Analysis: Can Channel 4 make its ad-free F1 coverage work?

Channel 4 has promised ad-free races when it takes over the BBC as the home of Formula 1 in Britain from next year. But given the commercial right fees, Kate Walker wonders if it can make it work.

Analysis: Can Channel 4 make its ad-free F1 coverage work?
Race start
BBC TV Camera
A TV camera man
Nico Rosberg, Mercedes AMG F1 W06 leads team mate Lewis Hamilton, Mercedes AMG F1 W06 at the start of the race
TV camera
Sebastian Vettel, Ferrari SF15-T at the start of the race
(L to R): Nico Rosberg, Mercedes AMG F1 W06 and team mate Lewis Hamilton, Mercedes AMG F1 W06 battle for position at the start of the race
Start: Nico Rosberg, Mercedes AMG F1 leads teammate Lewis Hamilton, Mercedes AMG F1
Lewis Hamilton, Mercedes AMG F1 W06 leads at the start of the race
Start: Lewis Hamilton, Mercedes AMG F1 W06 leads
Kimi Raikkonen, Ferrari SF15-T at the start of the race

When Channel 4 announced that it would be taking over the BBC's role as the UK's free-to-air F1 broadcaster, much of the focus was on its promise to deliver grands prix free from commercial breaks.

But given the cost of F1 broadcasting rights - even the highlights-only rights deal was worth a reported £12 million a year, excluding production costs - how can the channel balance the books?

According to C4, the books are already balanced, its launch press release reading: "The new agreement to broadcast Formula 1 World Championship strengthens the Channel 4 schedule and will not affect the level of spend on peak time, UK-originated content."

With no budget cuts to worry about, C4 can afford to do more than simply copy and paste the BBC template.

"Channel 4 and Formula 1 are the perfect partnership," Channel 4 chief creative officer Jay Hunt said of the launch. "We've the same appetite for innovation and we'll be demonstrating that to fans by becoming the first free-to-air commercial broadcaster to show the races ad-free."

What Channel 4 have yet to do is make it clear just what ad-free coverage means to them as a channel: is it races free from advertising of any sort (other than the trackside signage), or is it simply coverage run without a commercial break from the action?

Commercial-free commercial broadcasting requires a degree of innovation when it comes to financing productions.

Where F1 is concerned, Channel 4 have three key avenues for income: sponsorship of the coverage as a whole (F1 on 4, brought to you by Thomson's Teeth); picture-in-picture commercial breaks; and letterbox advertising framing on-track action throughout the bulk of the race, although the last two options rather stretch the notion of ad-free.

Over the course of the three-year deal, Channel 4 will be able to dip their toe in the waters of F1 broadcasting before deciding whether to commit to the expense of a long-term contract.

The channel has been afforded an excellent opportunity to experiment with the different means of monetising ad-free coverage, and to establish a viewership before a longer deal becomes available from 2019.

That enforced delay before any long-term decision has to be made also buys time in which to sound out suitable sponsors and partners.

Despite the cost of the broadcasting rights already being accounted for by C4, for other players there are risks involved in F1's free-to-air move away from the BBC.

The BBC dominates the British TV market, with BBC1 and BBC2 claiming an average 27.8 percent of audience share in 2014 (the last year for which figures are currently available). In comparison, BARB figures show Channel 4 had 5.6 percent of the audience in the same period.

While Formula 1 brings with it a loyal fanbase, there are already concerns that the switch to C4 could affect the wider sponsorship market, with Sir Martin Sorrell - chief executive of advertising behemoth WPP and non-executive director of the Delta Topco board - telling The Guardian: "I would say the move is neutral to positive.

"There will be more opportunities for TV advertising, if not in the races, then around them. But if you are talking about sponsors, then it is neutral to negative because less audience means less coverage."

In a market that has already seen high-profile teams fail to attract big-ticket sponsors despite plummeting rate cards, any further reasons to make blue-chip companies reconsider the wisdom of investing in F1 could prove to be bad news for the sport as a whole, even if C4's ad-free promises read like manna from heaven to the free-to-air-dependent British fan.

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