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Seven re-signs V8 Supercars

Seven West Media (ASX: SWM) has re-signed V8 Supercars for another two years. Under the deal, V8 Supercars will receive about $32 million a year in media rights from Seven. In return, Seven gets exclusive free-to-air broadcast rights.

V8 Supercars will also get additional revenues from Fox Sports – owned by News Corporation (ASX: NWS) for the rights to replays, Telstra Corporation (ASXL TLS), which owns the online and mobile rights and international broadcasters.

Related: Last throw of the dice for Ten?

According to the Australian Financial Review, Nine Entertainment wasn’t interested in broadcasting the lower-rating V8 motor racing, after outlaying around $500 million for 2013-17 rugby league broadcasts, and to reserve funds for the up-for-grabs cricket rights. Nine’s exclusivity period with Cricket Australia ended on 31 December. Ten Network Holdings (ASX: TEN) is struggling and limited to what it could pay for any sports, and is believed to have not made a bid for the V8s.

V8 Supercars is 60% owned by private equity firm Archer Capital and the remainder by the V8 teams.

From the 2013 season, Mercedes-Benz and Nissan will join Ford and Holden in racing V8s. Stone Brothers Racing is expected to ditch Ford and build 3 E-class V8 Supercars, each with special AMG engines. The Mercedes V8s are tipped to make their race debut at Adelaide’s Clipsal 500 in March.

Kelly Racing will unveil their Nissan V8 Altimas at the same race, and retired champion, Mark Skaife believes there will be at least another two manufacturers on the grid within the next few years.

Foolish takeaway

At a time when free-to-air networks are struggling, with some experts suggesting Australia can’t support three commercial stations, Seven may be onto a winner. The entry of Mercedes-Benz and Nissan, and opening up of V8 regulations could bring in more fans and see V8 Supercars generate high ratings – a plus for attracting additional advertising – which is key for the free-to-air networks.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.  The Motley Fool ’s purpose is to help the world invest, better.  Take Stock  is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  Click here now  to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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