We’ve been here before. And we’re going there again. Except, this time, things appear to be for the worse. Or, is it?
Of course, I’m talking about the Formula 1 rights announcement in July 2011 compared with the MotoGP rights announcement in May 2013. Yesterday, it was announced that BT Sport will be screening MotoGP exclusively live for the next five seasons. The feeling amongst MotoGP fans yesterday can be compared with the feelings of Formula 1 fans on July 29th, 2011. The circumstances behind both deals though, are significantly different. Regular readers of my blog will have seen me revisit the BBC and Sky deal on many occasions, most recently in March. BBC were needing to make cost cuts as a result of the licence fee being frozen, which in real money is a drop in income. As thus, in July 2011, BBC went to Sky asking if they wanted to share the F1 coverage with them. The benefit of that meant that BBC get to keep coverage, whilst cutting costs at the same time, and Sky gained in getting ten races exclusively live. BBC’s Formula 1 contract in 2011 was not due for renewal, as their original contract was set to last until the end of the 2013 season. If they had kept with Formula 1 on an exclusive basis, the rights negotiations between them and Formula One Management would have began in Winter 2012. BBC chose to enter the deal with Sky for Formula 1. Unlike the MotoGP deal, no other bids were invited, despite third parties clearly interested. There was one loser here: the fan, as now only half of Formula 1 races are live on terrestrial television.
In comparison, the current UK MotoGP deal was set to expire at the end of this season, meaning that as per any other broadcasting contract, the rights holder – in this case Dorna – would have sent the contract out to tender. BBC and Eurosport have already confirmed that they bidded unsuccessfully. I think it is fair to assume that their bids would have been slightly higher than previously to cover both of their interests. Neither of their bids (to form a combined bid as their bids would be in tandem) would have been significantly higher than before, though. It would not be in Eurosport’s interests to put in a high bid, I imagine their budget is fairly tight as it is for a channel of their nature. At the same time for reasons already explained, BBC would not be going significantly higher. MotoGP’s ratings have remained stable for many years at just over one million viewers per race, so there is no logical reason for them to bid any higher than they need to. Also, if BBC for example bid £3 million higher than previously and won, it would have meant that the Sports department would have to find savings elsewhere. So in come BT Sport, with a lot of money behind them, and the strength to put in a deal priced at £10 million per year, for arguments purposes. Neither BBC or Eurosport have the ability to put together a response. They have both been priced out the market.
Unfair, you may say, but it was a fair and due diligent process (unlike the ‘behind closed doors, no one else invited’ BBC and Sky deal). It does not mean that fans should like it, though. Of course, BT Sport should not be the enemy here, the majority of complaints should go to Dorna. They could have said to BT Sport “well we’re sorry, but you do not provide free-to-air coverage to over 90 percent of the United Kingdom, therefore we are sticking with BBC and Eurosport”. They didn’t. As always in the broadcasting world, money wins and fans lose. If Dorna really cared about the fans, they would have stuck with those that have provided coverage to the masses many years previously: BBC and Eurosport. Yes, neither have provided the interactive features and so and so forth. But for me, free to air and terrestrial television coverage is absolutely fundamental even in the digital age for motorcycling to succeed in this country. I would like to be proven wrong and be back here next April writing an article saying “One million viewers watch the Qatar Grand Prix on BT Sport”. I doubt it, unfortunately. I won’t be one of the ones switching over to BT Sport from August. This is not a battle of BT Sport vs Sky Sports. This is a battle of broadband providers, as was clearly evident in the free marketing unveiled yesterday.
An interesting question to ask is whether Dorna had any bids from another other broadcasters. Broadcasters never tend to say whether they put in a failed bid for something, unless they were the current contract holders. Starting with the terrestrials, I do not think ITV would have put in a bid, as MotoGP would have clashed on the majority of occasions with the British Touring Car Championship, which itself is now in a perfect position to become the second most popular form of motor sport on TV in this country. Channel 5 I doubt would afford it whilst Channel 4 is an unknown. The other possibility is Sky Sports. A few motorcycling personalities on Twitter at the latter end of 2012 making noises about Sky and motorcycle racing. I put in a request to Sky to ask if they did bid for the rights, but as of writing I have yet to receive a reply.
I think the fact that every MotoGP race will be exclusively live on BT Sport makes this an even worse pill to swallow than the BBC and Sky Sports F1 deal back in 2011. A lot of people inside the business will spin this as if it is some kind of good deal for MotoGP, but any deal which slashes your audience instantly is not a good one. In my opinion, a lot of people will see BT as the next ITV Digital/Setanta Sports/ESPN. Dorna have questions to answer on why they appear to have gone back on their 2008 intent of keeping MotoGP free-to-air. I always had MotoGP down as one motor sport which considered its fans first, with its fan friendly social media output and the such like. It appears, now that is not quite the case. Today, or at least when the chequered flag in Valencia, MotoGP may be one fan less. Or, at least 900,000 fans less in this country. I have e-mailed Dorna to see if there are any plans for a terrestrial television highlights package for 2014 onwards for those fans that will soon turn into ‘lapsed fans’ as a result of this deal. As always, I will post on here if I get a response.
Motorsport Broadcasting 
“As always in the broadcasting world, money wins and fans lose.”
This only applies because the idiot fans don’t stick to their guns.
Look at the F1 fan sheep who said they wouldn’t subscribe to Sky yet the same personalities on Twitter are now going on about how great the Sky coverage is.
Dorna, like FOM and CVC realise that their fans are mostly idiots and will eventually cough-up the cash.
As for me, I read your blog on a very regular basis but from being someone who would get up for all the early F1 races, I have only watched one race so far this season. Your blog has demonstrated that Sky’s involvement has been disastrous for F1’s viewing figures.
Disastrous is a highly evocative word and one that, if you go back through the archive and reread the articles on viewing figures, you would see it certainly isn’t disastrous! Yes, the figures are down, for BT and for sky, year on year.
My mother is one of the people who decided not to get Sky, despite being a lifelong fan of the sport.
Instead, she comes to my house to watch every race live, so she doesn’t have to fork out the cash.
I know of many people who choose to do this, and to call some fans “idiots” displays a sever lack of common sens and your lack of knowledge/research nullifies your argument.
Could have been a good point, but badly made and over aggressive. C- at best.
+1 andrewpredeth
Of course it’s disastrous (perhaps you aren’t aware of ongoing discussion between sponsors and FOM).
No reasonable individual expects F1’s viewer figures for 2013 to rise. Thus it is extremely likely that viewer figures will continue to fall & sponsors will consequently continue to demand fee reductions from the teams/FOM or drop out of F1.
Given that household budgets are continuing to be squeezed (rising fuel prices, rising retail prices, utility bills, etc.) it must be questioned whether the best solution for F1 fans in this climate is to spend almost £700 on Sky to watch 10 live races. It must also be questioned whether fans who are forced to rely on the BBC’s offering are going to remain as serious about F1 as they were when all the races were live.
I find it rather odd that you picked up on my use of one word – I said on facebook when the deal was announced in 2011 that it would destroy F1’s fanbase in the UK. The statistics from the first complete year of the BBC-Sky deal support my assertion & it seems I will be proved right. It is hardly likely, for example, that viewer numbers will increase on Sky’s platform given that (new customers) now need Sky Sports to view F1. It is only a matter of time before existing HD pack customers are told to upgrade to Sky Sports or go without F1. If you want to wait until 2018 to acknowledge that the involvement of Sky (instigated by the BBC and agreed by FOM of course) has been disastrous then that’s entirely up to you.
2012 viewing figures in the UK showed a 22% drop in the crucial unique viewers, and Sky’s viewing figures are currently 17% down on last years already dismal numbers, the BBC are slightly up this year, but there may well be a further overall fall in unique viewers again this year.
The teams have had to ask Mr E for 3% more money to offset lower than expected sponsorship revenue, they’ve had to take more drivers that have sponsors attached to them (sometimes wrongly called pay drivers), and there has been a loss of 1 team due to its inability to secure sponsorship, and 3 or 4 other teams are in a similar situation.
As more broadcasting contracts around the world do behind a pay wall, the situation will not improve.
+1 Dave
A good sum up but I would disagree with:-
‘BBC were needing to make cost cuts as a result of the licence fee being frozen, which in real money is a drop in income’.
A company that sets its own budget/schedule cannot have a shortfall in funding, what they were grizzling about was a shortfall in their wishlist, not their ability to run the BBC network.
Based on the Beebs argument, I would say I have a £250,000 budget shortfall because I can’t afford the the Ferrari F12 I want!
Going back to MotoGP and F1, I think we will have to put up with this drivel for at least 5 years until both fail to be an effective sales tool for pay-tv and broadband, only then will we maybe see a return to free, quality output.
There is a chance though that both could die in the meantime, if this seems far fetched I would suggest looking at the history of Champ Car and see how the loss of confidence by just a few key sponsors can kill a series.
o dear such invalid arguments again.
???
Dave – I think you’re being a bit unfair in terms of the business strategy. Yes there are discussions about the reduction in reach but the higher income viewer figures are holding up really well and there is a proportionate shift in the viewing population to a group with higher disposable income.
BT sports have got a fantastic strategy giving them the best possible chance of building a considerable audience – and I think it’s great for the long term that Sky have got competition in the broadband/content delivery market.
So Rohan, what you’re saying is that BT should be given credit for devising a business model that reduces viewers, although that doesn’t matter as they’re wealthier so sponsors will like them better?
The business model is questionable and their ethics and respect for the viewer are despicable.
Why on earth is it important for BT to take on Sky when they’re only the 4th biggest player in UK broadband?
Sky are second in the broadband market (http://www.guardian.co.uk/media/media-blog/2013/apr/21/bt-bsky-sports-rights-broadband?INTCMP=SRCH) and their business plan is to dominate UK delivery mechanisms for content. If they do that fans will really start to suffer.
The BBC will need a new funding model in a couple of years time which might considerably reduce their income and apart from ITV4 no freeview channel has any interest in expanding their coverage of motorsport.I think BT offering the channel free to their broadband subscribers is a decent deal all things considered.
And the brutal answer to your first question is yes business wise as long as the middle and high income younger demographics hold up.
The viewer demographic Vs those with higher disposable income is a false one, as Red Bull (a soft drink consumed mainly by the not so wealthy), achieved by far the biggest exposure of any sponsor, over 30% of all TV exposure, next up is Vodafone (another ordinary punter sponsor), then Santander (a high street bank).
Most other high profile sponsorship is directly aimed at the B2B community and not at any TV viewers, and these are still eclipsed by Blackberry phones and Burn (Coca-Cola, another pop drink).
Most sponsorship isn’t about letting viewers know you exist, most people know about Red Bull, Coca-Cola, Vodafone etc, etc, it’s about providing a connection between the viewer and the product, and sponsors want that connection to be as great as possible … A million people that buy 1 can of Red Bull each, is better than 1000 who buy 2 cans each.
True on Red Bull. Interesting views on awareness, branding and audience segmentation but I’m not sure at all the model is working in that way for the UK. I see modern F1 as more like golf than anything else expect slanted younger. Which suggests the demographics matter especially around men 16-34 and men ABC1. Given sky penetration is high amongst that demographic surely there is a feedback loop into the advertising buy for the vodaphones, kingfishers and santanders. Outside the UK I’ve no idea – I presume it’s mass market? And presumably the UK is only a small part of the bigger picture.
A few questions for you to consider. I’m still trying to understand the BT business model, as you rightly point out BT are positioning Moto GP and sport in General as a free addition to those subscribing to BT Broadband. The logical conclusion is that BT are trying to create key differentiators in the crowded broadband supply market. A logical move.
The logical and perhaps consumer benefiting response from Sky could be that in retaliation they offer F1 and other sports free of charge to it’s Broadband customers. Thus mitigating the key differentiator BT have bought to the industry.
Such a competitive move would be very good for the consumer, and possibly both sports
Another point to ponder. Industries and consumer trends develop, a consumer would in today’s world expect and be prepared to pay a premium for vinyl for example or even a CD over a digital download. If we apply that thinking to broadcasting, it is recognised that consumers increasingly engage through online presence, iplayers, 4OD etc. BT have recognised this and adapted their model accordingly. The TV presence is becoming irrelevant, if you want it you can have it, but you have to pay. If BT and Sky take the same approach they could engage with a new demographic (the young) which the sports they hold the rights to currently lack.
The final point to consider would be Dorma and FOM’s ability to adapt to this changing environment. the FOM Tata communications deal implies they sense it’s coming.
You make some good points Jon.
Great comments – really thought provoking.
this kind of forecast for the UK market supports BT’s sporting intentions:
Table 4 Key TCM Indicators in the UK: 2020 2020
Household possession of broadband-enabled computer 90.7% of households
Household possession of cable TV 15.1% of households
Household possession of mobile telephone 85.4% of households
Household possession of fixed-line telephone 83.5% of households
Household possession of satellite TV system 40.7% of households
Number of mobile phone subscribers 88.6 million
Mobile subscribers per 100 inhabitants 133
Number of Internet users 58.7 million
Internet users per 100 inhabitants 87.9
Jon, I’d agree that it would be a both a good business move and a great move for the customer for Sky to make F1 free to broadband customers.
Where this falls down is that Sky offered free/very cheap broadband deals to TV customers using 3rd party exchange hardware and enormous contention ratios and subsequently has a reputation for very slow speeds, unable to deliver quality streaming speeds.
As for the BT service, we’ll have to wait and see what the quality of the output/channel is like, only then can we comment how good the business model is. I could write a 10 page report on everything that’s wrong with Sky’s output.
And with the fibre optic investment by BT they have a shot at delivering a viable “TV” by wire service onto the holy grail (in Google language) three/four screen home environment of TV, mobile/tablet, laptop.