Competition issues for News Corp F1 bid?
May 16, 2011
By Colin Mann
A leading UK competition lawyer has suggested that a takeover of Formula One by News Corporation would face “concerns” because of a conflict of interest.
Paul Stone, head of competition and regulation for law firm Charles Russell says that “News Corporation’s involvement in the bid for Formula One could attract scrutiny from the competition regulators, given News Corporation’s interest in Sky.”
According to Stone, one area of concern for the sports and media group at the firm would be that News Corp might be able to influence decisions over which broadcaster is awarded rights to show the races, in order to advantage Sky.
News Corp has yet to make a bid for F1, but released a statement saying that it had formed a partnership with Italian investment fund Exor saying that “there can be no certainty that this will lead to an approach to F1’s current owners.”
Should News Corp make a successful bid for F1 and then move the sport to its own channels (whether subscription or free-to-air) it would give it a position of dominance over its rivals. It would be in the same position if it were to offer the rights to broadcast F1 to its rivals.
It has been suggested that if the UK’s BBC broadcast a News Corp-owned F1 and the two network owners found themselves bidding to screen another sport, such as rugby, News Corp could threaten to dramatically increase the price of F1 when the BBC’s contract runs out unless it pulls out of the running for the rugby.
It was as a result of similar concerns of an advantage over its competitors which prevented News Corp’s 39 per cent-owned subsidiary BSkyB from buying the Manchester United football club in 1998. The UK’s competition commission ruled that owning Manchester United would give BSkyB “influence over and information…that would not be available to its competitors.”
The European Commission (EC) would be forced to investigate a News Corp takeover of F1 as the combined entity would have a revenue above the threshold of €5 billion globally and €250 million in Europe. Stone says that perhaps the EC “might consider whether safeguards could be put in place to ensure that this type of decision is made independently of News Corporation’s interests.”