Motor-racing deal faces quick antitrust pitstop

Liberty Media

12/04/2024 09:00

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are his own.)
    By Streisand  Neto
       LONDON, April 11 (Reuters Breakingviews) - Liberty
Media’s  FWONA.O  pounce on the world’s best-known two-wheeler
championship may be a quick lap. The F1 owner announced on April
1 it had agreed to buy MotoGP’s Spanish parent company Dorna
Sports for 4.2 billion euros ($4.5 billion). Bringing together
the media rights of two major racing series may raise antitrust
questions in Europe. Still, the rapidly evolving digital market
plays in media mogul John Malone’s favour.
    Liberty Media’s latest acquisition did not come cheap. But
it seeks to replicate the success of F1, whose revenue nearly
doubled to $3.2 billion since the U.S. group took full control
in 2017. Digital engagement, including a Netflix partnership to
create the “Formula 1: Drive to Survive” series rapidly
increased the popularity of the sport and could be a prelude for
a similar formula for MotoGP.
    Malone’s group must first win a green flag from the European
Commission. The acquisition brings back memories of a 2006 case
involving CVC Capital Partners, a previous Dorna owner. The
buyout firm wanted to purchase F1 while holding onto MotoGP. The
EU Commission was at the time concerned with the private equity
firm gaining too much “bargaining power” on TV rights deals in
countries where racing sports were most popular, particularly in
Spain and Italy. These fears led the EU antitrust officials to
rule CVC had to sell the Spanish company to acquire F1.
    A divestment would erase the logic of the Liberty
Media deal. Malone, however, may be able to overtake the EU’s
concerns given the evolution in the media rights landscape.
“Today, there are far more players that can compete for these
rights,” Ben Van Rompuy, an assistant professor at the Europa
Institute of Leiden Law School, told Reuters Breakingviews. The
advent of digital platforms like DAZN, the streaming service
which penned a five-year deal for MotoGP rights in Spain till
2027, has changed the market. Veteran broadcasters such as Sky
Italia now face the prospect of bidding alongside streaming
services for MotoGP in future rights cycles, as evident with the
2020 and 2021 seasons.
    Law experts agree that, at worst, Liberty Media may be asked
to make small concessions such as not tailoring the length of
the rights contracts for the two motorsport circuits so that
there is no overlap in the auctioning process.
    Much like three-time F1 world champion Max Verstappen’s
near-perfect 2023 racing season, the risk of a possible
antitrust engine failure appears minimal. Market evolution since
2006 should give Malone and his pit crew a chance to make this
deal a quick pitstop.
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    CONTEXT NEWS
    Formula One’s (F1) U.S.-based owner Liberty Media announced
on April 1 it had agreed to take over MotoGP’s parent company
Dorna Sports, valuing the world’s leading motorcycle racing
championship at 4.2 billion euros ($4.53 billion) including
debt.
    The deal is expected to be completed by the end of 2024,
pending regulatory clearance.
    Dorna Sports, which was roughly 40% owned by British private
investment company Bridgepoint, also promotes the Superbike
World Championship and all-electric MotoE racing circuit as well
as the Moto2 and Moto3 junior categories.

 (Editing by Lisa Jucca and Oliver Taslic)
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