Formula One’s new owners have voiced their concerns over the TV broadcast deal inherited from the previous management, led by Bernie Ecclestone, fearing that the agreement with Sky will hurt the sport.
Liberty Media has been vocal in its desire to have a balance between paid-TV and free-to-air in its broadcast agreements, however Sky’s deal with Formula One was agreed in March 2016, 10 months before Liberty Media’s $8.5bn acquisition was completed.
The deal is an example of the kind of commercial moves made during the Ecclestone era, which chief executive, Chase Carey, recently summed up as a “short-term, deal of the day focus”.
Sean Bratches, Formula One’s managing director of commercial operations, stressed that free-to-air television was “critically important” to the sports longevity and success.
Speaking at the FIA conference in Geneva, Bratches revealed that the future of the sport’s media rights model would be a “hybrid” of the two and said having a “free-to-air voice” was essential to help grow its popularity and sponsorship revenue.
Earlier this month Carey revealed that part of the rights model would include the development of an owned online streaming platform.
“There is the cauldron full of cash on the pay side and on the other side of the scale you have brand and reach,” he said. “My view is a 30-70 model of free-to-air to pay, where you have a number of grand prix to be on free to air and then we can play and toil with the pay side to generate revenue that we can reinvest back into the sport.”
Channel 4 began to show highlights and 10 live races per season in 2015 after the BBC exited its six-year deal three-years early. It will continue to broadcast the sport for the remainder of the current season, after which time Formula One would lose its free-to-air presence in the UK entirely for the first time in its history.
Sky began its initial coverage in 2012 and a decline in audience numbers soon followed. Evidence for the impact of moving away from the free TV model can be found in the 2015 Formula One global media report, which shows a drop of 3.8 million viewers in UK between 2011-15.
Bratches said he was aware of the impact, but insisted there was little Liberty Media could do with regards to the Sky deal.
“That deal is an agreement that we inherited,” he said. “They are done between adult parties at an arm’s length and my suspicion is that Sky is very happy and we are going to honour and respect the deals that were in place when we arrived.”
Other sports which have been adversely impacted by a pay wall model include cricket. When the English Cricket Board sold the broadcast rights for the Ashes to Sky in 2005 it hurt the sport. The final day of the Ashes in 2015 had a TV audience of 467,000, whereas the average Channel 4 ratings for live coverage of the Ashes in 2005 was 2.5 million.