the benefits of our investment despite unfavorable variance in the calendar with Austria included in current quarter and Bahrain including last year's Q2 .There are some very exciting races headed into the summer break, including the first victory for Red Bull in their home GP in Austria. A fantastic performance from Sebastian Vettel in Germany moving up in the back of the grid to finishing second and the battle at the end of the Hungarian GP with Hamilton passing or stopping for the win with just three laps to go, Verstappen having secured his first pole position.

Attendance continued to grow for the German GP, we are building up the calendar for next year, including the return of the Dutch GP and renewals Silverstone and Zandvoort circuits. And lastly, we're very excited for Season-2 of the Netflix Series Drive to Survive, which will include all of the teams participating. Live Nation had another very strong quarter with double-digit revenue and AI growth and during the quarter, announced the acquisition of a controlling interest in OCESA, Mexico's largest promoter.

The Braves 68-48 in the NL East, seven games ahead of the Nats. We added three relievers to the roster just prior to the trade deadline. We announced that SunTrust Park will host the 2021 MLB All-Star game and we are proceeding Phase 2 of the Battery, which is going well. We started the vertical construction of Block-C, which has an expected completion in the summer of 2020 [Indecipherable] development is also at the grading stage with expected completion in fall of 2021.

You may recall that the 2018 season here included several positives that benefited the baseball side of the business including a very favorable home game schedule, a competitive team that won at the end of this season, including the postseason and non-game day special events. While attendance looks good so far this season, aided by strong on field performance many other of the above factors will continue to play out during the rest of the season.

Over at Liberty TripAdvisor, we rolled our existing trip margin loan into a new margin loan with additional capacity in a lower interest rate. Trip announced their earnings this morning and the market's responding well. They expanded their Hotel Media and Platform adjusted EBITDA margin to its highest level since 2015 through marketing efficiencies. We expect that the Hotel Media and Platform segment revenue can get back to growth in the fourth quarter of this year and that's despite Google aggressively pushing their own metasearch and travel products. We are excited for areas of growth in Hotel, Media, and Platform segment, which includes scaling media advertising revenue, driving consumer product enhancements that grow membership and cultivate loyalty, executing on impactful brand advertising and expanding our hotel B2B product offerings. During the quarter, experiences in dining revenue also grew 28% and the total number of reviews and opinions on the site grew $795 million -- $795 million.

With that, I'll turn it over to Brian for more on our financial results.

Brian Wendling -- Principal Financial Officer

Thanks Greg and good morning everyone. At quarter end, Liberty SiriusXM Group had attributed cash and liquid investments of $21 million, excluding $215 million of cash held at SiriusXM. The value of the SiriusXM common stock held at Liberty SiriusXM as of August 7th was $19 million and we have $875 million in debt against these holdings. Total Liberty SiriusXM Group attributed principal amount of debt with $8.8 billion, which includes some $7.9 billion of debt at SiriusXM.

Formula One Group had attributed cash and liquid investments of $58 million, which excludes $276 million of cash at F1 .Formula One Group has attributed public market securities with the market value of approximately $5.5 billion as of yesterday's close, including the intergroup interest in the Braves Group and our stake in Live Nation.

Total Formula One Group attributed principal amount of debt was $5 billion , which includes $2.9 billion of debt at F1 leaving $2.1 billion in debt at the corporate level .F1's total net debt to covenant OIBDA ratio has defined in F1's credit facilities for covenant calculations was approximately 5.6 as of the end of the quarter as compared to a maximum allowable leverage ratio of 8.25. We would note that the race calendar variances between 2018 and 2019 resulted in income from 22 races falling in the trailing 12 months ended June 30. We have set a target total net leverage ratio for Formula One Group or for Formula One of 5.6 times bank covenant OIBDA. Please note that these leverage ratios are for the Formula One business, not the Formula One Group.

Lastly, with the Braves, we had attributed cash and liquid investments of $127 million and attributed principal amount of debt of $470 million.

With that, I'll turn it over to Chase Carey to discuss Formula One .

Chase Carey -- Principal Financial Officer

Thank you, Brian. We are now 12 races into the season. I'm pleased to see Formula One living up to its promise with some phenomenal racing. Even with Lewis Hamilton and Mercedes in the lead, every Grand Prix offers plenty of action both on Saturdays and qualifying and on Sundays in the races. The races in Austria, Great Britain, and Germany have been called the Unforgettable travel G. The heat in Austria produced a thrilling battle with Max Verstappen overtaking Charles Leclerc with two laps to go.This battle and the strong performance of other young drivers bodes well for the exciting future Formula 1 racing.

Over 140,000 fans came to Silverstone on race day to see Lewis Hamilton win a record sixth British Grand Prix victory. Again, the rivalry emerged between Verstappen and Leclerc, but in the end this was overshadowed by Sebastian Vettel driving into the back of the Red Bull causing them both to tumble off the track.

The German GP has been referred to as a race for the ages, if you missed it, be sure to watch it on an F1 TV. The varying track conditions resulted in 7 cars not finishing the race and 78 pit stop. Max Verstappen won the day while Sebastian Vettel, who started in 20th, finished second and Daniil Kvyat secured 3rd for Toro Rosso. This is only the second podium for Toro Rosso and a great milestone for Honda as the last time two different Honda power teams were on the podium occurred in 1992. Red Bull set a record for fastest pit stop of 1.88 seconds, beating the record they had just set in Austria two weeks earlier.

Also the Hungarian GP confirmed the attractiveness of the sport, featuring an intense battle for the victory between Hamilton and Verstappen, which kept a 92,000 spectators at the Hungaroring breathless until the last few laps. When the 5-time World Champion took the lead of the race, thanks to a master stroke strategy implemented by Mercedes.

Through July 31st, attendance is up for the season and on the digital media front, our video views on social media year-to-date increased 67%, minutes watched increased 87%, while page views on digital products more than doubled. The Formula 2 and Formula 3 championships that provided great displays on track at every event with a number of young talents shining like China's, Guanyu Zhou in Formula 2 and Russia's, Robert Shwartzman in Formula 3. Mick Schumacher won his first Formula 2 race in Hungary and generated huge media buzz 15 years after his father, Michael last one at the Hungaroring. These 2 feeder series are a great addition to the Grand Prix experience as our other fan-oriented initiatives like the Bond in Motion exhibition attracted more than 80,000 visitors over the last 4 Grand Prix.

F1 TV is steadily improved throughout the first half of the season and we're getting closer to our targets, both in terms of content and reliability. We're thrilled to announce the season -- that season 2 of the Netflix Series Drive to Survive will air in 2020. For the first time, all 10 teams will feature in the 9-part docuseries. Given all the drama we've seen on the track, we can't wait to see the story lines developing behind the scenes, one of which is the speculation already building around which drivers will secure seats for the 2020 season and we look forward to seeing who'll be the Gunther Steiner of season 2.

The 2020 race calendar continues to evolve and we were excited to announce our return to Zandvoort for the Formula One Heineken Dutch Grand Prix, which will run for at least 3 years. Demand for tickets already far exceeds the capacity of 315,000 and we expect to seas of orange out to support hometown favorite, Max Verstappen. This is our second new location for 2020 in addition to the previously announced race in Vietnam. Additionally, we were delighted to extend the British Grand Prix at Silverstone until 2024. We are focused on preserving Formula One's historic venues in Silverstone, which posted the very first Grand Prix certainly fits the bill.

On the other side of the globe, Formula One will race in Melbourne until at least 2025 and again, the season -- launch of the season on March 12th through March 15th of 2020. With Formula One celebrating our 70th anniversary, and our 25th visit to Albert Park next year, the Formula One Rolex Australian Grand Prix promises to be a spectacle unlike any other.

Clearly, we remain in the fortunate position of demand outweighing supply of races and we are thoughtful about how we will manage the calendar for 2020 and beyond. We value our partnership with our existing promoters and balance that against growth opportunities of our sport and business to add exciting new locations. We expect to announce the 2020 race calendar in the coming weeks. In sponsorship, we announced Marelli as the official telemetry services supplier for Formula One. This will enable our ability to transfer more live data from the Formula One Cars to the broadcast center and improve the quality and quantity of race information that can be shared with our audiences worldwide.

Off the track, the 2019 Formula One New Balance Esports Series continues to attract the next generation of motor sports fans. Over 109,000 participants took part in qualifying from across 156 territories. Of the participants, 79% were under the age of 34, with half below the age of 24. For the first time ever, all 10 teams involved in the Pro Series selected their drivers at the Pro Draft on July 17th. These drivers will now join their official teens to prepare for the Pro Series comprised of 12 races contested over 4 live events, and we look forward to a thrilling championship. We also launched the F1 Esports Series China Championship, the first regional competition of the series. The champion and runner-up of the China championship will join the 2020 F1 Esports Pro Draft. We're glad to nurture the passion for racing in China through F1 Esports and identify the next wave of Chinese talents in racing F1 Esports and potentially Formula One in the future.

Following discussions in June between the FIA Formula One team principles and technical technical directors from the 10 teams for in a number of drivers, it was unanimously decided to defer the final presentation of the technical sporting and financial regulations for 2021 and beyond until the end of October. We've made substantial progress to date and believe the core objectives have been defined, we decided to take additional time to further refine the regulations.

I've stressed before that there are many details to be addressed and we want to ensure we think through the impacts of changes and we make with the goal of improving the competition, action, and unpredictability of our sport on the track in a sustainable and attractive situation for the teams and participants in Formula One. We look forward to providing these regulations later this year.

In summary, we're pleased with our second quarter results and the momentum in our business and are set to meet our targets for 2019. Now, I'll turn it back to Greg.

Greg Maffei -- President and CEO

Thanks, Chase and Brian. All in all, it was a great quarter for Liberty Media. As a reminder, we will be holding our Annual Investor Meeting on November 21st in New York. The link to register is on our homepage of our website. We appreciate it your continued interest in Liberty Media and with that operator, I'd like to open it up for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] We will now take our first question from Bryan Kraft with Deutsche Bank. Please go ahead.

Bryan Kraft -- Deutsche Bank -- Analyst

Thanks. Good morning. I had a few if you don't mind. Chase, wondering if you could give some color on the $175 million budget cap per team that's been reported. Just wanted to understand is that an all-in budget for every aspect of the teams F1 activities or are there some carve outs and is the cap different for teams that design and make their engines versus those that don't. Also want to see if you had any update on the race calendar in terms of the number of races you expect at this point. I know you talked a bit about some of the changes and renewals, but I don't know if you have a sense on account, you still expect it to be '21. And then separately, Greg, just wanted to ask you, you've strategically avoided any new traditional television focus media investments for several years now, just curious if there are any pockets of traditional television focus media that you think might be of interest at this point, whether it's from a valuation perspective or if you're thinking about the opportunity differently. Thank you.

Chase Carey

Okay. I guess in the two things that the budget cap and the calendar, I'll address and then let Greg go. I don't want to say too much about the budget cap -- just essentially because we're not through. So I think probably we'll provide more insights to it once we finalize it, sign it, and implement it. I think a bit -- but I guess a couple of general comments. There are carve outs probably most obvious one would be something like marketing, I mean what we're really looking to do is to rate the racing on the track more about how well you invest your money -- how well you spend your money not how much you spend to the degree their marketing initiatives or other efforts like that. I don't think they affect the competition the track and the focus on the cost competition -- focus on the cost cap is really to make the competition in the action on the track and the unpredictability and drama of the sport much better and make it a healthier business for the teams. So it is focused on those elements. There are few other carve outs that, there are a number of other carve outs that we think again to make the cost cap implementable to make sense, but I think probably that's -- probably leave it at that. It is consisting cost cap across the board for the teams, so it's not -- it's not a different cost cap now, the engine manufacturing and there are four entities to provide engines that is -- this is really a cost cap against the car. So the cost of -- the cost of acquiring the engines, there is a cost acquiring the engine, but the four teams that manufacture engines that we're addressing in a different way.

In terms of the calendar, we do expect, I don't want to probably get ahead of ourselves. We expect to announce the 2020 calendar in the next few weeks and so it will probably wait till we have that out there. We are fine -- we're close to finding -- I think it's largely finalized now. In general what I'd say about the calendar is I think we expect the number of races over the next few years to increase a bit. I think there is a limit to how much, but I think we do expect it to go up marginally. And as we announced the calendar, we'll provide more insights to when and where that occurs.

Greg Maffei -- President and CEO

Thanks, Chase. Bryan, I think we addressed some of our general fears about the traditional linear cable networks and particularly those that aren't scripted, which feels like a war zone, rising costs and rising competition, including new entrants who have different business models, which are more efficient and allow them in many cases to price the content at very low or no costs because they're being monetizing somewhere else, either through a prime service or something like that. So a very scary space, linear in total and scripted in particular and you've seen us vote with our feet on some of the things like R&D assets that we either didn't bid on or that we disposed of. There are niches that could be attractive, reported that we had bid on some of those. Those would be very much valuation dependent or something, where we think we have an angle, which is different, that's got to be really different though because we don't bring any synergies to the table. We don't have any existing content, assets like that to share. We obviously have different kinds of content that we're very enthused about including music and things like Formula One, but we don't have scripted or those kind of traditional linear content plays. So I think it's very much going to be situation specific. I would point out, in some cases we have found opportunities with things that we knew would eventually decline, but there was a period where we can capitalize on that and if we found something along those lines, we would do it, but it's got to be where we have a very defined story and something we can add to the picture and why it's going to be right or succeed in spite of a lot of headwinds .

Bryan Kraft -- Deutsche Bank -- Analyst

Okay. Thanks, Greg. Thanks, Chase.

Operator

We will now take our take our next question from Ben Swinburne from Morgan Stanley. Please go ahead.

Ben Swinburne -- Morgan Stanley -- Analyst

Hey, good morning everyone. Chase, I know you talked about announcing the calendar coming up in a few weeks, but there has obviously been a lot of activity on the race promotion front, there has been some press written about maybe some price reductions -- fee reductions. I'm just wondering if you can help us think about the trajectory of race promotion, revenue growth over time. If you take the changes in terms of mix, plus the calendar quantity if you expect this to be a growth driver for Formula One, sorry -- I guess pun intended on the revenue front, that would be helpful. And then for Greg, maybe a similar question to Bryan's, but on the music side, we've seen more investment, more capital going after just sort of like catalog rights, publishing rights, saw the Big Machine deal. I'm just wondering if you think that's an interesting area to look around given sort of the rise in consumption across platforms for Liberty .

Chase Carey

Sure. So I guess on the calendar. I guess, first, we do think -- we do view this as an area of revenue growth for us. So I guess just to put it simply, and it's probably -- it's not steady, it's not consistent with every event, some events are different. I think in some places the events are more mature, but I think we do have and do expect and do look for just actually probably increasingly be in every area of opportunity for us and I guess let's say driving it obviously adding a number -- adding a couple of race is a factor. I think we actually are very excited about the demand interest, the number of places that want to host a race and obviously supply and demand and I touched on it in the opening comments, it's important and therefore we value our historic relationships, but it is important to carve out opportunities to add a new race when the demand is there. And the appetite is there for stepping up for that and I think there are some places where and I've touched them before we inherited situations where we were not receiving what we should be receiving when we came in. So I think I guess it's sort of between the supply and demand being in our favor, the increase in the race calendar and addressing a couple of places, we are not receiving what we think we can and should be. We do expect this to be an area of growth for us.

Ben Swinburne -- Morgan Stanley -- Analyst

Got it.

Greg Maffei -- President and CEO

Ben, on Publishing, I would say that's obviously been a very, an area where there have been great businesses and valuations have responded accordingly. If we had gotten into Publishing five-seven years ago and we had a vehicle, which would allow us to buy incremental assets at something looks like the revenue line rather than the cost line or recognizing the lack of costs, because you've got the synergies, we might be in a position to do that, but these things have been pushed up unbelievably. It's sort of hard hard from where we stand, where we don't bring synergies to the table. We've been lucky to be in some of the best parts of the music business including obviously performance -- live performances through Live Nation and probably the best part of the distribution business through Sirius. Shame on us, maybe we should have gotten into the publishing a while ago, but I think it's -- we're -- that's some place where we don't have much to offer today and those values have been pushed up a lot.

Ben Swinburne -- Morgan Stanley -- Analyst

Yeah. Got it. Thank you.

Operator

We will now take our next question from Vijay Jayant from Evercore. Please go ahead.

Vijay Jayant -- Evercore -- Analyst

Thanks. For Chase, you talked about reliability and the user interface on the F1 TV products sort of approaching our expectations -- just sort of broadly, do you think of the product has enough tonnage at the price point, you have it to really scale globally. Are there any alternatives you're sort of considering on how to repackage that to really drive that as to be a big free cash flow generator for Formula One.

Chase Carey

I guess, in a nutshell, I mean, I'd say that the Formula 1 TV, the over top product is certainly still a work in progress and certainly I think probably improving, expanding, and enhancing the content component of it, it is certainly a part of that. I mean I think if we think about it, there are sort of three steps, you have to get through to really build this and they have to sort of happen in sequence, first, which is we've been working on. I think we've made headway as I touched on versus get a technical -- a platform that is reliable. And I do think you get frustrated customers and clearly we had some issues last year, earlier this year and I think we've made good strides. So I think the platform has to be reliable, then we need to find the content experience that's how somebody is going to buy it and then you need to sell and market it. I think you do have to sort of get those things done in order or you can't be selling them -- trying to sell and market something aggressively if you know the product is going to not meet the thresholds that it needs to meet for consumers.

So I think we are making strides. I think on the content side, clearly there are enhancements to come. We still are scratching the surface in terms of things like archival product, I touched on sort of enhanced data and information, I think that is an important area for us. And working on a number of ways to cover them, the sport more broadly and what goes around, it goes on around it more broadly, but I think the content experience and we have talked about it, I think we viewed the building of the content experience, it's something that really was going to occur over a couple of years. So we had a foundation, but it's clearly a foundation to be enhanced and I think what we expect will have there. I think there is something that it does can and will appeal to the passionate fans we have for the sport, which is significant around the world. And I think we believe it's an important opportunity for us to continue to build on, but it is a work in progress .

Operator

We will now take a look question from Jeff Wlodarczak from Pivotal. Please go ahead.

Jeff Wlodarczak -- Pivotal Research Group

Hey, good morning guys. Nice guess on the name. One for Greg and a couple for Chase. Greg, could you comment specifically on Liberty's potential interest in Univision. And then for Chase, a couple of follow-ups on the budget cap, how comfortable are you that you can -- those cost caps can be properly enforced. And then if you can get the cost caps in place, how significant of an opportunity is there to expand the automakers producing engines and/or fielding F1 teams. Thanks.

Greg Maffei -- President and CEO

So, Jeff, I think my comments a minute ago to Bryan about what kind of things we'd be interested in address some of that and I prefer not to comment on what we might do specifically, but I would say -- reiterate we need to have an angle of thesis on why we provide some value or why we have a different way to go at it and other buyers might. That having been said, for a lot of assets out there today in this space, there appear to be a lot more sellers than buyers. So we'll take those factors into account and see what we can come up with.

Chase Carey

In terms of the cost cap, I mean, actually one of the real positives is I think the evolving attitude toward it. We feel quite positive about where we are with the cost cap, in many ways teams that I think some of whom had concerns or issues going in are increasingly supportive, I mean I think by enlarge, right now the support is really quite broad and I think everybody believes it's an important part, an important element to the future of the sport. So I do think the support is built and the teams really are behind it as being an important cornerstone to building the sport going forward. And we wouldn't have done it if we didn't think it was enforceable and there's no reason to head down a path and clearly you account for anything, what you really need to make sure is you have access to the right information to do the accounting. And that's just about us being disciplined and firm about what we need and we've address that. We are going to use 2020, all the teams will participate get actually, I'm almost certain, I guess you call it effectively a dry run because the cost cap won't be actually enforced with consequences until 2021, but in 2020 what we actually are really going to go through is shaking out the bugs of accounting for the cost and clearly one of the goals in terms of the cost cap is to create a healthier and I talked about the competitive goals, but it is equally important, we create a the cost cap supports a business model, that is healthy and growing and positive for our existing teams and potential new teams coming into it and that has been enforced as we've had discussions with potential new teams all have looked at sort of steps in terms of cost discipline and probably a more balanced revenue distribution is being cornerstones to creating what they think is an exciting opportunity. So certainly that's a part.

Jeff Wlodarczak -- Pivotal Research Group

That's good news. Thanks.

Operator

We will now take our next question from David Karnovsky with JP Morgan. Please go ahead.

David Karnovsky -- JPMorgan. -- Analyst

Just one for Chase, would be interested to get your updated thoughts on F1's media rights. I think your TV contract with ESPN expires after the season, and in some markets you've moved to distribute races through sport streaming services like Da Zone. So I'm wondering if that's something you would entertain in the US and then maybe as a follow-on to a prior question, how are you thinking about the F1 TV product as part of this process, is it a priority to keep live races on that service in the US or would you be willing to give that exclusively to video partner? Thanks.

Chase Carey

Maybe at this point, every market is different, and clearly there are players coming into this space that have more -- multi-country aspirations as opposed to historically, most of our historical players look at in a more single country way, a lot of digital players that are expressing interest to come in or looking at it on a broader basis. But that being said, I think at its core, the situations do differ in each country you go into. In many ways, F1 TV is now a part of the portfolio that we have to figure out how do you optimize the opportunity in the market and that's looking at all the players, it is free pay digital and digital platforms that are -- multi-content platforms or a more dedicated content platform like F1 TV and what's the best way to maximize the opportunity for us working with whatever that partner is in a country, we will do and it will -- in some places, it'll depend on the partner we have, I mean clearly in certainly in the short-term, we are going to the traditional television world is going to continue to be the biggest part of our television universe with growing importance from digital in some places. We've got agreements where the traditional, I call it the the traditional television partner is partnering us with in distributing a growing F1 TV in a way, so the places we are partnering with traditional television, there are places to grow F1 TV, there are places we are doing it more on our own. And I think that certainly will continue to be the business model of having this portfolio, which I think is the reality of the world, the content today and figuring out how do you optimize your short and long-term opportunities in each market more broadly.

David Karnovsky -- JPMorgan. -- Analyst

Thank you.

Operator

We will now take our next question from Zach Silver with B. Riley FBR. Please go ahead.

Zach Silver -- B. Riley FBR

Okay. Great. Thanks for taking the question. First for Chase, I don't think we touched on sponsorship, you guys did two big deals in the back half of this year with AWS in ISG, just curious on how the current pipeline is looking and maybe how much these sponsors -- these partners care about firming up the new Concorde Agreement before entering engine new partnerships?

Chase Carey

Sure. I think the sponsorship arena actually, I mean sort of again like right now, we actually feel great about the level of interest. I think clearly it's been an area where I'd say the time required to grow this area of our business has probably been a bit longer than we would have anticipated a couple of years ago and that is probably understanding, it's a more complicated sell and a deeper sell and a more unique sell. So we needed to build more capabilities to deal with potential sponsors and also probably understanding the degree to which -- not really been marketed or sold to the universe of sponsors. So it's been both educating potential sponsors on the opportunity, where we're going, what we're doing and as well as creating products that enable us to do and into sponsorship world, it clearly has for everybody on it. Sponsorship and advertising is clearly an area, the broader that has challenges, but I think we actually feel good about -- it's not even more than good about the level of interest, the level like enthusiasm for the product, we've got to sign the deals, we've got more activity today than we have at any point in time, across more categories than we've had at any point in time. It does take longer -- takes longer to sell a client and longer to get a potential sponsor and longer to close a potential sponsor, but we've got a lot of activity going on.

And certainly, it's our goal to turn in the coming months to turn some of the activity into dollars and we feel we're getting there even if it's taking a bit longer than we would have hoped a couple of years ago and I think if it's going on, I think the sponsors, I mean I wouldn't say the Concorde Agreement is a non-factor, but I think there is a general -- I think the Concorde Agreement, it is a general understanding that we're in a pretty good place with the teams that doesn't mean and there are things to resolve, but we're dealing more with -- not that they're not important, but detail issues not broad conceptual directional issues.

I'm sure there'll always be noise just because that's the nature of the beast. But I think there is a growing confidence that we'll get to a place that everybody agrees -- that everybody can agree to and is much better for the sport and therefore for partners like sponsors.

David Karnovsky -- JPMorgan. -- Analyst

Got it. Thank you very much. And then maybe one for Greg, it's been rocky few months for terrestrial radio. And with that, I'd be interesting to hear your updated perspective on iHeart and longer-term plans for that stake.

Greg Maffei -- President and CEO

Well, I think the -- a lot of that rockiness is a function of looking at the stock price and the fact that emerged from bankruptcy through the market conditions and perceptions of both the leverage levels they were unable to complete the primary offering they were going to do reduce debt and you have a bunch of probably some of that natural holders long-term, natural holders of the stock, so a lot of that's credit pressure on the stock. I think the business is probably doing OK. They've got headwinds against kind of new entrants, but they also have a lot of strengths on some of the things we're trying to do and and the scale that they have. So we'll watch the business with interest and we'll watch how it's operating performances and I would not necessarily think all the things that are happening in the stock necessarily reflect sort of operating results on the longer term.

David Karnovsky -- JPMorgan. -- Analyst

Got it. Thank you very much.

Operator

We will now take our next question from Kannan Venkateshwar. Please go ahead.

Kannan Venkateshwar -- Analyst

Thank you. Greg, two if I may, first on iHeart just to follow up on that question, given the amount of cash coming out of Sirius, obviously it's been a source of interest on where the cash is deployed and buyback sort of big source, but at some point, given the ownership of Pandora does it make sense to get bigger on the advertising side with iHeart being a part of that. And secondly, when you think about the distribution side of the business, in the past I think you guys have spoken about potentially partnering with Comcast and getting into wireless in a bigger way, not just on the back-office stuff, but also more actively in owning a network. Could you just update our thoughts just given the backdrop of the spin to T-Mobile transaction and the way it's going, how you're thinking about the space right now? Thank you.

Greg Maffei -- President and CEO

Well on Sirius, cash -- it does generate quite a lot of cash. We use quite a lot of it in this quarter to repurchase stock. And they obviously have a continuing dividend which they've increased several times over the last few years. As far as scale in ad distribution, I think that's a very, something that they are clearly trying to do and that would obviously factor in an evaluation of iHeart. I would point out that they have been increasing their scale dramatically by things like the growth of the Pandora, CPMs and RPMs, but also the partnerships they have through add with people like SoundCloud, where we are doing a lot of monetization from all those are helping to increase scale, but we'll take all that in mind as we look at incremental opportunities. You switched a little bit gears there on the distribution side to Charter and I'd say Charter and Comcast, my observation would be Charter and Comcast are looking to partner every day in every way they can because they're naturally a lot of potential synergies around areas like wireless, whether that would ultimately lead to something larger including potentially an acquisition, we'll see how time will tell. Both are growing their MVNO relationships dramatically, the Verizon relationship and the MVNO subs in the wireless side. So as they get that scale, we'll continue to look at opportunities, whether it be purchasing spectrum and doing more on their own or perhaps more down the road, some kind of an acquisition, but that's really not today's -- I think today's agenda. I think they're more focused right now and growing their MVNO subs and seeing how the business performs and really how it drives some of the other products and how it fits with some of the other products that they sell on there and things that they have .

Kannan Venkateshwar -- Analyst

Thank you.

Operator

We will now take our next question from John Tinker with Gabelli. Please go ahead.

John Tinker -- Gabelli -- Analyst

Thank you. I noticed that Porsche and Mercedes have now signed up with Formula E, so obviously having to move to counter some of the negative press they've had on emissions. Can you just remind us what your relationship is with them or is it purely Liberty Global that has an ownership position?

Chase Carey

It's just Liberty Global and actually Discovery. So I guess two entities that in the past more connection to the Liberty hold that our shareholders in Formula E, we do not -- we and Liberty or not engaged with Formula E or Liberty Media.

John Tinker -- Gabelli -- Analyst

Do you think it would be a good hedged in a position?

Chase Carey

Look, I think our real upside is growing Formula 1. One of our priorities and we are going to be more in the fall is really an untold story in Formula 1 is the strides we've made to date in terms of sustainability. The hybrid engine that was launched a few years ago was an incredible step forward in terms of fuel efficiency while retaining power and we are working aggressively on things like synthetic fuels, actually working with the oil industry as a whole on synthetic fuels, biofuels, hydrogen fuels and I think you'll see between now and year-end, the sustainability issue becoming a much more front and center part of our story and something actually, we think -- we've talked in private with a number of our partners that are quite excited about and they can honest recognition that the environmental issue is important to everybody and a big part of making strides forward in that is how do you reduce carbon emissions from the combustion engine and I think that it could be as important as anything out there. We'll also have other initiatives in terms of environmental steps around our live events, freighting things to events so it's a multi-dimensional story around this, but I think the part we're putting particular energy into is the degree to which we're reducing -- the targets will have reducing carbon emissions with the combustion engine, and I think that has more upside for us than anything .

John Tinker -- Gabelli -- Analyst

Thank you.

Operator

We will now take our next question from Bryan Goldberg with Bank of America Merrill Lynch. Please go ahead.

Bryan Goldberg -- Bank of America Merrill Lynch -- Analyst

Thanks. I had a couple on F1. I was curious with respect to the US market opportunity for F1, I mean engagement seems to be up in the market. You've done a few fan festivals now, what updates can you provide on potentially getting a US race on the calendar in a market like Miami or elsewhere? And then I have a follow-up.

Chase Carey

It's important to us. We've been quite public about our goal to, I mean first the opportunity in the US, actually our television audience has grown well here this year. When you look at digital, it actually I think has been a positive surprise, because we didn't, a few years ago we weren't doing anything in digital so we stopped to measure, the engagement we had in the US digitally. There are lot more fans here than I think people believe there are. So I think we are excited about those opportunities. We've talked about the adding races in gold destination cities like Las Vegas or Miami. We've been engaged since the last year there. I think we've made good headway. We are continuing to make biggest meeting next week with parties there, meetings a month ago there. So I think we feel it's important, we feel we're making steps down the road. We are talking to, you've talked that new team entrants. As we firm up the business model for team ownership, we'd love to have -- we have half as the US team, we'd love to add to that with a high profile US team down the road, you'd love to have a US driver that probably takes -- takes longer. But we recognize there are multiple elements to continuing to grow and build the sport, engage the fan base here and it continues to be a priority, and I think we're making good headway on it and I think we looked up, certainly potentially add that -- probably the first step would be adding that race in a city like Miami or Las Vegas.

Bryan Goldberg -- Bank of America Merrill Lynch -- Analyst

Thanks. And then I guess one on capital allocation. I guess as we know with the leverage ratio now I think at 5.6 times and I think an implied value of F1 operating at the track or level, maybe at an $8.5 billion range, I'm just curious, how are you thinking about capital allocation priorities, more deleveraging versus reinvestment acquisition or returns to shareholders. Any updates there would be appreciated.

Greg Maffei -- President and CEO

Yeah. There were some...

Chase Carey

No, go ahead.

Greg Maffei -- President and CEO

Chase, you want to -- you'd take a short-cut?

Chase Carey

No, I was actually just going to say, I mean at least from my perspective again -- probably our focus has been getting the business to where it is. I think that will become a bigger topic for us in the short term, but I was -- I was probably going to let Greg add his comments to it, but I think the capital allocation, we were more focused on sort of probably to date, getting the leverage ratio to where we want it -- we're obviously getting there. So I think it becomes something that probably is a higher, a higher priority and higher focus as we go forward from here.

Greg Maffei -- President and CEO

Yeah. And I think there are some anomalies that cause this to be a little more favorable looking this quarter than the longer. We I think over the time, we will expect that -- we keep in the 5 to 6 range as we've targeted at the OpCo level and we'll see what opportunities arise. I'd point out we also have in that form tracker some assets, which ultimately may prove to be non-core, which provide incremental liability -- incremental, excuse me, cash. So we'll see how that all goes. But we have made decisions on what our plans are at beyond getting into that 5 to 6 range and staying there.

Bryan Goldberg -- Bank of America Merrill Lynch -- Analyst

Thank you.

Operator

We will now take our next question from Drew Borst with Goldman Sachs. Please go ahead.

Drew Borst -- Goldman Sachs -- Analyst

Great. Thank you. I wanted to ask about Formula One TV viewership season to date. I was wondering if you could share some statistics on how that's been tracking, I would say, I understand the shift in the UK market, but any sort of statistics or sort of general thoughts about how TV viewership this season has been going? Thank you.

Chase Carey

Sure. Guys, I guess I'd call it OK. We're actually down on sort of, I mean, we look at it first and foremost Saturday and Sunday qualifying race, down a couple of a few percentage points, although the biggest factor in that has been some anomalies in Brazil, where last year with the World Cup going through Brazil, a couple of our qualifying race has got sort of stuck -- got put for positive results either right before or after the meaningful World Cup event that had it impact, so we take Brazil out, look at our -- so we have core 24 countries, look at, if you look at the 23 ex-Brazil, we're actually up a couple of percent, a few percent, year-to-date and I think with the season that probably hasn't been competitive, for the last three races have been great, all honestly you go back before that we had some races that I would not call great, which is why we got to continue to improve it, and clearly the competition at the top, Lewis to his credit, he's got a pretty good lead. So I don't think in terms of generating -- I think we would hope as we go forward that we have more competition and we're going to improve the races working on improving the tracks and again initiatives too. So we've had some good races recently, but I think that overall for the 12 races to date, I'd say it's been OK. So I think with those races in place and looking at some of the other factors like you talked about like the shift in the UK, those things have an impact end up saying, ex the impact of the World Cup in Brazil were up I think we feel pretty good about.

Drew Borst -- Goldman Sachs -- Analyst

Thank you. That's very helpful. And then one follow-up on the same topic. Chase, how do you think about balancing sort of broad distribution over broadcast versus maybe the opportunity to earn higher fees on pay platforms -- is the old management sort of tended toward grabbing the pay platform higher fees, but how do you think about balancing long-term and short-term objectives of the sport?

Chase Carey

There is not -- I mean sort of reach versus dollars, I mean there's no question that's the ongoing dynamic, they both are important. We don't have a formula to look at it, I mean there are too many factors to try to sort of put a formula in place that lays over and each market is different, help penetrate it is to pay platform and what's the quality of the pay platform, I think in UK, SCOTT is a great job. They are sort of market-leading sports broadcaster. So there are too many factors to put that formula and those trade-offs are important. I think what I'd say is generally, which had been true and sort of all sports content, probably content in general, the trend continues to certainly be toward pay platforms and I don't think that's going to change that free over the air, the reach is great, but it's clothing mature business that I think continues to hit. I guess it takes more mature. So they're valued partner -- in many places the optimum is to sort of have a mix, that's not caller one but that isn't always possible. So I think we look at each on the merits, but I'd say, generally we do try to, I think the world do -- I think we will continue to move toward pay platforms, because that's where the world is going. I think also as you look forward, people have to realize and get educated that reach just got taking on a very different meeting historically it meant over the year, realistically if you want to reach a 20-year-old today, it's in a device you hold in your hand, it's not a 60-inch screen you put on a wall. So we are doing a lot to end up in to making sure that reach and that connection is as much coming through these digital platforms as well and not just the historic platforms. There is no question, I'm getting race on over-the-air broadcast is still a great experience, but you're connecting with both new and old fans in ways you never did before and whether that's richer context various social media and Netflix Series, so I think that view of -- that definition of reach as you balance reach and dollars is continuing to evolve.

Drew Borst -- Goldman Sachs -- Analyst

That's very helpful. Thank you.

Operator

We'll now take our last question from Jason Bazinet from Citi. Please go ahead.

Jason Bazinet -- Citi. -- Analyst

I don't know if this is for Mr. Maffei or Mr. Carey, but I would think when you're selling rights, it would be your TV rights, it would be a pretty rational market and when I looked at what the WWE step-up was, I didn't know if you interpreted that as sort of an aberration because their old deal was too low or are they split the between Raw and SmackDown between two buyers or if there was a bigger implication that has to do with some of the challenges Mr. Maffei was talking about with scripted being saturated and a lot of the programmers trying to lean toward live programming in a linear world that wouldn't have very positive implications for the long-term trajectory of Formula One's TV rights. So any sort of comment on that front would be helpful. Thank you.

Chase Carey

I'll give you my two sense and Greg will give you his two. Like I guess I think it all comes -- it comes down to competition and busier, whether it's WWE are Formula One, their unique content unlike scripted there isn't -- there is not really a comparable alternative. But the value gets driven by the competition for the rights, WWE ended up in a place where you had, we're the one player who really wanted those rights and sometimes competition only requires two. I think it is the driving force -- I think that one of the big way obviously, one of the core questions for us is how big -- what is the competition in the future for rights like this probably at the center of that how much does that the digital world, which seems to be moving increasingly into the content arena become bigger and bigger players in different shapes and forms for this content, but I think it's really just at its core -- it's competition for unique rights.

Greg Maffei -- President and CEO

I think and I agree with everything Chase said. I'd only say I think if you also look the buyers and are completely irrational even when there is competition and the underlying value of how much viewership there is and what the perception of the fan base and fan affinity and fan activity is we're all very positive, and I think trend well Formula One, when we look under-monetized with a very strong fan base. So we hope to just see lots of competition, but we think our underlying product is something that will merit their attention.

Jason Bazinet -- Citi. -- Analyst

Thank you very much.

Greg Maffei -- President and CEO

Thank you to all. I appreciate your interest in Liberty Media and look forward to speaking with you next quarter if not beforehand.

Chase Carey

Thanks a lot.

Duration: 59 minutes

Call participants:

Courtnee Chun -- Chief portfolio Officer and Senior Vice President of Investor Relations

Greg Maffei -- President and CEO

Brian Wendling -- Principal Financial Officer

Chase Carey

Bryan Kraft -- Deutsche Bank -- Analyst

Ben Swinburne -- Morgan Stanley -- Analyst

Vijay Jayant -- Evercore -- Analyst

Jeff Wlodarczak -- Pivotal Research Group

David Karnovsky -- JPMorgan. -- Analyst

Zach Silver -- B. Riley FBR

Kannan Venkateshwar -- Analyst

John Tinker -- Gabelli -- Analyst

Bryan Goldberg -- Bank of America Merrill Lynch -- Analyst

Drew Borst -- Goldman Sachs -- Analyst

Jason Bazinet -- Citi. -- Analyst

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