On the face of it, the announcement today that the Spanish TV rights to broadcast MotoGP have been awarded to the commercial channel Telecinco is good news. The channel is one of the very largest in Spain, is well funded and features some Spain's most popular TV shows, such as Gran Hermano, the local version of moribund Big Brother reality TV format.
The press release announcing the new deal certainly made it sound like a positive move. Dorna boss Carmelo Ezpeleta said of the deal, "Reaching this agreement with Telecinco once again demonstrates the status and firm grounding of MotoGP as a televised sporting spectacle which enjoys a huge, dedicated following. Telecinco are widely acknowledged for the excellence of their sports broadcasting and we are therefore highly confident that this deal is a firm step forward for MotoGP." In turn, the CEO of Telecinco, Paolo Vasile, stated "It has always been one of our goals to introduce MotoGP into our offering to viewers, as the sport has enjoyed numerous Spanish success stories." But what Vasile went on to say reveals much about the nature of this deal: "Telecinco will even be ready to work with Dorna before 2012 if the rights become available earlier."
For behind this story lies a tale of swingeing budget cuts at TVE, the Spanish state broadcaster. TVE has been hit by both falling advertising revenues and severely reduced state funding of the broadcaster. The company already broadcasts several of the most expensive sports series in the world, including the Soccer World Cup, Champions League and Spanish La Liga championship, as well as the three big professional cycling tours (of Spain, France and Italy), tennis championships and, of course, MotoGP. That level of spending is no longer sustainable, and TVE has come under severe pressure to cut one or more of those projects.
The axe has fallen on MotoGP. TVE was reportedly spending between 20 and 22 million euros a season on the series, which is immensely popular in Spain. In comparison, the BBC is believed to pay between 10% and 20% of that amount, to reach about a quarter of the audience achieved in Spain, while contracts in minority territories such as The Netherlands are said to go for around half a million euros per season. The move to drop MotoGP from the schedules faced heavy internal opposition from parts of the board which runs TVE, but the broadcaster could simply not afford to keep up that level of spending.
With TVE out of the running, Telecinco is unlikely to have committed to a similar fee structure for the rights to broadcast the series. The switch is almost certain to have cost Dorna money, especially given Telecinco's assurances that they stand ready to take over broadcasting MotoGP before the contract is due to start in 2012. This refers to the possibility that TVE could be forced to pull out before the end of its current contract. The state broadcaster is already negotiating with regional broacasters in Catalonia, Valencia and Andalucia to help shoulder some of the costs of the licensing fees.
If TVE cannot find sufficient financial support from these regional channels, they may be forced to pull the plug early and hand over to Telecinco. An announcement to that effect is expected to be made some time next week.
Though Dorna may have lost some income from the change in the Spanish TV market, its other main source of revenue is safe. The Italian TV rights rest with Mediaset, part of Italian Prime Minister and business tycoon Silvio Berlusconi's media empire, and part of the same group that owns the Spanish broadcaster Telecinco. Mediaset is in rude financial health, and unlikely to cut costs by dropping MotoGP. Especially not while Italian racing legend and marketing genius Valentino Rossi is still in the series.