F1 Goes To Pay TV
Friday, 29 July 2011
From next year F1 will cease to be available on free to air TV. 50% of races will require a Sky Sports subscription.
The news which will come as a shock to F1 fans around the world, is the first time the sport has not been available on free to air TV since it has been televised.
Free to air broadcasting has always been a basic principle of the sport which has been a major factor in it's 600 million fans world-wide. The most popular broadcaster is the BBC which is watched around the world, but which from next year will only have live access to half the races of the season. The remaining races will only be live on Sky Sports, but the BBC will run highlights of those races. Races will continue to be broadcast live on radio.
The cost of covering F1 is reportedly more than the entire cost of BBC4, and as the BBC tightens it's belt, it was expected to drop coverage from 2013, even before this announcement, but the absence of any free to air broadcast for half the season is unprecedented. ITV had previously made it clear that it would only be able to afford the rights if they were cheap. It is not known if this new deal, which offers significant savings to the BBC, means that they will, now, be able to continue to broadcast F1 albeit at this reduced level, beyond next year.
Given F1s dependence on sponsorship, it's not clear how losing up to half it's audience will effect the economics of the sport. Currently all the teams are funded by sponsorship, to the tune of £100,000,000 per year. It's not clear how many of those fans will be lost by the move to pay TV, but 50 million people worldwide currently watch the BBC coverage. If the UK modal is extended to other countries, it seems likely that the numbers of viewers will fall by up to half, presumably reducing the sponsorship money proportionally. However, many sponsors have revealed that they believe the return on investment is high enough that even investing on current terms but with a reduced audience may be viable but it seems likely that they will seek to reduce investment in the light of any reduction in return.
The price paid for the rights is not known, but traditionally only 1% of the TV rights money goes to the teams. Unless a larger share has been agreed, this means that many teams will find their revenue halved and face great financial pressures and the future of the smaller teams especially looks bleak. Not The News Of The World understands that most, if not all, team owners where unaware of this development until it was announced this morning. Martin Whitmarsh, head of the Formula One Teams Association, has questioned whether the deal aligns with the principles in the Concorde Agreement which governs the sport. The Concorde Agreement has specific provisions for Free to Air TV, as it is so critical for sponsorship of the teams. Whitmarsh says that a formal response will be issued once the teams know the details of how it will work and have considered whether it is in accordance with the Concorde Agreement.
Earlier in 2011 Murdoch was linked to attempts to buy the sports commercial management, and Bernie Ecclestone, the sports mogul and one time owner denied that F1 was up for sale, and indeed the deal was never struck. One of the big issues at that time was that the big manufacturers and advertisers want the sport to be shown on free-to-air channels in order to draw the biggest possible audience. At the time, when asked about whether this was an issue Bernie Ecclestone said, "Definitely, 100 per cent.", he continued, "...if Murdoch was to buy certainly he'd have to broadcast some free to air like it is now."
Half the season, including the British Grand Prix, Monaco Grand Prix, and the last race of the year will still be available on the BBC in 2011. Thanks Bernie.