Murdoch F1 bid has logic but faces challenges
LONDON |
(Reuters) - A bid led by Rupert Murdoch's media group to take control of Formula One racing has a clear logic even if it would face many challenges to secure the backing of the sport's high-profile players.
A source familiar with the situation told Reuters late on Tuesday that News Corp (NWSA.O) had held early talks with Mexican billionaire Carlos Slim and at least one of the sport's big car manufacturers about forming a consortium to acquire control.
Slim is the world's richest man and already has a link to the sport through his eldest son while the Times newspaper, owned by Murdoch, speculated that the manufacturer was Ferrari, the most successful and glamorous team which has long said it wants a bigger share of motor sport revenues.
Murdoch has made sport a cornerstone of his pay-TV operations and it has also been a prime motivation for many of its deals.
However a bid for Formula One would be complicated by the fact sponsors and carmakers want the widest audience possible, meaning races would most likely need to be shown on free-to-air TV in the main markets and not solely on paid-for channels.
It has already shown F1 in certain of its markets.
News Corp, which has led the push into high definition and 3D TV in Britain through its BSkyB (BSY.L) business, could also argue that it has experience in reaching a younger audience and the ability to invest in innovation.
Formula One Administration Ltd, the rights-holding company until the end of last year, posted a 2 percent rise in 2010 turnover to $1.1 billion, accounts filed with Britain's Companies House show.
It boosted team prize payments by 21 percent to $658 million, as the previous year's "Concorde Agreement" which governs the commercial side of the sport took full effect.
A separate source familiar with the matter said net debt was between $1 billion and $2 billion.
Formula One supremo Bernie Ecclestone told the Times on Wednesday the story was "rubbish" although separate sources had previously told Reuters that current owner, private equity firm CVC, was conducting a strategic review and could sell.
"The attraction for News Corp is that this is a global sport, there is an audience around the world," senior Screen Digest analyst Tim Westcott told Reuters.
"There's a lot to it, in terms of the race itself but also qualifying and practice laps, so it takes up a lot of air time. But the drawback would be that it has already grown as an event so you would wonder how much more potential there is.
"It is already very well exploited."
News Corp, which owns a host of media titles such as the Wall Street Journal and pay-TV channels around the world, already owns half of the National Rugby League.
Britain's BSkyB, part owned by News Corp, also previously tried to buy English Premier League side Manchester United.
A deal would also not be new for Slim, who already has a relationship with the sport via the Telmex-backed Sauber team through his eldest son Carlos Slim Domit. Telmex (TELMEXL.MX) is the Slim-owned leading fixed line telecoms provider in Mexico.
Carlos Slim Domit is also a member of the 10-man senate of the FIA, the sport's governing body which has the right to veto any change of ownership that they feel may have a negative impact on the sport.
The same body also includes former FIA president Max Mosley, who won damages after the News Corp-owned News of the World published pictures of him participating in a sado-masochistic orgy in 2008.
CVC, News Corp, Slim and Ferrari all declined to comment.
(Additional reporting by Alan Baldwin, Georgina Prodhan, Quentin Webb and Claire Ruckin; Editing by David Cowell)
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