Liberty taking cautious approach to future of live events

F1's commercial rights holder Liberty Media is taking a "step-by-step cautious" approach to the future of live events such as F1 but believes its businesses can remain profitable in a post-Covid world.

Liberty's core holdings - Formula 1 and concert oraniser Live Nation - have been severely hit by the coronavirus pandemic, with both businesses grinding to an indefinite halt.

Formula 1 is set to resume, if conditions permit, in early July in Austria but questions remain about the future of live events in a post-pandemic world.

"That’s the great unknown," said Liberty CEO Greg Maffei in an online shareholder meeting conducted last week.

"I think we’re taking a cautious attitude to the belief that things will adjust and change, that we can build businesses that can operate in a post-COVID world.

"Whether that’s through therapeutics or a vaccine, or just changed procedures, there will be ways to have live events.

"Will they be as scale or profitable as historically? I think that remains to be seen, so we’re taking a step-by-step cautious attitude."

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Last month, Liberty shifted assets between its subsidiaries to help boost Formula 1's liquidities and provide the sport with a safety net if ever the current season is scrapped altogether.

"One of the reasons we strengthened the FWON [F1] balance sheet was because of that potential, that things may not be as positive going forward, and particularly in the case of FWON, where we may need to provide support for some of the teams.

"We’re hoping for the best in terms of therapeutics and vaccines, but we’re not counting on that as our investment thesis. We’re trying to create attractive vehicles that have upside in any situation."

Liberty founder and chairman John Malone offered perhaps a more optimistic view on the future of live events, including Formula 1, believing a safety solution rather than a structural solution will prevail.

The American billionaire also highlighted the fact that Liberty's businesses could remain profitable even without a revenue stream provided by public attendance.

"The original thesis of live events perhaps being the best place to be on content for television or for digital distribution I think remains intact," said the 79-year-old entrepreneur.

"Unfortunately, we’ve had this pandemic. I personally believe there will be a therapy and/or a vaccine sooner rather than later that will get as back closer to normal.

"There’s undoubtedly going to be a hangover in terms of valuations, and obviously like anything else if this depression in valuation is excessive it presents opportunity for those of us who believe in the longer term thesis that this is a good place to be, live events, particularly when you have a substantial part of the revenue has little to do with gate attendance and a lot to do with television, and ultimate digital distribution.

"So the question is how do you manage your hand from here? And I would say the number one thing obviously is that everyone has been scrambling to improve their balance sheets so that they don’t have liquidity problems over the period that this is expected to really depress the business," he added.

"But I think the thesis of live events is still a good one, and I believe that there will be a health solution here, not a structural solution, that will return these events.

"Human beings are gregarious by nature. I can tell you the bars here in Florida are now open, and they’re pretty packed."

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