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Friday, August 24, 2012

Sobering thoughts on the future of BBC Free-to-Air F1 TV coverage

As you may know, I've spent much of this season (and last) moaning about the loss of free-to-air F1 and making all kinds of hair-pulling, frustrated, and futile statements about how the loss of "we" the F1 fan who watches most of the races on the telly and goes to one GP every (or every other) year will lead to a reduction in the level of sponsorship money enjoyed by the teams and the circuits.  In my wildest moments I may have even suggested that the impact of Subscription TV on the sport might bring it back to the stone age   days prior to the BernieMax commercialisation of the sport and the first Concorde Agreement.

I felt justified in that assertion, particularly given the fact that Bernie had always stated that free-to-air broadcasting was a fundamental requirement of the Sport.

I then read Kate Walker on ESPN F1 who writes an article entitled "Is TV killing Formula One?" and, like me, she's making the point that Sky just are not garnering the viewers that free-to-air does.  Her view is as populist as my own and as emotionally driven, as is evident from her conclusion:

"Fans matter. It may not feel like it at times, but every pair of eyeballs watching a TV broadcast of a race is helping the teams on screen pick up sponsors. Without the fans, the sponsors turn away. Without the sponsors, the teams can't afford to race. It sounds simple, because it is".

Unfortunately it would seem that we are wrong: The economics of the Sport in its current guise can do without 75% of us.  We are expendable, unnecessary, defunct, superfluous, (in short) REDUNDANT.

In seeking permission from Christian Sylt to reprint his article "Why business is the real engine which powers F1" I asked him for his expert opinion on this question which is one that is very close to my heart and the heart of, I think, the vast majority of British F1 fans (well 75% of them anyway!).  His considered response was devastating:

"In fact, the BBC/Sky sharing deal should not dramatically impact F1's overall viewing figures for two reasons. Firstly, as I wrote in the article below, although the BBC's figures are down slightly, Sky is offsetting a lot of the shortfall. This is just race coverage and doesn't even take into account the increased amount of footage that Sky is broadcasting outside the Grands Prix which gives a total of three times the number of hours screened by the BBC in 2011.

The second reason is that the number of viewers being lost by the BBC is in the single digit millions which couldn't possibly have a significant impact on F1's 515m total audience. If multiple broadcasters lost this number of viewers then it could start to have an effect but there is no evidence that this is happening. In contrast, a similar sharing deal was signed in Italy this year and you can bet your bottom dollar that if it was detrimental to F1's finances this would not have been done. Even if F1 ends up with a net shortfall of viewers from the deal (it would be single digit millions as I mention above) it would still be beneficial overall since it involves a significant increase in the fee paid. Hope this explanation helps and feel free to quote from it."

I have to say I challenged him on it (silly me - I didn't really want the answer) saying:

"Sorry to pick your brains further but your response to my question re Sky gives me the impression that you do not hold the opinion that Sky will take full TV coverage over at the end of the current deal, removing any live coverage of the sport from free-to-air.  I know Sky don't require the viewing numbers that free-to-air TV does given their dual income stream but I would worry that the grass roots of the sport, who couldn't afford Sky would switch off if all that was being provided was highlights.  I know Britain, for instance, only provides 1 - 2 percent of the global audience but it might well operate as a testing ground for Bernie with wider global implications into the future...This looks like the beginning of the end and I wonder whether an exclusive deal is in the pipeline which will create an alternate revenue stream but reduce sponsorship exposure.

In my long-winded way I'm wondering whether F1 could survive in its current form on revenue from Satellite channels which broadcast the sport to 20/25% of the current global free-to-air market".

to which he replied:

"I take your point about Sky in that it is destined to reduce the TV audience in a crucial market since the UK is F1's traditional heartland. However, even if this reduces sponsorship income for the teams (it would only be a tiny reduction since the drop in viewers is very small as I pointed out in my previous email to you) they will make this up through their share in F1's profits which should increase due to the higher fee paid by Sky. The other point to make is that although the UK is F1's traditional heartland, the sport is looking to markets such as China and India for future fans. Whether this proves to be a successful strategy remains to be seen".

In the global scheme of things we BBC free-to-air fans are the equivalent of a puddle compared to the Chinese and Indian oceans; if we dry out nobody will notice (or care). Sobering thought.