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New Faces To Attract Crowds, TV Money To Follow

The new sport for broadcasters is spending; often borrowed, always huge. More is being spent, largely on content, sometimes technical tricks, by rich newcomers not around a decade ago and legacy rivals hoping to be around a decade from now. There will be winners and losers but fewer teams.

fireworksLiberty Media completed its acquisition last week of auto racing franchise holder Formula One (F1) and named as CEO 21st Century Fox vice chairman Chase Carey to replace long serving Bernie Ecclestone. None of this was particularly surprising. Liberty Media is a top-ranked cable and pay-TV operator principally owned by John Malone, who also holds a significant share of Discovery Communications. Chase Carey is a well-regarded TV guy who pushed the Murdoch clan into TV sports, spending US$1.5 billion for US football league NFL rights. Bernie Ecclestone has been around long enough to pivot F1 from a elite European brand to something more global.

F1 has challenges and opportunities, said Mr. Carey to the (UK) Telegraph (January 24), widely seen as old, literally and figuratively. “We’re not marketing the sport, we’re not enabling fans to connect with it on the platforms that are available today, our sponsorship relations are one-dimensional, the events feel old, the hospitality feels as if it’s at least 15 years old.” Also in-coming is former ESPN executive Sean Bratches as managing director.

There’s a plan. “We have 21 races; we should have 21 Super Bowls,” he said, quoted by the Guardian (January 24). “They should be week-long extravaganzas with entertainment and music, events that capture a whole city.” It’s likely there will be new race venues, possibly in the US. Traditional F1 venues - Monaco, Monza, Nürburgring - are “traditions” to be “maintained.” The German Grand Prix at Hockenheim was dropped for financial reasons. British Grand Prix venue Silverstone is considered at risk.

But it’s TV that matters most and that means digital. “We have zero people in marketing and we don’t have a connection on digital media. We have to do a better job of enabling fans to connect to our stars. In the last four or five years the sport really has not grown to its potential.”

In related sports media news, Discovery Communications and Sky, principally owned by 21st Century Fox, are deep into nasty press releases and, perhaps, negotiations over money. Sky in the UK and Germany carries several Discovery channels, notably the Eurosport bouquet, and wants to renegotiate the carriage fees. If more money isn’t agreed by month’s end Discovery appears ready to go elsewhere or, more likely, on its own. Discovery shareholder Mr. Malone is also a minority shareholder in UK TV broadcaster ITV. Convenient, yes?

"We have been overpaying Discovery for years and are not going to anymore,” said a Sky UK spokesperson, quoted by Reuters (January 25). The folks at Discovery UK are hardly backing down. "We believe Sky is using what we consider to be its dominant market position to further its own commercial interest over those of viewers and independent broadcasters,” said Discovery Networks UK and Ireland managing director Susanna Dinnage in a statement.

Negotiations between Sky Deutschland and Discovery Networks Deutschland for German carriage fees are a bit less strident, but only a bit. “At the moment, it’s probably at its most acute in the UK, but we’ll see what it means elsewhere over the coming days and weeks,” said Sky CEO Jeremy Darroch on an investors conference call last week.

Sky Deutschland, Sky Italia and Sky UK were “integrated” as Sky last year. 21st Century Fox, holding 39% of Sky, has bid for the rest. While some sit on the edge of their chairs for regulatory approvals, Sky is rolling out streaming video services in the UK next year, Germany, Austria and Italy thereafter. Sky Italia began offering channels via broadband with Telecom Italia in 2015.

Eurosport retained exclusive rights to Olympic Games from 2018 through 2024 in Germany after a sub-license bid from public TV broadcasters ARD and ZDF failed to meet the rights holder’s expectations last November. Eurosport also holds Bundesliga football rights after the 2017/2018 season. UK public broadcaster BBC pulled back Olympic rights in a sub-licensing deal with Discovery.

F1 free-to-air TV rights are scattered, largely, among national broadcasters. UK Channel 4 took over rights from the BBC in 2015, a deal that expires after the 2018 season. Races are seen on RTL in Germany, Viasat in Scandinavia, RAI in Italy, Canal+ in France and NBC in the US. Pay-TV rights are widely held by either Fox Sports or Sky.

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