What’s the connection between Bernie Ecclestone, BAT and Rupert Murdoch? Answer: Digital television.
All three believe they can exploit the digital television rights to Formula One racing, meaning specifically pay-per-view revenue which, like the proverbial crock of gold, shimmers at the end of the rainbow.
Ecclestone has made great play recently about his altruistic motives for bringing F1 to market.
Cynics are more interested in dwelling on the 30 per cent of 1.6bn which his trust will pocket if all goes according to plan. However, it’s a bit more complicated than straightforward greed. Ecclestone has already invested a substantial sum – some say up to 70m – in building a digital empire and seems in desperate need of further capitalisation. He has within his web of interests, for example, a useful company, Sports World Communications – which specialises in television production – and F1 is currently conducting, for example, a pay-per view experiment with DF1 in Germany.
BAT also clearly believes that pay per view, immensely enhanced by digital technology, is the principal seam of gold. Why else risk 300m over five years in building a do-it-yourself F1 racing team, despite a lack of direct technical expertise? The announcement of its intention will, as predicted (MW November 13), be made on December 2. A few other initiatives, probably including a merchandising company, will also make their appearance. BAT has also let it be known (not officially, of course) that this super team is to be built around Tyrrell Racing – though its founder continues to deny fiercely that any deal has been signed. But the logic of such a deal is compelling. Tyrrell needs the money: it hasn’t won a race in years. BAT, on the other hand, needs ‘respectability’. It could, of course, cherrypick the best of Tyrrell without buying it. But that way it may not receive unanimous acceptance from the constituent parts of Ecclestone’s FOCA company, which will effectively provide the vehicle for flotation. And without that, BAT is highly unlikely to qualify for a cut of the profits.
Which includes any digital TV revenues in the future: if, of course, there are any. Unfortunately the DF1 pay-per-view experiment hasn’t been going as well as expected, according to sources; although it’s early days yet. Then again, a lot of investment is riding on the flotation being successful: but it’s looking shaky and Ecclestone’s unsolicited publicity over the past week won’t have helped matters.
Which brings us to Murdoch. He does have the resources, the expertise and the will to create a successful pay-per-view digital television network. What’s more, he is widely believed to be interested in acquiring a controlling stake in Ecclestone’s business, through BSkyB. Ecclestone has so far turned him down. But he might have to change his tune if the flotation were to bomb. Funny how Times Newspapers has been so well informed on the recent donations ‘scandal’.