Liberty Media Reports First Quarter 2013 Financial Results

ENGLEWOOD, Colo.--(BUSINESS WIRE)-- Liberty Media Corporation (“Liberty Media”) (Nasdaq: LMCA, LMCB) today reported first quarter 2013 results. Highlights include⁽¹⁾:

• SiriusXM reported strong Q1 results
  • Subscribers grew by 453,000 to a record 24.4 million
  • Record revenue of $897 million, up 12%
  • Net income of $124 million, up 15%
  • Adjusted EBITDA⁽²⁾ grew 26% to $262 million
  • Named Jim Meyer CEO
• Completed investment in Charter Communications on May 1
  • Own 27.3% of the outstanding equity
  • Four Liberty designated directors appointed to Charter’s board
  • Secured $1.4 billion in financing
• Repurchased $71 million of Liberty Media shares from February 1 through April 30

“We are extremely pleased with the operating results of our newest subsidiary, SiriusXM, which grew its subscriber base to over 24 million,” said Greg Maffei, President and CEO of Liberty Media. “After an extensive search, Jim Meyer was named CEO of SiriusXM. Jim has been an integral part of SiriusXM’s success and we are excited for him to lead the company going forward. Last week we closed our investment in Charter Communications and secured $1.4 billion of financing. We look forward to working with Tom Rutledge, his team, and our fellow board members.”

Liberty Media

On January 11, 2013 Liberty Media was separated from Starz. Therefore, as of the first quarter of 2013 Liberty began presenting Starz as discontinued operations. Liberty acquired its controlling interest in SiriusXM on January 18, 2013 and has applied purchase accounting in consolidating the results of SiriusXM since that date. Prior to the acquisition of Liberty’s controlling interest, we accounted for our investment in SiriusXM using the equity method.

Liberty Media’s revenue increased $754 million to $789 million in the first quarter. Adjusted OIBDA increased $288 million to $271 million and operating income increased $192 million to $160 million. The increase in revenue, adjusted OIBDA and operating income was primarily due to the acquisition of a controlling interest in SiriusXM as discussed above.

SiriusXM

SiriusXM reported its stand-alone first quarter results on April 30, 2013. 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 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) and operating income for SiriusXM’s stand-alone operating results as reported by SiriusXM, to those results as reported by Liberty, see Liberty’s Form 10-Q for the quarter ended March 31, 2013.

Highlights of SiriusXM’s earnings release included the following:

• Subscribers grew by 453,000 to a record 24.4 million
• Record revenue of $897 million, up 12%
• Net Income of $124 million, up 15%
• Adjusted EBITDA⁽²⁾ grew 26% to a record $262 million
• Free Cash Flow guidance increased
• SiriusXM repurchased 209 million shares of common stock

All such amounts are representative of SiriusXM’s stand-alone operating results and are not indicative of what is included in Liberty’s financial statements due to certain purchase accounting adjustments resulting from our January 18, 2013 acquisition of SiriusXM. SiriusXM is a separate publicly traded company and additional information about SiriusXM can be obtained through its website and filings with the Securities and Exchange Commission.

Share Repurchases

From February 1, 2013 through April 30, 2013, 0.6 million shares of Series A Liberty Capital common stock (Nasdaq: LMCA) were purchased at an average cost per share of $110.11 for total cash consideration of $71.0 million. After the completion of the Starz separation on January 11, 2013 through April 30, 2013, 1.1 million shares of Series A Liberty Capital common stock (Nasdaq: LMCA) were purchased at an average cost per share of $110.15 for total cash consideration of $123.0 million. Since the reclassification of the original Liberty Capital tracking stock on March 4, 2008 through April 30, 2013, 59.6 million shares have been repurchased at an average cost per share of $34.01 for total cash consideration of $2.0 billion. These repurchases represent 46.1% of the shares outstanding at the time of the introduction of the original Liberty Capital stock. Liberty Media has approximately $327.0 million remaining under its current stock repurchase authorization.

Liberty Media Corporation owns interests in a broad range of media, communications and entertainment businesses, including its subsidiaries SiriusXM, Atlanta National League Baseball Club, Inc. and TruePosition, Inc., its interests in Charter Communications, Live Nation Entertainment and Barnes & Noble, and minority equity investments in Time Warner Inc., Time Warner Cable, and Viacom.

FOOTNOTES

NOTES

Unless otherwise noted, the foregoing discussion compares financial information for the three months ended March 31, 2013 to the same period in 2012.

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-Q.

Cash and Debt

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

Total Liberty Media group cash and liquid investments increased $1.3 billion, primarily as a result of $1.2 billion in cash distributed from Starz, net cash acquired from the consolidation of SiriusXM and cash provided by operations during the quarter, primarily at SiriusXM. The cash inflows were partially offset by repurchases of common stock by Liberty and SiriusXM.

Included in consolidated cash and liquid investments is $207 million at SiriusXM. Although SiriusXM is a consolidated subsidiary, they are a separate public company with a significant noncontrolling interest, therefore Liberty may not have ready access to that cash. Total Liberty Media debt increased by $2.2 billion, as a result of debt acquired from the consolidation of SiriusXM.

Important Notice: Liberty Media Corporation (Nasdaq: LMCA, LMCB) President and CEO, Greg Maffei, will discuss Liberty Media’s earnings release in a conference call which will begin at 11:00 a.m. (ET) on May 8, 2013. The call can be accessed by dialing (877) 741-4241 or (719) 325-4781 at least 10 minutes prior to the start time. Replays of the conference call can be accessed until 11:00 a.m. (ET) May 15, 2013, by dialing (888) 203-1112 or (719) 457-0820 plus the pass code 1316456. 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, new service and product launches, the continuation of our stock repurchase plans, our recent investment in Charter Communications, our consolidation of SiriusXM, 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, competitive issues, regulatory matters affecting our businesses, 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 and 10-Q, 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.

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 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 table provides a reconciliation of adjusted OIBDA for Liberty Media to operating income calculated in accordance with GAAP for the three months ended March 31, 2012, June 30, 2012, September 30, 2012, December 31, 2012 and March 31, 2013, respectively.

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 and investment income (loss); interest expense, net of amounts capitalized; income tax expense and depreciation and amortization. SiriusXM adjusts EBITDA to remove the impact of other income and expense, loss on extinguishment of debt 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 its businesses, (ii) bases its internal budgets and (iii) compensates management. 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 and (iii) share-based payment expense. 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 SiriusXM’s operating performance, which provides useful information about its business apart from the costs associated with its physical plant, capital structure and purchase price accounting. SiriusXM believes investors find this non-GAAP financial measure useful when analyzing its results and comparing its operating performance to the performance of other communications, entertainment and media companies. SiriusXM believes investors use current and projected adjusted EBITDA to estimate its current and prospective enterprise value and to make investment decisions. Because SiriusXM funds and builds-out its satellite radio system through the periodic raising and expenditure of large amounts of capital, its 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. We also believe the exclusion of share-based payment expense is useful given the significant variation in expense that can result from changes in the fair value as determined using the Black-Scholes-Merton model which varies based on assumptions used for the expected life, expected stock price volatility and risk-free interest rates.

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 its 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 SiriusXM’s stand-alone net income to adjusted EBITDA is calculated as follows (in thousands):

Liberty Media Corporation
Courtnee Ulrich, 720-875-5420

Source: Liberty Media Corporation

Released May 8, 2013