Basis of Presentation |
12 Months Ended |
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Dec. 31, 2018 | |
| Basis of Presentation | |
| Basis of Presentation |
The accompanying consolidated financial statements of ҹѰ (formerly named ҹѰ Spinco,Inc.; see discussion below pertaining to the Starz Spin-Off (defined below)) (“ҹѰ,” “we,” “our,” “us” or the “Company” unless the context otherwise requires) represent a consolidation of certain media and entertainment related assets and businesses. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. ҹѰ, through its ownership of interests in subsidiaries and other companies, is primarily engaged in the media and entertainment industries primarily in North America and the United Kingdom. Our significant subsidiaries include SiriusXM Holdings Inc. (“SIRIUSXM”), Formula1 and Braves Holdings, LLC (“Braves Holdings”). Our significant investment accounted for under the equity method of accounting is Live Nation Entertainment, Inc. (“Live Nation”). As discussed in notes2 and 7, ҹѰ obtained a nearly 20% interest in Delta Topco Limited (“Delta Topco”), the parent company of Formula1, a global motorsports business, during 2016 and acquired the remaining interests, other than a nominal number of shares held by certain Formula1 teams, during January 2017. In September 2011, ҹѰ Interactive Corporation (“ҹѰ Interactive” and formerly named ҹѰ) completed the split-off of its former wholly-owned subsidiary (then known as ҹѰ) from its ҹѰ Interactive tracking stock group (the “Split-Off”). In January 2013, Starz (which was renamed Starz Acquisition, LLC in connection with its acquisition by Lions Gate Entertainment Corp. and was formerly known as ҹѰ) spun-off (the “Starz Spin-Off”) its then-former wholly-owned subsidiary, which, at the time of the Starz Spin-Off, held all of the businesses, assets and liabilities of Starz not associated with Starz, LLC (with the exception of the Starz, LLC office building). The transaction was effected as a pro-rata dividend of shares of ҹѰ to the stockholders of Starz. Also in January 2013, ҹѰ obtained a controlling interest and began consolidating SIRIUSXM. SIRIUSXM, since the date of our investment, has repurchased approximately 2.5 billion SIRIUSXM shares for approximately $9.4 billion. ҹѰ continues to maintain a controlling interest in SIRIUSXM following the completion of the share repurchases. As of December31, 2018, we owned approximately 73% of the outstanding equity interest in SIRIUSXM. On February 1, 2019, SIRIUS XM issued shares of SIRIUS XM Common Stock in conjunction with its acquisition of Pandora Media, Inc. (“Pandora”), which reduced our economic ownership in SIRIUS XM to approximately 67% as of such date. See note 7 for more information regarding the acquisition of Pandora. During 2014, ҹѰ’s board of directors approved the issuance of shares of its SeriesC ҹѰ common stock to holders of its SeriesA and SeriesB ҹѰ common stock, effected by means of a dividend. On July23, 2014, holders of SeriesA and SeriesB ҹѰ common stock received a dividend of two shares of SeriesC ҹѰ common stock for each share of SeriesA or SeriesB ҹѰ common stock held by them as of July7, 2014. Additionally, in connection with the SeriesC ҹѰ common stock issuance and the Broadband Spin-Off (defined below), outstanding SeriesA ҹѰ common stock warrants have been adjusted, as well as the number of shares covered by outstanding cash convertible note hedges and purchased call options (the “Bond Hedge Transaction”). See note10 for further discussion regarding the warrants and Bond Hedge Transaction. On November4, 2014, ҹѰ completed the spin-off to its stockholders common stock of a newly formed company called ҹѰ Broadband Corporation (“ҹѰ Broadband”) (the “Broadband Spin-Off”). In the Broadband Spin-Off, record holders of SeriesA, SeriesB and SeriesC ҹѰ common stock received one share of the corresponding series of ҹѰ Broadband common stock for every four shares of common stock held by them as of the record date for the Broadband Spin-Off, with cash paid in lieu of fractional shares. During August 2014, ҹѰ Interactive completed the distribution of ҹѰ TripAdvisor Holdings, Inc. (“ҹѰ TripAdvisor”) (the “TripAdvisor Spin-Off”). During July 2016, ҹѰ Interactive completed the spin-off of CommerceHub, Inc. (“CommerceHub”) (the “CommerceHub Spin-Off”). During November 2016, ҹѰ Interactive completed the split-off of ҹѰ Expedia Holdings, Inc. (“Expedia Holdings”) (the “Expedia Holdings Split-Off”). During March 2018, ҹѰ Interactive completed the split-off of GCI ҹѰ, Inc. (“GCI ҹѰ”) (the “GCI ҹѰ Split-Off”) and ҹѰ Interactive was subsequently renamed Qurate Retail, Inc. (“Qurate Retail”). Following these transactions, each of these companies operates (or in the case of Starz and CommerceHub, prior to their respective acquisitions, operated) as separate publicly traded companies, none of which has (or, in the case of Starz and CommerceHub, had) any stock ownership, beneficial or otherwise, in the other (except that GCI ҹѰ owns shares of ҹѰ Broadband’s SeriesC non-voting common stock). In connection with the Split-Off, Starz Spin-Off, TripAdvisor Spin-Off, Broadband Spin-Off, CommerceHub Spin-Off, Expedia Holdings Split-Off and GCI ҹѰ Split-Off, ҹѰ entered into certain agreements with Qurate Retail, Starz, ҹѰ TripAdvisor, ҹѰ Broadband, CommerceHub,Expedia Holdings and GCI ҹѰ, respectively, in order to govern ongoing relationships between the companies and to provide for an orderly transition. As a result, these entities are considered related parties of the Company for accounting purposes through the dates of the respective transactions. These agreements include Reorganization Agreements (in the case of Qurate Retail, Starz and ҹѰ Broadband only), Services Agreements (which, in Starz’s case terminated in April 2017, and in CommerceHub’s case, terminated in August 2018), Facilities Sharing Agreements (excluding Starz and CommerceHub), a Lease Agreement (in the case of the Starz Spin-Off only) and with respect to Starz and ҹѰ Broadband, Tax Sharing Agreements. The Reorganization, Services and Facilities Sharing Agreements entered into with ҹѰ Interactive were assigned from Starz to ҹѰ in connection with the Starz Spin-Off. The Reorganization Agreements provide for, among other things, provisions governing the relationships between ҹѰ and each of Qurate Retail, Starz and ҹѰ Broadband, respectively, including certain cross-indemnities. Pursuant to the Services Agreements, ҹѰ provides Qurate Retail, ҹѰ TripAdvisor, ҹѰ Broadband, CommerceHub (prior to termination), Expedia Holdings and GCI ҹѰ with general and administrative services including legal, tax, accounting, treasury and investor relations support. Qurate Retail, ҹѰ TripAdvisor, ҹѰ Broadband, CommerceHub (prior to termination), Expedia Holdings and GCI ҹѰ reimburse ҹѰ for direct, out-of-pocket expenses incurred by ҹѰ in providing these services and in the case of Qurate Retail, Qurate Retail’s allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent providing services to Qurate Retail. ҹѰ TripAdvisor, ҹѰ Broadband, CommerceHub (prior to termination), Expedia Holdings and GCI ҹѰ reimburse ҹѰ for shared services and personnel based on a flat fee. Under the Facilities Sharing Agreements, ҹѰ shares office space and related amenities with Qurate Retail, ҹѰ TripAdvisor, ҹѰ Broadband, Expedia Holdings and GCI ҹѰ at ҹѰ’s corporate headquarters. Under these various agreements, approximately $30million, $24million and $21million of these allocated expenses were reimbursed to ҹѰ during the years ended December31, 2018, 2017 and 2016, respectively. Under the Lease Agreement, Starz leases its corporate headquarters from ҹѰ. The Lease Agreement with Starz for their corporate headquarters requires a payment of approximately $4million annually, subject to certain increases based on the Consumer Price Index. The Lease Agreement expires on December31, 2023 and contains an extension option. The Tax Sharing Agreements provide for the allocation and indemnification of tax liabilities and benefits between ҹѰ and each of Starz and ҹѰ Broadband as well as other agreements related to tax matters. Among other things, pursuant to the Tax Sharing Agreements, ҹѰ has generally agreed to indemnify Starz and ҹѰ Broadband for taxes and losses resulting from the failure of the Starz Spin-Off and the Broadband Spin-Off, respectively, to qualify for tax-free treatment. However, Starz will be responsible for any such taxes and losses related to the Starz Spin-Off which (i)result primarily from the breach of certain restrictive covenants made by Starz, or (ii)result from Section355(e) of the Internal Revenue Code of 1986 (the “Code”) applying to the Starz Spin-Off as a result of the Starz Spin-Off being part of a plan (or series of related transactions) pursuant to which one or more persons acquire a 50-percent or greater interest (measured by vote or value) in the stock of Starz, and ҹѰ Broadband will be responsible for any such taxes and losses related to the Broadband Spin-Off which (i)result primarily from the breach of certain restrictive covenants made by ҹѰ Broadband, or (ii)result from Section355(e) of the Code applying to the Broadband Spin-Off as a result of the Broadband Spin-Off being part of a plan (or series of related transactions) pursuant to which one or more persons acquire a 50-percent or greater interest (measured by vote or value) in the stock of ҹѰ Broadband. In February 2014, the IRS and Starz entered into a closing agreement which provided that the Starz Spin-Off qualified for tax-free treatment to Starz and ҹѰ. In September 2015, ҹѰ entered into a closing agreement with the IRS which provided that the Broadband Spin-Off qualified for tax-free treatment. |