News Corp buddies up with Exor for F1 bid

News Corp's bid for Formula One could be a step closer to getting a green light after it partnered the owner of Fiat...

by Emma Haslett
Last Updated: 17 Jul 2013
These days, the drama in Formula One tends to be more in the politics than on the track, and last night, it lived up to its reputation when News Corp’s bid for the sport got more serious. It’s teamed up with Exor, the investment firm controlled by Italy’s ‘unofficial royal family’, the Agnellis. CVC Capital Partners, which owns 75% of the sport, has confirmed that News Corp has made a ‘friendly approach’, but has so far refused to confirm whether they’re in full-blown talks yet. So things are still pretty sketchy. And Bernie Ecclestone, the sport’s octogenarian figurehead, remains firmly against the idea, reiterating that the whole thing is ‘ridiculous’.

It’s something of a handbrake turn for News Corp, which in April said it was in talks with Mexican zillionaire Carlos Slim (who sponsors F1’s Sauber team) to launch a takeover. Slim doesn’t receive so much as a mention in today’s announcement, though, suggesting that News Corp regards Exor, which owns a 30% stake in Fiat, might be a more appropriate partner. As Fiat itself owns F1’s most popular team, Ferrari, it may have a point.

There may be serious problems with that proposition, though: apart from the fact that F1 teams like Red Bull and McLaren won’t be too impressed at the prospect of participating in a sport that’s owned by a rival, it’s actually against the rules of the Concorde Agreement, the contract between F1 teams, the sport’s governing body and CVC, for a team owner to control the sport. And that’s not the only tricky hairpin bend Murdoch et al will have to negotiate before they can get their hands on the sport. The agreement also stipulates that all races must be shown on free-to-air broadcasters – thus preventing News Corp from showing it on its subscription channels.

The agreement runs out at the end of 2012, though, so there is scope for change – and the chances of any sale being made before that date are slim. In fact, given the prospect of changes to the rules, other bids for the sport may emerge over the next year or so, but it’s doubtful anyone will sign on the dotted line before they’re decided. So this is just News Corp marking out its territory, as it were.

For his part, Ecclestone’s assertion that both he and CVC are firmly against any sale isn’t entirely convincing. As the saying goes, everything’s for sale, as long as the price is right – and CVC has owned its stake for six years now, a long time by private equity standards. Besides – although he’s its CEO, Ecclestone no longer has a controlling stake in the sport. So it’s really up to CVC.

And the sceptical view might be that at 80 years old, Ecclestone is getting on a bit and chances are he’s not going to be the boss forever. So despite his protestations, this deal could have legs. Or, erm, wheels.

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