Ferrari (NYSE:RACE) Buys into Liberty Media (NASDAQ:LMCA)

Ferrari (NYSE:RACE) Buys into Liberty Media (NASDAQ:LMCA)

Ferrari (NYSE:RACE) Buys into Liberty Media (NASDAQ:LMCA)

$RACE, $LMCA, $CMCSA

The acquisition of F1 by Liberty Media prompted changes when Bernie Ecclestone ankled his post as the Boss of the iconic motorsport racing series.

The team that has been there since the beginning, Ferrari, were the recipients of team payments above and beyond what other teams got in prize money. And Ferrari understands that its long-term commitment and continued commitment is Key to the success of the sport.

When Liberty Media acquired F1, it was keenly aware of the importance of Ferrari’s commitment to the series and as such, it is no surprise that they are the 1st team to divest its old position in F1 in favor of a new stock and cash offering that Liberty made to the teams as the Italian car company’s annual report says:

“as a consequence of the change of control, Ferrari exercised the options … and on 22 February 2017 received approximately $11.4 million in cash (including $2.7-M of previously undistributed dividends), 145 thousand Liberty Media Corporation shares and $9,110-M of Liberty Media exchangeable notes”.

Like they were more than 50 years ago, Ferrari is the 1st team to join up with Liberty Media’s new F1. The other teams have an option to buy into the program as well but Ferrari did it 1st.

Liberty Media is keen to expand F1, improve their fan base and financial return on investment as well as expand the US market. The US is the single biggest market for many of the teams and sponsors plastered on the side of their cars and is a huge market for Ferrari in particular.

The good news is that the US TV viewership increased last season to 13-M viewers with the Monaco Grand Prix the high-water mark. That’s a 15% increase for NBC Sports and some of that may have been born on the back of US Haas Team’s F1’s entry to the sport.

Another interesting point is that the US market has charged into the digital streaming portion of F1 at a rate of 10% which is the highest level in the world so it represents a good test lab for Liberty Media’s digital platform tests and monetization options for new media and distribution channels.

Notably, NBC Sports paying $3-M for the rights to F1 exclusively in the US and if there was a digital streaming option, would it be in conjunction with the NBC Sports digital online offerings or as a stand-alone of F1? We will soon know..

There is also the frame to consider as to why the US is the largest digital streaming market.

The fact is, most of the F1 races are happening when Americans are sleeping, I know this well because I cover all of them for HeffX-LTN. I am a dedicated fan, as are many of our readers.

The race times for F1 have always been Keyed to the UK prime-time audience, and the US has been an afterthought as far as live F1.

So, because of this start-time relationship, Americans watch the event a few hours later than live. This is a good and ready market and audience for a premier digital streaming product that offers media-rich content synchronized with timing and scoring.

So it is a reasonable to think that the digital streaming platform will be a joint effort between Liberty Media and NBC, a unit of Comcast Corp (NASDAQ:CMCSA). We wait, we see.

Stay tuned…

 

 

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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