Formula One TV Rights: The Baby-Like Innocence of Bernie Ecclestone

Duncan ScottAnalyst IAugust 4, 2011

When F1 fans get angry about the sport their ire is quite often focused on Bernard Charles Ecclestone, known to everyone except his employees as Bernie.

So when it was announced that UK TV rights for the sport had been partially transferred from public broadcaster the BBC to subscription TV company Sky TV it was to be expected that much invective would be directed at Bernie.

But in this case, Bernie is an innocent man. The initiative for change did not come from Bernie, but from the BBC.


Those resident outside the UK may not be aware that every UK household is charged a tax called a 'Licence Fee' to support the BBC. That tax is currently £145 per year, and refusing to pay it means prosecution.

Effectively the BBC is a subscription channel with the judicial system making sure nobody can opt out.

In the straitened circumstances faced by the United Kingdom of Great Britain and Northern Ireland the government has frozen the licence fee for three years. In consequence the BBC has been looking around for ways to save a little cash, although it will still be the world's largest broadcaster and still receiving £3.5B annually from licence fee receipts.

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Management eyes at the corporation fell on the £31 million paid annually for the right to broadcast live Formula One races. Because there was a contract they could not just walk away from the deal, so they made an approach to Sky TV with the proposal that the broadcast rights be shared.

The Deal

A deal cooked up was for each broadcaster to show half of the races live. Bernie would doubtless have scoffed at such a notion, but there was a sweetener; Sky would put extra money in. The BBC would reduce their commitment to £15 million per year, and Sky would pay £25 million.

So at a stroke the value of UK TV rights to F1 had increased from £31M to £40M. Of course Bernie was not going to turn that down, and his long-standing belief that F1 should be free-to-air was thrown out of the window.

Impact On Fans

Because every UK household is obliged to pay the licence fee, F1 on BBC has effectively been free to all fans. Those, this writer included, for whom F1 has been the only BBC broadcast they watch will not get a rebate.

From 2012 onwards watching all F1 races live in the UK is going to be expensive.

It is difficult to give a figure for what Sky TV costs because existing subscribers can hold out for a deal at renewal time. But for a new customer a subscription package including the sports channels is likely to cost well in excess of £400 per year, plus the £145 licence fee that still has to be paid.

Who Is Happy With The Deal?

Sky TV, because they are adding another sport to their portfolio.

The BBC, because they will save £16 million per year.

Bernie and his numerous companies, because the income from UK TV rights will increase.

The teams, or most of them. They get a share of TV rights income based loosely on their championship standings at the end of the previous season.

Martin Brundle, star F1 pundit and commentator. Sky seem certain to line his pockets with gold.

Who Is Unhappy With The Deal?

The fans, because they've been shafted. So what's new?


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