Bloomberg News

BSkyB to Broadcast Formula One Races, Ending BBC Exclusivity

July 29, 2011

(Updates with CEO’s comment in fourth paragraph.)

July 29 (Bloomberg) -- British Sky Broadcasting Group Plc, the U.K.’s biggest pay-TV company, won a seven-year agreement to broadcast the Formula One racing series that ends exclusive availability on the publicly funded British Broadcasting Corp.

Beginning in March 2012, the Sky Sports channel will be “the only place to see all the races, with at least half those being exclusively on Sky,” Isleworth, England-based BSkyB said in a statement today. Half of the races and qualifying sessions will still also be broadcast on the BBC’s outlets, it said.

BSkyB relies mainly on sports broadcasts and movies to lure customers. The broadcaster, partly owned by News Corp., sells “Sports Pack” add-on channels to video customers for about 20 pounds ($32.60). The BBC, which is funded by license fees from U.K. taxpayers, offers Formula One car races at no additional charge. The network gave up its exclusive broadcast rights, which ran through 2013, in an effort to save money.

“We were very happy with the price we paid,” BSkyB Chief Executive Officer Jeremy Darroch said on a conference call, declining to specify an amount. “It’s a great addition to what we do.”

BSkyB had 10.2 million customers for its TV product and 3.8 million for its Sky HD high-definition video service at the end of June. The company’s sales rose by 16 percent to 6.6 billion pounds in the 12 months through June.

News Corp.’s Role

BSkyB is 39 percent owned by New York-based News Corp., which was forced to drop a 7.8 billion-pound offer for the remaining shares of the pay-TV broadcaster amid pressure surrounding phone-hacking allegations at a U.K. newspaper owned by the U.S. publisher.

James Murdoch, deputy operating chief at News Corp., will remain chairman of the U.K. broadcaster, BSkyB said today.

BSkyB rose as much as 2.1 percent to 731 pence and was up 0.4 percent as of 12:07 p.m. in London trading. The stock has declined 2.4 percent this year.

The BBC, the world’s oldest public-service broadcaster, lost its license for Formula One in 1997 with the rights to broadcast the races going to ITV Plc. The BBC then won it back with a new agreement starting with the 2009 season.

The BBC has considered dropping Formula One coverage, which costs 60 million pounds annually, amid a freeze on its license fees, the Sunday Times reported last month. Formula One President Bernie Ecclestone has said that the races have to be available on free-to-air television, according to an agreement with the European Union. BSkyB’s programming is available through paid cable or satellite subscriptions.

“With this new deal, not only have we delivered significant savings but we have also ensured that through our live and extended highlights coverage all the action continues to be available,” Barbara Slater, director of BBC Sport, said in a statement.

--With assistance from Jonathan Browning in London. Editors: Tom Lavell, Robert Valpuesta

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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