F1’s New Owner, Liberty Media, to Expand the Iconic Brand
New F1 Chairman, Chase Carey, Vice Chairman of 21st Century Fox says changes are in store for Formula 1
Formula One Group’s new Chairman Chase Carey said Sunday in Singapore that Liberty Media’s purchase of the world’s #1 motorsport is not solely aimed at “taking the money”.
Note: John Malone’s huge media conglomerate recently agreed to acquire Delta Topco, F1’s parent company in a deal that values the sport at $8-B.
Liberty has placed 21st Century Fox Vice-Chairman Chase Carey, 61 anni, as Chairman alongside long-standing F1 Supremo Bernie Ecclestone, 84 anni, who continues as CEO.
The recent sale of F1 to Liberty Media (NYSE:LMCA) will lead to expanded race weekends, and many other digital offerings to boost the brand worldwide.
Chase Carey attended his 1st Grand Prix last weekend at Singapore. But, the word is that Mr. Cary has plans for changes. He wants to make the races “ bigger, broader and appeal to a much larger audience happening throughout the week.” Noting that Singapore took in over SG$150-M (US$109.5-M)for this season’s race week
Mr. Carey was appointed as F1’s Chairman 2 weeks ago as part of a planned takeover of the sport by American media investor Liberty Media. It has agreed to pay $4.4-B, and assume the debt ($8-B+) for the controlling stake, its bid awaits clearance from regulators to get the Green Light.
Unlike F1’s previous owner, the private equity firm CVC, who let CEO Bernie Ecclestone run the show, Liberty has signaled its intention to take an active role in the expanded development of F1.
Mr. Carey says that Liberty has long-term plans for the sport.
Liberty will market the sport, in telling the story of the stars and heroes and the incredible racing machines. Then strengthen it geographically. So there is growth possibility in every area of the sport.”
“Of course, profits are important, but realistically the primary goal of the business that I have been in has always been to build long-term value,” he said. “So the goal is not what can be achieved in the next 12 months, but where you are going to be in 3 to 5 years.
“That means the willingness to make investments. And I do think that Liberty, to its credit, has a history as a long-term shareholder. They are supportive and they know their business, as they have been in the media and entertainment space.
Liberty has some experience in sports management and has slotted F1 alongside its other investments in the sector. They include stakes in the Atlanta Braves and event promoter Live Nation, which Mr. Carey says is crucial to his plan to boost what is now and will be offered at F1 races worldwide
“Live Nation is really about building, first and foremost, the live experience at these races. These races are tremendous events, and in many ways one of the biggest events to occur in the city and country in which they occur, and I think there is an enormous opportunity to make that event much bigger, much broader and appeal to a much larger audience happening throughout the week.”
He added, “I think there is an enormous opportunity for us to really make these events something much bigger than they are today. They are great today, but I think we can take them to another level by adding all sorts of dimensions that are related to the sport and just related to entertaining people, exciting people and energizing people.”
The plan mirrors events held by electric race series Formula E, which is minority owned by broadcaster Discovery Communications and Liberty Media’s sister company Liberty Global (NASDAQ:LBTYB)
Formula E races are famous for their Music and Party-like atmosphere, which has helped to engage fans and is aimed at boosted its fortunes.
Last year F1’s profits hit $464-M on revenue of $1.7-B.
The iconic motor racing series revenues are driven by an annual television audience of 400-M, which fuels F1’s fees from broadcasters and sponsors. Together they comprise between 45 and 50% of revenues, this is what attracted Liberty to the enterprise.
“We were particularly attracted to F1 by the diverse revenue drivers,” says Mr. Carey. “Formula One is a Key player in the high-growth market for live premium sports rights. There is an increasing demand from broadcasters, advertisers and sponsors who want access to F1’s mass global live audiences and attractive demographics. Formula One’s March renewal with Sky (in Britain) was favorable compared to other renewals in the market and bodes well for Formula One’s media rights portfolio.”
At 21 races this year, F1 is close to its limit of 25 and adding any more requires consent from 3 of the Top Teams: Ferrari, Red Bull Racing and McLaren.
F1 is broadcast in 200 territories, which is 5 more than there are countries in the world, its TV coverage is saturated.
Liberty Media sees “the opportunity is to grow and develop the sport.”
Mr. Carey says he sees growth potential in new media.
“This sport, in many ways, is so ideally suited to any of these emerging technologies, whether it is in the gaming arena, the virtual reality arena; racing Sebastian Vettel and Lewis Hamilton. The technology around this sport is 2nd to none, and the interest in the capabilities of these cars is incredible. I think, as we can take advantage of that and develop all the extensions of it and all these ancillary businesses, again, it is not going to drive the business in the short term, I think they will all become an important part of the long-term growth of the business.”
Mr. Carey adds “the opportunity is to grow and develop the sport for the benefit of fans, the teams, partners and our shareholders by: increasing promotion and marketing of Formula 1 as a sport and brand; enhancing the distribution of content, especially in digital, currently a very small percentage of revenue; evolving the race calendar; establishing a broader range of commercial partnerships, including sponsorship’s; and leveraging Liberty’s expertise in live events and digital monetization to make our events bigger than ever.”
Explaining the possibility for expansion, he says, “There are multiple dimensions to developing the digital opportunities around Formula 1. There is the marketing potential of telling the Formula 1 Story, and it is a great story. You have got some of the most attractive stars in the world in the drivers, great teams, great brands, great technology. Taking advantage of that and making it accessible. Exciting that fanbase, that is a part of it. Using the data capabilities of digital media to figure out how you improve and continue to grow the sport and certainly the direct revenue opportunities.”
One thing for sure is John Malone, Liberty’s boss, will move aggressively get a return on his $4.4-B + investment.
I expect that as soon as the Green Light is lit for the takeover, Formula 1 will become a tracking stock for Liberty Media and the fans will given the opportunity to become stakeholders.
|NASDAQ:LMCA||29.33||20 September 2016||0.82||28.63||29.4||28.52||705,800|
|HeffX-LTN Analysis for LMCA:||Overall||Short||Intermediate||Long|
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|NASDAQ:LBTYB||35.37||20 September 2016||2.27||33.8||36.37||33.76||1,200|
|HeffX-LTN Analysis for LBTYB:||Overall||Short||Intermediate||Long|
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