BBC saved £150m through Sky F1 deal

16/07/2012

By the end of this week the BBC will be half way through the first year of its deal which sees it sharing the coverage of Formula One in the UK with subscription service Sky Sports. The deal was announced a year ago to massive protests from fans as this year, for the first time in the modern history of F1, not all races are being broadcast in full on free-to-air TV in the UK. The BBC is showing half of the races live, with delayed highlights of the others, whilst Sky Sports is broadcasting all races, qualifying and practice sessions live. It costs £480 annually to subscribe to Sky which is the last thing fans needed in these tough economic times. The BBC braved a gigantic backlash and battened down its hatches. It has now come out just how much they had to gain from it.

An article in today's Telegraph by Pitpass' business editor Christian Sylt reveals that the BBC has saved £150m over the course of its deal with Sky which runs until the end of 2018.

Dominic Coles, the BBC news group's chief operating officer and the man directly responsible for the F1 deal, picked Sylt to give an exclusive 'state of the union' interview reflecting on nearly half a year of the new deal. "In terms of licence fees we have saved hundreds of millions of pounds over the whole period of the contract," he said. The saving is understood to come to £150m over the seven year lifespan of the deal and although the BBC has lost half of the live races its fee has reduced by more than 50% because Sky is paying comparatively more. "Our fee is down by three quarters," said Coles.

It had previously been thought that the BBC was paying £15m annually for the F1 rights under the new deal but Coles' revelation puts the figure at £7.1m. We know this because the three-quarter reduction in the fee under the new deal comes to £150m which means that the BBC is paying £50m over the seven years putting its annual payment at £7.1m.

The deal prevented the BBC from having to drop F1 completely despite facing 20% budget cuts. "The sharing deal delivered very significant savings over the period of the new contract, whilst keeping F1 available to audiences free to air, which was not guaranteed given the sport is not one of those protected by the listed events legislation. Indeed, it is quite possible the sport may have ended up exclusively on pay TV if we had not successfully negotiated the deal," says Coles.

The BBC's previous F1 deal was due to expire at the end of 2013 but this was severed prematurely due to the pressure on the BBC's budgets. Coles says that the BBC approached Sky about sharing and presented this option to F1's boss Bernie Ecclestone. At some stage another broadcaster must have somehow found out that the BBC wanted to change its agreement because Channel 4 also put in a bid last year and its proposal was circulated online. It remains to be seen whether Channel 4 was informed about this opportunity by the BBC, the F1 Group or Sky. Someone must have told the channel because it put in a bid two years before the contract was up.

Mr Coles says that although "it is disappointing that people who haven't got Sky have to endure highlights for half of the Grands Prix, actually nearly half of these races are very early morning which people didn't tend to watch until the highlights came on. So all in all our audiences have remained pretty robust."

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