Annual report pursuant to Section 13 and 15(d)

Investments In Affiliates Accounted For Using The Equity Method

v3.22.0.1
Investments In Affiliates Accounted For Using The Equity Method
12 Months Ended
Dec. 31, 2021
Investments In Affiliates Accounted For Using The Equity Method

(7)  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 and market value (Level 1) of the more significant investments in affiliates at December 31, 2021, and the carrying amount at December 31, 2020:

December 31, 2021

December 31, 2020

 

    

Percentage

    

Fair Value

    

Carrying

    

Carrying

 

ownership

(Level 1)

amount

amount

 

dollar amounts in millions

 

Liberty SiriusXM Group

Live Nation

31%

$

8,336

 

$

89

163

Sirius XM Canada

70%

NA

 

642

 

643

Other

74

80

Total Liberty SiriusXM Group

805

886

Braves Group

Other

NA

NA

110

94

Total Braves Group

110

94

Formula One Group

Other

 

various

 

NA

 

30

 

38

Total Formula One Group

30

 

38

Consolidated Liberty

$

945

1,018

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

Years ended December 31,

 

    

2021

    

2020

    

2019

 

amounts in millions

 

Liberty SiriusXM Group

Live Nation

$

(235)

(465)

NA

Sirius XM Canada

4

 

5

 

(3)

Other

(22)

(24)

(21)

Total Liberty SiriusXM Group

(253)

(484)

(24)

Braves Group

Other

30

6

18

Total Braves Group

30

6

18

Formula One Group

Live Nation

 

NA

 

(112)

 

4

Other

 

23

 

4

 

8

Total Formula One Group

23

(108)

12

Consolidated Liberty

$

(200)

 

(586)

 

6

Live Nation

Live Nation is considered the world’s leading live entertainment company and seeks to innovate and enhance the live entertainment experience for artists and fans before, during and after the show. Liberty’s interest in Live Nation was reattributed from the Formula One Group to the Liberty SiriusXM Group effective April 22, 2020.

Due to the impact of COVID-19, Live Nation recorded significant losses during the years ended December 31, 2021 and 2020. In September 2021, Live Nation completed an offering of approximately 5.2 million shares of its common stock, resulting in a gain on dilution of our investment in Live Nation. See note 9 for details regarding the number and fair value of Live Nation common stock pledged as collateral pursuant to the Live Nation Margin Loan as of December 31, 2021.

Summarized financial information for Live Nation is as follows:

Consolidated Balance Sheets

December 31,

December 31,

    

2021

    

2020

    

amounts in millions

Current assets

$

6,684

 

3,650

 

Property, plant and equipment, net

 

1,092

 

1,101

 

Intangible assets

1,395

1,225

Goodwill

 

2,591

 

2,129

 

Other assets

2,640

2,484

Total assets

$

14,402

 

10,589

 

Current liabilities

$

6,856

3,797

Long-term debt, net

5,145

4,855

Other liabilities

2,037

1,799

Redeemable noncontrolling interests

552

272

Equity

(188)

(134)

Total liabilities and equity

$

14,402

10,589

Consolidated Statements of Operations

Years ended December 31,

2021

    

2020

    

2019

amounts in millions

Revenue

$

6,268

 

1,861

 

11,548

Operating expenses:

 

Direct operating expenses

4,356

1,402

8,467

Selling, general and administrative expenses

 

1,755

 

1,524

 

2,145

Depreciation and amortization

416

485

444

Other operating expenses

159

103

167

6,686

 

3,514

 

11,223

Operating income (loss)

(418)

(1,653)

325

Interest expense

(282)

(227)

(158)

Other income (expense), net

89

23

18

Earnings (loss) before income taxes

(611)

(1,857)

185

Income tax (expense) benefit

2

29

(67)

Net earnings (loss)

(609)

(1,828)

118

Less net earnings (loss) attributable to noncontrolling interests

42

(103)

48

Net earnings (loss) attributable to Live Nation stockholders

$

(651)

(1,725)

70

Sirius XM Canada

As of December 31, 2021, Sirius XM Holdings holds a 70% equity interest and 33% voting interest in Sirius XM Canada Holdings, Inc. (“Sirius XM Canada”). Sirius XM Canada is accounted for as an equity method investment as Sirius XM Holdings does not have the ability to direct the most significant activities that impact Sirius XM Canada’s economic performance.

Sirius XM Holdings has a loan to Sirius XM Canada in the aggregate amount of $120 million as of December 31, 2021. 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.

Sirius XM Holdings 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 currently pays Sirius XM Holdings 25% of its gross revenue on a monthly basis and pursuant to the Advisory Services Agreement, Sirius XM Canada pays Sirius XM Holdings 5% of its gross revenue on a monthly basis.

Sirius XM Holdings had approximately $21 million and $20 million in related party current assets as of December 31, 2021 and 2020, respectively. At December 31, 2021, Sirius XM Holdings had approximately $5 million in related party liabilities, which are recorded in other current liabilities in the consolidated balance sheet. Sirius XM Holdings recorded approximately $101 million, $97 million and $98 million in revenue for the years ended December 31, 2021, 2020 and 2019, respectively, associated with these various agreements. Sirius XM Canada paid dividends to Sirius XM Holdings of $2 million during each of the years ended December 31, 2021, 2020 and 2019.

SoundCloud

In February 2020, Sirius XM Holdings completed a $75 million investment in Series G Membership Units of SoundCloud Holdings, LLC (“SoundCloud”). The Series G Units are convertible at the option of the holders at any time into shares of ordinary membership units of SoundCloud at a ratio of one ordinary membership unit for each Series G Unit. The investment in SoundCloud is accounted for as an equity method investment as Sirius XM Holdings does not have the ability to direct the most significant activities that impact SoundCloud's economic performance.

In addition to Sirius XM Holdings’ investment in SoundCloud, Pandora has an agreement with SoundCloud to be its exclusive U.S. ad sales representative. Through this arrangement, Pandora offers advertisers the ability to execute campaigns in the U.S. across the Pandora and SoundCloud listening platforms. Sirius XM Holdings recorded revenue share expense related to this agreement of $60 million, $55 million and $40 million during years ended December 31, 2021, 2020 and 2019, respectively.  Sirius XM Holdings also had related party liabilities of $24 million as of each of December 31, 2021 and 2020, related to this agreement.