Formula One faces big
shake-up after Liberty deal
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[September 08, 2016]
By Alan Baldwin
LONDON (Reuters) - Formula One faces
its biggest shake-up in decades with the announcement on Wednesday
that U.S. cable TV mogul John Malone's Liberty Media has agreed to
take control of the cash-generating glamor sport.
The deal, which has an enterprise value of $8 billion according to a
company statement, heralds a new era for Formula One, a
European-dominated sport that has long sought to break into the U.S.
market and win fresh audiences.
It could also accelerate the exit of 85-year-old Bernie Ecclestone,
the Briton who has run the sport for nearly 40 years and built up a
business with annual turnover of around $1.9 billion.
Liberty Media said in a statement, which ended a long-running saga
surrounding the sport's ownership and potential flotation, that it
was acquiring an initial 18.7 percent stake from controlling
shareholder CVC Capital Partners.
The company hopes to complete a deal for the remainder by the first
quarter of 2017.
The statement added that Chase Carey, the executive vice-chairman of
Rupert Murdoch's 21st Century Fox and a director of Sky News owner
Sky Plc, will take over as chairman of the board of Formula One's
parent company with Ecclestone remaining as CEO.
"I greatly admire Formula One as a unique global sports
entertainment franchise attracting hundreds of millions of fans each
season from all around the world," Carey said.
"I see great opportunity to help Formula One continue to develop and
prosper for the benefit of the sport, fans, teams and investors
Ecclestone added that he welcomed the company into the sport and
looked forward to working with them.
The deal will be subject to the approval of the International
Automobile Federation (FIA), the governing body for Formula One and
other global motorsport series, and European anti-trust regulators.
CVC acquired majority control of Formula One in March 2006 and has
since recouped its money many times over with billions of dollars in
Ecclestone has been the deal-maker, securing lucrative television
contracts and hosting fees with countries such as Abu Dhabi and
Azerbaijan that are eager to feature on what is now a calendar with
a record 21 races.
A controversial figure, who has become as much a celebrity as any of
the drivers, 'Bernie' has been a part of Formula One ever since the
[to top of second column]
Chairman of Liberty Media John Malone attends the Allen & Co Media
Conference in Sun Valley, Idaho July 12, 2012. REUTERS/Jim Urquhart/File
A former team owner, he secured the television rights in the late
1970s and transformed the sport into one of the world's richest.
Reluctant to delegate, he has not groomed a successor and critics
have accused him of holding back the sport through a failure to
embrace fully new media or the digital marketplace, something
Liberty is expected to make a priority.
"Maybe it is good news that an American media company buys F1," Mercedes
motorsport head Toto Wolff said at the weekend's Italian Grand Prix.
"There are things we can learn from the American way, particularly in the
digital areas...they will have a close look and then analyze what they think
needs to be changed and what needs to remain."
Team bosses and other paddock insiders expect Ecclestone to be eased out only
gradually, given his intimate knowledge of the business.
CVC has twice tried to float Formula One but the plans stalled and the fund
instead sold stakes to U.S. investment groups BlackRock and Waddell & Reed,
along with Norway's Norges Bank.
It sold down its holding from 63 percent in 2012 in deals that at the time gave
the business an enterprise value, which includes debt and equity, of $9.1
That left CVC with a 35.5 percent stake in Delta Topco, Formula One's parent
company, with Waddell & Reed having 20.9 percent. Among other investors,
Ecclestone holds 5.3 percent and his family's Bambino Trust another 8.5 percent.
Malone's Liberty Global is the world's largest international TV and broadband
company, operating in more than 30 countries in Europe, Latin America and the
Caribbean through a series of different brand names.
Liberty Media has interests in the Atlanta Braves baseball team, satellite radio
service Sirius XM, entertainment group Live Nation LYV.N, and minority interests
in Time Warner TWX.N and Viacom VIAB.O.
(Additional reporting by Toby Davis; Editing by Ed Osmond)
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