Liberty Media Introduces F1 TV, Could Generate $500 Million/Year in New Revenue


Formula One (FWONK), in collaboration with Tata Communications (NSE: TATACOMM), has launched F1 TV; a mobile application that will enable Grand Prix race fans to “create their own unique, immersive motorsports experiences.” The subscription-based OTT service, powered by TATACOMM’s Ultra Live Video Delivery Network (or VDN), will carry commercial-free live race streams (beginning with the start of 2018 season on March 25th), live video from 20 in-car driver cameras, coverage of qualifiers, practice footage, highlights and press conferences. Liberty Media plans to offer the service in “light” ($70/year) and “premium” packages ($120/year); the premium service will only be offered in F1’s most popular markets (Germany, France, Spain etc.).

Howie Long-Short: Formula One estimates that the sport has 500 million fans worldwide, with “conservatively” 1% of that audience considered to be a “super avid hardcore fan.” If Liberty’s estimates are correct and they can convert those “super fans” into $500 million/year in new revenue (they won’t be able to in short-term due to existing agreements with traditional broadcasters), it’ll boost the FWONK revenue 28% (generated $1.784 billion in ’17). That will be welcomed news to the teams, as the collective payment declined $47 million (to $919 million) in the first year under Liberty Media ownership. TATACOMM, which delivers 25% of the world’s internet routes, isn’t new to Grand Prix racing; the company has been the Official Connectivity Partner of Formula 1 for the last 6 seasons. Shares of the company are down 18% (to $9.40) over the last 12 months. The concern? The time frame for the company to become profitable. It will be 2019, at the earliest.

Fan Marino: Liberty has hired Brian Tyler (an all-time Top 10 grossing film composer) to compose a theme song for the sport. Assuming Tyler is being compensated, I wouldn’t classify that as a responsible expenditure; certainly, not after watching 2017 revenues decline. While Tyler will likely do a great job, who cares? Not the “super avid hardcore fan” that’s paying for the OTT service. While the decision is unlikely to make a difference to the fans, it has the teams upset; they believe Liberty should be picking up the tab on this project.

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Formula One Undergoes Rebrand

Formula One (FWONK) is undergoing a corporate rebrand for the first time since 1993. The company is replacing its iconic “flying one” logo (see Fan Marino below) with a simplified version. The balance of the company rebrand will occur in March 2018, prior to opener in Australia, and will include; new graphics and production elements for the world feed, a new web platform and both live and on-demand OTT services. All marketing and business strategy will be focused on what the fans want (according to a Flamingo study); the race, the drivers and the rivalries. Fans initial response to the logo change has not been positive.

Howie Long-Short: Want to play F1 from within the telecom sector? Tata Communications (NSE: TATACOMM), the connectivity and hosting partner of the Formula One Group; repurposes, reformats and distributes content for OTT broadcasters (including: Vice Media & Red Bull Media House). TATACOMM also works with 7 F1 teams (including: Mercedes) on remote operations and technical support (i.e. capturing data, video feeds) at the track; enabling teams to run race simulation and create pit strategy. Note: FWONK is a tracking stock. F1’s commercial rights and other assets are owned by Liberty Media Corporation.

Fan Marino: Look at this logo. What do you see? A black F and a red 1 (made up of a bunch of lines to indicate speed), right? Nope. Focus your eyes on the negative space between the black F and red 1; you’ll see a white 1. Don’t feel bad, you weren’t the only one who didn’t notice this for the last 20+ years.

Exclusive: Inside Formula One’s Rebranding Strategy

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