Monday, 1 August 2011

My thoughts on the BBC/Sky F1 deal


If you are an F1 fan then there was huge, earth shattering news at the weekend which you cannot have failed to miss. For those of you who aren't, a new TV deal has been agreed that will see coverage change dramatically from next year. The exact details of how it will all work are still unclear, but essentially Sky will broadcast all the races live. The BBC will show half the races in full and the other half as a highlights package.

The areas which still remain unclear are whether the 10 races the BBC are showing will be live or deferred coverage. It is also unknown what the highlights package means and if in fact the 10 full races will actually be extended highlights as well.

My initial reaction to the news was that of unmitigated anger that F1 could move to pay TV after years of being told that could never happen. In fact we were being told this could never happen by Bernie Ecclestone (the head of FOM and television rights holder) as recently as May!
"it isn't possible that F1 could go on to pay-TV, we wouldn't want to do that." - Bernie Ecclestone

The BBC have clearly been forced to make cutbacks and it seems that rather than drop F1 totally the BBC themselves have brought Sky in on the deal. After all, the BBC have the contract until 2013 so if they pulled out early they would have to pay huge penalty fees to FOM, clearly they were eager to find a solution to avoid that scenario. It would seem the proposal they came up with would leave the BBC paying roughly the same amount it would cost in cancellation fees but allow them to keep half the races. Seems like a good deal from their point of view! Let's have a quick look at the figures shall we?

The BBC currently pays £31m per year for the television rights, under the new agreement they will be paying just £15m with Sky contributing £25m. So the BBC save around half their current spend and depending on the cancellation clauses may even be saving more money than if they'd dropped F1 entirely!

So, why did the BBC turn to Sky for help rather than another terrestrial broadcaster? Simple really, ITV had already dropped F1 and have shown no interest in it since, however Channel 4 & Five have both been in talks with FOM to make an independent bid. They wouldn't be interested in a share with the BBC, they would just take the lot. Sky on the other hand aren't in a position to bid for F1 since there is a Concorde agreement in place which exists between all the teams and FOM that states

"the Commercial Rights Holder may not permit Formula 1 events to be shown only by pay television in a country with a significant audience if it would materially adversely affect audience reach in that country."

As Sky are a Pay TV provider, they could never be granted the F1 rights while this clause existed, this is pretty much the best deal Sky could hope for in order to get their foot in the door. Of course, once they are in the pressure will then be on the teams to have that clause removed when the Concorde agreement is renewed next year, paving the way for F1 to move to Sky permanently from 2018 when the new deal expires... assuming the BBC don't drop out of this new deal early as well which wouldn't be surprising.

So where does all this leave the fans? Well they are given a whole load of spin for the BBC, FOM and Sky, but we weren't born yesterday and being told things like:

"we believe this new deal offers the best outcome for licence-fee payers." - Ben Gallop (Head of BBC F1)

"It's good for Formula 1, for sure there are going to be a lot more people viewing, and a lot more opportunities for people to view, so from that point I'm very happy." Bernie Ecclestone (FOM)

"(the deal) is rather good news and should be positively welcomed by fans." - Eric Boullier (Lotus Renault team principle)


So let's take a closer look at viewer numbers shall we? Currently the BBC F1 programme is among the highest rating shows they have, regularly topping the list of viewing figures, not just for BBC content, but for the whole of television! Currently over 6 million people regularly tune in to a race on Sunday. Sky on the other hand only have a total of 10 million subscribers, and that's everyone with a Sky box, not just those who have Sky Sports!

I'd like to know how exactly the viewing figures are going to go up? Inevitably the BBC will lose a lot of casual F1 fans if it's not being shown regularly, there will also be a lot of die-hard fans who lose interest once they can't follow the full season live. With the cost of a Sky subscription they won't be winning many new customers either, a quick look at the costs involved:

A Sky subscription with Sky Sports will cost £470 a year, if you add HD coverage to that which is free on the BBC it's another £120 a year. A total of £600! Now considering they are only broadcasting half the races exclusively live, that means they are asking an F1 fan without Sky to pay £60 PER RACE! Of course they will "enjoy" the rest of the channels and programming Sky offer, but they've lived without it in the past and would only be subscribing for coverage of the F1.

To take to task the issue of viewing figures even further, since Sky took over the rights to Cricket, they have seen audience numbers fall through the floor. When Channel 4 was covering it the sport was watched and enjoyed by many hundreds of thousands, if not millions more viewers. This is exactly what we can expect to see happen with F1!

The sponsors will also have to make some tough choices now, the calculations they make are simple. It's a very basic spend per head. You take the number of people viewing combined with the projected airtime you will get and divide it by the money you are willing to spend. Clearly with viewing figures going from several million to potentially just a few hundred thousand they will have to justify their expenditure which may prove very difficult indeed. F1 can expect to lose some of its sponsors altogether and others to reduce their spend dramatically.

Of course the fans don't actually matter at the end of the day because it's the money that talks. We are often told how the fans are crucial to F1 and that they are the one who own the sport, blah, blah, blah.... But it doesn't mean anything. The only glimmer of hope for fans is that FOTA (Formula One Teams Association) decide they don't like the new deal because it will lose them too much money in sponsorship. However, that's unlikely to happen. No doubt that of the extra £9m that FOM are making from this new deal, a fair chunk of that (if not more) is going straight to the teams to keep them sweet. The general consensus so far seems to indicate that the teams don't care about the fans either as long as they have the money in the bank. So far nobody has made a stand for the fans of the sport, F1 has found itself on a slippery slope having reached a peak in the last couple of years on the BBC.

I have to say I am utterly perplexed at how the BBC who are a public service broadcaster can simply offload one of its flagship titles in this fashion when they already own the exclusive rights for another 2 years! Losing something like football to Sky was a different scenario, since the contract had expired and they simply couldn't afford to outbid them. Here, the BBC have actively sought out and made a deal with Sky in order to shirk their responsibilities. It is truly disgraceful and all parties involved BBC, FOM, FIA and FOTA (excluding Sky, who have simply jumped at a business opportunity) should be utterly ashamed.

It's made even worse given the current situation with Rupert Murdoch!

I'll leave you with one final comment from Bernie Ecclestone himself that really sums up the whole situation:

"Sky have been trying to buy the TV rights from us for a long time, but we won’t because they are not free-to-air broadcasters. With their viewing figures it would be almost impossible for teams to find sponsors. That would be suicidal.” - Bernie Ecclestone, May 2011


Quite right Bernie, R.I.P F1!

6 comments:

  1. Counterpoint - I'm personally glad the BBC has made this cost cut and will hopefully use the money saved on broader services than a single sport, or protect services it would otherwise have to have cut. The BBC is making tough choices across the whole range of services, because of pressure to reduce costs. I don't think a public service broadcaster can justify the cost associated with a single sport which rakes in billions in revenue, regardless of the UK fan-base. I appreciate, as a non-fan my point of view carries little weight, but I don't think the BBC should be ashamed at all.

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  2. Tony, the current cost of F1 to the BBC is fairly small. £31m per year divided by the 20 races in a season works out to be £1.5m per race, if you then divide that by 6m viewers it gives you 25p per viewer!

    To me that says value for money! 25p per race of my license fee compared to the £60 it will cost to pay Sky for the same race!

    Of course that's not just the race, that's all the practise sessions, qualifying, pre-race, race, post-race, radio, web content. That's a LOT of content they are producing for that!

    But it's not even about the money or the BBC deciding it can't afford it. It's the fact they did a deal with Sky which takes F1 to pay-view TV. If they had simply dropped the contract then another free to view station would have picked up the right and fans could all still enjoy every race live!

    As it is, the BBC in their selfish pursuit of keeping a prestigious title like F1 are actually hurting the fans and the people who pay the license fee. That's why they should be ashamed!

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  3. Thanks for the response, it's fair to say I still disagree, and I don't think there's much chance we'll meet in the middle. I do appreciate and understand your stance, I would be mightily pissed off if the BBC cancelled something I really enjoyed.

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  4. So you think it's fair and right that the BBC are actively depriving fans of the sport they love? If they had not sought a deal with Sky then Channel 4 or Five would be bidding for the whole season and keeping it all on freeview.

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  5. Also, the figures I quoted above don't include the fact the BBC sell their coverage to over 10 other countries including Australia. The money this generates can be offset against their production costs making it even cheaper to produce.

    F1 is a huge industry in the UK generating hundreds of millions of pounds into our economy and providing thousands of jobs. Key to this is the popularity of the sport and reducing the viewing figures from 6m to 500,000 on Sky will have a guaranteed impact on that in the longer term!

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