Channel 4 Acquires Formula One Rights As BBC Cuts Back On Sports Rights

Channel 4 has picked up the broadcast rights to Formula One in the UK after the BBC, under pressure to make spending cuts, pulled out of its deal three years early. Channel 4, which faces its own uncertain future as the British government decides whether to fully or partly privatize it in the new year, has closed a three-year deal with Formula One World Championship believed to be around $90 million to broadcast 10 races a season from 2016. Channel 4, which is state owned but does carry advertising, has pledged not to air ads during the live races. The channel will also show highlights of all 21 Grand Prix as well as qualifying laps.

The opportunistic move by Channel 4 follows on from the BBC needing to find savings in excess of $1 billion. The BBC had initially signed a six-year deal in 2012 sharing broadcasting rights with pay TV’s Sky.

“I am sorry that the BBC could not comply with their contract, but I am happy that we now have a broadcaster that can broadcast Formula One events without commercial intervals during the race,” said Formula One chief exec Bernie Ecclestone.  “I am confident that Channel 4 will achieve not only how the BBC carried out the broadcast in the past, but also with a new approach as the world and Formula One have moved on.”

Channel 4’s emergence as the new free-to-air home of Formula One is somewhat of a surprise, with initial indicators pointing to ITV, which had previously broadcast the racing championship, as a more likely destination.

“Formula One is one of the world’s biggest sporting events with huge appeal to British audiences,” said Channel 4 chief exec David Abraham. “I’m delighted to have agreed this exciting new partnership with Bernie Ecclestone to keep the sport on free-to-air television.”

BBC Sport is currently seeking to make some $50 million in savings to its budget. The BBC has already cut back on its coverage of the Open Golf tournament, from live to extended highlights, as well as sharing the rugby Six Nations tournament as part of that. The savings from exiting the Formula One deal are believed to account for a significant amount of its outstanding balance.

“No Director of Sport wants to be responsible for reducing the amount of sport on BBC TV. But the current financial position of the BBC means some tough and unwanted choices have to be made. There are no easy solutions; all of the options available would be unpopular with audiences,” wrote BBC Sport Director Barbara Slater. “Any decision to have to stop broadcasting a particular sport or sporting event is hugely disappointing and taken reluctantly…These are very challenging times for the BBC and sport is not immune to those financial pressures.”

The BBC is facing its biggest changes in a generation as the Conservative government has undergone a strategic review to look at four critical aspects of the corporation’s future. Its mission statement and purpose; its scale and scope; its funding and its governance. The review marks the beginning of a process that should end, subject to agreement being reached, with the creation of a new royal charter defining the BBCs role. The current charter expires at the end of 2016.  In what has become an increasingly politicized debate, with many on the right seeking to end or at least dramatically cut back the current license fee model, John Whittingdale, the Secretary of State at the Department for Culture, Media & Sport, has conceded there is “no easy solution.”

It’s been a rough time recently for the BBC. The corporation had to announce cuts of more than 1000 jobs in the summer as part of a restructuring caused by a $234 million gap in license-fee income for 2016-2017 as well as face a bill in excess of $1 billion for new welfare charges. The public broadcaster is being asked to absorb the cost of the license fee for viewers over age 75 as the government attempts to shift the cost, currently covered by the Department for Work and Pensions, off its books.

The pubcaster has been under pressure to find alternative ways to fund its operations. Earlier this year, a report from the House of Commons Culture, Media and Sport Select Committee said the TV license is “becoming harder and harder to justify.”


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