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Why Liberty Media buying Formula One is a big deal?

Liberty Media has already acquired 18.17 per cent of F1 with the deal set to be completely sewn up by the first quarter of 2017, subject to certain conditions.

, ET Bureau|
Last Updated: Sep 10, 2016, 07.53 AM IST|Original: Sep 10, 2016, 07.49 AM IST
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It's happened. After years of speculation, rumours, talk of several parties weighing bids, Formula One will finally have new owners.

Liberty Media, an American media and communications company, confirmed late on Wednesday that it would be buying F1's commercial rights from private equity firm CVC Capital, the sport's largest shareholder, and others in a deal valuing F1 at $8 billion.

The changing of the sport's commercial guard has already begun. Liberty Media has already acquired 18.17 per cent of F1 with the deal set to be completely sewn up by the first quarter of 2017, subject to certain conditions.

F1 is already among the biggest sports in the world, behind only the Olympics and the football World Cup.

But Liberty Media's acquisition signals a major break from the past for the sport that could unleash its vast and as yet untapped potential and spark a stratospheric spurt of growth.

CVC, who bought F1 commercial rights ten years ago are a private equity firm. Their priority was to sweat any investment they make to maximise returns before selling it on at a premium. Their management of F1 has drawn harsh criticism and the firm has been blamed for prioritising those returns over developing the sport and setting it up for future growth.

Liberty, on the other hand, as a media, communications and entertainment company, will have to invest in the sport to make its purchase a success. The company already has interests in sports through its ownership of Major League Baseball franchise Atlanta Braves, and vast experience in live entertainment events and harnessing digital platforms.

That last bit is extremely crucial. F1 has been late to wake up to the digital revolution and is still consumed in a very traditional way. But the sport, with its technological complexity and variables involved, is a rich mine of data that can be packaged in innovative ways to better engage fans.

It can get fans old and new - especially the millennials - excited about F1 and reverse the decline in attendance and viewing figures which, to be fair, have also in large part been driven by the shift to pay-TV broadcasts in key markets and high ticket-prices. It could also break F1 into the lucrative American market, something the sport has struggled to do.

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