22/02/2013
NEWS STORY
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Late last week Pitpass' business editor Christian Sylt had an exclusive world scoop in the Guardian which we had all feared for a long time. He revealed that the deal which split Formula One television coverage in the UK between the free-to-air BBC and subscription service Sky led to viewing figures falling by 3.8m to 28.6m in 2012. The figures were outlined in F1's annual broadcast report which also showed that audiences had fallen in China, Russia and the US whilst there had been significant boosts in markets such as Brazil and Spain. Overall, although total viewers reversed from 515m in 2011 to over 500m last year it still makes F1 the world's most-watched annual sports series. Take that NASCAR and MotoGP! Sadly this story doesn't end there.
Over the past few days some websites have started asking how the F1 Group, which runs the sport, calculates the viewing figures. In a nutshell, their question is how much F1 does someone have to watch to be counted as a viewer? At one end of the spectrum, if someone who watches 60 seconds of F1 is considered a viewer then the results could hardly be considered serious. On the other had, if viewers are only people who have watched an entire race then it would make the figure of half a billion viewers pretty much bulletproof. In fact, it could be argued that if someone needs to watch an entire race to be considered an F1 viewer the standard has possibly been set too high.
It isn't hard to find the measurement criteria which F1 uses to arrive at the number of viewers it had last year and the details were presented in Sylt's original Guardian report. Despite broadsheet newspapers having some of the highest levels of checks and balances, with teams of sub-editors, deputy editors and editors looking over material before it is printed, some websites think they know better.
One website did a review of the viewing figures data and stated that "if you have ever wondered how such numbers are calculated it is worth noting that the figures involved come from the broadcasters themselves." When pressed by a reader whether the author had actually seen the source material for the viewing figures the response was: "I do not have a copy of the report." The author then proceeded to throw their support behind one reader who insisted that a viewer is defined as someone who has watched all (calculated at 75% or more) of the race.
Getting data from a source of unknown quality is hardly credible and of course led to confusion from readers about what is the actual measurement criteria used to identify a viewer of F1. At Pitpass our conclusions aren't based on unsolicited information from readers so we asked Sylt to clear up the question of how F1 arrives at its figure of having half a billion viewers in 2012. Sylt has a copy of the broadcast report and the page which explains how F1 defines its viewers can be found here.
To be completely clear, it states that "The data is based on the industry norm of a minimum non-consecutive, 15 minute viewing experience. New viewers (who had not watched previous races) are identified for each new race, with an overall end of season total audience of unique individual viewers."
In simple terms, F1 counts viewers as being people who have watched at least 15 non-consecutive minutes of F1. Crucially, it doesn't count them multiple times even if they have watched multiple races. So, once someone has watched at least 15 non-consecutive minutes of F1 he or she is added to other people who have cleared that threshold and at end of 2012 the total was added up to get the figure of over 500m viewers.
The same point is made in the May 2012 prospectus for the flotation of F1 which Sylt recently revealed is due to take place in October. The prospectus states that "In 2011 we had a cumulative live television audience of approximately 515 million unique viewers measured by the definition of 15 minutes of non-consecutive viewing time. This does not include those viewers that watch for less than 15 minutes, or see Formula 1 on the news or via other media."
This precisely matches Sylt's statement in his Guardian article that the broadcast report measures the number of people who have watched more than 15 non-consecutive minutes of the sport throughout the season. There are two crucial points which need to be made about this.
The first is that the 500m figure is cumulative which means that it is for the entire season. Secondly, a viewer is someone who has watched at least 15 non-consecutive minutes of F1 and they may have watched more. The upshot of this is that you can't divide the 500m figure by the number of races which took place last year to work out how many people watched each race. This is because the 500m figure comprises some people who watched much more than 15 minutes of F1 and may well have seen every race in full. These people are counted just the same as someone who has watched one minute of 15 races.
All we can conclude is that F1 had more than 500m viewers last year and this figure is arrived at by adding up the number of people who watched 15 non-consecutive minutes of the sport across the entire season.
TV is a powerful engine for F1 and provided 32.1% of its total revenue in 2011. This came to £320.4m ($488.9m) and was generated by 63 contracts with each known internally as a Television Rights Agreement (TRA). In some cases fees increase by up to 10% annually during the course of the TRA due to escalator clauses which are similar to those in race hosting contracts. Payments are typically made in advance of the race weekend and the term of each TRA is between three and five years. Following an anti-competition investigation in the late 1990s F1 agreed to limit its TRAs in the European Union to five years in countries where a race is held and three years in others.
The F1 Group films every race and makes the live international TV feed available to broadcasters without commentary. In turn, broadcasters arrange for the signal to be beamed by satellite from the circuit to the audience in their home countries after adding commentary in the local language. The one exception is the Monaco Grand Prix as this is filmed by a local company which distributes the international feed to the F1 Group and, in turn, it makes it available to other broadcasters.
Even though the F1 Group films all races, except for Monaco, it still appoints what is known as a host broadcaster at each of them. The host broadcaster is responsible for providing other on-site broadcasters with logistical support such as electrical feed, cabling and temporary production offices.
This all goes on behind the scenes and few TV viewers would know about it. The on-screen action is the end product but even that is directly affected by the TRA as each agreement states that the broadcasters are required to show the formation lap, the race in its entirety and the complete podium ceremony. It is thanks to all these factors that F1 has built up such a dominant position and regardless of the slight dip last year it is certainly not in danger of losing it.