F1 coverage could be threatened by loss of ad revenues

SEPTEMBER 20, 2001

F1 coverage could be threatened by loss of ad revenues

THE British ITV television channel will be breathing a major sigh of commercial relief this week that it signed an 80 million pound, four year deal for sponsorship of its World Championship F1 coverage from Toyota.

Less than a week after that deal became public, European broadcasting giant RTL warned that the sharp downturn in advertising means that media companies will have to cut back on what they pay for content such as football. And, by implication, F1.

There are growing fears in the media industry that the scramble for broadcasting rights, especially sporting ones, has seriously stretched some company's finances - notably TV companies Carlton and Granada. The situation has been made worse by another serious downturn in advertising after last week's terrorist attacks in the USA.

Kirch, who are not only grappling with the intricacies of managing the apparent loss they've made in purchasing the F1 commercial rights, may also have a headache in this respect in that it has also paid £850 million for the worldwide rights to the next World Cup.

Interestingly, Kirch has complained to the Office of Fair Trading in the UK that the BBC and ITV have refused to play what it was demanding for the UK slice of the rights.

It is also a sign of the times that stockbrokers Merrill Lynch this week downgraded BskyB, citing amongst other things, its 1.1 billion pound Premier League football contract " for which, with hindsight, we believe the company has overpaid."

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