Formula One subject of takeover talks by Rupert Murdoch and Carlos Slim

News Corp in talks to make joint bid for one of few sports where it has no foothold with Mexican magnate Carlos Slim

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Ben Quinn, Mark Sweney and Dominic Rushe in New York
guardian.co.uk, Tuesday 19 April 2011 22.15 BST
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Rupert Murdoch is said to be in talks to make a bid for Formula One with 'world's wealthiest man' Carlos Slim. Photograph: Lucas Jackson/REUTERS
Rupert Murdoch's News Corp is in talks with Carlos Slim, said to be the world's richest man, about making a joint bid for the control of Formula One motor racing – one of the few major commercial sports in which it has yet to gain a foothold.

The bid was, according to Sky News, in the early stages, with News Corp in talks about forming a consortium that would include the Mexican billionaire.

It would also be the first time that the global media group, which currently owns the rights to most live Premier League football, had taken over an entire sport and could be a major blow for the BBC.

The BBC counts F1 as the last major sport – unprotected by legislation governing its broadcast – over which it has sole broadcasting rights in the UK.

It secured the television rights to show Formula One in the UK from the 2009 season as part of a five-year deal covering all platforms and can broadcast F1 on the BBC Sport website as well as on TV and radio. However, senior managers have questioned whether the £40m a year cost of the contract is worth it at a time the BBC needs to make savings.

A spokesperson for News Corp declined to comment on what she described as "rumour and speculation".

However, a source with knowledge of the discussions has confirmed to the Guardian that News Corp was considering options regarding F1. "News Corp going into this transaction now is premature. They are thinking about F1 and options they could take but that is all it is at this stage," the source said.

The Concorde Agreement between F1's governing body and the teams, which governs the distribution of commercial revenues from the sport expires at the end of next year. "They [News Corp] will do nothing until after the next Concorde meeting – there is no way to possibly value or plan until after that," the source added.

News Corp already has its hands full with a very real attempt to take over the broadcaster BSkyB. The path for its proposed £8bn purchase of the 61% of BSkyB it does not already own was cleared in March when the culture secretary, Jeremy Hunt, approved News Corp's plan to separate off Sky News.

F1's current majority stakeholder, the private equity group CVC Capital Partners, was reported to be unaware of News Corp's interest, according to Sky News, which said there was no contact between them.

Aside from CVC's holdings, the ownership of F1 is held by a mosaic of different, smaller companies.

JP Morgan, the Wall Street bank which was a former F1 shareholder, was reported to be advising News Corp about the bid and said that taking part in a consortium was one of several options that News Corp is examining in relation to motor racing.

Mark Kleinman, Sky's business editor, said he had been told that the bid was at "an embryonic stage".

He added that James Murdoch, News Corp's deputy chief operating officer, was involved in the company's discussions with prospective partners. "The company is kicking the tyres, as you would expect, given that there may be a serious business opportunity to examine in relation to F1," Kleinman quoted a person close to the sport as saying yesterday.

"It has been approached by a number of potential co-investors and is thinking about its options but there is a very real chance that it will come to nothing."

CVC Capital Partners, which paid more than $2.5bn to gain control of F1 in 2005, declined to comment.

Any bid involving News Corp would face calls for regulatory scrutiny, because of rights issues involved and the political heat that surrounds the media firm.

A source told the Guardian that when CVC gained control of F1, European regulators "looked extremely hard" at the deal and he believes that given News Corporation's control of rights and sports there could be regulatory hurdles.

Also, both the FIA, F1's governing body, and its chief executive, Bernie Ecclestone, are considered, pretty much, to have veto rights on new owners.

"Unless any bidder – be it News Corp, its partners or a rival – is welcomed by Bernie nothing is happening," said the source.

News Corp is already facing investigations over its takeover of the remaining shares in BSkyB as well as the ongoing probe into its newspapers involvement in the illegal phone hacking scandal.

As well as regulatory scrutiny, a takeover might also face stiff opposition from some in the car industry who have been in favour of it remaining a free-to-air television event because of the large audiences it delivers for each race.

In the meantime, CVC faces issues of its own. The British entrepreneur billionaire Bernie Ecclestone has been questioned by German authorities about an alleged multi-million pound bribery scandal involving the sale to CVC. Ecclestone is not the subject of the investigation and is co-operating with the authorities.

Officials are trying to establish who paid about $50m (£33m) to Gerhard Gribkowsky, a former banker with state-owned BayernLB who oversaw F1's sale to CVC in 2006; they are believed to be planning to question CVC executives. Gribkowsky was arrested in January.

F1 would be a small investment for Slim. Last month, the 71-year-old was named the world's richest man by Forbes magazine – worth $79bn, most of which is wrapped up in América Móvil, Latin America's largest mobile phone company.