Formula 1 prepares for US broadcasting rights bidding war
Maffei says "we have lots of interest"
ESPN better be prepared to open the coffers — F1 is ready to seek maximum dollars for the US broadcasting rights.
Greg Maffei, the president, and CEO of Formula 1’s parent company Liberty Media told CNBC that “we have a lot of interest” and several broadcasters are in the mix. “And it’s likely to be at a much better price for us that’s hopefully still good for our broadcast partners too.”
According to some sources, Formula 1 has been seeking upward of $75 million per year for the US media rights. F1 has said that it wants the US rights to be more in line with international soccer rights — ESPN pays $175m for La Liga and $40m for Bundesliga.
ESPN replaced NBC as the US broadcaster of Formula 1 in 2018, and in 2019 extended for three years. That deal ends this year.
ESPN made it clear they wanted to extend that partnership beyond 2022.
From 2013 to 2018, NBC paid a microscopic $4 million per year to broadcast Formula 1.
NBC even had an agreement in place to pay $40 million to continue broadcasting Formula 1 for seven years, beginning in 2018 but put the brakes on the offer when the sport announced its plan to stream races online via F1TV.
A Look at the Numbers
In 2017, the last year NBC had the broadcast rights, the average number of viewers was 538,114 for the season.
Since ESPN took over the US broadcast distribution here’s a look at the yearly averages:
2018 - 547,722 viewers
2019 - 672,000 viewers
2020 - 608,000 viewers
The 2021 Formula 1 season averaged 934,000 viewers on ESPN. Through two races this season, Formula 1 is averaging 1.4 million viewers on ESPN, a 47% increase.
Formula One Group pocketed $787 million during Q4 2021, a 62.3% increase year-over-year.
In September, Reed Hastings, CEO of Netflix, said they would consider bidding on the broadcasting rights for Formula 1. With the success of Drive to Survive, especially in the USA, it seems like that would be a natural fit.
You can’t discount a Disney-backed ESPN from putting in a hefty bid, although right now it seems like they might be the least likely candidate. ESPN has a sweetheart of a deal, too. They were in the right place at the right time when NBC backed off the series and ESPN hasn’t paid a dime to broadcast in the United States.
Let’s not forget what Amazon is doing in the space either. They are working with the MLB to carry live games. There are rumors they would make a bid for the Olympics.
And the content game wouldn’t be complete if we didn’t talk about Apple. Starting this month, two MLB games will air every Friday night exclusively on Apple TV+. Apple reportedly paid $85 million for the rights to just two games per week.
Other potential players in the space would be YouTube, Disney+, or Disney owned-Hulu although there’s been zero indication — at least publicly — that they are involved in a bid. While these are purely speculative, the thought process here is that Maffei has said in the past he wanted to explore “large streaming platforms” and these would be some of the biggest.
If I was a betting man, I’d say it’s likely Netflix that makes the plunge to piggyback off of the Drive to Survive success and jump into live sports — something that keeps viewers coming back over and over again.
However, given the rising popularity of the sport in the US, all the broadcasters would be ready to bid for the new deal. ESPN, which already has an edge with Liberty Media wouldn’t hold back on making something happen. Amazon’s already involved in F1 and with various teams via AWS, they’re working on live sports deals to help revive the floundering MLB. I would fully expect Amazon Prime to make a hefty offer to bolster its live sports offering while taking advantage of the popularity its biggest competitor, Netflix, is working so hard to build.