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BBC and Sky: Who is really to blame and who should really stop it?

NEWS STORY
01/08/2011

The news that the BBC and Sky Sports will share coverage of F1 next year is just three days old yet it seems like a lot longer. There is already at least one petition with over 20,500 names signed up in opposition to it and the response from the public in general has been overwhelmingly negative. But who is really to blame and who should step in to stand up for the fans if it is really necessary?

The Times motor racing correspondent took a sideswipe at F1's boss Bernie Ecclestone on his Twitter page by saying that the deal is down to "the money that CVC Capital Partners, the owners, via Bernie, take out of the sport." Nice try but the real reason that Sky is on the scene is that the BBC broke its contract to broadcast F1. The Beeb had an agreement to broadcast the sport exclusively next year but something had to give in order for it to cut costs following the license fee being frozen. F1 was an easy target given that the alternative being bandied around was the BBC cutting its crown jewel of Wimbledon coverage.

Looking at it logically, it is hard to blame Ecclestone. He was simply doing his job which is taking the best deal on the table. According to F1's industry monitor Formula Money, the BBC was paying £31m annually for its exclusive annual coverage but under the new deal this will drop to £15m with Sky Sport's parent company BSkyB paying £25m. So overall F1 benefits due to the additional revenue.

Contrary to initial reports, the deal is not a breach of the Concorde Agreement, the contract between the teams and the F1 Group which runs the sport. An appendix to the contract states that "the Commercial Rights Holder may not permit Formula 1 events to be shown only by pay television in a country with a significant audience if it would materially adversely affect audience reach in that country." The new deal does not move F1 only on to Pay TV so it does not break this clause. It also means that Ecclestone remains true to his word when he said last month that "it isn't possible that F1 could go on to pay-TV, we wouldn't want to do that."

Some may well think that the way this clause has been adhered to is a technicality with the spirit of it intended to prevent F1 from shifting to Pay TV at all (though this is clearly not what it says). These doubters will presumably use this argument to once again blame Ecclestone for the BBC and Sky deal but even this isn't justifiable.

Once the BBC had made the decision to cut F1 it was left with a big question - how could it do this without losing too much face? It is understood that the Beeb needed to make cuts as quickly as possible which explains why its new agreement with Sky starts next year. If the BBC had dropped F1 completely next year it would have had to pay a huge financial penalty to the F1 Group so that was not an option.

Indeed, since the BBC had a contract to broadcast F1 next year if it wanted to reduce its fee or its obligations then the onus was on it, and not Ecclestone, to come up with a way to do this. The most logical way of reducing its fee is to reduce the amount of F1 it broadcasts and this is exactly what it did. Reducing its coverage by half required finding a partner to broadcast the other 50% of races and it is pretty obvious why the BBC turned to Sky.

Both ITV and Channel 4 were in negotiations about taking over the F1 rights and Ecclestone told Pitpass' business editor Christian Sylt that, if necessary, he would have asked Channel 5 if it wanted to make a bid. However, all of these stations are direct terrestrial rivals to the BBC whereas BSkyB is not since it is predominantly a Pay TV broadcaster. This explains why, according to Ecclestone, "the BBC brought Sky to us with the idea of a joint contract." Likewise, when asked whether he felt it was a shame a terrestrial broadcaster would no longer be showing every race live he said "it was not us who made that decision." The upshot is that it really does not make sense to blame Ecclestone for the decision given that the BBC brought Sky to him.

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