News Corp Mulls bid to aquire Formula One motor racing
04-19-2011, 03:42 PM
#1
Rennlist Member
Thread Starter
Join Date: Apr 2007
Location: New Jersey
Posts: 457
Likes: 0
Received 0 Likes
on
0 Posts
News Corp Mulls bid to aquire Formula One motor racing
From SkyNews: News Corporation, the global media group, is in the early stages of talks about forming a consortium that would seek to acquire control of Formula One (F1) motor racing, I have learned.
News Corp has been in preliminary talks in recent weeks with people connected to at least one of F1’s big car manufacturers, and with Carlos Slim, the Mexican billionaire who is the world’s richest man, about working together on a prospective takeover of F1. JP Morgan, the Wall Street bank (and a former F1 shareholder), is advising News Corp on the situation, which is at an embryonic stage, I’m told.
Participating in a consortium that would buy F1 is only one of several options that News Corp is examining in relation to the sport, which may come up for sale during the next 18 months.
I should say for the sake of clarity that there is a good chance that News Corp’s deliberations and talks with outside partners will not ultimately lead to a bid given the complexity of a deal and other competing claims on the media company’s finances (likely to include a renewed bid for the rest of BSkyB that it doesn’t currently own). In the context of other situations that it is looking at, News Corp's interest in F1 could quickly fade.
It’s also worth saying that F1’s current owner, the private equity group CVC Capital Partners, is understood to be unaware of News Corp’s potential interest and that there has so far been no contact between them.
I’m also told that News Corp could decide not to acquire a direct stake in F1’s owner but instead attempt in future to buy the rights to broadcast the sport across its TV platforms.
James Murdoch, News Corp’s deputy chief operating officer (and the chairman of BSkyB), has had a long-standing interest in F1, and is involved in the company’s discussions with prospective partners.
(If all this sounds rather undefined, that’s because things are at such an early stage. The only option that appears to be off the table, according to my sources, is a solo bid for F1 by News Corp.)
“The company is kicking the tyres, as you would expect, given that there may be a serious business opportunity to examine in relation to F1,” a person close to the sport told me this evening. “It has been approached by a number of potential co-investors and is thinking about its options but there is a very real chance that it will come to nothing.”
I should make the usual point given that I’m reporting about News Corp: the company owns about 39 per cent of BSkyB, the owner of Sky News. And, of course (if you needed reminding), News Corp is in the process of trying to buy the majority of shares in BSkyB that it doesn’t currently own, a move which is awaiting the approval (or otherwise) of the Government.
Slim’s prospective interest in F1 is not a surprise given that he already sponsors the Swiss Sauber team and its rookie driver, his compatriot Sergio Perez. According to Forbes magazine’s poll of the world’s wealthiest people, the Mexican billionaire is worth $74bn, meaning that he would have easily enough firepower to help News Corp finance an offer.
News Corp’s potential interest in acquiring F1 in conjunction with at least one other investor is interesting for a number of reasons.
For a start, it could have a major impact on the broadcasting of the world’s most glamorous sport, which has had a poor track record in terms of building large audiences on pay-TV platforms.
Major car manufacturers (the likes of Ferrari, Mercedes and Renault) and the multinational companies which sponsor F1 have historically pushed for it to remain a principally free-to-air TV event because of the vast audiences it guarantees for each race in the F1 calendar. Grands Prix are currently shown in the UK on the BBC, whose deal expires in 2013.
Analysts believe that any move by News Corp to acquire a shareholding in F1 would be likely to see it retaining free-to-air coverage, or combining it with some form of pay proposition.
News Corp’s exploration of ways in which it could be a part-owner of F1 while exploiting its worldwide appeal reflects the company’s interest in accessing the one global sports franchise that has so far eluded it.
International viewing figures for F1 have broadly declined in recent years, particularly among the demographic of young men that is of greatest interest to TV advertisers. I’m told the company believes partial ownership of F1 could help it accelerate the delivery of new services in a bid to widen the sport’s audience.
If News Corp was ultimately to be successful as part of a consortium buying F1, it would represent an escalation of its strategy of owning premium sports content. Sports assets it has previously owned include the LA Dodgers baseball team and the rugby Super League in Australia. BSkyB, the UK pay-TV operation, failed with an attempt to buy Manchester United in 1998.
It’s worth mentioning that back in 2002, News Corp was reported by UK newspapers to have been interested in taking a stake in F1 after the implosion of Kirch, the German media empire which owed News Corp in the region of £1bn.
Nothing came of that reported interest. If it does formally decide to revive it, the New York-based media group would have to bear in mind a number of factors likely to influence the outcome of any deal, according to people close to the sport.
1. I have it on good authority that while News Corp’s interest in formulating an offer for F1 is genuine, its conversations with potential partners such as Slim, are at an early stage, and the company has “not yet decided whether to get serious”. It has not made a formal approach to F1’s owners.
2. CVC Capital Partners, the private equity firm which owns F1, has not yet put the sport up for sale.
As those who follow the business of F1 will know, CVC bought the sport’s commercial rights-holder in 2005 and 2006 from a group of three banks (including JP Morgan) and Bambino Holdings, the family trust of the F1 supremo Bernie Ecclestone, who is now the sport’s chief executive.
Private equity firms typically hold their investments for between three and seven years, so we are now well into the window of when CVC might be expected to consider its options for the business.
That said, CVC has not yet appointed external advisers to handle a sale, and Ecclestone recently told Pitpass.com, an F1 news website, that although “people are knocking at their door all the time, CVC is not looking for any exit over the next two or three years”.
3. It’s difficult to know exactly how much it would cost to buy F1 because the sport’s value is tied so intrinsically to the length and shape of the commitment of the participating manufacturers, international broadcast deals and so on.
The current deal (known as the Concorde Agreement) between F1’s governing body (the FIA) and the teams, which governs the distribution of commercial revenues from the sport expires at the end of next year. Some of the teams are pressing for an imminent formal opening to negotiations about the next Concorde deal, which might involve them seeking a larger share of the sport’s revenues.
CVC paid north of $2.5bn to gain control of F1 in 2005-06 (it bought the shares in several tranches), although its value is likely to differ today.
4. It isn’t clear how News Corp would finance an offer for F1 given that it would need to find more than the £7.5bn it offered last year to fund a full takeover of BSkyB. The financial assistance of a partner to buy F1 could prove to be helpful in that respect.
5. The investigation being conducted by a German prosecutor into a $50m kickback allegedly paid to Gerhard Gribkowsky, a banker who helped facilitate the sale of F1 to CVC, may make it harder to sell F1 until the matter is resolved.
As I reported at the weekend, the Munich state prosecutor is trying to progress the case before she leaves her role at the end of May. A parallel investigation commissioned by CVC and the board of Delta Topco (F1’s current parent company) is also continuing.
6. Even if it does decide to bid for F1 in conjunction with partners, News Corp, which is dealing with the fallout from various investigations into phone-hacking in the UK, would be unlikely to have the field to itself. A number of sovereign wealth funds from the Middle East are understood to be interested in buying F1, while other media companies and private equity firms would also assess whether to make an offer.
A News Corp spokesman told me tonight: “News Corp does not comment on speculation.”
reference link: http://blogs.news.sky.com/kleinman/P...7-1bdcdcbeb360
News Corp has been in preliminary talks in recent weeks with people connected to at least one of F1’s big car manufacturers, and with Carlos Slim, the Mexican billionaire who is the world’s richest man, about working together on a prospective takeover of F1. JP Morgan, the Wall Street bank (and a former F1 shareholder), is advising News Corp on the situation, which is at an embryonic stage, I’m told.
Participating in a consortium that would buy F1 is only one of several options that News Corp is examining in relation to the sport, which may come up for sale during the next 18 months.
I should say for the sake of clarity that there is a good chance that News Corp’s deliberations and talks with outside partners will not ultimately lead to a bid given the complexity of a deal and other competing claims on the media company’s finances (likely to include a renewed bid for the rest of BSkyB that it doesn’t currently own). In the context of other situations that it is looking at, News Corp's interest in F1 could quickly fade.
It’s also worth saying that F1’s current owner, the private equity group CVC Capital Partners, is understood to be unaware of News Corp’s potential interest and that there has so far been no contact between them.
I’m also told that News Corp could decide not to acquire a direct stake in F1’s owner but instead attempt in future to buy the rights to broadcast the sport across its TV platforms.
James Murdoch, News Corp’s deputy chief operating officer (and the chairman of BSkyB), has had a long-standing interest in F1, and is involved in the company’s discussions with prospective partners.
(If all this sounds rather undefined, that’s because things are at such an early stage. The only option that appears to be off the table, according to my sources, is a solo bid for F1 by News Corp.)
“The company is kicking the tyres, as you would expect, given that there may be a serious business opportunity to examine in relation to F1,” a person close to the sport told me this evening. “It has been approached by a number of potential co-investors and is thinking about its options but there is a very real chance that it will come to nothing.”
I should make the usual point given that I’m reporting about News Corp: the company owns about 39 per cent of BSkyB, the owner of Sky News. And, of course (if you needed reminding), News Corp is in the process of trying to buy the majority of shares in BSkyB that it doesn’t currently own, a move which is awaiting the approval (or otherwise) of the Government.
Slim’s prospective interest in F1 is not a surprise given that he already sponsors the Swiss Sauber team and its rookie driver, his compatriot Sergio Perez. According to Forbes magazine’s poll of the world’s wealthiest people, the Mexican billionaire is worth $74bn, meaning that he would have easily enough firepower to help News Corp finance an offer.
News Corp’s potential interest in acquiring F1 in conjunction with at least one other investor is interesting for a number of reasons.
For a start, it could have a major impact on the broadcasting of the world’s most glamorous sport, which has had a poor track record in terms of building large audiences on pay-TV platforms.
Major car manufacturers (the likes of Ferrari, Mercedes and Renault) and the multinational companies which sponsor F1 have historically pushed for it to remain a principally free-to-air TV event because of the vast audiences it guarantees for each race in the F1 calendar. Grands Prix are currently shown in the UK on the BBC, whose deal expires in 2013.
Analysts believe that any move by News Corp to acquire a shareholding in F1 would be likely to see it retaining free-to-air coverage, or combining it with some form of pay proposition.
News Corp’s exploration of ways in which it could be a part-owner of F1 while exploiting its worldwide appeal reflects the company’s interest in accessing the one global sports franchise that has so far eluded it.
International viewing figures for F1 have broadly declined in recent years, particularly among the demographic of young men that is of greatest interest to TV advertisers. I’m told the company believes partial ownership of F1 could help it accelerate the delivery of new services in a bid to widen the sport’s audience.
If News Corp was ultimately to be successful as part of a consortium buying F1, it would represent an escalation of its strategy of owning premium sports content. Sports assets it has previously owned include the LA Dodgers baseball team and the rugby Super League in Australia. BSkyB, the UK pay-TV operation, failed with an attempt to buy Manchester United in 1998.
It’s worth mentioning that back in 2002, News Corp was reported by UK newspapers to have been interested in taking a stake in F1 after the implosion of Kirch, the German media empire which owed News Corp in the region of £1bn.
Nothing came of that reported interest. If it does formally decide to revive it, the New York-based media group would have to bear in mind a number of factors likely to influence the outcome of any deal, according to people close to the sport.
1. I have it on good authority that while News Corp’s interest in formulating an offer for F1 is genuine, its conversations with potential partners such as Slim, are at an early stage, and the company has “not yet decided whether to get serious”. It has not made a formal approach to F1’s owners.
2. CVC Capital Partners, the private equity firm which owns F1, has not yet put the sport up for sale.
As those who follow the business of F1 will know, CVC bought the sport’s commercial rights-holder in 2005 and 2006 from a group of three banks (including JP Morgan) and Bambino Holdings, the family trust of the F1 supremo Bernie Ecclestone, who is now the sport’s chief executive.
Private equity firms typically hold their investments for between three and seven years, so we are now well into the window of when CVC might be expected to consider its options for the business.
That said, CVC has not yet appointed external advisers to handle a sale, and Ecclestone recently told Pitpass.com, an F1 news website, that although “people are knocking at their door all the time, CVC is not looking for any exit over the next two or three years”.
3. It’s difficult to know exactly how much it would cost to buy F1 because the sport’s value is tied so intrinsically to the length and shape of the commitment of the participating manufacturers, international broadcast deals and so on.
The current deal (known as the Concorde Agreement) between F1’s governing body (the FIA) and the teams, which governs the distribution of commercial revenues from the sport expires at the end of next year. Some of the teams are pressing for an imminent formal opening to negotiations about the next Concorde deal, which might involve them seeking a larger share of the sport’s revenues.
CVC paid north of $2.5bn to gain control of F1 in 2005-06 (it bought the shares in several tranches), although its value is likely to differ today.
4. It isn’t clear how News Corp would finance an offer for F1 given that it would need to find more than the £7.5bn it offered last year to fund a full takeover of BSkyB. The financial assistance of a partner to buy F1 could prove to be helpful in that respect.
5. The investigation being conducted by a German prosecutor into a $50m kickback allegedly paid to Gerhard Gribkowsky, a banker who helped facilitate the sale of F1 to CVC, may make it harder to sell F1 until the matter is resolved.
As I reported at the weekend, the Munich state prosecutor is trying to progress the case before she leaves her role at the end of May. A parallel investigation commissioned by CVC and the board of Delta Topco (F1’s current parent company) is also continuing.
6. Even if it does decide to bid for F1 in conjunction with partners, News Corp, which is dealing with the fallout from various investigations into phone-hacking in the UK, would be unlikely to have the field to itself. A number of sovereign wealth funds from the Middle East are understood to be interested in buying F1, while other media companies and private equity firms would also assess whether to make an offer.
A News Corp spokesman told me tonight: “News Corp does not comment on speculation.”
reference link: http://blogs.news.sky.com/kleinman/P...7-1bdcdcbeb360
04-19-2011, 04:55 PM
#3
Rennlist Member
Wow...that would be ... interesting
04-19-2011, 05:56 PM
#4
Addict
Rennlist Member
Rennlist Member
My money is on Bernie to screw all these guys over somehow. Seen it too many times with the best of 'em. I might double down on Bernie over the devil himself is I had to choose one.
04-20-2011, 07:12 AM
#5
Drifting
Join Date: Dec 2004
Location: Munich
Posts: 2,722
Likes: 0
Received 0 Likes
on
0 Posts
It all SOUNDS very plausible, but its rubbish. If the Dirty Digger were to get his hands on F1, he would want to make it a premium service, the fight with European Government regulators who want F1 to be Free-To-Air would take too much attention to be worth it.
The DD has a track record for turning free-service into pay per view/pay to read services.
This is an article launching hares for dogs to run at. Presently, News Corp, the DD's main print operation, is mired in an illegal wiretapping and police corruption scandal that is threatening more important things like buying out the minority interest of BSkyB, which would be the broadcaster involved.
As far as the F1/BE/BayernLB/State Prosecutor issue is concerned, thats just German politics. The rule of thumb in kick backs in that part of the world is 3% and you are supposed to dress it up decently, my guess is that Dr Gribkowsky will end up paying a large fine but will remain smiling. When does a "success fee" become a bribe?
R+C
The DD has a track record for turning free-service into pay per view/pay to read services.
This is an article launching hares for dogs to run at. Presently, News Corp, the DD's main print operation, is mired in an illegal wiretapping and police corruption scandal that is threatening more important things like buying out the minority interest of BSkyB, which would be the broadcaster involved.
As far as the F1/BE/BayernLB/State Prosecutor issue is concerned, thats just German politics. The rule of thumb in kick backs in that part of the world is 3% and you are supposed to dress it up decently, my guess is that Dr Gribkowsky will end up paying a large fine but will remain smiling. When does a "success fee" become a bribe?
R+C
04-20-2011, 09:36 AM
#6
Nordschleife Master
I thin there is more to this that what it seems. Think about it... all the recent hub-bub about Eccelstone's underhanded dealings with shady doods and now this pops up? Hmmm...sounds like "someone" might be trying to get rid of certain incriminating dealings...if you catch my drift.
C.
C.
04-20-2011, 10:01 AM
#7
Drifting
Join Date: Dec 2004
Location: Munich
Posts: 2,722
Likes: 0
Received 0 Likes
on
0 Posts
I thin there is more to this that what it seems. Think about it... all the recent hub-bub about Eccelstone's underhanded dealings with shady doods and now this pops up? Hmmm...sounds like "someone" might be trying to get rid of certain incriminating dealings...if you catch my drift.
C.
C.
However, this rumour has been denied - http://www.bbc.co.uk/news/business-13143365
BTW - does Fox/Sky have any credibility in the US?
Trending Topics
04-20-2011, 10:02 AM
#8
Rennlist Member
It all SOUNDS very plausible, but its rubbish. If the Dirty Digger were to get his hands on F1, he would want to make it a premium service, the fight with European Government regulators who want F1 to be Free-To-Air would take too much attention to be worth it.
The DD has a track record for turning free-service into pay per view/pay to read services.
This is an article launching hares for dogs to run at. Presently, News Corp, the DD's main print operation, is mired in an illegal wiretapping and police corruption scandal that is threatening more important things like buying out the minority interest of BSkyB, which would be the broadcaster involved.
As far as the F1/BE/BayernLB/State Prosecutor issue is concerned, thats just German politics. The rule of thumb in kick backs in that part of the world is 3% and you are supposed to dress it up decently, my guess is that Dr Gribkowsky will end up paying a large fine but will remain smiling. When does a "success fee" become a bribe?
R+C
The DD has a track record for turning free-service into pay per view/pay to read services.
This is an article launching hares for dogs to run at. Presently, News Corp, the DD's main print operation, is mired in an illegal wiretapping and police corruption scandal that is threatening more important things like buying out the minority interest of BSkyB, which would be the broadcaster involved.
As far as the F1/BE/BayernLB/State Prosecutor issue is concerned, thats just German politics. The rule of thumb in kick backs in that part of the world is 3% and you are supposed to dress it up decently, my guess is that Dr Gribkowsky will end up paying a large fine but will remain smiling. When does a "success fee" become a bribe?
R+C
04-20-2011, 10:19 AM
#9
Drifting
Join Date: Dec 2004
Location: Munich
Posts: 2,722
Likes: 0
Received 0 Likes
on
0 Posts
VR
F1 is Free-To-Air in almost all European jurisdictions. It IS a premium service but its FREE
On the BBC - the last race in Shanghai, it was broadcast, using DVB-T, DVB-C or DVS-S (your choice) in 1080p HD, with a choice of different commentaries and a second video channel showing the relative position of each car on the circuit. Only the DVB-C option involved any element of payment as the BBC coverage is bundled with otther pay channels.
There is something I don't understand - viewers in the US don't like Free-To-Air (smacks of socialism), but do want government subsidies for Race Circuits (smacks of socialism).
R+C
F1 is Free-To-Air in almost all European jurisdictions. It IS a premium service but its FREE
On the BBC - the last race in Shanghai, it was broadcast, using DVB-T, DVB-C or DVS-S (your choice) in 1080p HD, with a choice of different commentaries and a second video channel showing the relative position of each car on the circuit. Only the DVB-C option involved any element of payment as the BBC coverage is bundled with otther pay channels.
There is something I don't understand - viewers in the US don't like Free-To-Air (smacks of socialism), but do want government subsidies for Race Circuits (smacks of socialism).
R+C
04-20-2011, 10:29 AM
#10
Rennlist Member
We do??
News to us.
Also, like in the US, the basic feed is "free" there, but as I said, Bernie makes most of his money from charging for the really good stuff: picking which in car cameras you want to see, etc. This is big $$$.
I am still not sure how Murdoch's involvement would change things in any way.
04-20-2011, 11:09 AM
#12
Drifting
Join Date: Dec 2004
Location: Munich
Posts: 2,722
Likes: 0
Received 0 Likes
on
0 Posts
04-20-2011, 11:50 AM
#13
Rennlist Member
04-20-2011, 12:17 PM
#14
Drifting
Over the past 2 decades, Fox has become one of the "Big 4 prime time networks" (CBS, ABC, NBC and Fox). From a news perspective, most Americans watch the dedicated news channels rather than the Big 4, namely CNN, Fox News and MSNBC (joint venture between Microsoft and NBC). Fox News tends to be right leaning (conservative), MSNBC is left leaning (liberal) and CNN is more middle of the road (though many would argue it is left-leaning).
It seems the American culture is becoming more extreme at both ends of the spectrum, and elections of late are highyl polarized...
-B
It seems the American culture is becoming more extreme at both ends of the spectrum, and elections of late are highyl polarized...
-B
04-20-2011, 01:01 PM
#15
Drifting
Join Date: Dec 2004
Location: Munich
Posts: 2,722
Likes: 0
Received 0 Likes
on
0 Posts
Well there are millions of words written about how Murdoch changes things.
He has done so on three Continents.
Murdoch, Sky and News International have a history of introducing disruptive technology to achieve their ends.
BSkyB is blocked from proceeding with buying out the non-Murdoch shareholders, largely because of pending criminal corruption and phone tapping enquiries which also include possible police corruption. This goes right to the top of News International.
Murdoch is so pervasive that he UK based Sky Sat channels are not allowed to be received outside the UK. So great is his ability to change things.
Its very hard for Brits and Yanks to understand that the two most powerful media families in the world are both Australian - Murdoch and Packer.
If those two wanted to, they would have Americans playing cricket! And Packer has form, he changed cricket fundementally in the 80s.
Who can tell how Murdoch would change F1, but he would, and not nicely, the Sport's participants are not his type of people.
R+C
He has done so on three Continents.
Murdoch, Sky and News International have a history of introducing disruptive technology to achieve their ends.
BSkyB is blocked from proceeding with buying out the non-Murdoch shareholders, largely because of pending criminal corruption and phone tapping enquiries which also include possible police corruption. This goes right to the top of News International.
Murdoch is so pervasive that he UK based Sky Sat channels are not allowed to be received outside the UK. So great is his ability to change things.
Its very hard for Brits and Yanks to understand that the two most powerful media families in the world are both Australian - Murdoch and Packer.
If those two wanted to, they would have Americans playing cricket! And Packer has form, he changed cricket fundementally in the 80s.
Who can tell how Murdoch would change F1, but he would, and not nicely, the Sport's participants are not his type of people.
R+C