Bernie Ecclestone was in many ways a visionary as he galvanised the Formula One teams to form a collective back known as the Formula One Teams Association (FOCA) back in 1974.
As the Brabham owner he realised the teams needed to stop fighting each other and band together if they were to receive an improved financial remuneration from the various commercial entities making some money from F1 at the time.
Ecclestone understood importance of TV rights
Once elected as chief executive of FOCA in 1978 and with Max Mosely as his legal advisor, together they negotiated over a number of legal issues with the FIA and its president Jean-Marie Balestre. This culminated in Ecclestone’s coup which secured his power based for decades – the right for FOCA to negotiate TV rights for the Grand Prix.
Prize money at the time was patchy and so Ecclestone contracted to guarantee this in exchange for 23% of the TV rights with the remaining 47% going to the teams and 30% to the FIA.
This was the basis for the Concorde agreements which stand today and define the legal duties and responsibilities of the teams, the FIA and the F1 commercial rights owner.
Liberty Media bought the commercial rights for Formula One in 2016 and removed Ecclestone as the FOM CeO in 2017 wishing to pursue a new direction in promoting the sport.
Liberty Media new F1 business model
Ecclestone’s model had been to partner with few, and create an exclusivity club, where he would extract the maximum amount of cash possible demo each interested party.
Liberty Media believed a new business model should be deployed, where Formula One has many more partners, more events and grows its audience which in turn will generate more revenue.
The primary F1 revenue in 2022 rose 14% to $2.107bn. This was split between race promotion fees (28.6%), sponsorship (16.9%) and media rights (36.4%) according to Autosport.
Formula One is now almost entirely on a pay-per-view platform for the live track sessions and the TV companies are reaching the limits of their economic models which make bidding for the national rights a worthwhile activity.
‘World Feed’ makes Global broadcasting simple
Ecclestone made one other move during his tenure which inadvertently made it simple for the owner of the F1 commercial rights holder to control 100% the TV production.
Irritated by national broadcasters who would favour their local driver trundling around at the back instead of broadcasting the real action, Ecclestone decided all TV production would be delivered in house.
Hence the ‘world feed’ was created and during certain times over the Grand Prix weekend, local broadcasters can only show the FOM TV pictures which are then broadcast in identical fashion all around the world simultaneously.
One of Liberty Media’s first commercial decisions was to allow global streaming platform Netflix to record and produce a fly on the wall season long documentary. Drive to Survive focused on off track matters and brought a number of the paddock personalities and their issues to the forefront.
F1 TV app in jeaorpardy
Global streaming platforms like Netflix and Amazon Prime have also in recent years been chipping away at the mainstream TV broadcasters sports broadcasts. From the US Tennis Open to premier League football, live sporting events can now be watched exclusively on platforms which initially targeted their success as Movie and TV show broadcasters.
Liberty Media realise if they can cut out the national and regional broadcasters and deliver just one global source for watching Formula One, their revenues will jump enormously.
Viewers can at present watch the sport through the F1 app which is subscription based and paid directly by the consumer. Yet at present the global coverage is restricted by the broadcasting deals in place and so the TV is not available to those who have national TV companies already contracted to F1.
It was thought as the current TV licensing arrangements unwind, Liberty Media would gravitate towards delivering F1 through its app. Yet this is a risky option given the platform required to deliver global streaming of simultaneous pictures to up to 500 millions people requires a massive infrastructure.
Apple bid 3 times more per annum
And so now Apple TV are bidding to become the exclusive Global supplier of the FOM produced world feed pictures.
According to the latest edition of Business F1 magazine, Apple are ‘serious’ about mounting a ‘blockbuster’ bid in the future for the global rights to broadcast F1.
It is thought that the deal could cost up to $2billion (£1.64bn) a year, an amount that would be twice as much as F1 currently receive from their global TV rights.
According to Business F1 magazine this blockbuster bid will come in around $nb a year, almost three times more than Liberty Media receive at present from Sky, Canal, etc combined.
Apple the home of F1
With the current TV contracts all ending at different times over the next 5 years, Apple are seeking an initial 25% of the market share which will eventually rise to 100% of F1 live TV.
The roaring success of Apple’s new deal with MLS (USA’s Major League Soccer) is behind the confidence shown by the Global Broadcaster to make such an audacious bid for the third most watched sporting series in the world.
Apple would clearly produce a whole host of other F1 TV content with invariably Netflix losing there right to produce Drive to Survive.
Sky Sports capabilities questionable
Of course other players will now take interest, particularly Sky Sports which now broadcasts to a number of European countries where the audience penetration is at its greatest.
The reality is the future pictures from F1 will sit with one global media company as this maximises the revenue model for Liberty Media.
It is questionable whether Sky has the technology to deliver this on a global basis, though their new Sky Stream service if significantly upgraded could form the platform for the broadcasting of F1 Global TV streaming in the future.
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