Channel 4 has swooped to pick up the free-to-air TV rights to for the first time after a cash-strapped BBC moved to pull out of its deal three years early.
The broadcaster has struck a three-year deal with Formula One World Championship thought to be worth as much as £35m-per-year to air 10 races a season from 2016.
The TV rights are thought to have cost about £25m annually while television production, which will put out to pitch, will cost about £10m a year.
Channel 4, which beat rival ITV by making a pledge not to air advertising during live races, will also broadcast highlights of all 21 Grands Prix and qualifying sessions.
It replaces the BBC, which has drastically cut back its sports rights portfolio in a bid to contribute to finding £700m in savings across the corporation, which had signed a six-year deal to .
“I am sorry that the could not comply with their contract, but I am happy that we now have a broadcaster that can broadcast Formula One events without commercial intervals during the race,” said Bernie Ecclestone, chief executive of Formula One.
“I am confident that Channel 4 will achieve not only how the BBC carried out the broadcast in the past, but also with a new approach as the world and Formula One have moved on.”
The future of the BBC’s presenting and commentary team of Suzi Perry, Eddie Jordan and David Coulthard is now up in the air, with Channel 4 only saying there will be an announcement about its line-up in due course.
So too the lucrative production contract which will be put out to tender – the BBC produced its coverage with an in-house team.
“Formula One is one of the world’s biggest sporting events with huge appeal to British audiences,” said Channel 4 chief executive David Abraham. “I’m delighted to have agreed this exciting new partnership with Bernie Ecclestone to keep the sport on free-to-air television.”
Sir Martin Sorrell, whose WPP spends about $76bn (£49.6bn) on advertising annually, says that the move from the BBC to a commercial broadcaster will be a double-edged sword for sponsors and TV advertisers.
“I would say the move is neutral to positive,” said Sorrell, who is also a director of the holding company that owns the Formula One business. “There will be more opportunities for TV advertising, if not in the races, then around them. But if you are talking about sponsors, then it is neutral to negative because less audience [on Channel 4 than the BBC in general for programmes] means less coverage.”
Ecclestone has admitted that Formula One has lost viewers since moving into pay-TV – in the UK Sky airs all races, half exclusively, on a dedicated channel – while TV rights fees are reportedly up by more than 100% annually since the 2012 deal.
Under the terms of the racing teams’ contracts Formula One cannot be broadcast excusively on pay-TV in any country where such a deal would materially adversely affect audience reach in that country.
Steve Martin, global chief executive of agency M&C Saatchi sport and entertainment, said Formula One is getting predictable and tired, with Channel 4 offering a potential breath of fresh air for coverage.
“As a property, it is dominated by one or two drivers and teams if you are lucky,” said Martin, whose agency has represented a number of drivers and sponsors. “It needs a refresh. If Channel 4 are smart around it and care, like they were with the London 2012 Paralympics coverage, they will nuture it and make it a showcase property.”
Channel 4 is a surprise winner of the BBC contract, a number of reportslast week pointed to the deep-pocketed ITV as the most likely broadcaster to step in
“I don’t know what the terms are, but presumably Bernie made the decision and I’m sure he made an intelligent decision,” said Sorrell.
State-owned Channel 4, which is potentially facing the prospect of a £1bn government sell-off, said the cost of the deal would not affect the level of spend on UK original content that it airs in peak time.
Channel 4 spends about £600m annually on programming, with £430m of that on UK originated productions.
“Channel 4 and Formula One are the perfect partnership,” said Channel 4 chief creative officer Jay Hunt. “We’ve the same appetite for innovation and we’ll be demonstrating that to fans by becoming the first free-to-air commercial broadcaster to show the races ad free.”
Barbara Slater, the director of BBC Sport, said the decision to drop its Formula One coverage was “hugely disappointing and taken reluctantly”.
Slater said for next year laid down by Tony Hall, the corporation’s director general, in July.
“No director of sport wants to be responsible for reducing the amount of sport on BBC TV,” she said in a . “But the current financial position of the BBC means some tough and unwanted choices have to be made. There are no easy solutions, all of the options available would be unpopular with audiences. Any decision to have to stop broadcasting a particular sport or sporting event is hugely disappointing and taken reluctantly.”
Slater said dropping Formula One would make up a “significant chunk” of the £35m savings target.
Other measures to hit the target include amending the BBC’s deal for Open golf, a move to extended highlights that , and a deal with ITV to .
The BBC said that as part of its “exit agreement” it is extending its Formula One radio rights deal until 2021.
The corporation was the traditional home of Formula One for many years until the rights were bought by ITV in 1997.
Formula One remained on the commercial broadcaster until 2009 when it returned to the BBC after a 13-year break. ITV exercised a break clause to ditch the sport with two years of its deal remaining to free up cash for Champions League football rights.
The BBC has been shedding rights to save money implementing a strategy to focus on flagship events of national importance including the World Cup and Wimbledon.
The BBC will also have to negotiate with Discovery for the rights to sub-license the Olympics from 2022, after the US pay TV giant and Eurosport owner paid .
In January, the BBC for Premier League Highlights to ensure the future of Match of the Day.
The corporation has given up the TV rights to the Australian Open, which will be aired by Eurosport, and is rumoured to be set to end its 38-year association with the BDO World Darts Championship.
In August, Channel 4 in Whisper Films, the sports production company part-owned by Coulthard and BT presenter Jake Humphrey.