Joe Pompliano
@JoePompliano
BREAKING: Apple TV has signed a 5-year deal with Formula 1 for its exclusive media rights in the US.
Here's what you need to know
1. Apple TV is replacing ESPN as F1's exclusive broadcast partner in the United States. ESPN was most recently paying $90 million annually, with reports indicating that Apple TV will now pay $140 million per year (+55%).
2. Formula 1's US rights have skyrocketed over the last 7 years. F1 initially let ESPN broadcast its races for free in 2018. That then turned into a $5 million deal, then $75 million to $90 million, and now $140 million annually.
3. F1 TV will continue in the US. You will need an Apple TV account to access F1 TV, but if you already subscribe to both services, you will actually save money (because your Apple TV subscription will now work for both).
4. Apple TV will have broadcast all sessions — practice, qualifying, sprint races, etc. — every grand prix weekend.
5. Apple is still determining who will be on the broadcast and production team.
6. The production on Apple TV should be extremely high-quality, as Apple doesn't typically compress its video as much as others (and is usually willing to try new things, like unique camera angles, etc.).
7. All F1 content on Apple TV will be available in both English and Spanish, taking advantage of the ~42 million people who speak Spanish in the US.
8. Formula 1 is hoping that Apple's large customer base in the United States will offset the audience loss that traditionally comes with switching from cable to streaming (i.e., a paywall).
Similar to the company's partnership with MLS, Apple will send push notifications to iPhone users, integrate F1 content into its news app, create custom playlists in Apple Music, and allow users to follow each race live via a dedicated widget on the iPhone home screen.
9. Apple's Eddy Cue says that the success of the new F1 movie (with Brad Pitt) created a strong relationship with the sports leadership team, ultimately helping get the deal done.
The F1 movie was an Apple Original film and has surpassed $628 million at the global box office, making it the highest-grossing sports movie ever.
10. Apple will put some of the races in front of its paywall, allowing users to watch certain F1 content inside the Apple TV app without a subscription.
Ultimately, this deal makes a lot more sense for Apple TV than it would have for ESPN. The inability to sell commercials during races limited how much higher ESPN could have gone with its rights fee, but that problem goes away on a streaming service like Apple TV.
Apple also gets to follow its thesis of owning an entire league end-to-end, similar to its deal with MLS. If someone in the US wants to watch F1, every event will be available in one place, rather than having to switch between multiple cable channels and streaming services.
And while the $140 million price tag might seem high, it's important to remember that some brands pay $100 million per year just to sponsor individual Formula 1 teams.
Apple TV will make some of the money back by adding new subscribers and reducing churn through a more diversified offering. But F1's premium audience is the perfect marketing platform for Apple, and there are also a ton of other benefits when it comes to hospitality, etc.
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