QVC Group Inc. (QVCAQ) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to Liberty's Investor Meeting. I trust that you've all seen the announcements we made this morning. I would love to know who won the pool and got those right. So somebody can tell me later. Also last night, thanks for many of you for joining us for dinner. And I do want to give out -- a shout-out to Jill Robinson, who did get the table theme right, which was the Top Trending Destinations in 2022 according to TripAdvisor. So here we are with our agenda today. One thing to note is that we will be doing Q&A at 1:30, and John will be streaming in live for that. And so if you -- and we will be taking questions from the live audience. So if you do want to ask questions, make sure you're back in here for that time. Okay. So we do have a Twitter handle. So we encourage you to use it. It is not just for faux Maffei and for Rich Greenfield, so please use it. Here is -- for those of you who have been to this meeting many times, this actually changed this year. So please make a note of this, take a picture. Got it, ask your friends, share the password. Okay, posting slides. Because of the announcements we made this morning, that means we need to do some filings. So please be patient, and we will get them up there as soon as we can. And we're doing something a little bit different this year called [ Eat and Meet. ] So if you notice downstairs, we've got some balloons with company names on them. And so during the lunch time, we will have company representatives there. And so if you want to talk to somebody from Trip or from Qurate, please go ahead and find the appropriate balloon. Now I would like to turn your attention to the very exciting FLS. If you could take a look at it, please. [Presentation]

Thank you. Now this is just kind of a fun -- these are our movie posters, a little walk down memory lane of some of our greatest hits or at least in our own minds. But we understand it's been a tough year, right? The market is volatile, but we still wanted to provide some levity and some entertainment and maybe take a stab at being creators. So we hope you enjoy it. [Presentation]

Good morning. Great to have you all here. At some of the past Investor Days, we've tried to look across the Liberty companies and provide some thoughts on trends or themes. We talked about streaming as a disadvantaged business model. We've talked about the strength of live experiences. We've chatted about the strength of audio and the opportunity to better monetize the ear. We've talked last year about some of the hype trains out there, including crypto. Mostly, we've had decent accuracy. This year, we want to take a little different tack and talk about our customers, try to find some connections across our portfolio. If you think about what's out there today, too many businesses are into quick actions. Click here, watch that, buy this, all about instant gratification. They target dopamine-induced brain pathways, much fueled by social media, but these pathways wear out, and there are diminishing returns on your marketing. It's like an addict, needing more to reach the same high. And it's increasingly difficult to remain engaging. Many of the business models at the Liberty companies are different, and they're architected that way. They're built so customers' brains can lean back, take a break and enjoy an experience. Think about SiriusXM in your car or a Braves game or a Formula One with your kid, QVC curating product that you want or Live Nation concert with your favorite music. This behavior leads to lasting connections and perhaps gives customers' decision-making mechanisms a break. If you think about it, you're tapping into an emotional center of the brain called the limbic system. I want to give a nod to Chad Hollingsworth, our team who had many of these great thoughts. But as you think about the Liberty companies as a result, many of them have built a deep connection with their customers. And it's built on storytelling, authenticity, trust and relationships. People are crazy. Think about the behavior and the emotional bonds they can build. The Northwestern had a 34-game losing streak. It's the longest in FBS history, but their fans remained loyal. Same as you can argue about the Jets, the Mets, the Cubs, the Lions and even the Rockies. We benefit from some of those same emotional similar connections, but we hope we don't defy the similar logic. The fans' emotional investments at the Braves and in the games is stunning. And it remains true even though the perennial winners, they remain loyal even when we have a heartbreaking loss to the Phillies. Sponsors at the Braves can get way more local eyeballs at a better price with a highway billboard. But they want -- those marquee brands want to bond and be in the signage at Truist Park for that same kind of loyalty. At Formula One, fans say, the drivers feel like my friends, and we are showcasing those drivers without their helmets, telling their story, getting people to bond with them. And think about how that's happened. 30 million people now follow Lewis Hamilton. McLaren remains a fan favorite because of their heritage despite their more recent poor record. We have strong country-specific loyalty to many of the drivers and the local brands. The national GPs produce, on average, 50% greater audiences. When it's in Mexico, the Mexican audience watches. And the audience of the Netherlands were up 81% because of the strength of Max last year. At SiriusXM, there are huge emotional responses. Think about Howard Stern, one of the greatest programming minds in history and the passion that he brings. When we had the '40s on 4 moved and pulled to somewhere else in the lineup, we had massive complaints. If you think your music choice, which is generally built when you're a teenager, it's a little scary to think about which drivers they were, who were complaining. But Warren Buffett told me that his Cadillac, which is now 7 years old, has never not been tuned to Channel 70, Siriusly Sinatra. That kind of happiness and levity that's built during your commute is priceless, and it becomes a habit. The connection is evidenced by the low churn that SiriusXM experiences despite the relatively high ARPU. At QVC and HSN, customers have a deep connection to their hosts, and they see them as close friends. They have conversations and real-time responses that make them feel like someone is talking directly to them. They love to browse and explore even if they're not purchasing, and they feel a connection to the founders, the stories and the history behind the brands. At TripAdvisor, the stickers are recognized globally. You trust a location when you see that sticker in the window. It feels familiar even when you're far from home. You rely on the accuracy of the reviews, which require trust in the platform. Those traveler photos are among the most trustworthy source of info. And over its 22-year history, TripAdvisor has built up that trust on a digital platform. At Live Nation, think about it, live music is among the most emotionally engaging experiences. Fan dedication to artists last decades. It's no coincidence that among the most common icebreaker questions is, what was your favorite concert? These attachments are difficult to create an important to protect. They stem from an emotional attachment, which is far stickier than FOMO. These emotional bonds form and are developed at key life stages, and they lead to impressive longevity among customers, and customers become fans, and fans become customers, back and forth, the teams, the brands, the artists. Younger cohorts can be far less loyal. Yesterday, it was ASOS. Today it's SHEIN. Yesterday, it was SpinDrift. Today, it's caffeinated AHA. Yesterday was feta pasta. Today, it's butter boards. Some of you actually know what butter boards are, thank God. These dopamine-based business models are fickle. And many of our customers do engage -- companies rather, do engage with younger audiences to fill the funnel. We build mindshare for when those relevant life stages, usually with higher discretionary income, occur. The Braves were the first to enter the metaverse with a digital Truist Park. Sirius is broadening its content in music and comedy and sports, drawing in younger audiences. At QNF1 -- excuse me, [ Q&H, ] we've launched a streaming service. We recently did a Backstreet Boys weekend. This brings in 35 year-old fans when they are just beginning to cap consideration for [ Q&H. ] We do look to get fans' attention early. For example, we recently invested in Overtime, an innovative Gen Z-focused sports platform. But we also acknowledge and are proud that many, though not all our customers across the Liberty family skew older or are more mature. For example, at SiriusXM, the average age is 56. At QVC and HSN, it's in the early 60s, and at the Braves, it's 43. As you get older, there is a time when kids are out of the house, focus turns back to yourself, you have peak free time and you know what you want. Convenience is key, and lean back models are increasingly appreciated, and you regain disposable income. We recently partnered with Harris Poll to look across and do some research on older cohorts. Conventional marketing targets ages 15 -- 18 to 54. As a result, 72% of boomers think that marketers don't speak to them and don't care about their interest. But the narrative around aging is changing. Hopefully, this audience knows who this is. I'm doubtful that anyone under 25 does. What's amazing is these women, not the mother, were on their 50s. This used to be 50, now this is 50. Totally different perspective. 73% of boomers believe 70 is the new 50. 62% believe they are currently in the most liberating phase of their lives. Older cohorts are defying legacy and expectations. They're defying gravity by living longer and healthier. They're defying retirement by opting for semi-retired and moving to more urban centers. They're defying the wealth handoff, spend the money on themselves rather than give it to Uncle Sam and their kids. And they are defying experience expectations, more travel, more live events. We may be talking about upper income consumers, but frankly, that's a lot of where our businesses go. Look at the average monthly spend amongst -- on sporting events. Boomers lead. Boomers are the top subscription spenders. Whose passwords are they sharing? You know our historical focus at Liberty on subscription businesses. It fits perfectly. It's the quintessential anti-dopamine burnout model. Subscriptions create a synthetic trust. It's efficient for the brain, and you can relax a world of excessive stimulants. Not surprisingly, at SiriusXM, as customers get older and they move through these life stages, they get car ownership, they increase the number of paid services and SiriusXM consideration increases. While total time spent listening may decline slightly over time, SiriusXM share goes up massively. And similarly, the relevance of core QVC and HSN customers grows with age. Around 35, we begin to get consideration. Around 45 to 54, we index about with the population. And over 55, we massively overindex. According to research at Cube, women over 50 purchase with the same frequency as millennials but spend 2.5x more on the same merchandise. Women over 50 have spending power of $15 trillion, but less than 5% of marketing targets them. Q focuses on this life stage. In fact, we celebrate it. We bring on celebrities rather that they love, like Dolly Parton and Cher. And the product assortment is curated for this demo. We have 32 neck creams on the HSN site. I thought you'd like that. We have launched special programming and product curation for women in menopause, and we've created Beauty Over 40, a series with Idina Menzel, which is on our streaming platform. It's not just older we're thinking about but life stages. At the Braves, as I mentioned, the average age is 43, but the fan distribution comes in 3 clear spikes: in the mid-20s, when they're a young professional, its let's get this party started; in the early 40s, they're in their new parents and they bring their kids, portable children in many cases; and in the late 50s when they're empty nesters, and it's let's get this party restarted. The Braves have prioritized the Battery as a family-friendly location, and we are seeing the results in the data, growing the number of season ticket holders with children. The average age of season ticket holders has actually been going slightly lower as we move towards those younger families. And we can see the lifetime value in this business being massive. Older generations bring younger generations to the game, I can remember going to a game and scoring a game with my father. But then they bring their friends, and the circle grows. At Formula One, we have TV-only era before, in which a fan's journey usually began and it was linear, and it began when they were probably introduced by a family member as a kid. But it was probably later when they developed their own interest, maybe around 12, oftentimes later than the sports they might have played, like soccer or something else. But in the mature European markets, greater than 50% of our fans have been fans for more than 10 years. But in today's journey, we have a deeper engagement with a broader set of touch points, and it's less linear. We have digital channels, which open up a world of accessible content, and younger audiences watch for reasons well beyond sport. Almost 50% of race attendees surveyed in the last -- in this year were first timers. Totally different experience. At Live Nation, festivals always skew younger, dating back to Woodstock. And it was the same this year at Lollapalooza. Even with the lineup of Metallica and Green Day, the average audience was still in their early 20s. But we know these fans aren't the -- aren't often the ticket buyers. Head of households are a key demo. The average ticket buyer for the Billie Eilish concert was 39, but that's not clearly the age of who attended. What's our takeaway? Lots of business leaders talk about generational changes, but we find it to look -- relevant to look at life stages. Some fundamental truths are universal regardless of generation. With your first job, you get some amount of discretionary income. When you have kids, often, your priorities shift. And then when you're an empty nester, both wallet and free time grow. Ultimately, bonds are formed when brands are embedded at key life stages. Younger generations do build the pipeline but don't focus too much on their wallet. Gen Z can be early adopters and lead trends, but they react, adopt and abandon faster than older customers. Again, dopamine burnout. The 55-year-old plus cohort is considered a look away in many people's eyes, but we say there's the opportunity. As boomer Wayne Gretzky said, skate to where the puck is going, not where it's been, wealthier, freer in time, freer to spend themselves and more loyal. Calling people boomer might be an insult on TikTok or from your kids, we see them as an opportunity. We are focused on fostering and protecting emotional connections with our customers, and our business models are not reliant on these dopamine pathways in a world of overstimulus. Our subscription model, again, is a prime example. We like to deliver experiences that bring joy. According to a Harris poll, while consumers are pulling back on spend, 65% are justifying discretionary spending that brings them joy. 75% have become more purposeful in how they spend their money to bring themselves joy, especially among older Americans. Look at our mission statement: Connecting people and bringing them joy. And look at the words on our website, wherever you see it, hear it, play it or buy it, Liberty. Now let's spend a second, we'll go back to Liberty Media. Thanks. [Presentation]

We asked [ Toto ] if he want to supply some content and literally he texted me that this morning of his own volition, so you can obviously see what he thinks. I want to talk a little about Liberty Media. And first, I want to give you an update on what we've done since our last Investor Day. At SIRI, despite a weaker SAAR and a weakening ad market, we have continued strong financial performance. At Live, we've seen incredible demand year-to-date, and we expect more growth in 2023. And at LSXM, we repurchased $538 million worth of stock at a SIRI effective look-through price of $3.91 per share. At the Braves, we won the NL East for the fifth time in a row. And for the first time since 2003, we won over 100 games. The team is very well set up for the future, and I'll discuss more about that in a minute. At FWON, the F1 excitement is buzzing globally. In Brazil, this week, our 2023 GP tickets went on sale, and they sold out in 1 hour and 40 minutes despite the fact we raised prices 20%. We are thrilled with the growth of our U.S. fans and our commercial partners' success. We renewed with ESPN. We moved AWS up the funnel to becoming a global partner. We have $10 billion of contracted revenue at Formula One and expect to grow in the fourth quarter. And we refinanced our FWON convertible earlier this year with less shares underlying and a higher conversion price. Most recently, this week, we did -- we priced a new F1 term loan with $25 million of annual savings despite a very difficult market, unbelievably good execution. Some reflection on the excitement about the business. Which brings us to the things we want to talk about in today's announcement. These were 2 of the best-kept secrets in the world. God, the sarcasm only goes so far. Okay. The split-off of the Braves Group tracker into a stand-alone public company is our first announcement; and the recapitalizing of the 3 LMC trackers and creating Liberty Live Group. So our second -- we believe this creates a simpler, more focused asset composition across our trackers. Why are we doing this? Well, first, to better highlight the value of the Braves outside of the tracking stock structure; to simplify our current tracking stocks at the remaining LMC; to provide greater investor choice; to provide focused investment opportunities; and we obviously aim to reduce the discount to NAV and enable potential business combinations. On the right side, I want to remind you -- we've had people who are questioning us and understandably. We have a long successful history of structurally separating assets. Here's a few of them on the right. And I would argue the top 3 are the most analogous to the Braves spin because they highlighted the value of underlying operating businesses. The ones at the bottom tend to represent entities that largely track on underlying public equities, and the performance of those public equities are what drove their performance. So if you look at the top 3 in particular, pretty successful. So with this simplified LSXM, what do you get? The NAV math is very simple now. FYI, the last time the structure was this clean, this discount was 18% versus yesterday's 37%. I leave it to you. In the past year, we have taken the actions we said we would. We delevered and strengthened the balance sheet. We now have a less levered LSXM, which enhances our flexibility, and we bought back a substantial number of shares at a massive discount to NAV. And in this simpler structure, we believe there is more we can do, and we are focused on rationalizing the structure in the near term. Switching now to the Braves. It is a brave new world. The Braves' success was on the field and in their financial statements. We swept the Mets to win the NL East title after a 10.5 game deficit. We had 2 Gold Glove Awards in Fried and Swanson. We had the NL Comeback Player of the Year in Ronald Acuña Jr. We had the Rookie of the Year in Harris, and we also had the runner-up for Rookie of the Year in Strider. Given the World Series win and our strong 2022 season, we are investing in the payroll to fuel the flywheel here: financial success; driving on-field success; driving financial success. And with this enormous financial success that we have, we believe we -- as we said, we have more to come. We were 8th in payroll this season, up from sort of mid-teens over the last couple of years. And I fully expect in the next few years, we're going to be in the top 5. We can afford it, and revenue growth and fan engagement are good for our long-term financial success and franchise value. You may have noticed -- there's high demand out there for sports assets. Money is flowing into the ecosystem with new players of all sorts driving demand. Among baseball teams, Baltimore and Washington are rumored to be kind of blink sale. We'd argue, I think, with some reasons that the Braves are a far more attractive asset. The LA Angels are rumored to be for sale and sold for over $3 million. We'll see. But each time each new deal seems to set a new benchmark for sports assets, and the valuations as a multiple of revenue seem to continue to go up. Let me turn to F1 for a sec. When we bought F1, we talked about a couple of things: protecting the heritage and growing the fan base. Most important was creating closer racing with the cost cap, the new regulations and creating investable franchises. And we've made a lot of changes since 2017 there and other ways to make the sport more accessible. We've improved the viewing experience, and we've grown a diversified fan base. I suspect some in this room are probably new fans as well. We've grown race promotion, and we think there's more to go. And we've done that by growth rolling the revenue per race and the number of races. And these revenue drivers are still working in our favor. We have the largest calendar next year, and the supply-demand economics are working in our favor among promoters. They increase their capacity, and they're still selling out. For example, Austin attendance this year was up 70% over 2017 with 445,000 fans. Enhancing promoter partnerships is part of our mentality. It improves their economics and ultimately benefits us. And Vegas, which we'll talk about more in a sec, will allow us to be better partners and have better learnings. Media rights. We've had unparalleled success growing existing contracts, having interest from new broadcasters and growing the audiences. And that flywheel is working. We've signed shorter agreements in our growth markets. For example, we signed a 3-year deal before within the U.S., and we signed a 3-year deal again in the U.S. Why? We expect we're going to get more money in 3 years. We're bullish on our prospects. We think there'll be continued growth also in F1 TV, which after a slow start has really accelerated over the last couple of years. Sponsorship. Another thing we probably started more slowly than we had hoped, but the dynamic has been excellent more recently. The flywheel is working here as well. Fan interest has generated more interest among sponsors. We grow the fans, we grow the broadcast and we grow the sponsors. And we have new global partners this year. AWS moved up to global. MSC came aboard. Salesforce came aboard. And we continue to expand the inventory of assets available for sponsorship, including digital inventory and virtual signage. Last area I want to talk about on the revenue side is hospitality experiences. Year-to-date, we've already generated 109% of the fiscal 2019 hospitality revenue, excluding many large Paddock Clubs are still taking place in Q4. This is the results of Q3. Drivers, demand and ability -- what are the drivers -- and demand to flex pricing, increase capacity and additional sponsorship opportunities for hospitality. This is another way to connect with fans, and they're out there, things like the F1 exhibition we have in Madrid that will come next year. So let me talk a minute about Vegas, and Brian will touch on this a little more. We continue to grow the U.S. fan base with the third race. Very exciting. There were some who worried that we would drain Miami and Austin with a third race, certainly doesn't appear to be the case. And no one can accommodate the demand on the larger crowds that we expect in Vegas. We continue to grow the U.S. fan base. As I said, U.S. viewership on TV was up 28% to the first 20 races over last year. And this helps fuel other revenue streams like advertising and sponsorship. We will have additional uses for the land purchased at FWON for this race, but we underwrote this land purchase and the investment we will make in the Paddock on the basis of the race alone and have upside for year-round experiences we believe beyond that. This is a great economic opportunity for us and the larger Las Vegas community. So what is that economic opportunity? We know you've all been wondering. Here's a general overview of the ticket levels, capacity and pricing we expect in Las Vegas. And we expect a total capacity over 100,000 per day with much of it tilted towards the higher end Paddock and hospitality experiences. We are confident this will be the largest revenue for any one race ever held probably by a significant amount. But I will note, Vegas is not cheap. There will also be substantial costs. And we expect the profit contribution over time will be as attractive as any top 5 flyaway race. We're already seeing incredible demand, as you can see on the right, at the LVGP launch party. Now at FWON, we've had great success, and with that has come rising cash flow. And we've taken the leverage down substantially. We have impressive liquidity. Many of you wonder what we're going to do with this. We think this cash does create optionality. Some of it will be reinvested back in Vegas, but we also see an opportunity in this market for lots of -- given the dislocations for us to find interesting things to do, including further buybacks. So what's our investment thesis? May I remind you, we'd like to think -- we think like owners. We're aligned that way. We have permanent capital, which gives us flexibility, and we think we have a differentiated approach. We've had long-term success doing that. Obviously, recent challenges in the marketplace, as you've seen, but for many. But I would remind you, we have a flexible toolbox, and we tend to use it, I think, effectively. One of the things that perhaps differentiates us against many corporates is our willingness to exit. And I would like to point out, we've done that pretty well with some well-timed exit. It's been harder to invest over the last few years. It's been better to have exits. 2 years ago, we sat here and told you we sold LendingTree. Our stock is down 90% since. We sold iHeart at $25 a share. Many of you questioned our foray into iHeart. Pretty good. It's down about 8%. And DIRECTV, I remind you, we had a pretty good run and a well-timed exit when you compare what subsequent investments have been. Let me finish and let Brian come up after me by talking a little bit about ESG across our portfolio. Last year, we announced a coordinated approach across the portfolio for ESG. This year, we held our second annual ESG summit, and we've had several micro summits since. We try and share the knowledge about this across our companies. We think it's some value-add, and some of our notable updates on ESG are on this slide, and obviously, this will be posted to the website. So with that, let me turn it over to Brian. Thank you. [Presentation]

My wife calls me [indiscernible], I think we can all see why based on that TikTok experience. Good morning. Exciting news today for shareholders, Liberty and the Atlanta Braves. We'll get into some more details on this morning's announcement in the next couple of slides. First, the Braves tracking stock has become an asset-backed security through a split-off transaction that we would expect to complete in the first half of next year. This transaction will be subject to the approval by the Braves Group shareholders and MLB, and the new entity will be called the Atlanta Braves Holdings. Holdings will include essentially all the assets and liabilities of the current Braves Group tracking stock, and we would anticipate addressing the intergroup interest in connection with that split-off. With this transaction, we hope to eliminate the tracking stock discount and have a security that more closely reflects the underlying value of the Braves. In connection with the split-off, we will recapitalize our existing tracking stocks and create a new tracking stock to highlight our investment in Live Nation as well as some of our other investment holdings. This will be called Liberty Live Group. Holders of Liberty Sirius and the Formula One Group will get a -- receive shares in Liberty Live Group equal to their proportionate share of the net assets that they contribute to the new tracker. And that final asset composition and the exchange ratios will be determined closer to the time of the transaction. Here's how we'll look after the transactions. Essentially following the split-off, you'll -- and the creation of Live tracker, you'll have 3 pure-play trackers at Liberty Media and an asset-backed Braves security. Liberty SiriusXM Group will only have our interest in SiriusXM, cash and associated debt, as Greg pointed out. The Formula One Group -- we'll have the operating business of Formula One, including debt at their level, plus corporate level cash and debt, and this will include our Las Vegas land purchase as well. Liberty Live Group will hold our 31% interest in Live Nation and the Live Nation exchangeables, a nominal amount of cash for corporate overhead and corporate interest expense and the undrawn Live Nation margin loan. And the Braves Group will hold the Braves, the assets of the Battery as we discussed, cash and associated debt at the Braves. It wouldn't be an Investor Day unless I was talking about either exchangeables or a cash convert. So let's look at the 1.375% basket convertible. Just to recap, in the third quarter, we repurchased 21% of the outstanding principal for $210 million. This represented an effective share repurchase on 4.5 million LSXM shares as well as the pro rata reduction in the intergroup interest shares associated with the Braves and Formula One groups. The repurchase was funded with $179 million of cash on hand at LSXM as well as cash from the Formula One and Braves groups for the settlement of the intergroup interest corresponding to the amount of the notes repurchased. LSXM also received $27 million in proceeds from the partial unwind of the bond hedge and warrants. You can see on the slide here the remaining basket shares that underlie the convert following this repurchase. This security matures in October of next year. And if the basket convert isn't refinanced in advance of the closing of the transactions that we announced today, the basket would be adjusted to include the new Live tracker based on the exchange ratios in place at that time. And in that scenario, the intergroup interest would remain outstanding until the convert is refinanced and would be adjusted with the ultimate distribution ratios. Looking quickly at the Braves. The Braves has continued to grow revenue both in their baseball operations as well as the Battery, experiencing a 7% CAGR since 2019. This is looking only at the first 9 months of the year, and therefore, excludes postseason revenue, which can be significant. As you can see here on the slide, $100 million last year with our World Series run. This revenue growth has come as the Braves continue to invest in the team with payroll up $44 million since 2019 and $30 million just since last year, putting us in the top 8, as Greg mentioned. This also led to 5 straight NL East titles. We believe this sets us up for future success with the young talent secured for years to come. And we support Alex' methodical approach to growing this further as opportunities arise. Growth on the top line has also added to other costs such as retail and concessions, COGS driven by the record attendance, increased revenue share payments and increase in other costs associated with different events at the stadium as well. It still results in a profitable business that continues to invest in both the team and the Battery. Looking at the Braves' balance sheet. At quarter end, they had $174 million of cash and restricted cash. This is down a bit from $217 million at this time last year, but debt has also decreased $120 million in that time period despite our continued investments in the Battery. This includes $15 million of restricted cash, which relates to certain revenues, which are pledged for debt service, stadium maintenance and lease payments. We refinanced a number of our debt instruments in 2022, providing better terms and allowing more frequent distributions of the restricted cash. Weighted average cost of debt at the Braves is 4.6%, and the weighted average maturity is 8 years. And in looking at the maturity profile, we're in good shape. We have recurring amortization on the stadium debt and then modest maturities for the next few years that we would expect to cover with cash from operations, refinancings or using availability on the revolver or the MLB facility. And for debt, that's associated with fully leased Battery properties. We would certainly expect to refinance those obligations. Turning to Formula One. They've continued to show strong revenue growth and growing OIBDA margins despite the temporary setback of 2020, growing primary revenue at a 10% clip and other revenue at 15% CAGR and increasing margins 220 basis points since 2018. And we expect this growth to continue with nearly $10 billion of future revenue already under contract as of 9/30, plus additional renewals that were signed so far in Q4, including finalizing the Australia extension and our latest ESPN renewal. This reflects the continued demand for the sport across all categories and represents 50% growth since 2018 and 30% growth this year alone. Our cost structure is predominantly variable with team payments representing 62% of the cost base. And as a reminder, team payments under the new Concorde Agreement are fully variable and based on pre-team share EBIT. So CapEx activities are now included in the calculation through depreciation expense. As operating profits grow, there's increased operating leverage under the team payment calculation to Formula One. I would be remiss if I didn't take this opportunity to remind you all that F1's results are best viewed on an annual basis because the mix of flyaways and the number of races can dramatically impact quarterly results. With that said, there's been a lot of questions this year about the growth in other cost of revenue line item. As you can see from the slide, if we compare back to the first 9 months of 2019, you see that other cost of revenue is up $129 million and SG&A is up $45 million. This compares to a $320 million increase in total revenue at relatively consistent margins. We often describe increases in other cost of revenues being due to growth in hospitality or freight, which you can see from the slide are primary drivers. But we want to note that other costs of F1 revenue covers all revenue streams and includes items such as technology costs, commissions to partners, costs associated with F1 TV, FIA fees and other operating costs. We've seen big growth in hospitality costs as Paddock Club attendance has grown, but this is coming with incremental margin. Freight costs have certainly been pressured by the supply chain issues that we're not immune to. We would view this as temporary though, and we're taking steps to mitigate these increases. We're still moderately margin positive on our freight activities but we have seen this margin come down as we try to support the teams during this unusual time. SG&A is also up, primarily due to increased personnel costs, and we also changed our -- the company's LTIP program in the current year to make it a cash-based LTIP as opposed to a stock-based program, which it was in the past. There are some onetime items in legal and professional costs that are not individually material, and Vegas so far has not been very significant, only $6 million for the first 9 months of the year. Just another view of the cost side of the P&L. I would say here, you can see in each period that expenses have grown, but in each period, revenue has also grown and has more than offset the cost increases, providing that incremental OIBDA margin that we talked about. SG&A and other cost of revenue for these periods has stayed consistent as a percent of total revenue. And as you can see here, team payments as a percent of adjusted OIBDA has declined from 70% in 2018 to 66% for the last 12 months, and we would expect further declines as we grow pre-team share OIBDA. Looking at Vegas. At the end of the day, the funding is relatively simple. The land of the Paddock Club building sit at the corporate level, and the race operations sit at the F1 operating company. As previously disclosed, we repurchased 39 acres for $240 million, and we would expect a similar dollar amount spent on the building and track CapEx. This is based on preliminary estimates, and we'll update you as we get closer to the event if there are material changes. This is net of support that's provided by the local stakeholders. These are large numbers, but the opportunity is even larger with expected revenue approaching $500 million. And as Greg said, total economics put this in the top 5 of all races in terms of total profit to the company. In terms of what sits where, the Las Vegas GP will pay rent and other fees to FWON corporate for use of the building during the race period. And then FWON corporate will work to develop year-round activations beginning in 2024 to generate additional returns on our investment. Based on preliminary estimates, there's an attractive payback period at the corporate level. And we view the land as an attractive long-term investment, reflecting our long-term commitment to Las Vegas. You've seen this slide many times. Formula One converts a high percentage of OIBDA to free cash. Here, we're showing the 5-year average, excluding 2020. As you can see at the operating company level, F1 converts roughly 2/3 of OIBDA to leverage free cash. Very minimal working capital impacts, low CapEx and a low effective tax rate. Primary impacts to working capital on a year-over-year basis relates to the timing of receipt for race promotion fees generally related to our first quarter races. The most significant impact at the opco level is -- or at the corporate level is -- at the opco level, sorry, is interest expense, which we've actually normalized here to reflect $145 million decrease in interest expense over this period. And as you heard from Greg earlier, we plan to refinance the debt, F1 debt shortly with a $500 million paydown. We would expect to further reduce this interest expense in '23 by about $25 million. This is a historical view, so it doesn't include Las Vegas, but following the initial build-out, we would expect these percentages to return to historical averages. Cash taxes have remained in the low single digits over this time period. We do expect a modest increase to the mid- to high single digits primarily due to U.K. tax rate increases. And lastly, we do have currency impacts at F1, but those impacts are generally pretty immaterial as roughly 80% of our revenue and costs are in U.S. dollars. The P&L is exposed to both transactional and translational currency moves. The team payment calculation is impacted by the transactional FX gains and losses, which further offset some of our exposure. The most significant revenues that are not in U.S. dollar include certain broadcasting agreements and certain promoter agreements. And our most material current exposure is to the pound, but we have a natural offset with our London-based corporate headquarters and personnel expense. Thank you very much. [Presentation]

All right. Good morning, everybody. Nice to see everybody here in New York. Greg, I want to say what a pleasure it is to be here in New York, Talk a little bit about joy. What was it? We were 10.5 games back in the division before one of those New York teams got overtaken? Sorry for all you New York fans out there. We don't feel bad for you. We feel our joy. I would be remiss if I didn't start by acknowledging the transaction or the directional of the transaction. From our perspective, from a Braves' team perspective, it's business as usual. I mean our goal is going to be every year to try to win a World Series and to operate the best sports and entertainment business possible. I think we have shown that, and I think we're going to continue to show that. As you can see, the title of this slide here is World Championship business every year. And despite the fact that we did not win the World Series this year, of course, we won it last year, we're still celebrating. We're still having that joy. We did have a really, really good year, and there's much to talk about there. Before we do, I think it's worth mentioning, while Liberty has had a relatively short period of owning the Braves, all very good times, very joyful times. We've been in existence for 152 years. It goes back to Boston. And then after that, Milwaukee. We've been in Atlanta since 1966. We've won 4 World Championships. So we've got a long and storied history in our franchise. There's a couple of maps that have been up there already shown. But one of the things that I wanted to point out is, for all intents and purposes, we own the South, the Southeast. We've got a 6-plus state region that we draw from. And we are the team in the Southeast, not just Major League Baseball team, but we're the favorite team of just about everybody that's in that region. We've got about 40 million fans, we estimate. And as mentioned, we had over 3.1 million people come visit us at Truist Park this year. So some great stats. Each blue dot, by the way, represents where a fan came from, just so you know. And then specific to Atlanta, the reason we put this here is while we're sitting here in New York, I think it's worth noting that Atlanta is a great place. It's a great city. The highlight here is that it's an extremely diverse city. And we're a member of that city. We're a part of that community. We have a lot of giveback that we do as part of our foundation and a lot of related things to embrace that community. But we're really pleased with the diversity that we can appeal to and the way in which that complements our business. And of course, we're joined in Atlanta by a number of other very large companies, Coca-Cola and Delta and others. So specific to our fan base, our fan base continues to grow. Obviously, when we do better, it grows even faster. We have a diversity, as I mentioned, amongst our fan base that I think is second to none in baseball. We'd become younger over the years. That's something that's also very good in the world of Major League Baseball. You hear these tidbits about baseball being only an older person's fan -- older person's sport. That's not necessarily the truth with us. And I think the other ways in which we'd become younger is we've connected to our fans. We've connected to our fans clearly in a lot of different ways. Here's some reflection on the right side of the screen with our social media and how that has grown over a period of time. So we're continuing to emphasize that, lean into that and try to do more with the engagement that we have with social media. Speaking of our fans, one of the things that we've been doing for, I would say, the better part of the past 10 years is we were one of the early adopters to begin with of a digital ticket environment, previously at Turner Field and now at Truist Park. And why is that important? Well, with that as well as other connectivity, it gives us an ability to capture data. We know who's coming into our ballpark. We know who the fans are, and then we can market to them and market to them more specifically something that is more tailored for them and give them an experience that they want. I think the future of this is not only how we can grow the business as you've seen, ticket sales and the like, but also what is the evolution of direct-to-consumer and how we play a role with that, how we might help market that and become a greater role in developing that business. So we're looking forward to that, and we have a huge emphasis on the capturing of data, the use of data in our environment. And again, I think that's something that stands apart from not just other Major League Baseball teams but other professional sports teams. Here's a snapshot of, obviously, United States, and the red dots represent where people are streaming Braves games, watching Braves games throughout the country. The point here is while certainly our focus and our geographic territory is confined to the Southeast, we are really a national team. We have fans all over the place. If I was to do a show of hands in this room, I'm sure I'm going to get a lot of you, especially after this past joyful year. We have about 145 games that are broadcast regionally. The remaining are broadcast nationally with some of the national partners that are denoted there. The other thing, I think, that's worth pointing out is radio is alive and well in our business. We have over 160 affiliates, making it the largest radio affiliate network in all of professional sports. So we have a lot of people that we connect with on radio as well, and we'll continue to lean into that. I know a lot has been talked about with respect to our broadcast and specifically broadcast revenues. You can see that we're entering the period where we have a nice little step-up in our broadcast revenue. So that's going to be fun to enjoy. It is worth noting, and I think it's the elephant that's out there in the world of regional sports networks, we are aware of some of the changes and the disruption in that environment. We're very much a part of the solution in that, working closely with Major League Baseball as well as our own thoughts on what we can do to mitigate some of the changes there. But in the meantime, we have a great relationship with Bally's, and they're doing a wonderful job of broadcasting, as I said, those 145 games or so. It was mentioned about our attendance. Here's a quick graph showing our attendance since we went into Truist Park. We've had nothing but upside with the exception, of course, being some of the COVID-impacted years where we had limited attendance as a result of that. This year, having over 3.1 million fans embrace the team was absolutely incredible. We had the highest percent capacity sold of our ballpark compared to any of our peers in baseball. And we hope to have that continued. We've already had really strong success going into this off-season. So our fans are eager to come back and cheer on the team that won 101 games this year and our fifth consecutive division championship. Some of the specific KPIs of our business, top left, is sponsorship continues to grow. Puts us in the top 3 in all of Major League Baseball. The other points here are specific to attendance as well as revenues from each of our games. And as you can see, we're trying to do a good job of both offering a competitively priced ticket but also continue to chase the yield from which we derive a lot of those revenues. And things are looking bright in the future for that. The Battery, our real estate development portion of our business, has been working exceptionally well. One of the things that we decided to do on this graph is show you not just the amount of square footage that we have, but on the left side of the screen, we began to measure us across the country and some of the attractions that are out there that people visit across the year. On a 12-month rolling average, we had 10 million people come through the Battery Atlanta, simply incredible. And on the bottom left, you can see some of the attractions and places that people visit across the country and how we rate. In Atlanta, amongst leisure activities, we are by far, number one. As far as our results, results are great. Obviously, we had some tremendous year coming off of last year's World Championship. We are incredibly proud of the work that our staff has done, engaging with our fan base and what that's resulted in with respect to the revenues. Obviously, when you have gains in attendance, you're going to have gains in the revenues that derive from our events, not just ticket sales, but we had incredible results in concessions and retail and all the other event-related revenues. So as you can see, we've had a fairly significant uptick in our total revenues. Of course, the expenses are reflective of we're investing more in the team and some of the other things that it takes to run this business. So overall, OIBDA is $81 million, and we obviously have an operating income of $13 million there. So overall, if you compare this business, we're doing exceptionally well. Things are bright for the Atlanta Braves, really proud of the results that we've had. Excited about what this new venture might mean for us. But I think the lasting point that I'll make for you is that for us, it really means that we're going to continue to operate the business the same way we have. And that's been a successful business. It's been successful in large part because of the way that Liberty allows us to operate. They take a relatively hands-off approach, allow Terry McGuirk; myself; Alex Anthopoulos, who runs our baseball team; Mike Plant, who runs the development; Jill Robinson, our CFO, who is here, to operate this business in the best possible way. So I look forward to answering any questions in our sessions later. But in the meantime, let's have some joy in knowing that we won the division championship here, the division. And hopefully, we'll win the World Series again next year. Thank you all for having me. [Presentation]

We'll take a break now. And if you could come back at 10:25, we'll start back up with Sirius. Thanks. [Break] [Presentation]

Well, if there are any of you out there who aren't yet subscribers, hopefully, you'll take another look after seeing that video. Pure joy, and we actually had an unintentional 3 months free at the end of that. I don't know if you caught that. I'm really excited to be here with you all today to share a bit with -- what we've accomplished since I last stood up on this stage a year ago and to give you a first look at where we're headed. See you all can read that in your spare time. Okay. Just over 20 years ago, SiriusXM defied the odds with the introduction of subscription-based premium radio. And many of -- probably you thought that we'd never get people to pay for radio, something that was generally available for free. But we've proved the naysayers wrong. And here we sit in 2022, the largest audio company in North America. And we are focused on our vision to shape the future of audio where everyone is effortlessly connected to the voices, stories and music they love. And we're making great strides with 150 million listeners across our platforms, 40 million subscribers and an enabled fleet that at year-end will total 153 million cars on the road. At our core, we have always been a consumer-centric organization. We've been D2C long before all these other media companies jumped on board. But as we look to capture the next generation of subscribers, we have to evolve our business to serve our consumers in even more meaningful ways. And in order to do this, over the past year, we unified our product and technology organization under our new Chief Product and Technology Officer, Joe Inzerillo. And we brought together our commercial teams under our Chief Commercial Officer, Joe Verbrugge, so that we can provide a 360-degree view of our consumers across our touch points. We have also made great strides on our key growth priorities. First, owning the car. We are the leading in-car audio entertainment service and focused on bringing even more innovation to the space. Second, streaming. We know future growth opportunities will come with younger, streaming-first customers, and we're developing an in-app experience to better serve them. And third, extending our ad platform. We see podcast as a huge growth driver for our ad business, and our portfolio of offerings gives us a huge leg up on the competition. And to give you a quick glimpse into the future of our business, I'll also touch upon something I believe will amplify all these areas of our business, something we're calling SiriusXM Everywhere. Now I want to spend a few minutes on each of these areas. So beginning with reinforcing SiriusXM leadership in the car. SiriusXM is the only audio service to have partnered with every major car manufacturer to integrate our service directly into the car. Our new and used car penetration rates continue to remain strong at 83% and 52%, and our enabled fleet is now over 150 million vehicles. And we have the highest share of year in car of any premium service. In addition to recent extensions with Subaru and Stellantis, we just launched or announced an exciting new partnership with Lucid, and our 360L pen rates continue to climb with the launch of Nissan Altimas just this fall. Our 360L solution and 2-way data have enabled us to bring new data-driven capabilities to our in-car experiences, and we are enhancing our ability to deliver much better, more relevant, personalized music and talk recommendations to our listeners. And while this might be table stakes among other media companies, we're just getting started. These new solutions have enabled us to move faster than ever, given the long product cycles from the OEMs, and we look forward to continuing to innovate on this front. Moving on to streaming. We see this as a key growth driver for our business, and we continue to extend our superior in-car listening experience anywhere a consumer is tuning in. And I'm excited to give you a sneak peek into a design refresher app going live later today. As you can see, this new user interface introduces a much cleaner navigation that emphasizes content discovery across new personalized carousels. These updates come on the heels of recent improvements we've made to our app in CarPlay and coming soon to Android Auto. We've also continued to invest in exclusive content across music, comedy, talk and sports to drawing streaming first subscribers that are younger and more diverse. And we recently launched the channels that -- including Selena Gomez radio. We've had an announcement around Drake where he did a show, Table for One on his channel, Sound42, and he's delivering 2 unique experiences at the Apollo in just a few weeks. And we have live play-by-play of every NFL game across North America. We are giving listeners unique opportunities to connect with content they love and that they can't get anywhere else. These efforts have contributed to SiriusXM's household streaming rates rising 60% since we brought streaming free to our subscribers 3 years ago. And finally, to further expand our reach in marketing, our strategy has been to launch distribution and promotion agreements with a wide variety of brands, including T-Mobile's 4 months of SiriusXM ON US promotion. On to our ad platform, a $1.8 billion business, 3 major factors set us apart in the marketplace. First is scale. Not only do we reach 150 million listeners across our portfolio, but we've also driven significant growth in podcasts, and we have over 50 million listeners across all third-party platforms. Next is technology. Across our ad tech stack, we are making improvements to streaming and podcast ad capabilities, making it easier for creators and publishers to monetize their content while simplifying how advertisers buy, target and measure their investments. And finally, content. We are the gateway for advertisers to the biggest events and personalities across news, sports and entertainment with new agreements signed over the past year with major publishers, Including True Crime, Juggernaut, audio check, we offer the best of podcasting on and off platform. Plus with new deals like Team Coco and Crooked Media, we're bringing podcast listeners into the SiriusXM ecosystem with exclusive content on our air. And earlier this month, we signed an agreement with Google to sell inventory across the YouTube extensions of our audio programming, allowing marketers to extend their investments with 1 seamless buy. Although marketplace headwinds have continued to play a role in the fourth quarter of this year, we are confident that we are making the best strategic decisions to future-proof our business. SiriusXM began as a hardware-centric business with subscriptions tied directly to the technology in the car. Today, we are building offerings for people, not devices, with -- as we continue to give our subscribers the best experience everywhere they want to tune in. We are investing in a revamped consumer experience and a net new technology infrastructure. These systems are built to scale. They'll also bring further innovation to 360L and they will allow us to be more agile and dynamic in and out of the car. The acquisition of Pandora provided us with very strong data-backed capabilities, including our music genome project, which we are leveraging across our products. And over the next year, we will continue to add to our capabilities, building entirely new commerce and identity systems. Ultimately, the result will be a reimagined SiriusXM app experience launching in late 2023, one that takes the ease and connection we have in car and extend it everywhere, our current subs want to listen and inviting new listeners into our experience as our stand-alone streaming business continues to grow. As you can see in this early mock, we think there's a lot of opportunity to create more engaging features and functionality, particularly around sports content, some images here you might recognize and we're just getting started. These new features will proliferate throughout our 360L platform and provide our in-car listeners with far more personalized experience is -- as this platform continues to grow. And as we look to continue to profitably grow our business, we are laser-focused on investing in areas we believe will deliver strong returns while also better serving our customers and streamlining costs. At our core, our value proposition to listeners remains the same. We give passionate audiences the content they crave, from sports and music to talk, news and podcasts. It's joy. And our unique ecosystem gives creators that they may want most: Scaled audiences. We distribute podcast broadly across all platforms and seek opportunities to migrate audiences back to our premium service through increased exclusivity as audience fandom matures. Earlier this week, we launched Team Coco Radio, which is the perfect example of this. It's executive produced by Conan O'Brien. The 24/7 channel features exclusive content from Conan and leverages the broad distribution of his enormously popular podcast, Conan O'Brien Needs a Friend, to bring audiences back to SiriusXM where they can go on to discover many other pieces of relevant content. Our hosts are on the leading edge of culture and create emotionally engaging experiences that are habit forming for our listeners. There are must-hear moments on our air every day that you can't get anywhere else, just like you saw in that video. Across SiriusXM, we are uniting listeners with a powerful shared experience of live. Building communities across interests and passions where all voices are welcome. Looking ahead, you will see us continue to broaden our content to appeal to younger and more diverse audiences. You will also see us reinforce our differentiated position in the marketplace, where our unparalleled stable of SiriusXM host defined content discovery across audio genres, complemented but not driven by algorithmic programming. It is this perfect combination of human curation and best-in-class technology presenting our content that will shape the next evolution of SiriusXM. So with that, let's dive into the numbers. Despite continued automotive supply chain constraints, we added 187,000 self-pay subscribers in the third quarter. This is consistent with our record of steady subscriber growth over time. Sub growth has benefited both from a record low churn of 1.5%, a testament to our fantastic content and our very loyal subscriber base and from our growing base of streaming-only customers. Looking at the trailing 12 months, we delivered solid results as we continue to drive growth and a disciplined approach to cost management across our organization in an increasingly challenging economic environment. We delivered growth in both advertising and subscription revenue, the latter benefiting from extremely high ARPU growth, which has grown 7% so far this year. Adjusted EBITDA remained strong and reflects meaningful investments in product and content, and free cash flow is down modestly this year because of the satellite insurance recoveries we reserved last year of $225 million. We have a demonstrated track record of growing revenue and EBITDA and converting that to into free cash flow. This year's free cash flow is particularly strong, given the benefit last year from the insurance recoveries and a nearly $200 million headwind on cash taxes. Year-to-date, we have returned $1.8 billion in capital to our shareholders, with $1 billion of that being paid opportunistically as a special dividend this past February. Just this month, we increased our recurring dividend by 10%. That's on the back of a 50% increase last year. And so since inception in late 2016, we have increased the dividend by an average of 16% each year. While the increasing dividend will certainly represent more of our capital returns going forward, we are well positioned to be able to opportunistically repurchase our shares over time. And with leverage at 3.5x no significant debt maturities for years to come, and most of our debt fixed at attractive rates, we think our balance sheet is very well positioned. As the biggest audio company in North America, we are focused on maintaining and building on that footprint in profitable ways to deliver value to our shareholders. And for our listeners, we are building the future of audio where everyone is effortlessly connected to the voices, stories and music they love, wherever they are, and through a curated and personalized listening experience. In close, 2022 has set the stage for an evolution of our business in 2023, and we look forward to sharing updates as our journey continues. Thank you. [Presentation]

All right, thank you. Everyone has a Taylor Swift ticket underneath their seat, and I'll leave. So today, we're going to take you through 7 ways that we're going to keep growing this business. First and foremost, we operate in one of the most exciting industries. This is an industry that's been growing for 20 years, and we believe the best is yet to come. The most important reason that this industry is so powerful is just the fan. We saw it this week, obviously, but this is a passionate fan when you ask fans, what is their most important experience that they're going to spend on, it's all about the concert. We've seen this over the years, in the good times and bad. And as you see here, it's also the last thing that they're going to cut back on. And the best part about it is it's still an actually very affordable experience. Although it's the #1 experience, it's pretty much the most affordable experience. So this pound-for-pound punches probably the best in the league and we see continual access to all tickets to all fans across the globe. And now we've got to make sure we have the supply always ask the question, where are the future stars. If you look at the charts today and the facts, there's a continual new pool of young artists, especially in this new creator economy. Every young artists from around the globe thinks they're going to be the next Harry Styles and Billie Eilish, and we'll continually to see the charts dominated year after year by new artists. And if we look at our indicators for '23, that supply/demand seems to be coming through. We're looking at an incredible record year out of '22, but we also believe '23 right now is tracking ahead of last year in terms of ticket sales. So with all that supply demand, we believe that's been the foundation for our growth to date. We believe it will continue to propel us forward for years to come. And now I'll take you through how we're going to not only use the tailwind of an exciting industry, with 7 ways we're going to make sure this double-digit AOI continues. First and foremost, we've continually been a global leader, but it's still a huge market, a huge TAM that we have to grow. Outside of America, lots of markets that are low market share, we're going to update our target today to 175 million fans we think we can grow this business too. And most of those fans are going to come outside of America, as we now look at the globalization of the artist thanks to all the social platforms. Every artist knows when Taylor Swift drops an album from Cape Town to Milan, and those are all new markets for us. So a lot of the growth is going to come in markets like South America, Asia, Eastern Europe, where we have a very low market share and a great opportunity ahead of us. And one of the advantages we have this year, even versus maybe the last slowdown in the economy is we're much more advanced on our pricing tools using our fan data. Our job isn't just to figure out how to price the front of the house closer to market, but it's also really how do you price the back end of the house. 97% of shows don't sell out. So for all the press, we read about the odd high-priced ticket, that's the 1%. Most of our job is, how do I fill the house? How do I make sure on a Wednesday night, we put a few more people in those seats? And our pricing tools let us do that, figure out the best way to price the front as well as the back to make sure we drive as much occupancy as possible. Our venue business has been a highlight for the last couple of years, but it's a business we've been in forever. We're looking more towards the future as live has become such an important tenet now in venues. You look across the globe, whether it's the L.A. Forum, the Ziggo Dome in Amsterdam or our recently new arena in Austin. Sport -- music now is the core tenant. They've always kind of been a stepchild to the sports arena. But today, you look on a global basis, music can drive from clubs to arenas a great return. When we look outside of America where you don't have the NBA, NHL arenas infrastructure, we see great white space around all these major cities around the world to expand our Venue Nation business. And looking at its growth, it continues to be a big piece of our business. We're doing a better job every day on the VIP and the hospitality, the food and beverage, all of the levers you have when you control the environment within the concerts. And we think this business is going to be continually one of our top growth industries. And sponsorship touches all of this. We're looking at '23 probably another record year in sponsorship. We are seeing more and more brands look to live music and Live Nation is kind of their league to enter the space. We know how popular the NBA and the Super Bowl and the NFL, those scarce commodities are to brands. We're that equivalent on the music side, more and more brands want to find ways to touch fans, integrate in meaningful ways into the experience. And our business has been growing because of that. We have over 1,000 sponsors. '23, coming off a record '22, looks to be another record year. And our final business is Ticketmaster obviously, this week demonstrated more than anything I could say earlier, the Fever's fan that lives in our space. That's the benefit and the good of our space. Everyone wants a concert ticket. This is a case where we had over 3.5 million registered fans try to buy a Taylor Swift ticket. That was a record registration 4x what we've ever done in history. We invited 1.5 million on that day to come and buy those tickets. But it's kind of like having a party, everybody crashed that door at the same time, and 3.5 billion requests -- system requests at that on that morning. Where 12 million kids try to jam the door to buy 2 million tickets. So we had some slowdowns on the site for a few hours, so we can throttle the speed. The reality is Ticketmaster's platform is robust in -- the most robust in the world. We recovered. We sold 2 million tickets the most we've ever sold in 1 day in history and another 1 million tickets of other artists on the same day. So although we regret it was a -- some slowdown in some queues and some error codes for a short period for some fans. We did manage to recover. We got all those tickets sold. But this is a business where no matter how well you'd execute 12 million kids wanted 2 million tickets. So there's no nice way to tell 10 million Swifties, there's no tickets. So they do what they do and they go to social and we deal with that every day. But our job is to work for the artist, the venue, provide the most stable and the system that says, how do you want to price it. So overall, this is a business that has had incredible growth to date. We look at this business on a global basis like concerts, huge opportunity outside of America. We really haven't grown the business to where we need to South America, Japan, one of the biggest markets of the world, Latin America. Most of Western Europe is all new territory for us. So this will be a global story, taking that brand and our technology, doing what we do well in America to the rest of the world. And what we're really proud about a Ticketmaster over the last few years is how do we grow this business beyond service fees? As more of the -- service fee really is dictated by the venue, how do we build our scale and use our scale to deliver value and new products and services for fans and enterprise? It's been a big growth business for us. The revenue beyond the service fee, we think this will continue to be a large business for us. So when you step back, we think we have an incredible attractive TAM on a global basis. We have 3 or 4 TAMs on their own, which are attractive. We're growing and leading in all of them, and we think we have many more years of growth ahead of us. Thank you. [Presentation]

Hello, everyone. I'm sorry to miss you in person as we are finishing the 2022 season in Abu Dhabi, as you can see. Last year, I would highlight the key priorities and opportunities for Formula One, which were: Delivering an incredible product that strengthened competition and action on the track; enhancing the long-term prospect of the sport and ensuring an attractive business model for all participants and attracting partners; and continuing to deliver on our sustainability and diversity and inclusion initiatives. I'm happy to report we made significant progress in all of these areas. We have seen already phenomenal interest in the sport continue to grow, and we see a number of factors driving this. This season, we have seen a new generation of cars designed to race more closely, and the results have been great to watch. The cars can race side-by-side, follow more closely, and this has given us some dramatic races and close finishes. Race, combined with our incredible TV production of the races and deployment across the globe by our dedicated broadcast partners as excited and thrilled our fans. Alongside this, Drive to Survive continues to cover the battles through a different lens. We believe this drama and coverage continues to grow many new fans, and we were pleased to announce that we are confirmed for season 5 and 6. We also continue to see very impressive social media coverage, F1 across our own platforms, but also from the teams, drivers, media and fans. Our drivers continue to be the heroes of the sport, and their talent has produced exciting outcomes. This year, we have seen a lot of drama and intrigue as to who will drive for which team and who will secure one of the [ scars ]open seats. New rivalries have emerged, and we have witnessed some unexpected podium combinations. Fernando Alonso continues to set records for race starts, which will continue as he moves to Aston Martin next year. While on the other hand, of the spectrum. We will welcome new drivers' pairs, including American drivers, Logan Sargeant to Williams, Nyck de Vries to AlphaTauri, Pierre Gasly to Alpine and Oscar Piastri to McLaren. We continue to see strong demand to host races. We have said we need to ensure the right strategic balance for the old sport. And as I have said before, I believe 24 races is the maximum we will go to and we are pleased to have confirmed the 2023 calendar that will include 6 sprint events, and we will soon announce the details of where those events will be. Last May, we welcomed the Miami Grand Prix to the calendar, and it lived up to the hype. The 2022 Miami GP has been the most viewed live race in U.S. history with ticket selling out in record times and presale ticket selling out in less than 60 minutes, and the staff power was unmatched. This further established Formula One's presence in the United States. On top of the always incredible Austin race that witnesses a new record in the U.S. of 440,000 fans over the weekend. And we will continue to build on that momentum with a much anticipated Las Vegas Grand Prix joining the annual race calendar in November 2023. Each of the U.S. races are unique with their own identities, and we will work successfully over a season. These are a few of the factors propelling us forward. And this is just the beginning. We continue to capitalize on all of the opportunities in front of us, and we believe that this business will remain strong even in a potentially challenging macroeconomic environment. Through the terms of the 2021 Concorde Agreement, changes to the technical regulation and the introduction of the cost cap, we have created a sustainable and thriving economic environment for the teams. This more level playing field has created a more engaging and unpredictable spectate on the track. More teams are contenders for points. This has, in turn, increased the value for the teams through many avenues. We've seen increased sponsorship activity at the team level, particularly from the countries and brands never before associated with Formula One, that has also been increased interest from entities wanting to buy a team or start a new team. And this interest, coupled with the effect of the measure we have introduced has seen teams value propelled to a level where it would be difficult to buy back on the great team for less than $500 million, if not considerably more. This, along with the strength of our global brand and sustainable plan and also attracted a new engine supplier, Audi, who will join in 2026, and recently announced their partnership with Sauber and other OEMs, including Porsche, continue to actively consider future involvement in the sport. We've seen increased demand from our fans to experience the sport in person. Grand Prix tickets have been selling out in record times. This has created a healthy environment for our promoters who must continue to enhance the fan experience. There continues to be strong demand from other cities and countries to host an F1 race, which put us in the driver seat with a limited number of space on race calendar. From an F1 business perspective, there are many positive aspects to our model. With these continued tailwinds as the pre-team EBIT, the main measure of our performance that determine the size of the price full paid to the teams increases then the application of the terms of the Concorde agreement. We see the price fund as a percentage of the pre-team EBIT fall in relative terms. Additionally, we have multiyear counters across all of our primary revenue lines, some spending as long as 15 years future terms, are largely variable cost structure and limited foreign exchange exposure. We believe this helps insulate the business in the event of a more challenging macro environment. Let's look at some of the impressive metrics and milestone the business has achieved. Fans are watching across all platforms and attending races in record crowds. On average, TV viewership to date this season is up to compared to 2021, with significant double-digit increase in some of key markets including the U.S. We continue to break attendance records, with multiple venues, recording sellout and crowds regularly exceeding 300,000 and even over 400,000 attendances across 3 days period of events. After the first 18 races, we have already seen 4.5 million attendances, which is 36% higher than 2019. The last year's circuits were able to host at full capacity. We are also seeing a higher percentage of first-time attendances, female and under 25 in 2022. We will host 18 Paddock Clubs in 2022, and expect that number to increase to 21 in 2023, including in Las Vegas, which, as noted, will be a self-promoter event. The sprint event format at 3 event has been a success, generating significantly higher viewership than the equivalent prior year events where qualifying run on Saturdays instead of the spring. And we look forward to having 6 Sprint event in 2023 based on the success of the concept. We've also seen tremendous engagement across patterns, with growth in the unique users' page and video views and followers. We have now surpassed 59 million followers across all platforms, growing 30% year-over-year. This builds upon our results in 2021, when Formula One was the fastest-growing major sport league in terms of followers and had the highest engagement rate with the social posts. Our fan base continues to be younger and more diverse. Sky Germany reported that over half of the new viewers this season are under the age of 35, and 40% of the new viewers overall are women, while almost 40% of Sky U.K.'s new viewers since 2019 are women. Our own data shows the average of our fans in 37 years. 22% of our fan base is aged 16-24, up to 6% in 2017 and 40% are women, up 8% on 2017. Our successful eSport League is yet another great fan engagement tool. The 2022 F1 Sport Series World Championship presented by Aramco, returned in September in a new 3-day prevent format and an increased offering of live shows. Drivers will compete in 4 events and battle for the $750,000 prize pot. The 2021 series chattered records and reached over 23 million views across all platforms and 103% increase over a year. And already 2022, the first event saw a 67% increase in total view Paris day across the digital platform when compared to event 1 of 2021. We're excited to see how we can exceed these figures in 2022. Continuing in the world of gaming, F1 games has gone from strength to strength, particularly due to the new addition of Frontier's F1 Manager '22, currently, the developer best-performing game. EA's F1 2023 launched in July and is up year-to-over-year by 14%, making it the franchise biggest game launch to date. This year's title topped the games sales chart in June, solely on presale and before the game event launched. Finally, Hutch has crossed a huge milestone, reaching $100 million in gross revenue in 38 months. F1 Clash has been in constant growth every quarter and taking market share, ranking #3 in the global mobile racing gen. Our incredible fan growth and engagement is powered in F1. We recently envied the 2023 calendar and our scheduled 24 races around the globe, although COVID situation in China remain an issue, and this is not certain that we're going to be able to be there in 2023. But we will continue to monitor the situation and keep everyone update. Since the start of 2021, we have renewed and extended 10 races countries, including Abu Dhabi, Melbourne, Mexico and Monaco and agreed to 4 new race deals in Miami, Las Vegas, Imola and Qatar, with 5 of these deals out beyond 2030. This lays a strong base for the race calendar for many years to come. We are going to focus on maximizing quality, not quantity, and we'll optimize the mix of races and could consider new models like alternative years for some locations. We remain interested in new markets. For example, a return to Africa and further expansion in Asia, and we'll continue to explore alternatives to race there. We expect all promoters to continue to provide full experiences for fans and continuously improve and adapt to what our fans want. We also expect to learn a lot as we take on the promoter already in Las Vegas, which we believe will enhance our relationship with our promoters' partners. Speaking of Las Vegas, we are almost exactly a year out from taking over the sport and the payment capital of the world. We launched the preregistration portal at the end of August, and to say demand is high would be an understatement. We also had an incredible launch party with the teams and drivers on the of November 5, showing what F1 and Vegas has to offer. We expect to welcome over 100,000 fans per day and should set new records for the ultra high end of experiences. We are progressing on our development of the Paddock Club and racetrack, and I'm excited to host here around activation in the U.S. Here is assembled what you will see Vegas next year. [Presentation]

Demand is also high for Formula One media rights. We were delighted to announce a multiyear extension with Sky in the U.K., Ireland, Germany and Italy, a significant commitment from both sides that shows the huge potential the sport continues to have, and the potential for further growth across those markets. As the official broadcaster of Formula One, Sky Sport F1 will continue to be the only dedicated channel to broadcast Motorsport in each of the Sky markets and provide their best-in-class commentary to over 80 markets. As we have mentioned before, our strategy has been to do shorter-term deals so that we can continue to set new levels with each contract. Certainly, we saw a much more competitive situation in the U.S. And we were delighted to announce in October a new multiyear extension of our broadcast rights partner with the Walt Disney Company, ensuring that F1 races will continue to be shown on ESPN networks in the United States throughout the 2025 season, while maintaining our F1 TV rights. 2021 set a record as the most viewed F1 season ever on the U.S. television., , with an average of 949,000 views per race. That average has increased to 7 figures in 2022, with real numbers increased as the sport popularity continues to grow. After 18 races so far, lifetime on broadcast have average 1.2 million viewers on ESPN networks with multiple events attracted race record television audiences. Earlier this year, the inaugural of Miami Grand Prix, broadcast on ABC, generated an average viewership of 2.6 million, the largest U.S. audience on record for a live F1 Grand Prix. We also reached an early extension with CANAL+ in France and new deals in Brazil, Australia, Austria, Belgium, Mexico, and more widely across Latin America and in China for digital streaming. Furthermore, in Asia, we have reached a multi-territorial agreement with in Sport and are in the process of concluding of renewals in India and Japan. F1-TV has proven to be a value-add, complemented to the sport. And we have seen the average active F1 TV per subscriber doubled when comparing the first half of 2022 to the same period in 2021. Moving on to sponsorship. We are extremely pleased with our progress. Last year, we mentioned that we are focused on tech, both enterprise and consumer, and we have delivered in the space. Recently, we were excited to announce that AWS will continue a global partner following 5 years as an official partner. We also renewed and expanded our strategic partnership with Workday as they become a regional partner F1 across Europe, the Middle East and Africa. We welcome Salesforce, the global leader in CRM, as a global partner to power and grow fans engagement and create a new era of unique experiences. And Lenovo joined as an official partner ahead of 2022 season with their technology being used across our organization, both backup base and our races. Tata Communication, with whom we had a historic relationship also returned to us, becoming our official connectivity provider. Outside of technology, we added MSC Cruises as a global partner. And I also added AlphaTauri as official premium fashion apparel supplier, and Patrón Tequila in our Paddock Clubs. Having delivered all these new partners, we are continuing to seek other partners in sectors like financial services and travel, to name but 2, and are also considered ways to increase our sponsorship inventory through the creation of new assets, including the potential use of additional digital advertising solutions to expand opportunities for regional sponsorships and the creation of new sponsorship packages comprised of regional Las Vegas assets together with global activation. To touch on our final priority, we remain committed to our action to our important initiatives on sustainability and diversity and inclusion. Our platinum aim at partaking the biggest issue facing our sports and global communities. In the area of sustainability, we will be net zero carbon by 2030. Together with Aramco, we are working to develop a 100% advanced sustainable fuel by 2026, and we will trial this in F2 and F3 from next year. While this will be impactful for our sport, the real impact would be from a multiplier effect across the global auto sector. We continue to have positive engagement with European Union leaders on the role of our drop-in sustainable fuels can have as a significant emission reduction technology for the automotive sector in the continent, a recognition that this will play an important role for the existing fleet of cars on the road. In our commitment to support diversity and inclusion, we extended funding of the Formula One engineering scholarship program until 2025. This program covers the full cost of student tuition and living expenses. We have already supported 10 student with another 10 per year and have founded the program through 2025, which will, in total, change the lives of 50 students. In the communities in which we raised, we continue to support the F1 in school STEM program. This is the largest STEM program in the world, operating in over 50 countries, and providing children with hands on interactive experiences. Our action in these areas will align well with many of our partners. We are working increasingly closely with our promoters' partners to implement sustainability practices at the races. For example, at Zandvoort, for the Dutch Grand Prix, almost 80% of the 105,000 fans arrived by bike or train. And the generator use biofuel resulted in a 75% to 90% reduction in emission for the energy use in the race. As part of our global partnership with Salesforce, we will identify actionable insight from F1 carbon footprint, helping to accelerate our mission to reach net zero emission by 2030. In terms of our footprint, we are working closely with our logistics partner, DHL, on a number of innovative logistics solution to support the sport air, road and sea freight requirements aimed at delivering reduction in emission from our logistics operation. Lenovo is also focused on diversity and inclusion and removing barriers and through partnership, we work with F1 on projects. And Audi was true to the sport, not only as a global stage for their brand, but as a fit for their sustainability goals as well. Reflecting on 2022, we are proud of the progress we have made and the results we have produced financially and commercially. We will enter 2023, with great momentum, and we will continue to seek and capitalize on the many opportunities in front of us. We appreciate your support and hope to see you at race in 2023. Avanti tutta, full speed ahead. Thank you so much. Ciao a tutti. Bye-bye from Abu Dhabi.

All right, I'm going to switch now to Qurate Retail. Obviously, a very tough year, a very disappointing year in many ways, and you're going to hear more about it from David Rawlinson, but we think we have the elements in place to dramatically improve it over the next several quarters and years. Important in that was the work we did do this past year to strengthen the balance sheet and ensure our ongoing future. Importantly, as I said, was doing the sale leasebacks on 6 QVC properties. We sold largely the U.S. properties, and we expect also we've entered an agreement to do something on the U.K. and German properties, which is very attractive financing in a very volatile debt market. Liability management, and this was a key part of it is important. That allowed us to reduce our OIBDA coverage of interest effectively despite the headwinds we had. We did receive insurance proceeds related to the Rocky Mountain Fire. Obviously, the Rocky Mountain Fire was massively disruptive for the business. You're going to hear more about that from David Rawlinson and the things we can do to improve over the next several quarters. We refinanced our MSI exchangeables. We tendered for some of our debt, and we repurchased some of our outstanding exchangeables. Importantly, we have additional sources of liquidity going forward, including incremental insurance proceeds and debt financing at some of the subsidiary levers or even potentially asset sales. To undertake some of the work that you're going to hear on Project Athens, and to improve the business, as David has talked about. Importantly, we hired a new team, many of replacing existing team members or, in some cases, adding elements of strength that we didn't have. And I think this diverse and strong team is well positioned to do better for this business in 2023. You heard a little bit about how the customer base we serve during my earlier thought piece, but the reality is we have a unique base that loves to shop, is older than the average. New customers are coming in are slightly younger. They are more fluent than the average. Their children are generally grown. These are the empty nesters that I was talking about, many of them have grandchildren for whom they wish to shop. And this is the point: They regain their time, they regain their ability to focus on themselves. And shopping is an important consideration and focus of many of them. Particularly, obviously, we have a 95% customer base that's women and Q speaks well. H speaks well, really all of our companies speak well to their needs and desires. You can see here that these consumers have substantially more dollars than younger consumers, and they are focused on shopping and they are focused on that market, driving their needs. I think that's -- I'm not going to click. I think I'm going to introduce David now, David Rawlinson.

I don't know, do I wait for the music to go off? I guess I'll just get started. It's great to be here for you and with you today. There we go, there we go. It's great to be with you today. I want to start with a quick reminder for those of you who may be new to the story of what the Qurate Retail Group is. At our heart, we are a collection of human-focused, connection inspired retail brands. Our iconic franchise is our core video commerce franchise, that's QVC, it's HSN, it's QVC International. Okay, let me go forward. Here we go. It's QVC International. Our iconic video commerce brands have 14 million customers, $10 billion in revenue. And every day, we air over 100 hours of live programming across our networks. The business has consistently grown the number of minutes viewed. Last year, we had over 66 billion minutes viewed. And then in Q3, that number was up an additional 8%. And so with that, I'll -- I think we have a short video to introduce some of the brands. [Presentation]

In June, I announced Project Athens. Project Athens is a true bottoms-up turnaround targeted at driving OIBDA margin expansion and free cash flow growth. We made substantial project [ growth ] since I announced the program. We've completed our assessment and planning phase. We've also aggressively started execution and early actions, most notably addressing the tragedy at our Rocky Mount facility. Greg mentioned it a little bit. For those of you who were new, in December we had a buyer at our second largest and most efficient distribution center in Rocky Mount, North Carolina. This catastrophic event has been a major headwind in 2022, and recovering has been a prerequisite to launching this turnaround. Post fire, the team has made rapid progress in cleaning up our inventory, improving our throughput capacity and our fulfillment center network. And as you'll see, that fulfillment center network and the supply chain challenges all of retail faced this year has been the biggest drag on profitability and now is the biggest opportunity going forward. To carry out Athens, as Greg mentioned, we've added a real stable of talent. We have Scott Barnhart, who joined as COO last month. He brings 30 years of experience at Cardinal Health, Aramark, Conagra and Diageo. Our new Chief People Officer, Linda Aiello, comes with deep global expertise. She's been at Stitch, Fix, Uber and LVMH. Soumya Sriraman joined as President of Streaming. She was formerly the Head of Amazon Prime Video Channels. And before that, she was founding CEO and President of BritBox. And then Stacy Bowe joined as our Chief Merchandising Officer for QVC U.S. She has previous experience at G3 apparel and over 20 years at Macy's and macys.com. We're now transitioning into Phase II, Execution and optimization. We expect our actions to start having noticeable impact on the bottom line in the second half of 2023, and we're working furiously with outside partners to make this happen. Our goal for the next 2 years is to expand OIBDA margins back to healthy levels and accelerate free cash flows. These are the 5 pillars of Project Athens. They're going to guide everything we do. They're going to guide our strategy and they're going to guide our execution and they're going to align our expectations. I'll start by going quickly through each pillar. Start with the customer, customer experience. Let's start with customer count. Customer count is a key metric, and this has been going in the wrong direction. We've historically reported customer counts at quarterly earnings on a trailing 12-month basis. This graph shows you year-over-year percentage variances on a quarterly versus a 12-month basis. We attracted many new low-quality customers during the pandemic. People stayed at home, they watched TV, they surfed the web. And we benefited from that, and then the world reopened. We are now starting to see moderation in the rates of decline. I showed this quarterly view because it will take time to see this in the lagging 12-month data. But we're encouraged that we see a path to stabilizing the customer base. The new rate -- the decline rate of new customer acquisition moderated substantially in Q3. The team has a real sense of urgency on this. It's hard to grow if you have a declining customer count. We're undertaking a range of activities to help here. Importantly, our order to delivery times are now back to pre-Rocky Mount fire levels. This is important because delivery performance is a primary driver of satisfaction and retention and bringing down the churn rate. We've also done a lot to improve the customer experience. For example, we've improved the post-purchase experience by making returns easier. We are also very focused on building the right type of long-term relationship with our customers. QVC reinstituted and a reimagined their monthly mailer. Their program guide that's been very popular with customers. Mike DeShais, the President sent a personalized note to a segment of lapsed customers with the Christmas and July gift. That generated 43% engagement and on average, $600 million of increased spend in the following month. At HSN, we're doing a lot to attract new customers with free shipping over $75, more electronics programming and build coupons offers and incentives. These moves have driven the improvement in the rate of decline and the customer file. As have others, we are doing a reintroduction campaign for HSN. QVC has a new partnership with the Rockettes. And we're also doing a lot of round through shipping, which can sometimes be a pain point for our customers. I would say, importantly, we've been able to run these campaigns largely in either a margin neutral or a margin-accretive way. Pillar 2 is about rigorously executing our core processes. We have to be excellent every day in every business, and we are reinvigorating the focus on that. The crown jewel of what engages and retains our customers is our programming and our host. This past August, we completed the Foodie Travel series, where host went behind the scenes to meet families and communities behind some of our customers' favorite food brands. The team traveled to Maine and Iowa and Tennessee to be right there capturing lobster, popping corn and savoring barbecue. This authentic connection in storytelling delivered fantastic results, driving nearly 20% more sales than average show expectations. And now we're moving on to launch the New York City Holiday Foodie Travel Mini Series, as we continue to experiment with new ways of storytelling. The primary story we tell every day is QVC is today's special. You hear us talk about the TS and HSN today's special value. This program has lost its luster over time. We've now selectively eliminated the pre and post selling to TSs and TSVs to concentrate attention and to drive urgency to buy. This has led from TSV productivity being down last year to TSV productivity growing in the second half of this year. There's much more we need to do here, but we've shown that we can move the needle and we're all encouraged by it. Pillar 3 is lowering our cost to serve customers. This is the first time that we've shown this look, so I'll take a little bit of time with it. As you can see, cost pressures led to the majority of QxH's OIBDA decline in the margin pressure in recent years. QxH OIBDA declined slightly more than $600 million over the last 3 years on a 12-month rolling basis. Fulfillment and freight were more than $300 million of this headwind, and they were driven by inflation, cost pressure for freight, fuel, packaging and wage rates, as well as substantial costs related to the Rocky Mount fire. Lower sales volume contributed about 1/3 of the pressure. Marketing was about 1/4. And then these headwinds were partially offset by product margin expansion. As we look into 2023 and 2024, we see opportunities to reduce these pressures. The largest portion of profit growth will be driven by Project Athens related work, the work we're doing on both the commercial and cost side of the business with expected generation of $300 million to $600 million in incremental adjusted OIBDA. Looking at some of the details. In fulfillment, we anticipate a $40 million reduction in inbound freight this year. We've seen ocean freight rates down 10% to 25% already. We believe there is $100 million worth of favorability and Rocky Mount through increased productivity, lower detention and demurrage costs that were driven by excess storage needed after the fire, lower inventory levels and getting to a normalized fulfillment center network. We think we'll get about half of that $100 million in savings in 2023. Marketing is a clear opportunity to improve our performance and cost efficiency, and it's a focus of Project Athens. We also see continued product margin expansion opportunity as we wound down our inventory reduction efforts. I'll come back to that in a second. Partially offsetting these tailwinds and opportunities, there's about $50 million of incremental rent. That's a part of the favorable sale and leaseback transaction you just heard Greg talk about. And so we have a very clear picture now of the margin erosion and what's happened to the business over the last 3 years. We have a clear plan, and we have a clear path to drive margin expansion. I've mentioned inventory a few times. The improvements in our supply chain operations and better execution is really starting to help here. In June, I announced the goal to reduce inventory levels by 20% to 30% by the end of the year in 2023. We are well ahead of that plan, and our inventory levels are already down versus last year. Coming back again to the fire at Rocky Mount, it drove massive supply chain disruption not only leading to additional labor like who had to take over manual processes from the largely automated center, but also literally through trailers that we couldn't process that were sitting in the yard. At one point, we had 1,000 trailers in the yard. As we ended Q3, that was down over 80%, and it's down further still now. So we've made a lot of progress in the recovery. I would say we've largely recovered in what's still a makeshift but stable supply chain. And like I said, we've reduced order-to-delivery times back to pre Rocky Mount levels. As these costs fall off over the next year, you will see it show up in additional margin. I want to take another look at costs. We've been actively managing our headcount down. For the total company, it declined 7% or 1,800 team members since last year. While Zulily was the primary driver of the reductions to date, we have just announced the hiring freeze across the total company and Athens will reduce cost further still. These are always hard decisions, but they're the right thing to do for the long-term health of the business. We'll be announcing further specifics on our plans here soon. Pillar 4 is about optimizing the brand portfolio. Zulily is rebuilding the foundation to consistently bring everyday value for mom while resetting their cost base. Terry Boyle hit the ground running since joining in March as President and CEO. Zulily, as many of you know, grew up as a flash sales site. But what we found is moms often have consistent needs. In September, Zulily repositioned itself as a digital superstore for mom. We've been encouraged by the response, especially by the supplier community. Since September, we signed 300 new always available national brands on the site. We have also made site improvements as we modernize what was eventually or initially built for a flash inventory model. This has included improving site search, category search, shop by brand search capabilities. Terry has also brought a rigorous focus on cost efficiencies and improving the unit economics of the business. As shown earlier, Zu had a substantial reduction in head count year-over-year including a reduction in force in May. That plus IT and marketing cost control led to a nearly 20% reduction year-over-year in SG&A. There is much, much more to be done to make Zulily a healthy business again. But these are the most encouraging signs I've seen in the last year. Also in this pillar are the Cornerstone brands: Frontgate, Ballard Design, Garnet Hill and Grandin Road have just been a remarkable success story. Even in a pressured macro environment, we have seen continued consumer demand for their proprietary home products. Why? Strong employment has sustained strong purchase activity across home interior categories. And CBI's target upper income demographic has been less impacted by the volatile consumer spending environment. CBI has delivered extraordinary market share, gaining growth over the last 3 years with 44% revenue growth over that time frame. Going forward, we continue to see growth opportunities in controlled retail expansion. We opened a front gate in Houston and in Nashville this year, and a Ballard Design studio concept in West Palm Beach. It is a lesson for all of our retail brands: Exclusive product at the right time and the right price wins. Pillar 5 is about building new high-growth businesses, leveraging our core strengths. We have long had nearly ubiquitous coverage in traditional TV. But as the consumer moves and explorers we must move with her. Nielsen reports that streaming has now over taken broadcast and cable, and we can't ignore that. We have 3 approaches. Let me start with our app, the QVC+ and HSN+ streaming service. I'm pleased to announce that distribution is continuing to grow. We launched as an available app on Samsung Smart TVs. In October, we launched on Contour from Cox in October as well. We collectively are now in 92 million homes with our apps. Second, our free over-the-top are fast channels. We're also moving with urgency to this space. We are currently in 31 million homes. This week, we announced that we launched in this space on the Roku Channel, which was not included on the slide because it happened after we went to press. Finally, with vMVPD or virtual subscription services, services like Sling, Hulu and YouTube TV, we are on all of the major services. QVC has about 95% penetration. HSN has about 50% penetration, YouTube TV just added HSN in September. We are increasingly everywhere our potential customers are. And we have a short video on this. [Presentation]

Content drives it all. Streaming generally requires a more intentional behavior, and content is what drives this behavior. Our streaming business model is unique and powerful because we use content to drive direct sales, not simply engagement that is then sold to advertisers as inventory. Our business model also allows us to create this content in-house for a fraction of the price of our media competitors. Some notable examples include our joining with Netflix for Stranger Things, also joining with social influencer Tessa Netting to present 4 original streaming shopping events inspired by the hit series. We also had 2 live streams. It delivered our largest daily user count ever. In October, we struck a cord with exclusive streaming content from 90s iconic band, the Backstreet Boys, and in advance of their releasing their first holiday album. QVC's presale of the album sold out that weekend. We will have over or we had just in Q3, over 0.5 billion minutes of viewed QVC+ and HSN+ continue to deliver both entertainment and commerce. A few call out here on results of streaming. We now have 200 streaming-only shows and 14 statics dropping new content every week. Our BCB team, the team I put in charge of this effort started working together in March. From Q2 to Q3 this year, we saw a 45% growth in monthly active users on our streaming experience and total minute growth, up 18% quarter-over-quarter. We have the capabilities, talent and team to win in live streaming, and we will continue to press here. I will just say that because we're leveraging our core assets, we are able to do this with a relatively modest level of investment, which leads me to my final point, how we're going to continue to generate increasingly larger volumes of cash flow. Free cash flow generation has been core to Qurate over time, and we anticipate returning to healthy sustainable cash flow. As I described in June, '22 will be the base year as we establish our free cash flow reference. I would note that this free cash flow look does not include potential proceeds from business interruption insurance. In 2023, we believe there's more than $250 million of identifiable tailwinds, including the normalization of working capital from our inventory actions and the related payables, the tax we paid for buying down the MSI exchangeables, normalization of operations from Rocky Mount and improved freight rates, inflation of various types, European energy prices and the sale-leaseback rent will be headwinds in the $50 million to $100 million range. As we look to the second half of 2023 and 2024, we believe there's $300 million to $500 million of run rate, operating cash flow opportunities to capture, and we have detailed specific plans for executing against that opportunity. On the far right, you see 8 work streams. Each has sub work streams and accountable owners. We see continued recovery from Rocky Mount, providing about $80 million in benefit. Project Athens is expected to produce an additional $200 million to $400 million of run rate, post tax operating cash flow from the work streams. We believe the cost work streams will contribute the majority of these cash flows. This creates substantial cash flow growth next year that is not heavily dependent on the economy or strong growth. And for many of these initiatives, execution is already well underway. In June, I announced that this would be a 3-year turnaround, and that it would take some time. A few months later, we are furiously executing to remake this business. It has a strong core, and you can already see some of the signs of improvement in the data, but it will not show up overnight. In the short to medium term, we have direct line of sight to substantial free cash flow growth and OIBDA expansion. And in the longer term, we will have the leading and most profitable video commerce and live stream business in the world. Finally, I just want to reiterate Project Athens outcomes. 2022 is the base year. We'll have stable revenue, double-digit CAGRs on both OIBDA and free cash flow, and we remain committed to our 2.5x leverage target. When we first announced Project Athens in June, I referenced inspiration as being Plato's Republic. Plato wrote the Republic out of a desire to create a society with soul, as an alternative to the highly regimented, rigid military culture of Sparta. It mirrors our own mission to create soul and then put it back into retail, and our vision to be the leader in emotionally driven and human-focused retail. We have to transform the company to get there, and we are. Thank you. [Presentation]

All right. So now we've got lunch downstairs, and we'll see you back here at 12:30, please. [Break]

Okay. There we are.

I keep thinking we should have John on a bigger screen like the voice of Oz kind of...

Hello.

Hi, John.

Hello, John.

Hi, everybody.

So we have some microphones around, but maybe we'll just start with some pre-submitted questions first, John. Somebody wanted to hear your thoughts on the history and your thoughts on overbuilders.

Well, over building has never been very successful in the industry. It's been done by government organizations and sometimes aggressors. Generally, what they find is it takes a lot longer. They get a much lower market share than they had anticipated. And returns have never lived up to expectations. So I think all the talk of sort of same technology overbuilding has been driven by super cheap money in an absence of alternate investment opportunity. So I think the Federal Reserve has taken care of some of that right now. Technological competition on the other hand -- we experienced that, Greg and I did when we saw satellites start to take big market share from linear cable. And we actually got out of linear cable in the U.S. and got into satellite because we thought it was a better technological solution for linear distribution of video. Obviously, technology then created random access, and you then had a superior terrestrial technology for delivering that new service. So it really depends on what function you're trying to fulfill and whether you have cost, technological capital investment advantage over the incumbent, which would determine really the likelihood success of entering as a new competitor. And we've seen this many times over the years, we've seen technological competition. We've seen Intel, in fact, virtually announced the end of the cable industry with -- MMDS was their technology. Fundamentally, to me for our entrenched or established cable business, I think Tom just did a great job of explaining it. We have a very capable network, capable of its capacity being expanded dramatically at relatively low marginal cost and quicker, which really is any incremental demands for greater transport capacity, terrestrial broadband efforts are in the best position to be able to supply that. Also, the thing we didn't talk about, but Greg had a great chart there, Liberty Broadband with a 14% cash on equity return right now, run rate and going up fairly rapidly, it's pretty hard when you start there and you can incrementally add facility, pretty hard to compete with that, especially when it's in scale. So I personally wouldn't want to put a lot of my money into an overbook.

Ameritech. Remember John, Ameritech. It's a great example.

Right. I mean you can cherry pick, you can scam, you can build out the suburbs if the cable operator has been to sleep and hasn't gotten the job done. But it's very, very hard to contemplate a direct terrestrial overbuild, including underground having any kind of attractive return on investment.

Okay. Do you want to see if -- do we have any questions?

Questions from the audience?

Right here.

Yes, that's Barton right there.

Barton Crocket.

Yes. There's a mic right there.

Okay. Great. So I guess 2 things. One, on the tracker and the split this morning. The question is this, what keeps you from doing more with Liberty Sirius? I mean, obviously, there's been a great reaction from your investors to the Braves being split off as a separate asset-backed equity. I think that the meaningful investors I talk to in Liberty Sirius are, I think there's an element of frustration that there hasn't been a larger step, perhaps a harder spin. You see some of that in the stock today. So I was wondering if you could talk to them about why not doing more at this point?

Well, we tend not to judge it just on [ one half ] days of trading. That may be a little abrupt. I think I showed that chart about how many spins we've done and how they performed. I think there are reasons why we've made that easier while we've made future transactions simpler. They were more complicated before. Now they're simpler. And I think you should trust that we are going to continue to pursue things that are in the benefits of long-term shareholders.

Yes, Greg, on your chart, you left out, for instance, Expedia, which turned out to be an extremely successful spin divestiture. Obviously, even Liberty Broadband was the result of the spinout and it has performed quite well in terms of value creation. So I think the right answer is positioning and timing. I was just thinking that to myself that I'm sort of happier as an investor to see Broadband where it is today than I was, say, a year ago or 1.5 years ago, if, in fact, I'm a long-term investor and the company is generating a lot of cash and shrinking its equity, my long-term returns are being enhanced by my patience rather than then trying to exploit valuation in the near term. I mean companies are always worth more dead than alive frankly. The question is what's the right timing and what's the right efficiency. And I think you have to read the creation of the live tracker as a move in the direction of ultimate separation and efficient distribution. But in the meanwhile, I believe that, that vehicle that Greg is creating can be a companion investor with live and can participate in building value for both live and for itself in cooperative ways that perhaps it on its own couldn't do and live on its own couldn't do.

Craig. Sorry...

Sorry, you would -- you want to stay on the Craig?

You ask the one before Craig.

Okay. During the pandemic, cable and home shopping were very important infrastructure and businesses, travel, sports and live entertainment were shut down. Now travel, sports and live entertainment have experienced a surge, and we may be back to another wave of cord-cutting regarding infrastructure. How do we manage -- how do you manage these businesses through such cycles?

Well, the reality is the challenge for QVC and HSN has been the cord-cutting has basically gone on for the last several years. Now Charter, credit to Tom and team actually had a blip up in video for a period there, but that was a short-term perturbation. You've basically seen a decline. So you're seeing them in project [indiscernible] and otherwise rightsize their cost basis to get the core, which is got headwinds, had big time headwinds over the last year as inventory was out of place and the fire, but has longer-term headwinds, which are somewhat secular in terms of cord-cutting, they're rightsizing the cost structure to accommodate that and then investing in the streaming part where clearly there is growth. And I think that's what's got to be managed. We are in a world where experiences are rising. And if you take the Liberty portfolio, that's been a winner for some of our companies. But if you look at particular QxH, that is a headwind. And they're going to rightsize, figure out how to deal with it and then invest where there is growth on the streaming side, where they think there's a lot of opportunity. I don't know, David, would you want to add anything?

Yes, I thought that was pretty good. I think...

Thanks.

The -- so there's the secular headwind. There's the top line challenge. But I think what we've continued to see is that if you look today, just the number of streaming homes we're in are greater than the number of linear TV homes we're in. We just haven't used that additional REIT. Once we start using that additional REIT and getting productivity out of it, I think you can see a different type of top line future for the business, but it will take time to get fully through that transition. And until then, we have what is an incredibly strong differentiated linear TV business. There's nothing else like it. That has to be a profitable business, and it should, and that's part of the work.

Okay. Do you want to go back to Craig?

Craig Moffett from Moffett Nathanson SVB Securities. John, I'd love to hear your thoughts about convergence and maybe starting through the lens of your wireless business in cable and the way that you can offload traffic onto your network. I can think of a number of different steps, right? You can -- today, there's WiFi offload, you're starting CBRS offload. How far down that path does it make sense to go? Would it make sense, for example, to go even further and acquire mid-band spectrum? Or even would there ever be any regulatory appetite for letting wireless and cable companies come together in a combination?

Well, so let John comment and then maybe Tom add to that.

My experience on convergence internationally is that, for instance, in Europe, virtually all of our businesses are currently converged wired and wireless either through the acquisition by us of a wireless carrier or through essentially the merger between us. That's true in the U.K., it's true in Holland, it's true in Switzerland, true in Belgium, for instance. It's true in -- now in Chile, where we've just merged our broadband business with Carlos Slim's wireless business. So our experience is that convergence creates a lot of synergy, first of all. Second of all, it reduces churn pretty dramatically. And to the degree that it reduces the number of competitors who are essentially cutting each other's throats at least to a more stable business environment, better profitability. I think from Charter's point of view, and Tom probably could speak to it. The ability to use your own spectrum to build your own radios opportunistically, I think could turn out to be extremely attractive. So having that optionality in order to drive down the cost of providing the wireless component of the network, I think it is just a wonderful option.

Tom?

So just to add to that, yes, the convergence is real. The interesting fact about mobility is that most mobile activity is in very defined, relatively small geographic areas. So most consumption is in the home and then in the business, which is why 85% of all bits carried by devices that are distributed by mobile carriers are actually on the WiFi networks of broadband wireline companies like us. And the opportunity when you're selling mobile, which is a lot less bits in total when it's outside the home than it is inside the home is to -- if you have an MVNO like we do, to take traffic where it's opportunistic to take that traffic and move it onto your own network. And that is an opportunity because of the geographic dispersion of how mobile is used. So CBRS is an additional opportunity where we purchased some spectrum, the opportunity to use the spectrum, manage the spectrum. And to do that opportunistically, wherever we deploy capital to do that will be places where there's traffic sufficient, where that cost reduction and us carrying the traffic on the CBRS system pays for the capital investment necessary. So that's the opportunity in terms of -- so the question you asked was, is there more spectrum that we'd want to buy. And it's really a question of cost and opportunity and whether or not it can be used by us efficiently where actually we get a return to any capital we would spend to it. And that return is the savings.

But the good news is we have a ubiquitous permanent MVNO deal, and we're not required to build out in the unattractive places only as Tom said, Charter gets to weigh and say, in what markets does this make sense to be an owner and pursue those CBRS owner economics? And what markets do we want to let the other guy -- generally, the less densely populated markets where its relatively low traffic compared to the cost of the rollout, let that carrier handle the cost and let us ride on him.

Yes. And the future of asset mergers is really a question of can you merge the assets in a way that at the price that makes it efficient from a cost perspective.

Next question, do you want to do this one, then we'll go to the audience.

Okay. So about Qurate. We got a few on this. How will you address near-term maturities? How will you pay the preferred dividend? And also, have you considered buying back the preferred stock?

So look, I think we've done a lot to strengthen the balance sheet of Qurate over the last several quarters. And you saw we actually have reduced -- even with lower EBITDA, we have reduced fixed coverage ratio. We've taken it down. And we have a full revolver capacity as well as other potential asset sales to handle our debts as they come due, including the preferred dividends. And we're doing that and buying time to give David and his team the opportunity to go out and execute on what they believe they can. We've seen some of these are clearly onetime problems in terms of the fire, in terms of the supply chains, but also the longer term for growth, give them time to be the free cash flow machine that Q and H historically have been. So yes, I think we'll pay them as they come due. And we'll look at the opportunities and depends on what we see and our flexibility to go out and repurchase some of those instruments at below par.

Okay. Rich?

Who did you point at? Rich? Okay.

I think that's Richard there.

That is. The T-shirt stands out. Sorry, is that for you today? I already gave you a prop this morning [indiscernible].

I wore a T-shirt for you, Greg. I guess a question really for John. I think probably everyone in this room sort of looks at Warner Brothers Discovery as an LBO gone bad in the last few months. And I guess just given sort of Tom's comments about sort of the outlook for the video business and the headwinds video is facing or being a smaller business as well as Disney, which seems to have had a lot of struggles recently, and I think a lot of investors have sort of soured in recent days. What gives you so much confidence because it seems like you have a lot of conviction in what you've been saying. Why are you so convinced? And is it M&A related? Or just what gives you that confidence in the story and how it fits into the next few years?

Well, I think the #1 thing I think it gives me confidence is the management. I have enormous confidence in David Zaslav and his guys having seen the integration of Scripps with Discovery a couple of years ago. Number two, the balance sheet that they put together, 17-year average maturity, 4% cost of funding, very light, near-term maturities. Number three is, at least as an investor, it's -- even in its absolutely worst year, it's generating a 10% cash return on its equity value. So to stay in as an investor and look for the future, where the cash return is almost certain to dramatically increase is a pretty good upward pointed vector. I think the transition -- let's face it everybody went for this mid-Oklahoma land rush of streaming. I think Greg pointed out to this audience a year ago that, that was a fool's errand. I'm not going to call AT&T management fools, but they certainly [ went there ]. And they threw everything but the kitchen sink at it, and they put the run rate of the business in a little bit of stress. That said, it's still a business, even with all of those issues that's generating meaningful free cash flow right now. The synergies that we predicted, I believe, are quite achievable. And those are not trivial. Those are, I think, now estimated at run rate $3.5 billion a year. So yes, we have a modestly shrinking linear business, which generates a lot of free cash flow. The model, the dual stream model, which we had a lot to do with creating is going to be hard to replicate. That was a very profitable and stable economic structure for content producers. But obviously, the public has shown an interest for random access and streaming. They've also shown distaste for the overpriced sports rights parasitized big bundle. So to -- for a lot of consumers, they weren't necessarily bailing on the content that they like to watch. They were bailing on the price tag when compared to what Netflix and others were offering for entertainment programming. So the real challenge, I think, for the content industry is how to put their product in front of the consumer in an attractive way without having to buy through or buy around a very expensive bundle of content. And [ John McCann ] had it right about, I don't know, 10, 12, 15 years ago, when he wanted to force unbundling a la carte. We don't have this problem, by the way, in Europe, where sports has always been -- expensive sports has always been a la carte and has never been a burden on the television bundle for the typical viewer. This is a challenge in America. Sports has gotten to be somewhat of a tax on the public and has gotten to be perhaps prohibitively expensive. And this is a real challenge. As long as there's competition amongst distributors, sports will have a disproportionate economic market power, and will continue to. So I don't see an end to that. The other phenomenon that I think we have to look at is network neutrality essentially created a global super highway for big tech, where they don't participate in any of the capital requirements that they are burdened places on the network. But this is something that I think perhaps was a regulatory error that let's say, for instance, that Facebook, Meta, I guess now, were to come and attach as an edge supplier to our networks. Meta with massive consumption of network capacity, a real latency challenges and relatively few customers willing to buy it. Is that appropriate essentially that the distribution industry should eat and then have to recover that across its base of customers when it's benefiting one particular edge supplier. So I think there is a regulatory challenge here that eventually needs to be addressed. And the one size fits all, everybody pays the same mentality, which is really what's created the power of sports economics is perhaps something that ultimately needs to be addressed.

So maybe, John, kind of along those lines from one of our shareholders, observed that Netflix is particularly sticky. Do you have any comments on why this may be? And if you think their foray into sports rights is the best move for their shareholders?

Well, I think Reed Hastings, his shareholders should build up a huge monument because he's done a fabulous job with that company. He got out in the lead. He saw the opportunity and he exploited the opportunity, and he went for massive scale and he does have a revenue and scale advantage over the other streamers at this point. So he was there early. He does an excellent job. His service is very convenient and easy to use. And a lot of people are regarding it now as a foundational programming service. So I just attribute it to his excellent execution. I think his effort to essentially be the only entertainment service by broadening out and spending so much on so much content is not likely to be successful because there's just too many variant cases. There's just too much content. And I think when he started to see growth slow, even international growth slow, I think the message is there's going to be more than one streamer. How profitable they are, I think, will depend on the discipline that they exhibit in terms of controlling their costs and keeping their expected growth rational and not throw too many Hail Mary passes. But clearly, there's going to be a lot of experimentation in streaming with bundling. I think the way I see it, Disney is a attempting to have an internal bundle of 3 different streams, serving perhaps 3 slightly different audiences. It may well be that streamers, I think that HBO Max is attempting to bundle with Discovery+ to see what kind of stability that creates. Sports has always been a way to share shift or markets. If you can buy a big sport event exclusively, you will always gain customers. And then you have to chalk that up to marketing expense. In the long run, it seems to me that whoever has the best funnel to gain and the lowest churn will be the one that's the most profitable in the streaming world because marketing costs, combined with fairly high churn rates is pretty brutal to long-term profitability as that business evolves. So...

Hopefully, they don't listen to you...

No, I don't believe the willingness to pay for these services is infinite. And so right now, people are experimenting with price, they're experiencing -- or experimenting with subsidizing, with advertising revenue, the public's tolerance or entertainment programming, long-form scripted programming being interrupted with advertising and paying a subscription fee, I think, is what's being evaluated now.

Hopefully, I'll listen to you, John, because we're a huge beneficiaries on this side with Formula One for all these guys bidding against our content and seeing new guys enter. So I'm hoping -- Reed heard the first part about how good he is and not the second part about bidding on sports. Thank you.

Are you are picking or am I?

No, you are.

James.

Right there in the middle. James, do you want to put your hands up? Yes...

Or you can scream.

Greg, you mentioned that regarding the live tracker creation that this opens up some options that may not have been there prior to separating that out from Liberty Sirius. Can you give us some idea of what those might be? Could they include things like could SIRI now by Liberty Sirius stock instead of their own, for example?

Well, I think Jennifer is here, so you can lean on Jennifer that she should be buying Liberty Sirius stock. But look, that may make a ton of sense for SIRI, right? We're at 82-plus percent of SIRI at Liberty SIRI. We've said sooner or later, those are likely to be combined if SIRI's choice is to buy stock in itself at 100% or at a 37% or maybe it's 38% or whatever the discount is, seems like buying it effectively through Liberty SIRI is more attractive. But I think one of the other things we've talked about or one of the other ideas I want to put in your mind is at Liberty Live we can do things perhaps there that build attractive assets that can eventually go into live and fit well with live, and some of those could be natural extensions of live's business, whether it's facilities-based or services-based businesses around the concert, either concert halls or companies that service concerts. We're getting some visibility to that through Las Vegas and understanding what that takes and who the players are. And there could be synergistic assets that work in there as well. So I think both sides of the house have more flexibility to do different things, and we'll look for those opportunities, particularly in this market where a lot of that stuff is getting beaten up.

David Zaslav is overpaid and arrogant. He has half the stock price. And while Scripps and Discovery may have done well, he's not producing movies. After Black Adam, he has no movies this year. And Warner Brothers is better off, worth more alive than dead.

I'm not sure that was a question, and this actually is the Liberty Media and Liberty companies. But thank you for the thought. I'll pass it on to David at our next SIRI Board meeting. Doug in the middle.

Yes, Doug.

Greg, just following up on Liberty SIRI. Are there any other steps that Liberty SIRI should or could take to make a deal down the road with SIRI easier? I think in August, you mentioned that might be an issue. And is debt pay down sort of necessary or a key focus? And John, you mentioned earlier your thoughts streaming had to consolidate. I'm curious which companies you expect to consolidate?

Let me just finish on Liberty SIRI something that's actually relevant to this company and audience, but put that aside. The -- I think there's -- we're over 80%. We can do a tax-free deal tomorrow with them. When I talk about the debt loads, you need to think if the 2 were combined, Liberty SIRI and SIRI, you need to think about what the combined debt load is, and we've eyed that carefully with the knowledge that SIRI is an incredibly stable, great free cash flow generater, low churn, but we're certainly mindful of not incurring several billion more dollars of debt between the 2 companies. So I don't think there's anything needs to be done, we can [ affect ] that. We'll look at what opportunities are there. And as I said, stay tuned. John, you want to talk more about who's going to merge up with streaming? You selling Warner Brothers this morning or this afternoon? Sorry.

Well, we can't sell Warner Brothers for at least 2 years because it was a tax-free spinoff and you have to wait 2 years. So I'm not wasting any energy on thinking about who Warner Brothers could merge with or what corporate transaction could take place there. Now there are a ton of small streamers that are very specialized, who might find ultimately that they're going to have to consolidate into some of the bigger guys if their content is unique and relevant. But at the moment, there's a lot of blood flowing down the gutters of people who are streaming. Some of them can afford it and some of them can't. So my guess is the ones who can't will ultimately have to look for some kind of consolidation or exit with their content. That's just sort of the law of nature, I guess. The only other thing I would say to the comment on Mr. Zaslav is yes on paper, he's way overpaid. But remember, almost all of his compensation is in the form of options that are priced at multiples of today's stock price. So unless the stock really performs, he's really not overpaid.

Why don't we just let other people talk. Thank you. I'm glad John is not commenting on my compensation today at least. Any other questions. Let's go over here.

Kutgun Maral with RBC Capital Markets. I wanted to ask about fixed wireless. I think we're all aware of the fundamental technical limitations of the service. But at the same time, the consumer adoption so far has been far greater than we expected. So it seems like we've certainly maybe underestimated the near-term competitive threats. What gives you the confidence that we're not underestimating the long-term threats over there? And what the terminal penetration of the fixed wireless market could look like?

Yes. I think many observers were surprised at how fast fixed wireless rolled out. I don't disagree with that observation all. But I do think there are inherent limitations both on the consumers who are going to want it, what the performance will be and the capacity of the mobile players. And hopefully, I've given you enough time, Tom, to have your succinct answer ready to go.

I do think that if you think about the passings that have been activated in fixed wireless, I'm shocked that the growth is so small. Because when you -- any new greenfield operator, in an overbuild environment and all the overbuilds I've ever seen and competitive entrants. There's a sort of grass is greener market share shift of around 10% usually very quickly, and that tends to move back and forth and beat kind of the hurdle rate that really the differentiation in the product requires to get over. And so I -- when I look at the passings and I look at the customers, I think that's not doing very well.

Okay. So over here, Peter.

Question goes back to the linear TV bundle. So when we reconvene here in '25 or 2026, there might only be 50 million subscribers left. And I'm wondering if you were running the NBA or the NFL and it reached that level of scale, what might you do?

Well, I'll think Adam Silver and Roger Goodell both done a pretty good job of looking across and exploiting cleverly how to distribute their product across a range. And frankly, smaller version, we had the same issue in F1. What point do you jump across and go primarily to -- here in the U.S., what point do you jump across and go permanently to a streaming platform. And I think you'll see them pick and choose and look for the opportunity when that scale and that access is wide enough. The NFL is particularly unique, obviously, their strength and ability to draw people to a platform is stunning. So I wouldn't exactly worry that they're going to have any shortage of opportunities and people are going to be willing to slice and dice and say, okay, I'll watch it here or I'll watch it there or -- and they'll pursue it, whichever platform it's on. NBA, still strong, not as strong obviously NFL, but they can draw a lot of fans. I don't know, John, what you might add.

Yes. I mean this would be a great question for [indiscernible] and ESPN, who -- an awful lot of [ publicity ] cash flow is dependent on ESPN. And ESPN is probably the biggest single expense that a linear distributor has. So they have the problem on the other side of the fence, which is how they replace that revenue stream if the bundle breaks down. So it's going to be interesting to watch. You could cut it both ways, you could say if major sports leaves the exclusivity of linear television does the drop in the cost, that's the increased profitability of the bundle from a distributor's point of view, more than offset the decline in glue that's driving the bundle. It's a conundrum for both sides, frankly. And one of the reasons it's very interesting. The reason why the cable industry didn't evolve into just streaming random access a la carte menu on all of the traditional programming was contracts between the content providers and the distributors. So when CNN+ was going to be launched or was launched. It didn't include CNN, which is kind of curious, you would think if 40% of households don't have access to CNN because of cord-cutting that maybe they might include CNN in it, but they could not contractually do it because of limitations they have with existing distributors. So the whole legal contractual relationship between the distribution industry and the content guys, it's got to be renegotiated in a way in which people with good content will be able to provide it to the half of the country that's not currently able to receive it because of contractual limitations.

And the world -- look, the world will find another way to get the NFL. NFL is strong enough that they'll find ways to put together the whole universe or the whole universe will find ways to get -- distribute them. It's just not going to be the case. Baseball has got challenges in the L.A. market, what percentage can't see the game. That's a huge problem. The NFL because of its national structure, we'll find a way around that problem, a lot simpler. Another question? Up here in the back, yes.

Jim McGovern, Regions Bank, Senior Lender. Just thinking about CenturyLink Lumen. This is the cable question. They just decided that for capital markets reasons or for execution regions, we've got too much on our plate, and they decided to have off to Brightspeed. What's different about Charter and either it's access to capital over the longer term or the ability to execute, better management, top to bottom, that puts them in a different place. Just maybe the basis of my question is the penetration, if I understood the chart correctly, was 28%...

No, of its 55-odd million homes, it's penetration for broadband is 55%, something like that, right, Tom? Just -- I'll let Tom comment more on the operating side. Start with the financial side of Lumen. Looked at a bunch, limited free cash flow generator, given the size of its dividend. Now they're restructuring that. But for a long time, very different position. Declining business, SPD, declining opportunity there, not really been able to grow or protect its consumer franchise, which doesn't have the kind of footprint. They do have an interesting fiber footprint. But when you weigh it all up, not a massive free cash flow generator with limited growth. It's a very different condition than what Charter has gone through. Tom?

Right. We -- I'm sorry, if I was unclear on the penetration issue, but we have infrastructure in front of 55 million homes, and we have 32 million customers. So we have 55% penetration of the opportunity. And I thought another way, there's 45% of the country has a free -- a completely paid for a cable system in front of them, and that's an opportunity to sell cable and Internet service and mobile service and all the products we offer. The penetration of 28% that I showed was our take of the total opportunity from a telecom spend per household, including mobile, not including video and not including traditional telephony, just broadband and mobile. And so it just means that there's a lot more financial household spend opportunity for us to capture with the products that we sell than our traditional way of measuring penetration presents. And that's what I was trying to say.

Another question over here. I think we've got two in a row there. We'll keep the mics next to each other. I'm sorry, yes, right there.

On Liberty Live, I guess, I know the intergroup interest are going to be rationalized, I'm guessing. Is that a source of capital that you can use at Liberty Live? And then I think both John and Greg have mentioned about using this vehicle alongside live maybe for acquisitions in that kind of area. Is that kind of the mandate? Or is it just broad Liberty opportunistic kind of find an opportunity to do it? Or is it -- because it is called Live? I'm just trying to get through that.

Yes. I think we're looking to capitalize it with, I think, around $400 million and some of that will come from intergroup interest and some of that may come from -- on cash, but we'll balance and set that out. So it's appropriately capitalized. We have the ability to raise incremental capital through there or inject other forms of capital. The mandate for Liberty Live is going to evolve. I'm saying the most obvious and interesting things relate to things that fit well with Live Nation. And we've talked to Michael about those kind of opportunities. So I think there's plenty of those that are interesting. You never want to say never. No one probably thought we were going to invest in broadband and into Charter incrementally through Liberty Interactive. We try and have a broad mandate across TMT. This is the kind of markets we like. Things go sideways for others. We try and get past our pain and find the opportunity. So I think we've got a good place to focus there, things that are very logical and that is an attractive space, all those around Live Nation, but I'm never going to say never on anything else. One next door there to -- yes.

GCI offers a different selection of speed, services, bundles, et cetera, versus operators in the Lower 48. And it's been an innovator for quite some time. So to what extent should we view that network as -- or like a road map for Charter? Architectural differences, is that a factor? And basically, what I'm getting there is, can Charter deploy DOCSIS 4 at $255 home pass?

Well, I'll let Ron comment. But the conditions in Alaska, his competitive situation is very different than the Lower 48, and the kind of network he has is very different from the Lower 48.

Yes, we have some very unique advantages up there, starting with lesser competition. As I mentioned in my comments, we don't have fixed wireless because C-band was not auctioned off in Alaska. So there's no spectrum for fixed wireless. I don't think our technology plan differs very much from Tom's. I mean we're looking at high split, migrating to DOCSIS 4.0. They probably have smaller cascades than we do. They may get to extended full duplex before we do. But our clear assessment is we can get 10 gigs down with the plant that we've got by the time we get to 4.0. I think Tom is talking about faster upstream speeds. We believe 10 down is more than enough to meet the consumer demand because today, the consumer can't use more than 2.5 gigs in the house. The Plume WiFi router, which is the state-of-the-art has a point to plug in 2.5 gigs. You can't go any faster than that. You're buying 10 today, you're throwing 7.5 gigs away. So I think Charter's plan and Tom should comment, but I don't think it differs that much from ours. And I think they'll probably get ahead of us because they can do it more to scale.

Yes, I would agree that there aren't that many differences really -- I mean, the density of Alaska and the density of our plant is significantly different, which means you use different techniques to get capacity out of your network. And you actually have a higher cost on a relative basis for consumers when there's lower density in terms of capital investment. But I agree, we're on -- in terms of what you can do with the network and how you can use the DOCSIS technologies and the evolutionary pathway that we've developed for DOCSIS is common. And the capital costs for like environments in terms of density and you've got some really unusual circumstances. And you evolved from a different topology than we did. So it -- but in terms of future spend, I agree with you, usage in the network is 14:1 down versus up. And I don't see a significant product breakthrough that's going to change that. And I also agree, which is why I said earlier about having the best wireless WiFi platform is really the key to our strategic success. I think, competitively in that you can't actually receive 10 gigs of product on any device that exists in the world. And most devices, even if you had the router, the device themselves, in fact, all devices can't deal with that kind of speed. So there is no -- unless you've got like as we do, 0.5 billion devices, that speed gets distributed over a lot of devices, but the actual speed itself can't be used by a device.

Okay. Maybe 1 or 2 more, Courtnee? All right. We may have an early adjournment for lunch or for post lunch.

There's one there...

There's one here? Or as my kids say, second lunch.

I had a couple of questions on Qurate. The first was when you looked back over the last 2 years, that data, which you were looking all the time, you sort of thought the customers were following traditional customers that you added. What mistakes do you think you made looking at them versus the separate evaluation now? And then I guess the second question would be for your best customers, can you just sort of talk about any differences in churn and frequency of purchases, et cetera, between prepandemic, post-pandemic and maybe how you're tracking the data to make sure you're getting, you think, a pretty accurate picture of what's going on.

David, do you want to take that?

Yes. So on the pandemic churn question that was before my time. So -- but I'll hazard a guess, which is that when you actually look at the data for the pandemic customers, at first, they behaved a lot like our traditional customers. And so it took the ending of the pandemic, the change of behavior to then be able to see it in the trailing data that they actually were not our traditional customers. So I think if you were trying to read it real time as management then we're doing, it was reasonable to look at the data as it existed at that time and say the early signs are this looks like a lot of our traditional customers. I think it's become clear once we've had some of those customers in the customer file for 6, 12, 18 months, 2 years now, that they were really a different set of customers. I think the critical cut has been, are they engaging at all in our video commerce enterprise. So A lot of those customers were digital-only customers who came to our website and did some shopping on our website. That's not really core to how we build deep relationships with customers, people who came and experienced a lot of our core value proposition stayed with us. In terms of our best customers, so we have about as good a best customer file as exist in retail. They're very loyal, they're high spend, they're high frequency. We've seen around the edges for a while. We saw especially during the Rocky Mount fire where we had delivery challenges. We saw a little bit of weakness, but you're still seeing retention rate well into the 90s for our best customers, you're still seeing average spend grow per customer with our best customers. You're seeing an average number of minutes watched grow per customer with our best customers. So that still creates an incredibly solid base for the business.

Great. We're done.

Good.

Let me thank you for coming to Liberty's Investor Day 2022. Appreciate your interest in our companies. Appreciate your support. Hope to see you again next year, if not sooner. Thank you.