John Ourand and Adam Stern:
Sources say that ESPN has agreed to pay around $75–90M per year for the rights. Currently, ESPN pays in the neighborhood of $5M per year for the rights, having signed a 3-year/$15M deal in 2019.
ESPN’s deal gives the media company flexibility to put a small, but undetermined number of races exclusively on its ESPN+ streaming service. Most races will be carried on linear television, either ABC or ESPN, sources said.
Sources said that Amazon put forth a higher bid — said to be around $100M per year — with the right to sublicense to a linear broadcast network. Comcast’s offer was similar to ESPN’s monetarily, sources said. Comcast’s offered would have put several of its races on its Peacock streaming service — in addition to linear coverage on NBC and USA Network. Through its Sky subsidiary, Comcast is a big F1 partner outside of the U.S. Netflix had discussions with F1 and actually made an offer, but its bid wasn’t close on money. F1 executives made it clear that they were not ready to put all of its races on a streaming service yet.
First and foremost, the step-up in the contract per-year is insane. And that is thanks to the rise in popularity of F1. Which is, in no small part, thanks to Netflix and their popular streaming show, Drive to Survive.
I’ll admit that I haven’t watched the show myself, but I have enough people I know in my life who have and are now addicted to the sport, that it’s only a matter of time. And while anecdotal, these aren’t my typical sports friends. They’re all kinds of people. They’re more into the show than the races, but the races are the culmination of the show.
And that’s why it’s also insane to me that Netflix not only didn’t do everything they could to win the rights to the races here, but they weren’t even competitive, apparently. Yes, we all know Netflix has historically wanted to avoid sports rights.¹ It’s a bad combination of expensive and ephemeral.² But it’s expensive for a reason. And it’s a reason Netflix is suddenly finding themselves caring about. It feels like this is a mistake on Netflix’s part. But they also undoubtedly couldn’t believe that step-up in price. Which again, they largely drove! So the real mistake here was not locking up the rights years ago, ahead of doing the show. Sure, they couldn’t have known how well it would play. But sometimes such gambles pay off.
It’s equally fascinating that Amazon placed a much higher bid — with more flexibility to sublicense, no less — and yet didn’t win. The last line in the excerpt would seem to say it all: F1 wasn’t ready to go all-in on streaming. So perhaps there was no way Netflix could have won. But they also have a great piece of leverage in their show, so… Again, they really should have locked down these rights years ago. Drive to Survive started in 2019 — the same year ESPN inked their 3-year/$15M F1 deal which just expired. My god, what a deal that would have been for Netflix.
And I suspect all streamers have to recognize that going into the next iterations of these types of shows. When you’re selling milk, don’t forget to lock up the cow.
¹ Though I had a feeling they’re be pressured (from multiple sides) to change this stance at some point soon.
² Not to mention, increasingly a nightmare in user confusion. Which Apple is trying to fix one unloved deal at a time…
