Rachel_Sandford
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Last Friday, Formula One head Bernie Ecclestone along with BBC and BSkyB confirmed that they have just come to an agreement regarding future F1 race broadcasts. The seven-year agreement, which starts in March of 2012 and runs till 2018, divides the coverage of the races between the terrestrial broadcaster BBC and pay-TV broadcaster BSkyB.
Under the new agreement, BSkyB will be showing all the races, half of them exclusively. BBC, which currently shows every Grand Prix on free TV, will only be allowed to broadcast half the races and qualifying rounds, including the British Grand Prix and the Monaco Grand Prix. They will also show “extensive highlights” of the other races, while working with Sky to “build up coverage of each Grand Prix on BBC News.”
This means that for the first time in history, F1 fans will have to pay to watch all the races, and according to a recent online poll, they are not happy. In fact, 81% of participating readers would not buy a subscription to Sky Sports, since the annual subscription is £470, about the same cost of buying tickets to four of the F1 races.
The move to pay-TV is a significant one for F1. Other sports, such as football and rugby moved to pay-TV some time ago, while F1 stuck to free broadcasters which gave them funding from sponsors that wanted to reach mass audiences. Though pay-TV broadcasters can afford to pay for more rights, F1 does stand a chance to lose some of its advertising revenue because of reduced viewing figures. This is especially true for the sponsorship revenue enjoyed by the teams.
Reaction of the fans and feedback from the teams were two of the biggest factors Ecclestone faced when negotiating a new F1 deal. Last month, Ecclestone stated “I will do my best to keep F1 on the BBC. The BBC have done a great job for us and we like their shows and the people obviously like it because so many are watching.” He also added: “It isn't possible that F1 could go on to pay-TV, we wouldn't want do that.”
Unfortunately, Ecclestone's promises were beyond his control. BBC has had to cut its spending since the government froze its funding, which was largely generated by license fees. It is estimated that the BBC was paying F1 about £60m annually to broadcast the races. When it picked up the rights to show the races in 2008, the Beeb did not face a bidding war since ITV, which was set to show the races till 2010, broke its contract by dropping F1 in order to retain football coverage. Because it had no competitors at the time, BBC was likely to be paying just 5-10% of ITV's annual payment, an amount too large for the company to justify.
Now, with less money to spend, the BBC was forced to either break their contract and drop F1, which would mean they'd suffer a huge financial penalty, or they could reduce coverage, which would reduce their annual fee. The latter, of course, made more sense, so they sought to find a partner for the other half of the races, and went with BSkyB. “The BBC brought Sky to us with the idea of a joint contract,” said Ecclestone, who had been in negotiations with ITV and Channel 4, and was open to negotiations with Channel 5. Of course a collaboration between any of these broadcasters and the BBC seemed unlikely but since all these stations are direct terrestrial rivals to BBC.
The new agreement between the companies stipulates that BBC pay roughly £15m while BSkyB pays about £25m. Put together, this is significantly more than what was previously being received, and this pacified concerns brought about by the Formula One Teams Association (FOTA.) Initially, teams, especially British teams, were worried that they would lose their fan-base and therefore lose advertising profit, but since teams share 50% of F1's profit as prize money, the joint revenue received from BBC and BSkyB works in their favor.
Ecclestone sat with team heads in the Hungarian GP paddock explaining the situation. Prior to this meeting, the teams were not given more than 24-hours notice about the deal being made, and as far as teams knew, the BBC would not be broadcasting anything other than highlights. By the end of the meeting, however, some the teams began to show support and acceptance.
Eric Boullier, team principal for Lotus Renault said “I think it is rather good news and should be positively welcomed by fans.”
On the other hand, some teams are still concerned. Team principal for McLaren, Martin Whitmarsh said “Bernie assured me, and I asked him several times, the deferred coverage will not be highlights, it will be a full race.” Pirelli's motorsport director, Paul Hembry, also voiced concerns that the model might be replicated across Europe. “We know from being involved in other sports that can create problems,” he said. “Because you end up having less visibility, so it is a concern.”
When asked to give a comment, representatives of both BBC and BSkyB expressed optimism.
“We are absolutely delighted that F1 will remain on the BBC. The sport has never been more popular, with TV audiences at a 10-year high, and the BBC has always stated its commitment to the big national sporting moments,”said Barbara Slater, director of BBC Sport. She added, “With this new deal, not only have we delivered significant savings but we have also ensured that through our live and extended highlights coverage all the action continues to be available.”
Barney Francis, managing director of Sky Sports, said “We will give F1 the full Sky Sports treatment, with a commitment to each race never seen before on UK television.” With regard to the deal itself, Jeremy Darroch, BSkyB Chief Executive Officer, said “We were very happy with the price we paid. It's a great addition to what we do.”
One sports reporter also expressed optimism, tweeting “Soccer became a game of the masses. F1 in bars and pubs? Huge potential to make F1 a social event.”
Though the future of F1 in terms of its viewing figures and revenue are yet to be seen, given the new deal, what is certain is that News Corp, which owns 39% of BSkyB, will definitely not be buying F1, something fans had strongly opposed. Rupert Murdoch's company, which already owns and controls pay-TV companies like Sky Italia and Sky Deutschland, had expressed interest to buy F1. Given the recent phone-hacking scandal the company faced, however, it seems to have backed off the F1 deal along with dropping its plans to buy the remainder of BSkyB. The scandal has greatly affected the share price of BSkyB, declining 2.4% this year. The company has announced that it would be paying £750m to its stockholders via a buyback of its own shares.
Under the new agreement, BSkyB will be showing all the races, half of them exclusively. BBC, which currently shows every Grand Prix on free TV, will only be allowed to broadcast half the races and qualifying rounds, including the British Grand Prix and the Monaco Grand Prix. They will also show “extensive highlights” of the other races, while working with Sky to “build up coverage of each Grand Prix on BBC News.”
This means that for the first time in history, F1 fans will have to pay to watch all the races, and according to a recent online poll, they are not happy. In fact, 81% of participating readers would not buy a subscription to Sky Sports, since the annual subscription is £470, about the same cost of buying tickets to four of the F1 races.
The move to pay-TV is a significant one for F1. Other sports, such as football and rugby moved to pay-TV some time ago, while F1 stuck to free broadcasters which gave them funding from sponsors that wanted to reach mass audiences. Though pay-TV broadcasters can afford to pay for more rights, F1 does stand a chance to lose some of its advertising revenue because of reduced viewing figures. This is especially true for the sponsorship revenue enjoyed by the teams.
Reaction of the fans and feedback from the teams were two of the biggest factors Ecclestone faced when negotiating a new F1 deal. Last month, Ecclestone stated “I will do my best to keep F1 on the BBC. The BBC have done a great job for us and we like their shows and the people obviously like it because so many are watching.” He also added: “It isn't possible that F1 could go on to pay-TV, we wouldn't want do that.”
Unfortunately, Ecclestone's promises were beyond his control. BBC has had to cut its spending since the government froze its funding, which was largely generated by license fees. It is estimated that the BBC was paying F1 about £60m annually to broadcast the races. When it picked up the rights to show the races in 2008, the Beeb did not face a bidding war since ITV, which was set to show the races till 2010, broke its contract by dropping F1 in order to retain football coverage. Because it had no competitors at the time, BBC was likely to be paying just 5-10% of ITV's annual payment, an amount too large for the company to justify.
Now, with less money to spend, the BBC was forced to either break their contract and drop F1, which would mean they'd suffer a huge financial penalty, or they could reduce coverage, which would reduce their annual fee. The latter, of course, made more sense, so they sought to find a partner for the other half of the races, and went with BSkyB. “The BBC brought Sky to us with the idea of a joint contract,” said Ecclestone, who had been in negotiations with ITV and Channel 4, and was open to negotiations with Channel 5. Of course a collaboration between any of these broadcasters and the BBC seemed unlikely but since all these stations are direct terrestrial rivals to BBC.
The new agreement between the companies stipulates that BBC pay roughly £15m while BSkyB pays about £25m. Put together, this is significantly more than what was previously being received, and this pacified concerns brought about by the Formula One Teams Association (FOTA.) Initially, teams, especially British teams, were worried that they would lose their fan-base and therefore lose advertising profit, but since teams share 50% of F1's profit as prize money, the joint revenue received from BBC and BSkyB works in their favor.
Ecclestone sat with team heads in the Hungarian GP paddock explaining the situation. Prior to this meeting, the teams were not given more than 24-hours notice about the deal being made, and as far as teams knew, the BBC would not be broadcasting anything other than highlights. By the end of the meeting, however, some the teams began to show support and acceptance.
Eric Boullier, team principal for Lotus Renault said “I think it is rather good news and should be positively welcomed by fans.”
On the other hand, some teams are still concerned. Team principal for McLaren, Martin Whitmarsh said “Bernie assured me, and I asked him several times, the deferred coverage will not be highlights, it will be a full race.” Pirelli's motorsport director, Paul Hembry, also voiced concerns that the model might be replicated across Europe. “We know from being involved in other sports that can create problems,” he said. “Because you end up having less visibility, so it is a concern.”
When asked to give a comment, representatives of both BBC and BSkyB expressed optimism.
“We are absolutely delighted that F1 will remain on the BBC. The sport has never been more popular, with TV audiences at a 10-year high, and the BBC has always stated its commitment to the big national sporting moments,”said Barbara Slater, director of BBC Sport. She added, “With this new deal, not only have we delivered significant savings but we have also ensured that through our live and extended highlights coverage all the action continues to be available.”
Barney Francis, managing director of Sky Sports, said “We will give F1 the full Sky Sports treatment, with a commitment to each race never seen before on UK television.” With regard to the deal itself, Jeremy Darroch, BSkyB Chief Executive Officer, said “We were very happy with the price we paid. It's a great addition to what we do.”
One sports reporter also expressed optimism, tweeting “Soccer became a game of the masses. F1 in bars and pubs? Huge potential to make F1 a social event.”
Though the future of F1 in terms of its viewing figures and revenue are yet to be seen, given the new deal, what is certain is that News Corp, which owns 39% of BSkyB, will definitely not be buying F1, something fans had strongly opposed. Rupert Murdoch's company, which already owns and controls pay-TV companies like Sky Italia and Sky Deutschland, had expressed interest to buy F1. Given the recent phone-hacking scandal the company faced, however, it seems to have backed off the F1 deal along with dropping its plans to buy the remainder of BSkyB. The scandal has greatly affected the share price of BSkyB, declining 2.4% this year. The company has announced that it would be paying £750m to its stockholders via a buyback of its own shares.