Form 8-K Liberty Media Corp For: May 09

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

 

 

FORM 8-K

CURRENT REPORT

 

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

 

 

Date of Report (date of earliest event reported): May 9, 2016

 

 

 

LIBERTY MEDIA CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

12300 Liberty Blvd.

Englewood, Colorado 80112

(Address of principal executive offices and zip code)

 

 

Registrant's telephone number, including area code: (720) 875-5400

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Item 2.02.  Results of Operations and Financial Condition

On May 9, 2016, Liberty Media Corporation (the “Company”) issued a press release (the “Earnings Release”) setting forth information, including financial information, which is intended to supplement the financial statements and related Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2016 filed with the Securities and Exchange Commission (the “SEC”) on May 9, 2016.

This Item 2.02 and the Earnings Release attached hereto as Exhibit 99.1, insofar as they disclose historical information regarding the Company's results of operations or financial condition for the period ended March 31, 2016, are being furnished to the SEC.

Item 9.01.  Financial Statements and Exhibits

 

(d)  Exhibits

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: May 11, 2016

 

 

 

 

 

LIBERTY MEDIA CORPORATION REPORTS

FIRST QUARTER 2016 FINANCIAL RESULTS

 

Englewood, Colorado, May 9, 2016 - Liberty Media Corporation ("Liberty Media" or “Liberty”) (NASDAQ: LSXMA, LSXMB, LSXMK, BATRA, BATRK, LMCA, LMCK) today reported first quarter 2016 results.  Highlights include (1):

 

“SiriusXM again posted strong results, setting a record for quarterly revenue and subscriber growth that resulted in an increase to its forecasted 2016 full-year net subscriber additions on its earnings call on April 28th,” stated Greg Maffei, President and CEO of Liberty Media.  “At Liberty, we completed the recapitalization into three tracking stocks groups on April 15th.  While the tracking stocks have experienced expected early volatility, we anticipate that the rationale for the recapitalization will play out over time.”  

 

Subsequent Events

On April 15, 2016, Liberty Media completed the Recapitalization of Liberty’s common stock into three new tracking stock groups: (i) the Liberty SiriusXM Group, (ii) the Liberty Braves Group and (iii) the Liberty Media Group, and therefore, the Recapitalization had not been completed as of March 31, 2016. For purposes of presentation herein, the assets and liabilities of Liberty Media (excluding cash and liquid investments) have been allocated among the three tracking stocks as if the Recapitalization had occurred on January 1, 2015. This is intended to supplement and enhance the information included in our prior period financial statements but is not intended to provide a comprehensive view of what each tracking stock group's performance would have been had the Recapitalization actually occurred on such date.

 

In connection with the Recapitalization, Liberty Media entered into a Supplemental Indenture for its 1.375% Cash Convertible Notes due 2023.  The Notes will be convertible into cash based on the product of the conversion rate specified in the indenture and the basket of tracking stocks, at the applicable distribution ratios, into which each outstanding Series A share of Liberty Media Corporation was reclassified.  The Supplemental Indenture amends the conversion, adjustment and other provisions of the indenture to give effect to the Recapitalization.  The Supplemental Indenture has been filed as an exhibit to our Form 8-K dated April 19, 2016.

 

Liberty Media intends to offer subscription rights (the “Rights”) to acquire shares of Series C Liberty Braves common stock to raise capital to repay the Intergroup Note (as defined below) and for working capital purposes. The Rights will be distributed to holders of all series of Liberty Braves common stock and will enable such holders to acquire shares of Series C Liberty Braves common stock at a 20% discount to the volume weighted average trading price of the Series C Liberty Braves common stock for the 18-day trading period ending on (and including) May 11, 2016. Liberty expects that the distribution date will be 5:00 p.m. New York City time on May 18, 2016 and that the proposed Rights Offering will commence on May 19, 2016 (which is also the proposed ex-dividend date for the distribution of the Series C Liberty Braves Rights), and will remain open for 20 trading days, subject to extension. Further details regarding the Rights Offering will be included in an offering document under form S-3 to be filed with the SEC prior to the distribution of the Rights.

 

On May 2, 2016, Hallmark Cards, Inc. (“Hallmark”) announced that it had completed a previously announced merger with Crown Media Holdings, Inc. (“Crown”) and had taken the company private. Liberty Media held an approximately 3% ownership interest in Crown and expects to receive approximately $48 million in pre-tax proceeds in connection with the privatization, which will be attributed to the Liberty Media Group. 

Operating Results

LIBERTY SIRIUSXM GROUP – Liberty SiriusXM Group's revenue increased 12% to $1.2 billion in the first quarter, adjusted OIBDA(2) increased 9% to $439 million and operating income increased 16% to $336 million. The increases in revenue, adjusted OIBDA and operating income were primarily attributable to an increase in the daily weighted average number of subscribers and increases in certain of SiriusXM’s self-pay subscription rates.

 

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. SiriusXM reported its stand-alone first quarter results on April 28, 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 is 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-Q for the quarter ended March 31, 2016.

 

Highlights of SiriusXM's earnings release included the following:

The businesses and assets attributed to Liberty SiriusXM Group consist primarily of Liberty Media’s interest in SiriusXM.

 

LIBERTY BRAVES GROUP - Liberty Braves Group's revenue decreased $1 million to $4 million in the first quarter, adjusted OIBDA(2) decreased $15 million to $(36) million and operating income decreased $17 million to $(43) million. The decrease in revenue was primarily due to a non-recurring disbursement of approximately $2 million received from MLB during the first quarter of 2015. The decreases in adjusted OIBDA and operating income were primarily due to an increase in operating expenses driven by the acceleration of approximately $11 million in player salary expense as a result of released and injured players during the first quarter.

 

The businesses and assets attributed to Liberty Braves Group consist primarily of Liberty Media’s subsidiary Braves Holdings, LLC (“Braves Holdings”), which indirectly owns the Atlanta Braves baseball team and certain assets and liabilities associated with its ballpark and mixed-use development project.

 

LIBERTY MEDIA GROUP – Liberty Media Group's operating income increased $507 million to $488 million in the first quarter primarily due to proceeds from the Vivendi lawsuit settlement that are one-time in nature.

 

The businesses and assets attributed to Liberty Media Group consist of all of Liberty Media’s businesses and assets other than those attributed to Liberty SiriusXM Group and Liberty Braves Group, including its interest in Live Nation, minority equity investments in Time Warner and Viacom and an approximate 20% intergroup interest in the Liberty Braves Group.

 

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). For the period covering the creation of the Liberty Media Series C common stock on July 24, 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).  There were no repurchases of Series A or Series C Liberty common stock from February 1, 2016 through April 30, 2016. The total remaining repurchase authorization for Liberty Media stock is approximately $1.3 billion and can be applied to repurchases of Series A and Series C shares of any of the Liberty Media Corporation tracking stocks.

 

FOOTNOTES

 

LIBERTY MEDIA FINANCIAL METRICS - QUARTER

 

 

 

 

NOTES

 

Unless otherwise noted, the foregoing discussion compares financial information for the three months ended March 31, 2016 to the same period in 2015.

 

The following financial information with respect to Liberty Media's equity affiliates and available for sale securities is intended to supplement Liberty Media's condensed consolidated balance sheet and statement of operations to be included in its Form 10-Q for the period ended March 31, 2016.

 

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 cash and liquid investments attributed to Liberty SiriusXM Group decreased $10 million during the quarter. Cash from operations and additional borrowings at SiriusXM were more than offset by shares repurchased by SiriusXM and capital expenditures. Cash and liquid investments attributed to Liberty SiriusXM Group as of March 31, 2016 and December 31, 2015 reflects the cash and liquid investments at SiriusXM as of such dates and does not include $50 million of corporate cash attributed as part of the tracking stock Recapitalization in April. 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. 

 

Total debt attributed to Liberty SiriusXM increased by $0.3 billion primarily as a result of borrowings in excess of repayments under SiriusXM’s revolving credit facility.

 

Total cash and liquid investments attributed to Liberty Braves Group increased $31 million during the quarter primarily as a result of borrowings under a note obligation from Liberty Braves Group to Liberty Media Group (the “Intergroup Note”), partially offset by debt repayments and capital expenditures related to the construction of the new ballpark and adjacent mixed-use development. As of March 31, 2016, approximately $456 million had been spent on the ballpark and mixed-use development, of which approximately $250 million of funding had been provided by Cobb County and related entities. Of the $206 million of Braves’ funding as of March 31, 2016, $76 million had been spent on the ballpark and $130 million on the mixed-use development (including $7 million of cost towards future development phases, including purchased land cost, not reflected in currently forecasted equity contribution towards mixed-use development). Cash and liquid investments attributed to Liberty Braves Group as of March 31, 2016 and December 31, 2015 reflects the cash and liquid investments at Braves Holdings as of such dates and does not include $50 million of corporate cash attributed as part of the tracking stock Recapitalization.  

 

Total debt attributed to Liberty Braves Group decreased by $32 million primarily as a result of repayment under the Braves’ credit facilities. Total debt attributed to Liberty Braves Group excludes any amounts drawn on the Intergroup Note (see below). 

 

Total cash and liquid investments attributed to Liberty Media Group increased $426 million during the quarter primarily as a result of pre-tax proceeds from the Vivendi lawsuit settlement, partially offset by Intergroup Note funds lent to Liberty Braves Group.  Cash and liquid investments attributed to Liberty Media Group as of March 31, 2016 and December 31, 2015 reflects all cash and liquid investments of Liberty Media Corporation less cash and liquid investments at SiriusXM and Braves Holdings as of such dates, and is inclusive of $50 million of corporate cash that was attributed to each of Liberty SiriusXM Group and Liberty Braves Group as part of the tracking stock Recapitalization on April 15, 2016.  

 

Total debt attributed to Liberty Media Group was flat year over year.

 

Intergroup Allocations

 

Attributed to Liberty Braves Group is an Intergroup Note from Liberty Media Group with total borrowing capacity of up to $165 million to partially fund the equity contribution on the mixed-use development.  As of March 31, 2016 and December 31, 2015, Liberty Braves Group had drawn approximately $101 million and $31 million, respectively, on the Intergroup Note, which is included in the Intergroup payable (receivable) line item on the condensed consolidated attributed balance sheet. The Intergroup Note is expected to be repaid using proceeds from the Rights Offering. Any remaining proceeds from the Rights Offering will be attributed to the Liberty Braves Group.

 

The Intergroup tax payable for the Liberty SiriusXM Group presented below is indicative of the group’s income tax liability through March 31, 2016.  Per the tracking stock tax sharing policies, consolidated income taxes arising from the Liberty SiriusXM Group in periods prior to the Recapitalization will be allocated to the Liberty Media Group.  As such, the balance of the Intergroup tax payable (receivable) between the Liberty SiriusXM Group and the Liberty Media Group was adjusted to zero at the effective date of the Recapitalization.

 

 

Following the creation of the tracking stocks, Liberty Media Group holds an approximate 20% intergroup interest in the Liberty Braves Group. Liberty Media Corporation shares outstanding as of April 30, 2016 do not include shares underlying Liberty Media Group’s approximate 20% intergroup interest in the Liberty Braves Group. As of April 30, 2016, approximately 8.4 million(3) notional shares are underlying this interest. Assuming issuance of such shares, the Liberty Braves Group outstanding share count as of April 30, 2016 would be 41.9 million(3).  

 

 

Important Notice: Liberty Media Corporation (Nasdaq: LSXMA, LSXMB, LSXMK, LMCA, LMCK, BATRA, BATRK) 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.D.T.) on May 9, 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, 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, fluctuations in the prices of the tracking stocks, the proposed rights offering 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 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, 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, satisfaction of conditions to the distribution of Rights for the proposed rights offering and the ability of Liberty Media to realize the expected benefits of the Recapitalization and the proposed rights offering, changes in law and market conditions conducive to stock repurchases and the proposed rights offering.  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 Forms 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.

 

This press release does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of any securities referred to in this press release in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. The rights offering will be made only by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended.

 

Contact: Courtnee Chun (720) 875-5420

 

 

LIBERTY MEDIA CORPORATION

BALANCE SHEET INFORMATION

March 31, 2016 (unaudited)

 

 

LIBERTY MEDIA CORPORATION

STATEMENT OF OPERATIONS
Three months ended March 31, 2016 (unaudited)

 

 

LIBERTY MEDIA CORPORATION

STATEMENT OF OPERATIONS
Three months ended March 31, 2015 (unaudited)

 

 

 

LIBERTY MEDIA CORPORATION

STATEMENT OF CASH FLOWS INFORMATION

Three months ended March 31, 2016 (unaudited)

 

 

 

LIBERTY MEDIA CORPORATION

STATEMENT OF CASH FLOWS INFORMATION

Three months ended March 31, 2015 (unaudited)