Potential fight brewing over F1 (Malone v. Murdoch)

Post here all non technical related topics about Formula One. This includes race results, discussions, testing analysis etc. TV coverage and other personal questions should be in Off topic chat.
Post Reply
User avatar
GitanesBlondes
26
Joined: 30 Jul 2013, 20:16

Potential fight brewing over F1 (Malone v. Murdoch)

Post

This is starting to come out, it looks like we may have a potential fight between Rupert Murdoch (again!) and John Malone of Liberty Global over ownership of F1 rights.
Formula One looks set to become the latest battle ground in the rivalry between media chiefs John Malone and Rupert Murdoch, after Mr Malone entered discussions to buy a major stake in the motorsport.

Mr Malone’s Liberty Global, the media empire that owns Virgin Media, and Discovery Communications, the cable television giant, have made a joint approach to Formula One’s backers, CVC Capital, about taking a 49pc stake in the business. The deal could value Formula One at more than £6.5bn.

CVC currently owns 35pc of Formula One, including all the voting rights. The private equity firm would not comment on the potential deal, or disclose details of where the remaining 14pc would come from. However, it is thought that it could be selling its stake alongside the Lehman Brothers estate, which also owns 12.3pc of Formula One, and is obliged to offload its stake by the end of June this year.

Liberty and Discovery are understood to have requested access to private information about CVC’s finances, but the talks are at an early stage and may not result in a firm offer.

The talks do, however, present a challenge to Rupert Murdoch. Any deal between Formula One and Liberty Global would be a major problem for the octogenarian founder of the News Corporation newspaper group and the 21st Century Fox film and television behemoth.

Mr Murdoch tried to take control of Formula One himself in 2011, when he approached Mexican billionaire Carlos Slim and a major car manufacturer about forming a consortium to buy the motorsport.

That plan was scotched by Formula One’s chief executive, Bernie Ecclestone, but Mr Murdoch subsequently made Formula One a star feature of BSkyB, the satellite broadcaster 39pc owned by 21st Century Fox.

The pay-television giant snatched the right to air all Formula One races from the BBC in 2011, and launched a dedicated Formula One channel the following year. This channel was immediately touted as one of the crowning glories of the satellite television business, but it has become increasingly important to BSkyB over the past year, after BT broke its virtual stranglehold over the Premier League football rights it has traditionally used to lure subscribers.

BT entered the sports rights market in 2011, buying the exclusive rights to a slew of Premier League and then Champions League matches, which have helped it to build a successful new television business and take a bite out of BSkyB revenues. The telecoms giant already has its eye on Formula One rights, and is likely to seize on any change in ownership as an opportunity to push BSkyB out of the competition.

If Liberty Global and Discovery were to secure the Formula One voting rights, they will effectively be able to determine which television company gets the broadcasting rights when they next come up for offer. Liberty could use them to boost Virgin Media, but it may prefer to take BT’s cash, and use BT’s burgeoning television platform as the most efficient way to put a dent in the BSkyB empire.

However, analysts predicted that Mr Murdoch may ultimately mount another takeover attempt himself. “I am not sure he has the firepower [on his own] but I wouldn’t discount Murdoch at all,” said Alex De Groote, a media analyst at Panmure.
Mr Ecclestone said he was not aware of the talks with Liberty Global, but that CVC Capital had received numerous approaches about Formula One. “You’ve got all these people that buy and sell companies, like people that buy and sell anything,” he said. “They always think that somebody who wants to sell is in trouble. They think they [CVC] are in trouble.”
CVC considered taking Formula One public in 2012, but put the brakes on its plans because of the eurozone crisis. At the time, it was targeting a $10bn (£6.1bn) valuation.

Liberty Global and Discovery Communications both declined to comment.

http://www.telegraph.co.uk/finance/news ... stake.html
I honestly believe Todt should start a breakaway grand prix series with the teams so they would have the commercial rights in a new series. Split the pie 14 ways, 1 slice for the FIA and the remainder goes to each team in escalating increments based on constructor's standings. If there are only 11 teams, the 12th and 13th spots would be reinvested back into the sport. It's a shame the sport doesn't insulate itself from outside investors whose concern only extends to how much money they can siphon out.
"I don't want to make friends with anybody. I don't give a sh*t for fame. I just want to win." -Nelson Piquet

Pup
Pup
50
Joined: 08 May 2008, 17:45

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

I'm sure that there would be a clause in the agreement between FOM and the FIA that the FIA would maintain F1 as its premiere series.

beelsebob
85
Joined: 23 Mar 2011, 15:49
Location: Cupertino, California

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

GitanesBlondes wrote:I honestly believe Todt should start a breakaway grand prix series with the teams so they would have the commercial rights in a new series. Split the pie 14 ways, 1 slice for the FIA and the remainder goes to each team in escalating increments based on constructor's standings. If there are only 11 teams, the 12th and 13th spots would be reinvested back into the sport. It's a shame the sport doesn't insulate itself from outside investors whose concern only extends to how much money they can siphon out.
Unfortunately, it wouldn't work like that. They need to get their money from somewhere – and guess where that is – Malone and Murdoch. If they do the equivalent of sticking their middle finger up at those two, their new series will never get off the ground.

User avatar
GitanesBlondes
26
Joined: 30 Jul 2013, 20:16

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

beelsebob wrote:
GitanesBlondes wrote:I honestly believe Todt should start a breakaway grand prix series with the teams so they would have the commercial rights in a new series. Split the pie 14 ways, 1 slice for the FIA and the remainder goes to each team in escalating increments based on constructor's standings. If there are only 11 teams, the 12th and 13th spots would be reinvested back into the sport. It's a shame the sport doesn't insulate itself from outside investors whose concern only extends to how much money they can siphon out.
Unfortunately, it wouldn't work like that. They need to get their money from somewhere – and guess where that is – Malone and Murdoch. If they do the equivalent of sticking their middle finger up at those two, their new series will never get off the ground.
I have to disagree with you on this.

Funding would not be an issue when one considers the sponsors many of the teams have - sponsors open connections that would be needed to fund a new series by way of loans. You have to take into account who is on the board of many of the larger team sponsors. Second, if you have Ferrari, Red Bull, Mercedes, and McLaren with you, that alone makes the entire thing easier as the rest of the teams will follow. The Ferrari legacy and brand is far bigger than F1 is, or ever will be, as it's the most recognized brand on the planet.

Another point I would make, is once Ecclestone is out of the picture, such a thing becomes much easier to do.
"I don't want to make friends with anybody. I don't give a sh*t for fame. I just want to win." -Nelson Piquet

Pup
Pup
50
Joined: 08 May 2008, 17:45

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

GitanesBlondes wrote:Another point I would make, is once Ecclestone is out of the picture, such a thing becomes much easier to do.
Provided you're willing to breach a contract. Everyone is signed up through 2020, so we won't hear about any breakaway plans until then.

Besides, the threat of a breakaway is already built into the current agreement. The teams and the FIA used to get diddly from CVC, and now the FIA is taking a $40m/yr payment and the teams are getting ⅔ of the revenue straight off the top. They didn't get that money by saying 'pretty please'.

beelsebob
85
Joined: 23 Mar 2011, 15:49
Location: Cupertino, California

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

GitanesBlondes wrote:
beelsebob wrote:
GitanesBlondes wrote:I honestly believe Todt should start a breakaway grand prix series with the teams so they would have the commercial rights in a new series. Split the pie 14 ways, 1 slice for the FIA and the remainder goes to each team in escalating increments based on constructor's standings. If there are only 11 teams, the 12th and 13th spots would be reinvested back into the sport. It's a shame the sport doesn't insulate itself from outside investors whose concern only extends to how much money they can siphon out.
Unfortunately, it wouldn't work like that. They need to get their money from somewhere – and guess where that is – Malone and Murdoch. If they do the equivalent of sticking their middle finger up at those two, their new series will never get off the ground.
I have to disagree with you on this.

Funding would not be an issue when one considers the sponsors many of the teams have
The teams have those sponsors exactly because it gets those sponsors on TV. This would not be true if Murdoch and Malone were against them.

User avatar
GitanesBlondes
26
Joined: 30 Jul 2013, 20:16

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

beelsebob wrote: The teams have those sponsors exactly because it gets those sponsors on TV. This would not be true if Murdoch and Malone were against them.
You have to think in terms of the global market.

Murdoch already lost the rights to F1 in the US market.
"I don't want to make friends with anybody. I don't give a sh*t for fame. I just want to win." -Nelson Piquet

Pup
Pup
50
Joined: 08 May 2008, 17:45

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

It's great that you think they should do this, but you've yet to mention either a how or a why.

F1 isn't what it was in 2008. I don't think most fans appreciate the quiet revolution of the '09 and '14 concorde agreements. Put simply, the incentives that existed for the teams to break away back then really don't exist anymore, while all of the problems of making such a series work are still exactly the same. The teams now have primary say over the regulations and they take the lion's share of F1's income - there's no real reason for them to go through the troubles of forming their own series.

beelsebob
85
Joined: 23 Mar 2011, 15:49
Location: Cupertino, California

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

GitanesBlondes wrote:
beelsebob wrote: The teams have those sponsors exactly because it gets those sponsors on TV. This would not be true if Murdoch and Malone were against them.
You have to think in terms of the global market.

Murdoch already lost the rights to F1 in the US market.
The US market for F1 is absolutely minuscule in comparison to the european and japanese markets. Cutting the UK out entirely (and anywhere else where murdoch has his finger in *any* pie, which is basically everywhere), is taking a massive proportion of the viewership out of the equation.

User avatar
GitanesBlondes
26
Joined: 30 Jul 2013, 20:16

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

Pup wrote:It's great that you think they should do this, but you've yet to mention either a how or a why.

F1 isn't what it was in 2008. I don't think most fans appreciate the quiet revolution of the '09 and '14 concorde agreements. Put simply, the incentives that existed for the teams to break away back then really don't exist anymore, while all of the problems of making such a series work are still exactly the same. The teams now have primary say over the regulations and they take the lion's share of F1's income - there's no real reason for them to go through the troubles of forming their own series.
The greatest why is because of the con job Mosley and Ecclestone pulled with the commercial rights.

The way I look at it, is that the Concorde only buys time. If you think for one second that the teams are ok with leaving billions on the table, you have another thing coming.
"I don't want to make friends with anybody. I don't give a sh*t for fame. I just want to win." -Nelson Piquet

User avatar
GitanesBlondes
26
Joined: 30 Jul 2013, 20:16

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

beelsebob wrote:
GitanesBlondes wrote:
beelsebob wrote: The teams have those sponsors exactly because it gets those sponsors on TV. This would not be true if Murdoch and Malone were against them.
You have to think in terms of the global market.

Murdoch already lost the rights to F1 in the US market.
The US market for F1 is absolutely minuscule in comparison to the european and japanese markets. Cutting the UK out entirely (and anywhere else where murdoch has his finger in *any* pie, which is basically everywhere), is taking a massive proportion of the viewership out of the equation.
However minuscule the US market is, it's the last great untapped market for F1.

Also you assume that Murdoch wouldn't be ok with a breakaway formula, but the way I look at it is that any broadcaster would salivate at the opportunity to not get locked into one-sided agreements from a purely financial perspective.
"I don't want to make friends with anybody. I don't give a sh*t for fame. I just want to win." -Nelson Piquet

beelsebob
85
Joined: 23 Mar 2011, 15:49
Location: Cupertino, California

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

GitanesBlondes wrote:
beelsebob wrote:The US market for F1 is absolutely minuscule in comparison to the european and japanese markets. Cutting the UK out entirely (and anywhere else where murdoch has his finger in *any* pie, which is basically everywhere), is taking a massive proportion of the viewership out of the equation.
However minuscule the US market is, it's the last great untapped market for F1.
That's the point – it's untapped. Thus, the sponsors don't give a crap about it. Sure, it means that the organisers will try to go after it so that the sponsors do give a crap, but just now – the sponsors don't give a crap
Also you assume that Murdoch wouldn't be ok with a breakaway formula, but the way I look at it is that any broadcaster would salivate at the opportunity to not get locked into one-sided agreements from a purely financial perspective.
Absolutely Murdoch wouldn't be okay with a breakaway formula – he'd much rather get locked into a one-sided agreement with himself than have to bother negotiating with the teams.

Moxie
5
Joined: 06 Oct 2013, 20:58

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

The issue of Murdoch vs. Malone, or breakaway series, or the American market, it all boils down to exposure. How many people do you know personally that are willing to pay extra money for access to watch F1. In my market, that is exactly what I must do because NBCSN is not included in any standard package from any of my local providers. If these guys actually cared about building an American market, they would actually give the uninitiated the chance to see the sport. As previously mentioned, any breakaway series will have that much more difficulty with exposure if they tick off the worlds to largest media moguls.

Pup
Pup
50
Joined: 08 May 2008, 17:45

Re: Potential fight brewing over F1 (Malone v. Murdoch)

Post

GitanesBlondes wrote:If you think for one second that the teams are ok with leaving billions on the table, you have another thing coming.
I don't mean to beat a dead horse, but if the reports about the terms of the new concorde are to be believed, the teams should get an estimated $1 billion+ per year from CVC. CVC's own cut, after expenses, will probably be a bit over $300 million. The FIA will get $40 million from CVC and another $25 million in fees from the teams and drivers.

People still seem to think of the sport as it was before FOTA and Todt. Bernie got his bottom spanked hard in the last two concorde negotiations. Real hard.

So, the teams aren't going to break out just for a cut of that $300M. Not when they consider the costs and hassle of starting up and running their own series. It wouldn't make any sense. Just getting someone to run the sport for them would probably cost most of that. Not to mention the decreased income they'd get from having to negotiate new contracts with every venue and media outlet. No one would pay a startup sport the same fees. A puny 10% drop in fees and another 10% cut for a promotions agency, and they've lost that $300M already.

So yeah. No one likes Bernie or Max - I certainly don't. It's been fun bitching about them. But Max is gone and discredited and creepy, and Bernie is probably headed to jail, and the teams now get most of the money that Bernie once did, and there's no Max anymore twisting rules left and right every year and waging vendettas.

So it's over - we had a good 15 years of whining about those two, but now they're gone and hey, the teams won! It's just that they did it quietly at the negotiating table, with guys like Whitmarsh and Todt, instead of heading off with some dramatic rebellion, a la Ron and Max.

And so no one paid attention - but it happened nonetheless.

Post Reply