U.S. billionaire John Malone's Liberty Media has "agreed to take control" of Formula 1 in a deal valuing the sport at $8B, according to Bond, Ahmed & Garrahan of the FINANCIAL TIMES. The two-part maneuver will initially see the U.S. media group buy 18.7% of F1 parent company Delta Topco for $746M "in cash from a consortium of shareholders led by CVC Capital Partners." Liberty will then "move to take full control of F1" by early '17 once the deal has been approved by regulators, the FIA and the U.S. company's shareholders. Once phase one of the deal is signed off, Liberty will pay a further $354M in cash and $3.3B "in newly issued shares." CVC and other F1 shareholders will "receive shares in a Liberty Media tracking stock, which is being renamed Formula One Group." Existing F1 shareholders will get 65% of the equity in the tracking stock "but Liberty Media will control it." Liberty Media has agreed to take on F1’s debts of $3.6B -- "giving the entity an enterprise value" of $8B. Chase Carey, the former exec vice-chair of Rupert Murdoch’s 21st Century Fox, has been appointed F1’s new chair, replacing Peter Brabeck-Letmanthe, the chair of Nestlé. F1 CEO Bernie Ecclestone, who has run the sport for the past 30 years, "will continue in the role but has agreed to sell" his and his family’s 15% stake in the sport as part of the deal. When asked about how long Ecclestone "might continue" as CEO, Carey said that it was "open-ended." Carey: "I don't go into it with a time frame. We will work together as long as it’s a good partnership for the business and the sport. He deserves a great deal of credit and respect for what he has done in Formula 1" (FT, 9/7).
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| John Malone |
NEW DIRECTION: The PA reported neither CVC Capital Partners nor Liberty Media "would comment on the status of their long-running negotiations," or what role Ecclestone "would play going forward." As a "major investor in the internet," many observers expect Malone to "move F1 more in that direction, which would not be difficult as Ecclestone has made no apologies about ignoring the digital revolution." Liberty Media will also want to grow F1's presence in the U.S., "where it has traditionally struggled against home-grown alternatives," although the U.S. Grand Prix in Austin has been a "relative success." And F1 fans should "expect more innovations with gaming technology and virtual reality, as well as a much more coherent marketing effort with the drivers and teams." But the days of terrestrial broadcasters like the BBC, ITV or current U.K. home Channel 4 providing free-to-air coverage on Sunday afternoons "might be numbered" (PA, 9/7). BLOOMBERG's Eric Pfanner reported the deal "reflects a push by media companies to secure popular programming at a time when TV faces increasing competition from digital alternatives." The deal will "provide a windfall" for CVC, which bought control of Formula 1 from lenders in '06 for $2B and "later sold stakes to BlackRock Inc. and Waddell & Reed Financial Inc." (BLOOMBERG, 9/7).
