Apple’s been working closely with international racing circuit Formula 1 for a few years now, bringing “F1: The Movie” to the big screen and, on December 12, to Apple TV. Formula 1’s TV rights in the United States are currently up for bid, and Apple is reportedly working to extend and deepen its F1 relationship.
John Ourand, the excellent sports business reporter now at Puck, reported last week that Apple got a deal to broadcast Formula 1 in the U.S., and it’s due to be announced shortly, perhaps even this weekend:
The number I keep hearing is $140 million per year for U.S. rights, a significant bump from the $90 million per year that ESPN currently pays.
The main holdup had been a dispute around Formula 1’s streaming service. Apple stuck to its original position that the racing circuit needed to shut down F1 TV in the U.S., and was reluctant to dole out $140 million on rights fees just to have the races carried on another streaming service. Because F1 TV is profitable in the U.S. market, Formula 1 has been hesitant to pull the plug. It’s not entirely clear where the two sides netted out on this, but it’s an area to watch when the deal finally gets announced. Meanwhile, this will be Apple’s most significant sports rights deal since it signed a 10-year, $2.5 billion deal with the MLS three years ago.
The issue here is that there are currently two different ways to watch Formula 1 in the U.S.: on ESPN, via standard television pathways, or streaming on F1’s subscription product, F1 TV Pro, for $85/year (or $130/year if you want it in 4K with multiview). So what is Apple buying for a 55% increase on what ESPN currently pays? Is it just buying the rights to a simple video stream, or does it want to capture the entirety of the F1 audience in the United States?
The first option seems very unlike Apple. Other than bringing a few new viewers into Apple TV, how does showing races in America (most of them very early in the morning) show off Apple’s brand and technological prowess? The entire point of a streaming-only product is that once you’re off traditional TV, you can go beyond the single stream and provide interactive options. The whole point of streaming TV, especially sports, should be that you can leave the flat video stream behind and build something cool using software.
That is, by the way, what F1 TV Pro is: A sophisticated bit of software that merges track data with multiple cameras to let viewers choose how they want to watch races. It’s absolutely the product that Apple should aspire to build, or co-opt, in this deal.
I understand that Formula 1 owner Liberty Media is reluctant to lose a profit center, but if Apple’s paying them an extra $50 million, isn’t that the proper trade-off? Also, working with Apple in the U.S. could be part of a longer-term tech partnership between F1 and Apple that could extend worldwide.
It’s a bit mystifying. I really don’t know how this is going to play out, but here are some possibilities:
Apple just picks up what ESPN is doing, a simple video stream. I’m sure it isn’t what Apple wants to do, but maybe that’s all that’s on offer. It’s packaged similarly to MLS Season Pass ($99/year), with a discount offered to Apple TV subscribers, with the occasional race made available outside the package as a teaser. (A question: Would Apple continue ESPN’s practice of just using the Sky feed from the UK rather than building its own broadcast team? I really, really can’t see it, but this is already the worst among Apple’s options, so who knows?)
There’s some sort of weird co-branding deal where Apple sells subscriptions to F1 TV, splits the proceeds with F1, and in the U.S., the F1 TV app uses Apple’s feed and announcers instead of the ones usually provided on the F1 stream. Apple ensures that the F1 TV app is expanded across all of Apple’s platforms with some whizzy new features. And a simpler feed of just the race is available inside the TV app.
Apple erases F1 TV access in the U.S. and offers its own equivalent instead. A new app across Apple’s platforms (including Vision Pro) gives access to multiple camera views and race data in exchange for an annual subscription fee. In this scenario, maybe the flat ESPN-style race video is available to all Apple TV subscribers.
The more I think about it, the more the last option is the only one that makes sense from an Apple perspective. A simple video stream is essentially a legacy product, especially in a sport that’s rich with data and a perfect fit for an interactive experience. If that’s all Apple can get from F1, I guess we’ll know that Apple really wanted to extend its relationship with them beyond making “F1: The Movie” and this was the only partnership on offer.
If F1 chooses to hold on to F1 TV in the U.S. rather than take advantage of the opportunity to build a partnership with a global tech giant that could eventually extend around the world… it feels like a failure in vision. I realize Apple may be offering more money, but if all they’re allowed to do is take ESPN’s place, it would probably be better to make the cheaper deal with ESPN and reach a broader audience. Making a deal with Apple should mean building a richer technological partnership.
So far, Apple has been very careful in its bidding for sports rights. I suppose we’re about to find out if it’s got a big plan for Formula 1, or if it’s just desperate to keep rubbing elbows with the world’s greatest race drivers—and is willing to pay a premium for an underwhelming product.
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