Why the BBC should NOT pay for F1 rights

Rumour has it that the BBC is considering letting its right to broadcast Formula 1 in the UK lapse after the 2013 season. Whilst this may be kite flying by the BBC in an attempt to get the price of any renewal lowered, there are several very good reasons why the BBC should not be the F1 broadcaster in the UK.

  1. The F1 commercial rights holder is a debt funded private equity owned business with an extremely aggressive ‘profit maximisation’ objective. It will always try to obtain the best commercial terms for the rights it holds, even if that bankrupts its partners in the process (see the fate of countless event promoters from A1 ring to Spa to Indianapolis).
  2.  F1 teams (and the rights holder) depend on sponsorship money as part of their business model. The BBC carries no advertising, so sponsors are unable to leverage their sponsorship investment in the UK though advertising linked to the televised F1 events. The UK is the only major market where this is the case.
  3.  In an open market a bidder who is able to ‘factor in’  advertising income SHOULD be able to bid more for the rights than one who obtains nothing from advertising. Therefore any time the BBC wins rights to something like F1 in a competitive marketplace it has, by definition, overpaid for those rights because it cannot recover anything from advertising.

So there you have it. All the bleating about people not liking ad breaks interrupting coverage, or references to ‘crown jewel’ sports is irrelevant.

On a purely commercial basis, the BBC cannot win TV rights. It can only win by overpaying.

If ITV bid £10m and the BBC bid £10m, the BBC would have overpaid because of its inability to fund any of the fee from advertising income.

They shouldn’t host the national lottery (a programme with no inherent artistic value) for exactly the same reason.

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  1. By the same argument, the BBC shouldn’t be broadcasting Wimbledon or any other sporting event. One could even extend that to encompass events such as the Olympics, which is effectively being subsidised by the tax payer.

    What I don’t see in your analysis is the returns to BBC for syndicating F1 commentary to third party broadcasts, of which there are many.

      • Chris D
      • June 20th, 2011

      Good point on the third party broadcast income. I suppose if I was being churlish I could say that ITV could factor that in too, but it’s is a good point and shows there are benefits to having F1 as well as disbenefits. .

  2. True, but as an F1 fan, I am being a bit biased here. I’d rather have my license fee pay for an ad-free broadcast of my favourite sport than have it pay for episodes of the Family Guy and other such BBC 3 gems .

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