F1's pay TV drive can only shrink its audience

It's probably fair to say Formula 1 has not enjoyed the easiest start to 2016. Every new season offers fresh hope, but the cars had barely begun to turn wheels in pre-season testing before the knives were out again - commercial chief Bernie Ecclestone telling the British press that the current state of F1 was "the worst he'd ever known" and that he wouldn't pay to take his family to watch a race.

Not even a grand prix on the board and already F1's audience appeal was coming under fire. 'F1 is not worth watching' says the man whose job it is to sell it to TV companies and their audiences, as he has done this week by inking a new six-year deal with Sky Sports.

For Ecclestone's comments to have made that February day's edition of the Daily Mail, he must have spoken them before the cars turned wheels. But that's beside the point...

Come mid-morning of the first day of pre-season testing at Barcelona, the press gathered at McLaren's motorhome for a briefing with its racing director Eric Boullier - keen to know his thoughts on Ecclestone's utterances.

"I understand his frustration, but we have to live with what we have," Boullier said. "He is the commercial leader in the sport, so if you see your TV figures going down that is obviously concerning.

"In my opinion it [the drop in TV figures] is because we go, for obvious reasons, to some pay TV. Obviously pay TV has a reduced number of viewers compared with free-to-air."

Boullier was not trying to be controversial. He was simply stating the obvious. 'Pay TV' deals - such as the one Ecclestone did with Sky this week - are shrinking F1's audience.

Hours before Sky Sports announced its new deal to make the UK's TV coverage of F1 exclusively 'pay-per-view' from 2019 until 2024, the Grand Prix Drivers' Association - a lobby group for F1 drivers - published an open letter calling for reform to F1's "obsolete" governance structure.

That letter warned of the "difficult global economic environment, swift change in fan and consumer behaviour, and decisive shift in the TV and media landscape" that F1 faces right now, also suggesting certain regulatory and business decisions "could jeopardise its future success."

One really does wonder if Ecclestone's right hand knows what his left is doing sometimes...

As the GPDA points out, we are currently living through a seismic shift in the media landscape. The wildfire spread of high-speed internet and mobile technology has transformed the way people consume media.

No longer must they simply be satisfied with whatever powerful proprietors and executives wish to spoon-feed them. The internet means democracy of information, it means choice, it means diversification, it means power to the people.

The floodgates have opened.

This has created a twofold tension in the media world. On the one hand many people now expect to receive a certain degree of information and content for free, which makes production of profitable and sustainable media products in what remains a capitalist economy extraordinarily difficult.

On the other, organisations trying to give the people what they want to an acceptably high standard are struggling to afford to do so without introducing subscriptions and paywalls.

The internet is simultaneously creating bigger audiences and driving more information and content behind paywalls.

This is inevitable. Major media companies are discovering the folly of offering 'quality' content for free in the modern world. Take the Guardian for example, which according to British media trade magazine Press Gazette must slash its costs by upwards of £50million this year to counteract rising losses.

The internet gives consumers so much power over what media they use and when they use it (something F1 is slow to realise), but it also gives advertisers greater knowledge of the reach of certain products and thus a better idea of the value of their spending. The internet means data, which means value can be measured quantitatively. The result is a drop in ad revenue.

So, without a bottomless pit of cash to fall back on, the focus has to be on quality and therefore those smaller audiences that Boullier mentions - the hardcore of fans prepared to pay a premium for a quality product.

That's F1's TV model. It's what Sky is all about. And to be fair those who consume Sky Sport's F1 coverage are impressed with its efforts to justify the subscription.

As Ecclestone puts it: "Sky's commitment to the sport and standard of coverage is second to none."

But the inevitable consequence of backing this horse will be a further decline in F1's overall audience. Casual viewers will not be prepared to fork out high monthly subscription fees and will simply do something else with their time and money. Some will simply be priced out of watching the sport they love, even if the desire remains.

The saving grace is that Sky Sports has pledged to offer the British Grand Prix for broadcast free of charge - either itself or through a deal with a terrestrial channel, should any be interested.

Channel 4 has not leapt to throw its hat into the ring, having only just begun its arrangement to see out the BBC's original deal to maintain F1 on free-to-air TV in the UK until the end of 2018.

We will see if there are any takers.

Sky has also pledged that any arrangement concerning free-to-air would include showing highlights of every race and every qualifying session.

For me, this is vitally important for F1's future.

Sky has owned the TV rights to English football's Premier League since its inception in 1992, but the beautiful game's popularity in this country remains underpinned by the BBC's long-running and much-loved Match of the Day highlights show, which is free-to-air - licence fee/TV tax notwithstanding.

MotoGP is broadcast live via subscription by BT Sport, but highlights of every race on ITV4 ensure the majority of UK viewers can still follow the pinnacle of motorcycle racing unencumbered by extra financial commitment.

Repeated cuts to public spending in the UK mean the BBC and its F1 coverage have paid the price for the British government's fiscal policy, as the licence fee takes repeated hammerings and programming suffers as a result.

Poorer fans will have this new Sky deal to thank for a public service element of F1 broadcasting remaining in future. And F1 will also have this to thank if a short-term financial arrangement for the commercial rights holder does not ultimately kill off yet more of the dwindling audience that so concerns Bernie Ecclestone in the first place.