Liberty Live Holdings, Inc. Fair Value Disclosure
(5) Assets and Liabilities Measured at Fair Value
For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any recurring assets or liabilities measured at fair value that would be considered Level 3.
The Company’s assets and liabilities measured at fair value are as follows:
December 31, 2025 | December 31, 2024 |
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Quoted prices | Quoted prices |
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in active | Significant | in active | Significant |
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markets | other | markets | other |
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for identical | observable | for identical | observable |
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assets | inputs | assets | inputs |
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Description | Total | (Level 1) | (Level 2) | Total | (Level 1) | (Level 2) |
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amounts in thousands |
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Cash equivalents | | $ | 507,389 | 507,389 | — | 335,345 | 335,345 | — | ||||||
Financial instrument liabilities | 20,265 | — | 20,265 | — | — | — | ||||||||
Debt | $ | 1,666,546 | — | 1,666,546 | 1,556,399 | — | 1,556,399 | |||||||
The fair value of debt and financial instrument liabilities, which includes forward contracts, is based on quoted market prices but is not considered to be traded on “active markets,” as defined by GAAP. Accordingly, those debt and financial instrument liabilities are reported in the foregoing table as Level 2 fair value. As of December 31, 2025, financial instrument liabilities are comprised of the 2025 Forward Contracts, as defined in note 8. The fair value of the 2025 Forward Contracts was derived from a Black-Scholes-Merton model using observable market data as the significant inputs.
Changes in the fair values of the 2025 Forward Contracts are recognized in realized and unrealized gains (losses) on financial instruments, net in the consolidated statements of operations.
Realized and Unrealized Gains (Losses) on Financial Instruments, net
Realized and unrealized gains (losses) on financial instruments, net are comprised of changes in the fair value of the following:
Years ended December 31, | ||||||
| 2025 | | 2024 | | ||
amounts in thousands | ||||||
Equity securities | $ | (11,857) | (7,136) |
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Financial instrument liabilities | (20,265) | (11,716) | ||||
Debt |
| (129,858) | (243,881) |
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$ | (161,980) | (262,733) |
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The Company uses the measurement alternative (defined as the cost of the security, adjusted for changes in fair value when there are observable prices, less impairments) for its equity securities without readily determinable fair values. For such securities the downward adjustments for the years ended December 31, 2025 and 2024 were $7,779 thousand and $11,402 thousand, respectively, and the cumulative downward adjustments as of December 31, 2025 were $22,020 thousand. The upward adjustments for the years ended December 31, 2025 and 2024 were not material, and the cumulative upward adjustments as of December 31, 2025 were $127,113 thousand. Impairments for the years ended December 31, 2025 and 2024 were $4,077 thousand and $10,630 thousand, respectively, and the cumulative impairments as of December 31, 2025 were $14,707 thousand.
The Company elected to account for its exchangeable senior debentures (as described in note 8) using the fair value option. Changes in the fair value of the exchangeable senior debentures recognized in the consolidated statements of operations are due to market factors primarily driven by changes in the risk-free rate and in the fair value of the underlying shares into which the debt is exchangeable. The Company isolates the portion of the unrealized gain (loss) attributable to changes in the instrument specific credit risk and recognizes such amount in other comprehensive earnings (loss). During the years ended December 31, 2025 and 2024, the Company recognized zero and $1,743 thousand, respectively, of previously unrecognized gains related to the retirement of a portion of the 0.5% Exchangeable Senior Debentures due 2050, which was recognized through realized and unrealized gains (losses) on financial instruments, net on the consolidated statement of operations. The change in the fair value of the exchangeable senior debentures attributable to changes in the instrument specific credit risk before tax was a gain of $19,711 thousand and loss of $69,129 thousand for the years ended December 31, 2025 and 2024, respectively. The cumulative change since issuance was a gain of $2,139 thousand as of December 31, 2025, net of the recognition of previously unrecognized gains and losses.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.