John Malone's Liberty Media to Buy Formula One
September 07 2016 - 8:10PM
Dow Jones News
John Malone's Liberty Media Corp. said it agreed to acquire
Formula One in a cash-and-stock deal that values the auto-racing
franchise at $4.4 billion.
Chase Carey, the former chief operating officer at 21st Century
Fox Inc., will serve as chairman of Formula One, succeeding Peter
Brabeck-Letmathe, who will remain on Formula One's board. Bernie
Ecclestone will remain Formula One's CEO, and the organization will
remain based in London.
Formula One stages races in cities from Monte Carlo to Kuala
Lumpur. It markets lucrative television rights and sponsorships and
negotiates contracts with venues and teams. CVC Capital Partners, a
London-based private-equity firm, bought majority control of
Formula One in 2006.
"There's an opportunity to continue to build this business and
take it to the next level," Mr. Carey said on an investor call,
noting that Formula One attracts large TV audiences and reaches
favorable demographics for advertisers.
For Mr. Malone, the Formula One deal adds to a flurry of recent
deal-making. A pioneer of cable TV, the 75-year-old has surged back
onto the media scene in the past few years. In the U.S., he helped
engineer Liberty-backed Charter Communications Inc.'s roughly $60
billion takeover of Time Warner Cable Inc. last year, and was a key
player in the union of pay TV channel Starz with the studio Lions
Gate Entertainment Corp. in June.
Mr. Malone has noted the leverage sports TV programmers have in
the U.S. cable market, and the large share of the monthly cable
bill that goes to networks such as ESPN.
Companies backed by Mr. Malone—including cable operator Liberty
Global PLC and TV channel-owner Discovery Communications Inc.—have
been aggressive in expanding overseas, especially in Europe, to
chase growth outside the maturing U.S. market. Discovery also has
been investing heavily in sports content abroad; last year, it
completed a $1.1 billion acquisition of Eurosport, which airs
everything from major tennis tournaments to the Olympics.
Lately, the risks of big international bets by U.S. media
companies have been on display as the strong dollar has weighed on
financial results for companies, such as Discovery. Liberty Media
also owns stakes in companies including satellite-radio operator
Sirius XM Holdings Inc. and the Atlanta Braves baseball team.
Liberty's acquisition of Formula One is happening in two stages.
In the first stage, it has acquired an 18.7% stake. It is aiming to
acquire the rest in the first quarter of 2017, contingent on
approval from antitrust regulators, Formula One's regulatory body
and other entities.
The complex deal involves Liberty paying in cash, newly issued
shares and convertible debt. Formula One Group will own the racing
business. Liberty Media shareholders will have a 35% ownership
interest, while existing owners including CVC will have the
remaining 65% interest.
CVC has considered selling Formula One in the past, but an
agreement was never reached.
One complication was a trial that Formula One's colorful founder
Mr. Ecclestone faced in Germany related to charges of bribery and
fraud. A court in 2014 dropped the case against Mr. Ecclestone in
return for a payment of $100 million.
"Bernie has been a wonderful CEO for us," Donald Mackenzie,
co-Chairman of CVC, said in a statement. "There have been many
successes and the occasional challenge but there has never been a
dull moment."
CVC has raised more than $70 billion from investors in the last
two decades to buy companies around the world. Its assets range
from Petco, a U.S. retailer of pet food and supplies, to Chinese
restaurant chain Da Niang Dumplings.
Write to Simon Clark at simon.clark@wsj.com
(END) Dow Jones Newswires
September 07, 2016 20:55 ET (00:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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