LIBERTY MEDIA REPORTS

FOURTH QUARTER AND YEAR END 2015 FINANCIAL RESULTS

 

Englewood, Colorado, February 26, 2016 - Liberty Media Corporation ("Liberty Media") (NASDAQ: LMCA, LMCB, LMCK) today reported fourth quarter and year end 2015 results.  Highlights include (1):

 

 

“SiriusXM had another outstanding quarter and year, reaching record revenue and adjusted EBITDA, ending the year with 29.6 million subscribers.  SiriusXM continues to focus on its world-class exclusive content and announced a long-term agreement with Howard Stern that includes Stern’s extensive audio and video library,

in addition to channels with David Bowie, Billy Joel, Hank Haney and Nigel Barker,” stated Greg Maffei, President and CEO of Liberty Media.  “At Liberty, we are very pleased to announce a settlement of litigation with Vivendi which resulted in a payment of $775 million, of which we will net after-tax proceeds of approximately $420 million. We continue to make progress on our plan to recapitalize into three tracking stock groups and expect to hold a shareholder vote in April.”

 

Liberty Media announced today that it has entered into a settlement of its lawsuit against Vivendi Universal S.A., pursuant to which Vivendi S.A. has paid Liberty Media $775 million in settlement of all claims related to a dispute that arose from a 2001 transaction.  Liberty Media had prevailed in the United States District Court for the Southern District of New York with a jury verdict of approximately €765 million (excluding pre-judgment interest).  Both sides had appealed the earlier judgment.  As a result of the settlement all appeals have been dismissed and the parties have provided each other with mutual releases.    

 

Following the payment of a contingency fee to its legal counsel, as well as amounts payable to Liberty Global plc, a former subsidiary which was a plaintiff in the action, Liberty Media expects to net after-tax proceeds of approximately $420 million in cash. 

 

Liberty Media was represented at trial by Baker Botts LLP and on appeal by WilmerHale.

 

Liberty Media

Liberty Media's revenue increased $113 million to $1.2 billion in the fourth quarter and $345 million to $4.8 billion for the year.  Adjusted OIBDA(2) increased $5 million to $364 million for the fourth quarter and $211 million to $1.6 billion for the year.  Operating income increased $11 million to $217 million for the fourth quarter and $113 million to $954 million for the year.  The increase in revenue, adjusted OIBDA and operating income was primarily due to the operating results of SiriusXM.

 

During November 2015, Liberty Media’s board of directors authorized management to pursue a reclassification of the company’s common stock into three new tracking stock groups, one to be designated as

the Liberty Braves Group, one to be designated as the Liberty Media Group and one to be designated as the Liberty SiriusXM Group, and a distribution of subscription rights related to the Liberty Braves Group tracking stock following the creation of the new tracking stocks.

 

In connection with the creation of the new tracking stocks, Liberty Media will be holding a Special Meeting of Stockholders on April 11, 2016 at 1:30 p.m., M.D.T., at the corporate offices of Starz, 8900 Liberty Circle, Englewood, Colorado 80112. The record date for the meeting is 5:00 p.m., New York City time, on February 22, 2016.   At this special meeting, holders will be asked to vote on several proposals related to the creation of the new tracking stocks.  The distribution ratios and other relevant information regarding the new tracking stocks are available in the Form S-4 filed on February 18, 2016 and declared effective by the SEC on February 19, 2016.  The completion of the tracking stock restructuring is contingent upon (among other things, including the requisite stockholder approval) receipt of an opinion from counsel regarding the tax free nature of the transaction.

 

SiriusXM

SiriusXM is a separate publicly traded company and additional information about SiriusXM can be obtained through its website and filings with the SEC.  SiriusXM reported its stand-alone fourth quarter and year end results on February 2, 2016.  For presentation purposes, in this release, we include below the results of SiriusXM, as reported by SiriusXM, without regard to the purchase accounting adjustments applied by us for purposes of our financial statements.  Liberty Media believes the presentation of financial results as reported by SiriusXM is useful to investors as the comparability of those results are best understood in the context of SiriusXM's historical financial presentation.  For a reconciliation of revenue, adjusted OIBDA (as defined by Liberty Media) and operating income for SiriusXM's stand-alone operating results as reported by SiriusXM, to those results as reported by Liberty Media, see Liberty Media's Form 10-K for the year ended December 31, 2015.

 

Highlights of SiriusXM's earnings release included the following:

Share Repurchases

Between the reclassification of the original Liberty Capital tracking stock on March 3, 2008 and July 23, 2014, Liberty Media repurchased shares of Series A common stock for aggregate cash consideration of $2.9 billion, representing 51% of shares outstanding(3).  From November 1, 2015 through January 31, 2016, Liberty Media repurchased approximately 298 thousand shares of Series C common stock at an average cost per share of $39.34 for total cash consideration of $11.7 million. For the period covering the creation of the Liberty Media Series C common stock on July 23, 2014 through January 31, 2016 Liberty Media repurchased approximately 9.2 million shares of Series A and Series C common stock, collectively, at an average cost per share of $37.96 for total cash consideration of $350 million, representing 2.7% of shares outstanding(4).  The total remaining repurchase authorization for Liberty Media stock is approximately $1.3 billion.

 

FOOTNOTES

 

 

NOTES

 

Unless otherwise noted, the foregoing discussion compares financial information for the year ended December 31, 2015 to the same period in 2014.

 

The following financial information with respect to Liberty Media's equity affiliates and available-for-sale securities is intended to supplement Liberty Media's consolidated balance sheet and statement of operations to be included in its Form 10-K for the year ended December 31, 2015.

 

Fair Value of Corporate Public Holdings

 

Cash and Debt

The following presentation is provided to separately identify cash and liquid investments and debt information.

 

 

Total Liberty Media cash and liquid investments decreased $391 million during the quarter. Cash from operations at SiriusXM was more than offset by shares repurchased by SiriusXM, shares repurchased by Liberty Media, cash used to fund the settlement of the Live Nation forward contract and capital expenditures. Included in the year end consolidated cash and liquid investments is $112 million at SiriusXM.  Although SiriusXM is a consolidated subsidiary, it is a separate public company with a significant non-controlling interest; therefore Liberty Media does not have ready access to SiriusXM’s cash balance.  Excluding cash held at SiriusXM, Liberty Media’s cash and liquid investments balance at December 31, 2015 was $104 million.

 

Total Liberty Media debt increased by $94 million primarily as a result of borrowings on the SiriusXM credit facility and other corporate level borrowings.

 

 

Important Notice: Liberty Media Corporation (Nasdaq: LMCA, LMCB, LMCK) President and CEO, Greg Maffei, will discuss Liberty Media's earnings release in a conference call which will begin at 11:30 a.m. (E.S.T.) on February 26, 2016.  The call can be accessed by dialing (844) 838-8043 or (678) 509-7480 at least 10 minutes prior to the start time.  The call will also be broadcast live across the Internet and archived on our website.  To access the webcast go to http://www.libertymedia.com/events.  Links to this press release will also be available on the Liberty Media website.

 

 

This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about business strategies, market potential, future financial prospects, the creation of the new tracking stocks, the distribution of subscription rights and the subsequent rights offering, growth of SiriusXM's subscriber base, the future financial performance of SiriusXM, the continuation of our stock repurchase plan, the repurchase activity of SiriusXM, the construction of the new stadium for the Atlanta Braves and the associated mixed-use development 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, including, without limitation, possible changes in market acceptance of new products or services, regulatory matters affecting our businesses, the satisfaction of conditions to the creation of the tracking stocks and the distribution of subscription rights and the ability of Liberty Media to realize the expected benefits of these transactions, the competitive position of SiriusXM versus other radio and audio entertainment providers, the ability of SiriusXM to attract and retain subscribers, the dependence of SiriusXM upon the auto industry, general economic conditions, the failure of SiriusXM’s satellites (which are not insured), the interruption or failure of SiriusXM’s information and communication systems, the security of personal customer information, royalties SiriusXM pays for music rights (which increase over time), the unfavorable outcome of pending or future litigation, the failure to realize benefits of acquisitions, rapid technological and industry change, failure of third parties to perform, changes in consumer protection laws and their enforcement, continued access to capital on terms acceptable to Liberty Media,  changes in law and market conditions conducive to stock repurchases.  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 forward-looking statement contained herein to reflect any change in Liberty Media's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Please refer to the publicly filed documents of Liberty Media, including the most recent Form 10-K, for additional information about Liberty Media and about the risks and uncertainties related to Liberty Media's business which may affect the statements made in this presentation.

 

Additional Information

 

Nothing in this press release shall constitute a solicitation to buy or an offer to sell shares of Liberty Media’s existing common stock or Liberty Media’s proposed Liberty Braves Group tracking stock, Liberty SiriusXM Group tracking stock or Liberty Media Group tracking stock. The offer and sale of shares of the proposed tracking stocks will only be made pursuant to Liberty’s effective registration statement. Liberty Media stockholders and other investors are urged to read the registration statement filed with the SEC regarding the proposed tracking stocks, including the proxy statement/prospectus contained therein, because they contain important information about the issuance of shares of the proposed tracking stocks. Copies of Liberty Media’s SEC filings are available free of charge at the SEC’s website (http://www.sec.gov). Copies of the filings together with the materials incorporated by reference therein will also be available, without charge, by directing a request to Investor Relations, (720) 875-5420.

 

Participants in a Solicitation

 

The directors and executive officers of Liberty Media and other persons may be deemed to be participants in the solicitation of proxies in respect of proposals relating to the approval of the issuance of the tracking stocks. Information regarding the directors and executive officers of Liberty Media and other participants in the proxy solicitation and a description of their respective direct and indirect interests, by security holdings or otherwise, are available in the definitive proxy materials with respect to the creation of the proposed tracking stocks on file with the SEC.

 

Contact: Courtnee Chun (720) 875-5420

LIBERTY MEDIA CORPORATION

CONSOLIDATED BALANCE SHEET (unaudited)

 

 

 

LIBERTY MEDIA CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)

 

 

 

 

 

 

LIBERTY MEDIA CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

 

 

 

NON-GAAP FINANCIAL MEASURES

 

SCHEDULE 1

 

This press release includes a presentation of adjusted OIBDA, which is a non-GAAP financial measure, for Liberty Media, together with a reconciliation to operating income, as determined under GAAP.  Liberty Media defines adjusted OIBDA as revenue less operating expenses, and selling, general and administrative expenses, excluding all stock based compensation, and excludes from that definition depreciation and amortization, restructuring and impairment charges and separately reported legal settlements that are included in the measurement of operating income pursuant to GAAP.

 

Liberty Media believes adjusted OIBDA is an important indicator of the operational strength and performance of its businesses, including each business' ability to service debt and fund capital expenditures.  In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance.  Because adjusted OIBDA is used as a measure of operating performance, Liberty Media views operating income as the most directly comparable GAAP measure.  Adjusted OIBDA is not meant to replace or supersede operating income or any other GAAP measure, but rather to supplement such GAAP measures in order to present investors with the same information that Liberty Media's management considers in assessing the results of operations and performance of its assets.  Please see the attached schedules for applicable reconciliations.

 

The following tables provide a reconciliation of adjusted OIBDA for Liberty Media to operating income calculated in accordance with GAAP for the three months ended December 31, 2014, March 31, 2015, June 30, 2015, September 30, 2015, December 31, 2015, respectively, and the years ended December 31, 2014 and 2015.

 

QUARTERLY SUMMARY 

 

 

 

ANNUAL SUMMARY

 

 

 

 

SCHEDULE 2

 

This press release also includes a presentation of adjusted EBITDA, which is a non-GAAP financial measure used by SiriusXM, together with a reconciliation to SiriusXM's stand-alone net income, as determined under GAAP.  SiriusXM defines adjusted EBITDA as follows:  EBITDA is defined as net income before interest expense, net of amounts capitalized; income tax expense and depreciation and amortization. SiriusXM adjusts EBITDA to exclude the impact of other income, loss on disposal of assets, loss on extinguishment of debt, loss on change in value of derivatives as well as certain other charges discussed below. This measure is one of the primary Non-GAAP financial measures on which SiriusXM (i) evaluates the performance of their on-going core operating results period over period, (ii) base internal budgets and (iii) compensate management. As such, adjusted EBITDA is a Non-GAAP financial performance measure that excludes (if applicable):  (i) certain adjustments as a result of the purchase price accounting for the merger of Sirius and XM, (ii) depreciation and amortization, (iii) share-based payment expense and (iv) other significant operating expense (income) that do not relate to the on-going performance of SiriusXM’s business.  The purchase price accounting adjustments include: (i) the elimination of deferred revenue associated with the investment in XM Canada, (ii) recognition of deferred subscriber revenues not recognized in purchase price accounting, and (iii) elimination of the benefit of deferred credits on executory contracts, which are primarily attributable to third party arrangements with an OEM and programming providers.  SiriusXM believes adjusted EBITDA is a useful measure of the underlying trend of their operating performance, which provides useful information about their business apart from the costs associated with their physical plant, capital structure and purchase

price accounting. SiriusXM believes investors find this Non-GAAP financial measure useful when analyzing their results and comparing their operating performance to the performance of other communications, entertainment and media companies. SiriusXM believes investors use current and projected adjusted EBITDA to estimate current and prospective enterprise value and to make investment decisions. Because SiriusXM funds and builds-out their satellite radio system through the periodic raising and expenditure of large amounts of capital, SiriusXM’s results of operations reflect significant charges for depreciation expense. The exclusion of depreciation and amortization expense is useful given significant variation in depreciation and amortization expense that can result from the potential variations in estimated useful lives, all of which can vary widely across different industries or among companies within the same industry. SiriusXM believes the exclusion of share-based payment expense and loss on disposal of assets is useful as they are not directly related to the operational conditions of their business.  SiriusXM also believes the exclusion of settlements related only to the historical use of pre-1972 sound recordings is useful as it does not represent an expense incurred as part of normal operations for the period.  

 

Adjusted EBITDA has certain limitations in that it does not take into account the impact to SiriusXM’s statements of comprehensive income of certain expenses, including share-based payment expense and certain purchase price accounting for the merger of Sirius and XM. SiriusXM endeavors to compensate for the limitations of the Non-GAAP measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the Non-GAAP measure.  Investors that wish to compare and evaluate SiriusXM’s operating results after giving effect for these costs, should refer to net income as disclosed in their consolidated statements of comprehensive income. Since adjusted EBITDA is a Non-GAAP financial performance measure, SiriusXM’s calculation of adjusted EBITDA may be susceptible to varying calculations; may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. The reconciliation of net income to the adjusted EBITDA is calculated as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE 3

 

SiriusXM’s free cash flow derives from cash flow provided by operating activities, capital expenditures and restricted and other investment activity.  The calculation for free cash flow is as follows (in thousands).