Quarterly report pursuant to Section 13 or 15(d)

Investments In Affiliates Accounted For Using The Equity Method

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Investments In Affiliates Accounted For Using The Equity Method
6 Months Ended
Jun. 30, 2018
Investments in Affiliates Accounted for Using the Equity Method  
Investments In Affiliates Accounted For Using The Equity Method

(9)   Investments in Affiliates Accounted for Using the Equity Method

Liberty has various investments accounted for using the equity method. The following table includes the Company's carrying amount and percentage ownership of the more significant investments in affiliates at June 30, 2018 and the carrying amount at December 31, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2018

 

December 31, 2017

 

 

    

Percentage

    

Fair Value

    

Carrying

    

Carrying

 

 

 

ownership

 

(Level 1)

 

amount

 

amount

 

 

 

dollar amounts in millions

 

Liberty SiriusXM Group

 

 

 

 

 

 

 

 

 

 

 

SIRIUS XM Canada

 

70

%

$

NA

 

$

636

 

672

 

Other

 

 

 

 

NA

 

 

 6

 

 —

 

Total Liberty SiriusXM Group

 

 

 

 

 

 

 

642

 

672

 

 

 

 

 

 

 

 

 

 

 

 

 

Braves Group

 

 

 

 

 

 

 

 

 

 

 

Other

 

various

 

 

NA

 

 

97

 

145

 

Total Braves Group

 

 

 

 

 

 

 

97

 

145

 

 

 

 

 

 

 

 

 

 

 

 

 

Formula One Group

 

 

 

 

 

 

 

 

 

 

 

Live Nation (a)

 

34

%

$

3,383

 

 

751

 

756

 

Other

 

various

 

 

NA

 

 

169

 

177

 

Total Formula One Group

 

 

 

 

 

 

 

920

 

933

 

Consolidated Liberty

 

 

 

 

 

 

$

1,659

 

1,750

 


(a)

See note 11 for details regarding the number and fair value of shares pledged as collateral pursuant to the Live Nation Margin Loan as of June 30, 2018.  

 

The following table presents the Company's share of earnings (losses) of affiliates:

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Six months ended

 

 

 

June 30,

 

June 30,

 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

amounts in millions

 

Liberty SiriusXM Group

 

 

 

 

 

 

 

 

 

 

SIRIUS XM Canada

 

$

(1)

 

(5)

 

 —

 

(2)

 

Total Liberty SiriusXM Group

 

 

(1)

 

(5)

 

 —

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

Braves Group

 

 

 

 

 

 

 

 

 

 

Other

 

 

 3

 

 1

 

 6

 

 4

 

Total Braves Group

 

 

 3

 

 1

 

 6

 

 4

 

 

 

 

 

 

 

 

 

 

 

 

Formula One Group

 

 

 

 

 

 

 

 

 

 

Live Nation

 

 

19

 

23

 

 3

 

 8

 

Other

 

 

 1

 

(3)

 

 5

 

 2

 

Total Formula One Group

 

 

20

 

20

 

 8

 

10

 

Consolidated Liberty

 

$

22

 

16

 

14

 

12

 

 

SIRIUS XM Canada

On May 25, 2017, SIRIUS XM completed a recapitalization of SIRIUS XM Canada Holdings Inc. (“SIRIUS XM Canada”), which is now a privately held corporation.

Following the transaction, SIRIUS XM holds a 70% equity interest and 33% voting interest in SIRIUS XM Canada, with the remainder of the voting power and equity interest held by two of SIRIUS XM Canada’s previous shareholders.  The total consideration from SIRIUS XM to SIRIUS XM Canada, excluding transaction costs, during year ended December 31, 2017 was $309 million, which included $130 million in cash and SIRIUS XM issued 35 million shares of its common stock with an aggregate value of $179 million to the holders of the shares of SIRIUS XM Canada acquired in the transaction. SIRIUS XM received common stock, non-voting common stock and preferred stock of SIRIUS XM Canada.  SIRIUS XM owns approximately 591 million shares of preferred stock of SIRIUS XM Canada, which has a liquidation preference of one Canadian dollar per share. SIRIUS XM Canada is accounted for as an equity method investment as SIRIUS XM does not have the ability to direct the most significant activities that impact SIRIUS XM Canada's economic performance.

SIRIUS XM also made a contribution in the form of a loan to SIRIUS XM Canada in the aggregate amount of $131 million on May 25, 2017.  The loan is denominated in Canadian dollars and is considered a long-term investment with any unrealized gains or losses reported within Accumulated other comprehensive (loss) income.  Such loan has a term of fifteen years, bears interest at a rate of 7.62% per annum and includes customary covenants and events of default, including an event of default relating to SIRIUS XM Canada’s failure to maintain specified leverage ratios.  In addition, the terms of the loan require SIRIUS XM Canada to prepay a portion of the outstanding principal amount of the loan within sixty days of the end of each fiscal year in an amount equal to any cash on hand in excess of C$10 million at the last day of the financial year if all target dividends have been paid in full. During the six months ended June 30, 2018, SIRIUS XM Canada repaid $3 million of the principal amount of the loan.

SIRIUS XM also entered into a Services Agreement and an Advisory Services Agreement with SIRIUS XM Canada. Each agreement has a thirty year term. Pursuant to the Services Agreement, SIRIUS XM Canada will pay SIRIUS XM 25% of its gross revenue on a monthly basis through December 31, 2021 and 30% of its gross revenue on a monthly basis thereafter.  Pursuant to the Advisory Services Agreement, SIRIUS XM Canada will pay SIRIUS XM 5% of its gross revenue on a monthly basis.  These agreements superseded and replace the former agreements between SIRIUS XM Canada and its predecessors and SIRIUS XM.

SIRIUS XM has approximately $14 million in related party current assets as of June 30, 2018 which includes amounts due under the Service Agreement and Advisory Services Agreement and certain amounts related to transaction outside the scope of the new services arrangements. At June 30, 2018, SIRIUS XM has approximately $4 million and $6 million in current and noncurrent related party liabilities, respectively, primarily related to the legacy agreements with SIRIUS XM Canada which are recorded in current and noncurrent other liabilities, respectively, in the Company’s condensed consolidated balance sheet. SIRIUS XM recorded approximately $23 million and $28 million in revenue for the three months ended June 30, 2018 and 2017, respectively, and $47 million and $40 million in revenue for the six months ended June 30 2018 and 2017, respectively, associated with these various agreements in the Other revenue line item in the condensed consolidated statements of operations. SIRIUS XM Canada paid gross dividends to SIRIUS XM of $1 million and $4 million during the six months ended June 30, 2018 and 2017, respectively.