Quarterly report pursuant to Section 13 or 15(d)

Information About Liberty's Operating Segments

v3.21.2
Information About Liberty's Operating Segments
9 Months Ended
Sep. 30, 2021
Information About Liberty's Operating Segments  
Information About Liberty's Operating Segments

(11)   Information About Liberty's Operating Segments

The Company, through its ownership interests in subsidiaries and other companies, is primarily engaged in the media, communications and entertainment industries. The Company identifies its reportable segments as (A) those consolidated subsidiaries that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA (as defined below) or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of the Company's annual pre-tax earnings.

The Company evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue and Adjusted OIBDA (as defined below). In addition, the Company reviews nonfinancial measures such as subscriber growth, churn and penetration.

For the nine months ended September 30, 2021, the Company has identified the following subsidiaries as its reportable segments:

Sirius XM Holdings is a consolidated subsidiary that operates two complementary audio entertainment businesses, Sirius XM and Pandora. Sirius XM features music, sports, entertainment, comedy, talk, news, traffic and weather channels and other content, as well as podcasts and infotainment services, in the United States on a subscription fee basis through its two proprietary satellite radio systems and is streamed via applications for mobile devices, home devices and other consumer electronic equipment. Sirius XM also provides connected vehicle services and a suite of in-vehicle data services. The Pandora business operates a music, comedy and podcast streaming discovery platform. Pandora is available as an ad-supported radio service, a radio subscription service, called Pandora Plus, and an on-demand subscription service, called Pandora Premium.
Formula 1 is a global motorsports business that holds exclusive commercial rights with respect to the World Championship, an annual, approximately nine-month long, motor race-based competition in which teams compete for the Constructors' Championship and drivers compete for the Drivers' Championship. The World Championship takes place on various circuits with a varying number of events taking place in different
countries around the world each season. Formula 1 is responsible for the commercial exploitation and development of the World Championship as well as various aspects of its management and administration. 

The Company's segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, differing revenue sources and marketing strategies. The significant accounting policies of the segments are the same as those described in the Company's summary of significant policies in the Company's annual financial statements filed on Form 10-K.

As of December 31, 2020, Live Nation met the Company’s reportable segment threshold for equity method affiliates due to significant losses driven by COVID-19. Although the Company owns less than 100% of the outstanding shares of Live Nation, 100% of the Live Nation amounts are included in the tables below and are subsequently eliminated in order to reconcile the account totals to the Company’s consolidated financial statements. The Company’s investment in Live Nation was reattributed from the Formula One Group to the Liberty SiriusXM Group effective April 22, 2020. Live Nation’s revenue and Adjusted OIBDA are reflected with the Formula One Group prior to the reattribution and with the Liberty SiriusXM Group following the reattribution.

Performance Measures

The following table disaggregates revenue by segment and by source:

Three months ended

Nine months ended

September 30,

September 30,

    

2021

    

2020

    

2021

    

2020

 

amounts in millions

Liberty SiriusXM Group

 

 

 

Sirius XM Holdings:

Subscriber

$

1,666

1,594

4,918

 

4,757

Advertising

 

452

345

1,235

 

866

Equipment

41

47

149

113

Other

39

39

113

115

Total Liberty SiriusXM Group

2,198

2,025

6,415

5,851

Braves Group

 

 

 

 

Corporate and other:

 

 

 

 

Baseball

 

222

 

102

 

433

 

119

Development

 

12

 

8

 

33

 

24

Total Braves Group

234

110

466

143

Formula One Group

Formula 1:

Primary

612

558

1,235

590

Other

56

39

114

70

Total Formula One Group

668

597

1,349

660

Consolidated Liberty

$

3,100

2,732

 

8,230

 

6,654

Live Nation’s revenue was $2,699 million and $184 million during the three months ended September 30, 2021 and 2020, respectively, and $3,565 million and $1,624 million during the nine months ended September 30, 2021 and 2020, respectively.

Our subsidiaries’ customers generally pay for services in advance of the performance obligation and therefore these prepayments are recorded as deferred revenue. The deferred revenue is recognized as revenue in our unaudited condensed consolidated statement of operations as the services are provided. Changes in the contract liability balance for Sirius XM Holdings during the three months ended September 30, 2021 were not materially impacted by other factors. The opening and closing balances for our deferred revenue related to Formula 1 and Braves Holdings for the nine months ended September 30, 2021 were approximately $349 million and $504 million, respectively. The primary cause for the increase related to the receipt of cash from our customers in advance of satisfying our performance obligations.

Significant portions of the transaction prices for Formula 1 and Braves Holdings are related to undelivered performance obligations that are under contractual arrangements that extend beyond one year. The Company anticipates recognizing revenue from the delivery of such performance obligations of approximately $631 million for the remainder of 2021, $2,060 million in 2022, $1,718 million in 2023, $3,592 million in 2024 through 2029, and $481 million thereafter, primarily recognized through 2035. We have not included any amounts in the undelivered performance obligations amounts for Formula 1 and Braves Holdings for those performance obligations that relate to a contract with an original expected duration of one year or less.  

For segment reporting purposes, the Company defines Adjusted OIBDA as revenue less operating expenses, and selling, general and administrative expenses excluding all stock-based compensation, separately reported litigation settlements and restructuring and impairment charges. The Company believes this measure is an important indicator of the operational strength and performance of its businesses, by identifying those items that are not directly a reflection of each business’ performance or indicative of ongoing business trends. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, stock-based compensation, separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

Adjusted OIBDA is summarized as follows:

Three months ended

Nine months ended

September 30,

September 30,

    

2021

    

2020

    

2021

    

2020

 

amounts in millions

Liberty SiriusXM Group

Sirius XM Holdings

$

720

 

661

 

2,101

 

1,915

Live Nation

306

(320)

164

(647)

Corporate and other

 

(5)

 

(7)

 

(12)

 

(26)

1,021

334

2,253

1,242

Eliminate equity method affiliate

(306)

320

(164)

647

Total Liberty SiriusXM Group

 

715

 

654

 

2,089

 

1,889

Braves Group

Corporate and other

 

55

 

5

 

86

 

(49)

Total Braves Group

 

55

 

5

 

86

 

(49)

Formula One Group

 

 

Formula 1

 

180

 

14

 

312

 

(34)

Live Nation

NA

NA

NA

(125)

Corporate and other

(4)

(6)

(14)

(26)

176

8

298

(185)

Eliminate equity method affiliate

NA

NA

NA

125

Total Formula One Group

176

8

298

(60)

Consolidated Liberty

$

946

 

667

 

2,473

 

1,780

Other Information

September 30, 2021

    

Total

    

Investments

    

Capital

 

assets

in affiliates

expenditures

amounts in millions

Liberty SiriusXM Group

Sirius XM Holdings

$

29,739

 

725

 

244

Live Nation

13,331

246

110

Corporate and other

1,758

149

44,828

1,120

354

Eliminate equity method affiliate

(13,331)

(246)

(110)

Total Liberty SiriusXM Group

31,497

874

244

Braves Group

Corporate and other

1,625

108

26

Total Braves Group

1,625

108

26

Formula One Group

Formula 1

8,815

10

Corporate and other

 

3,020

 

34

 

Total Formula One Group

11,835

34

10

Elimination (1)

(538)

Consolidated Liberty

$

44,419

 

1,016

 

280

(1) This amount is primarily comprised of the intergroup interests in the Braves Group held by the Formula One Group and the Liberty SiriusXM Group and the intergroup interest in the Formula One Group held by the Liberty SiriusXM Group. See note 2 for information regarding the intergroup interests. The Braves Group intergroup interests attributable to the Formula One Group and the Liberty SiriusXM Group are presented as assets of the Formula One Group and Liberty SiriusXM Group, respectively, and are presented as liabilities of the Braves Group in the attributed financial statements. The Formula One Group intergroup interest attributable to the Liberty SiriusXM Group is presented as an asset of the Liberty SiriusXM Group and is presented as a liability of the Formula One Group in the attributed financial statements. The offsetting amounts between tracking stock groups are eliminated in consolidation.

The following table provides a reconciliation of Adjusted OIBDA to Operating income (loss) and Earnings (loss) before income taxes:

Three months ended

Nine months ended

September 30,

September 30,

    

2021

    

2020

    

2021

    

2020

 

amounts in millions

Adjusted OIBDA

$

946

 

667

 

2,473

 

1,780

Impairment, restructuring and acquisition costs, net of recoveries (note 10)

95

(13)

(24)

Legal reserves

16

Stock-based compensation

 

(65)

 

(68)

 

(188)

 

(180)

Depreciation and amortization

 

(274)

 

(279)

 

(806)

 

(812)

Operating income (loss)

702

320

1,466

780

Interest expense

 

(168)

 

(153)

 

(484)

 

(480)

Share of earnings (losses) of affiliates, net

 

9

 

(187)

 

(134)

 

(442)

Realized and unrealized gains (losses) on financial instruments, net

 

(40)

 

16

 

66

 

(163)

Gains (losses) on dilution of investment in affiliate

142

 

 

152

 

1

Other, net

 

(72)

 

(32)

 

(54)

 

(2)

Earnings (loss) before income taxes

$

573

 

(36)

 

1,012

 

(306)