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Leading sports network ESPN has renewed rights for one of the most popular racing leagues in the world, beating out several other players and raising the annual amount paid to the league.
What Happened: Formula 1 has renewed its deal for U.S. media rights with ESPN, a unit of The Walt Disney Company (NYSE:DIS), according to a report from Sports Business Journal.
ESPN beat out bids from Amazon.com Inc (NASDAQ:AMZN) and Comcast Corporation (NASDAQ:CMCSA), according to the report.
ESPN will pay between $75 million to $90 million per year for the rights. This marks a huge increase from the estimated $5 million annually paid by ESPN in a three-year deal signed in 2019.
The sports media company will have flexibility to put a limited number of the Formula 1 races exclusively on ESPN+, its sports streaming services. The majority of races will air on either ABC or ESPN.
Amazon.com may have reportedly had a higher bid, closer to $100 million annually. The Amazon deal included the right to sublicense its rights to a linear broadcast network.
The Sports Business Journal report's sources said the offer from Comcast was similar in dollar amount to ESPN, and the company also wanted to utilize its streaming platform Peacock for some coverage and air the majority of races on NBC and USA Network.
Netflix Inc (NASDAQ:NFLX), which has been credited with increasing awareness for the sport thanks to a docuseries on the streaming platform, also bid for the rights.
The Netflix offer wasn’t close in money terms to the other bids.
Formula 1 executives were hesitant to make all their races available only on a streaming network at this time.
Analysis: Formula One Adds Las Vegas: Here's Why US Growth Is So Important
Why It’s Important: The new media deal could be a win for shareholders of Liberty Formula One (NASDAQ:FWONA) (NASDAQ:FWONK) given the sharp increase in the annual amount payable by ESPN to the league.
Television viewership has increased for Formula 1 in the U.S. over the last several years, with Netflix being credited as a reason.
The addition of more live races in the U.S. and races occurring in U.S. friendly time zones could also be a contributing factor versus very early morning races on Sundays not attracting as many viewers.
The first ever Miami Grand Prix was broadcast on ABC and had a record 2.6 million viewers, the largest live Formula 1 U.S. television audience.
Formula 1 is averaging 1.3 million viewers for races in the U.S. according to Sports Media Watch. Viewership is up 39% from last year.
Strong viewership in the U.S. was one of the strengths reported by the Formula One company in its 2021 financial results and could be a catalyst going forward for futured years.
With several races appearing exclusively on ESPN+, Disney could see an increase of subscribers for its sports streaming platform.
FWONA Price Action: Formula One shares were up 3% to $58.41 on Friday versus a 52-week range of $40.08 to $64.70.
Photo via Shutterstock.
