Malone in talks with CVC over F1 stake
US cable billionaire John Malone has approached the principal shareholder in Formula One about buying a stake in the motor racing series, in a move that could radically alter the relationship between media companies and the owners of live sports rights.
The chairman of Liberty Global and Liberty Media has held preliminary talks with CVC Capital Partners, which owns about 35 per cent of F1, said people familiar with the matter. Any deal is expected to value the motorsport at more than $9bn including debt.
Mr Malone’s Liberty Global has spent almost $30bn on European cable assets in the past two years while Liberty Media group is the driving force behind a $61bn battle to control Time Warner Cable and consolidate US cable. Any move into sports rights ownership would give his expanding empire an advantage over rivals such as Rupert Murdoch’s News Corp, BT and others who spend billions of dollars to secure the rights to broadcast live sport.
It would also intensify the rivalry between Mr Malone and Mr Murdoch, who made an unsuccessful pitch to buy F1 three years ago. At that time, Bernie Ecclestone, F1’s 83-year-old chief executive, said the idea of a media mogul owning F1 was not a good idea. But CVC would welcome an exit as a way out of the legal imbroglio surrounding Mr Ecclestone, who is caught in bribery allegations.
The private equity group has made a hefty profit on its eight-year investment, sold chunks of its stake and taken dividends. But it has had to put plans to list the sport in Singapore on hold because of Mr Ecclestone’s legal wrangles in the UK and Germany. It has also been unable to implement a succession plan because Mr Ecclestone has shown no willingness to retire and has kept a firm grip on the business he helped shape.
Mr Ecclestone said: “If someone came along [with an offer], I think they’d do it.”
It’s not the first time F1, which boasts a global TV audience of about 450m viewers, has attracted interest from a media company. News Corp teamed with Exor, the investment firm controlled by the Agnelli family, to work on a bid for the company in 2011. News of Mr Malone’s interest in F1 was first reported by the NY Post on Monday
Any acquisition led by Mr Malone could be carried out through Liberty Media, Liberty Global or Discovery Communications, with the US businessman sitting on the board of all three companies.
Discovery Communications is spending $345m on increasing its stake in sports network Eurosport, which it plans to use to acquire second-tier sports rights. Liberty Global and Discovery Communications declined to comment.
“It depends what they want to do with it,” Mr Ecclestone said. “If they want to control the sport through TV, it’s probably not good. But what sounded stupid a few years ago may not be stupid today. The world is changing so fast.”
CVC bought F1 in 2005-06 from its lenders, investing nearly $1bn and using $2.5bn of debt. Since then, CVC has returned more than 5 times its initial investment through the sales of shares to institutional investors in 2012 and dividends.
Mr Ecclestone stepped down from the company’s board last month after being told he would stand trial in Munich on bribery charges.
His troubles stem from a former German banker confessing to receiving $44m from him and Bambino, an Ecclestone family trust, in the aftermath of F1’s sale to CVC. Mr Ecclestone has denied wrongdoing, saying he was “shaken down” by the former banker.