Chase Carey: ‘Broadcast rights remain F1’s major driver’

Chief executive confident revenue growth will eventually hit higher gear.

Chase Carey: ‘Broadcast rights remain F1’s major driver’

Getty Images

Formula One chief executive Chase Carey has said the motorsport series' revenue growth remains in the hands of its broadcasters after its 2018 instalment was watched by close to half a billion unique viewers.

Year on year, engagement last season grew by ten per cent to a 490.2 million viewership. Though the championship’s revenue climbed a modest two per cent to US$1.8 billion compared to 2017, operating losses widened from US$37 million to US$68 million through 2018.

Carey also said that this year will mark "a more fulsome marketing launch" for its over-the-top (OTT) platform F1 TV, which was rolled out by the series' owners Liberty Media seven weeks later than planned last May, due to technical issues at its inception.

Speaking during Liberty Media's earnings call, Carey said: "We knew 2018 would be a year of investment, however we now have the right organisational structure in place and expect that the majority of future investment will be revenue generated.

"For the second year in a row, we were the fastest growing major sport on social media platforms and are pleased with this increased engagement across all platforms.

"With respect to our F1 TV over-the-top platform, 2019 will in many ways be the true commercial launch of the product. After using 2018 as a beta test, we have strengthened the platform and will have a more fulsome marketing launch as we kick off the F1 season.”

Carey said that he expects growth across all of the series’ key pillars – including media rights, race promotion, and sponsorship – while television fees will remain its largest money-maker.

Looking beyond this season, he is also optimistic around further expansion to the race season, with options to add Grand Prix beyond the introduction of Vietnam next year.

Last month, Carey hit back following criticism of the series after the Formula One Promoters Association (Fopa), which represents 16 of the 21 Grand Prix venues, issued a statement that highlighted concerns around Formula One’s migration from free-to-air TV and its plans to add new races to the calendar.

"We had a number of renewals last years as we had a number of renewals the year before,” Carey said of the existing 21-race calendar. “The most positive aspect of that is we are increasingly encouraged by the breadth of interest [by] new parties who want to come in.

"Some of our races are long-term partners, some are not so long. Our first approach is, if we can get to a place that works for both of us, is to renew races, though we are not always going to be able to get there.

"But, to make sure that we are getting fair value, it is important that we have alternatives in places that provide, not just attractive finances, but attractive races; an example being Vietnam [which] we think is going to be an exciting new place to go.”

In its statement, Liberty Media confirmed that the loss of the Malaysian Grand Prix last season was “not fully offset by the return of two European races in France and Germany”.

Insight from the financial publication Forbes shows that Formula One’s revenue was US$195.9 million short of projections made by investment bank Morgan Stanley before the 2018 season, and claims this was a the result of slow broadcast rights growth.

Meanwhile, Forbes reports that the US$616.7 million received from race hosting fees was also US$43.9 million lower than the forecast made in January last year.

Greg Maffei, Liberty Media’s chief executive, offered his backing to Carey and the potential for the championship going forward.

He told investors: "We are very pleased with the progress that Formula One has made over the past two years and we are confident that tremendous potential still exists.

"We realise the hard work and dedication that Chase and his team have put into this organisation and look forward to seeing the pay-off soon. We are committed to the F1 business."