Liberty Media is an interesting company that doesn’t get the credit it deserves, especially their CEO Greg Maffei and chairman of the board John Malone. The company owns three major names being SiriusXM, Formula One and Braves Group; there’s also two separate but related companies to Liberty Media being Liberty Global and Liberty Latin America. Formula One was up 48.5% in terms of revenue compared to Q2 of last year. With revenue came more debt, although unlike taking a 35 million operating loss in 2021, there was a 65 million dollar profit in Q2 of 2022. Braves Group is a major league baseball team that increased their revenue by 21% and their operating profit by 16%. What’s clear so far is that sports are acting as a hedge to interest rate hikes and the company is seeing large profits unlike others right now. SiriusXM on the other hand, Liberty Media’s largest owned company saw a 4% increase in revenue and a 3% decrease in operating profit. The debt to equity ratio of all three companies combined attributed to 1.31, this is a very healthy number because it means there was a debt of $1.31 for every dollar of equity. For each individual company, SiriusXM had a debt to equity of 1.69, Braves had 3.51 and Formula One had .65.
Not only are Liberty Medias debt to equity ratios impressive for Q2 but also their free cash flow. Free cash flow is characterized as the money leftover after paying its financial obligations. Liberty Media has a free cash flow of 766 million dollars which although is down from previous years, it’s important to keep in mind that most companies are struggling right now in an economic global overview. A great portion of analysts and investors tend to look at the companies net profit margin too as opposed to gross profit margin. 19.09% was the net profit margin when factoring in the expenses like cost of goods sold, taxes and interest; compared to other entertainment companies which have an average of 3.86% net profit margin. The one concern that holds for Liberty Media is their ability to pay off short debt obligations, these being debts that must be paid in less than a year. Medias current ratio (current assets – current liabilities) was -583 million dollars, although it could be cumbersome to pay off short debt obligations, most of the debt that must be paid off from senior notes is due in 2049 giving breathing room to pay off debts in general.
Formula One is the contender that stands out from the two other companies under Liberties grasp because of the amount of growth that its sustained when first bought in 2016. Most investments that Liberty Media takes have historically worked out in their favor whether it be purchasing most of SiriusXM because of their inevitable bankruptcy in 2009 (where the company was bought before being bankrupt) or picking the right investment options for their portfolio. Liberty Media has proved itself in the business world as a top contender of innovation in this space with little downside surrounding the firm. As the world economy braces for impact on continues rate hikes, Liberty Media is taking this current moment as an opportunity to be looking for more vulnerable companies to scoop up in the near future potentially.
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