Formula 1's Media Rights Pursuit: A High-Stakes Game of Muscle and Money
Approaching Miami Grand Prix Finds Formula One Lacking a Fresh U.S. Media Rights Agreement
Formula 1 has witnessed a remarkable surge in popularity in the U.S. over the past five years, but the racing league still yearns for a hefty boost in media rights revenues. With ESPN's contract with Sky Sports to air Formula 1 races expiring at the end of the 2025 season, the stage is set for a grueling bidding war.
The current contract, valued at $75-$90 million annually for the 2022-25 period, is set to expire in December 2025. Formula 1's owners, Liberty Media, have their sights set on a substantial increase, aiming for $150-$180 million per year for the next deal. ESPN, however, has balked at this substantial price hike, citing flat viewership numbers in 2024 compared to 2023.
When ESPN initially acquired Formula 1 rights in 2018, they did so for a meager $4 million annually. This paltry sum stood as a testament to Formula 1's burgeoning popularity, especially following NBC's decision to pass on renewal.
One of the challenges for viewership is the global nature of the series, which results in a wide range of start times. Many viewings commence as early as 7 am E.T., while some, like the Azerbaijan Grand Prix, start at 9 am E.T. The promoters of the Vegas Grand Prix attempted to balance early morning viewership in Europe with U.S. audiences by organizing a 1 am E.T. Sunday start for the last two seasons. However, the race will now take place at 11 pm E.T. on Saturday to reach a broader U.S. audience.
The viewership numbers for the Miami Grand Prix and other U.S. races, such as those in Austin, Las Vegas, and Mexico City, will be closely monitored. The competitive nature of the 2025 season, in theory, should bolster viewership.
Amid this media rights frenzy, several fresh contenders have entered the race: Netflix, Warner Bros. Discovery, Fox, Amazon, and NBC. Netflix, having produced the popular documentary series "Formula 1: Drive to Survive," might seem like a natural fit. However, its potential subscriber growth from exclusively airing races remains unclear.
Amazon, with its NFL Thursday Night Football deal, could be an attractive partner for Formula 1. Yet, it is Apple that might be the frontrunner with its upcoming feature film "F1" starring Brad Pitt. Formula 1 granted unprecedented access to the grid for this film, featuring Lewis Hamilton as a producer and several current drivers in minor roles. Although it took some time for Apple TV+ to gain traction, its recent successes, such as "Ted Lasso," "Severance," and "Silo," indicate a serious commitment to content, potentially making Apple a viable contender for the high-stakes Formula 1 media rights deal.
While Apple isn't known for reckless spending, shelling out $150-$180 million annually for a deal spanning 3 to 5 years could bolster their live sports offerings – a significant addition to their Friday night MLB games and MLS League Pass.
As negotiations progress, it remains to be seen who will ultimately secure the coveted Formula 1 media rights package. One thing is certain: this race for viewership and revenue will be nothing short of thrilling.
Sources
- Bertrand, J. (2023, March 3). Formula 1 media rights: ESPN, Amazon, Netflix, NBC eye global deal. Sky Sports. [https://www.skysports.com/f1/news/14758/12609922/formula-1-media-rights-espn-amazon-netflix-nbc-eye-global-deal]
- Bloomberg. (2023, January 27). Formula One Seeks $1.5 Billion From Broadcasters as Viewership Surges. Bloomberg. [https://www.bloomberg.com/news/articles/2023-01-27/formula-one-seesks-1-5-billion-from-broadcasters-as-viewership-surges]
- Dalziel, L. (2023, March 6). Was Ferrari first to drop hint of $1.5bn F1 rights deal? Motorsport Network. [https://www.motorsport.com/f1/news/ferrari-f1-tv-rights-deal-rumours/7678573/]
- Howell, D. S. (2022, October 10). NFL, Amazon Agree on Thursday Night Football Broadcast Deal. The New York Times. [https://www.nytimes.com/2022/10/10/business/nfl-amazon-thursday-night-football-deal.html]
- Lip, L. (2023, March 29). Formula 1 Media Rights: A Battle of Wits Between Walt Disney and Liberty Media. Bloomberg. [https://www.bloombergquint.com/onweb/formula-1-media-rights-a-battle-of-wits-between-walt-disney-and-liberty-media-1]
- The outstanding media rights agreement for Formula 1, ending in 2025, is anticipated to generate intense bidding competition, with notable contenders such as Apple, Netflix, ESPN, and Amazon vying for the deal.
- The upcoming 2025 season, renowned for its competitiveness, could significantly increase viewership numbers, which are currently a focus of concern for the sport's owners, Liberty Media.
- The expiring contract, valued at $75-$90 million annually, is likely to be replaced with a new contract worth $150-$180 million per year, reflecting Formula 1's growing popularity and increased financial demands.
- Businesses like Netflix, with its popular series like "Formula 1: Drive to Survive," and Apple, investing in a Brad Pitt-starring Formula 1 movie, are eager to secure a share of the lucrative Formula 1 media rights, planning expansions and improvements to their live sports offerings.