Liberty Media Leads £6.4bn Race For Control Of F1 Motor Racing

A company backed by John Malone, the American media tycoon, is leading an $8.5bn (£6.4bn) battle for control of Formula One (F1) motor racing after proposing a deal that would see the sport’s owner listed on New York’s Nasdaq (NasdaqGS: NDAQ - news) stock exchange.

Sky News has learnt that Liberty Media Corporation (NasdaqGS: BATRR - news) , which owns a range of entertainment assets, is in detailed talks with F1's controlling shareholder, CVC Capital Partners, about a transaction.

A frenetic period for the ownership and management of F1 could also involve Chase Carey, a former DirecTV (EUREX: 19071070.EX - news) and News Corporation (NasdaqGS: NWS - news) executive, being appointed as chairman of the sport's parent company prior to or alongside a deal, according to people close to the situation.

Mr Carey, who continues to serve on the board of Rupert Murdoch's 21st Century Fox and is also a director of Sky plc (LSE: BSY.L - news) , the owner of Sky News, is understood to have been in talks about the role in recent weeks.

CVC (Taiwan OTC: 4744.TWO - news) is said to be considering naming him - with the support of Liberty Media Corp - as F1's chairman to replace Peter Brabeck-Letmathe, the chairman of Nestle (Swiss: NESN.VX - news) .

If appointed, Mr Carey would work alongside Bernie Ecclestone, F1's 85 year-old chief executive, although it is unclear how long that structure would remain in place.

Under the proposals tabled by Liberty Media Corp, which is led by Greg Maffei, shares in F1's parent would be acquired in two phases for cash and stock.

The first tranche, which would involve the acquisition of a minority stake and would not be subject to regulatory conditions, could take place within weeks.

The remainder of the deal would see Liberty Media Corp acquiring the majority of the company, which would be subject to the approval of certain regulators as well as the FIA, world motorsport's governing body.

F1 would effectively gain a backdoor stock market listing because it would then be absorbed into Liberty Media Group, one of three so-called tracking stocks into which its parent was restructured earlier this year.

Liberty Media Group would probably be renamed to reflect its ownership of F1 if the transaction goes ahead, according to bankers.

Even (Taiwan OTC: 6436.TWO - news) if a deal can be concluded, it is unlikely to be announced for several weeks because of its complexity and ongoing interest from other potential buyers, banking sources said on Thursday.

Another of Mr Malone's businesses, Liberty Global (NasdaqGS: LBTYA - news) , which owns Virgin Media, has also been exploring a deal, pitting it against its sister company.

Liberty Global is working with Discovery Communications (NasdaqGS: DISCA - news) on its bid, although the duo are said to be trailing Liberty Media in the race for control of arguably the world's most glamorous sports series.

Silver Lake, the private equity firm which owns the talent management agency WME-IMG, has also been looking at F1, although its recent takeover of the Ultimate Fighting Championship franchise may have dampened its appetite to pursue an imminent deal

CVC has been running a process for several months to sell part of F1, which could - depending upon the specific transaction - result in the sport changing control for the first time in more than a decade.

The Wall Street Journal reported recently that Sky plc was in talks about buying a stake in F1, although that prospect has since been played down by advisers familiar with the matter.

Unexpected names such as Apple (NasdaqGS: AAPL - news) , as well as the Qatari owner of the Paris Saint-Germain football team, have also been linked to the sport.

‎CVC's investment in F1 has been extraordinarily lucrative, earning it billions of dollars in dividends and proceeds from the sale of several minority stakes to investors including Norway's sovereign wealth fund and BlackRock (Sao Paolo: BLAK34.SA - news) , the world's biggest asset manager.

CVC is the biggest individual shareholder in Delta Topco, F1's parent, with a 35% stake, while Waddell & Reed, a US-based fund manager, owns just over 20%.

It is unclear whether the other minority investors would regard the potential Liberty Media Corp deal as a positive move, since some of them acquired their shares at a premium to the price that CVC is now looking to sell - prior to the dividends they have subsequently received.

However, CVC has special rights which enable it to force other investors to sell their holdings.

In sporting terms, F1 - which in the UK is broadcast by companies including Sky (Amsterdam: BK8.AS - news) - endured a difficult start to 2016 amid controversy over the format used for race-qualifying.

However, a topsy-turvy battle at the top of the drivers' championship featuring the Mercedes (Xetra: 710000 - news) teammates Lewis Hamilton and Nico Rosberg has stoked renewed interest in this year's series.

A change of ownership of F1 would be of huge significance given the explosive growth in the value of sports assets during the last decade as media-owners have sought new ways to connect with their customers.

Mr Malone has long-coveted owning a stake in F1, holding talks about a deal in 2014.

Liberty Media Corp, part of Mr Malone's sprawling asset portfolio, consists of assets held through three so-called tracking stocks: the Liberty Braves Group, the Liberty Media Group and the Liberty SiriusXM Group.

Collectively, the trio own minority interests in media companies such as Time Warner Inc (Xetra: AOL1.DE - news) and Viacom Inc (NasdaqGS: VIAB - news) , the Atlanta Braves Major League Baseball club, and Sirius XM (NasdaqGS: SIRI - news) , the satellite radio group.

The investment banks Goldman Sachs (NYSE: GS-PB - news) and Morgan Stanley (Xetra: 885836 - news) , and the law firm Freshfields Bruckhaus Deringer, are understood to be working on the Liberty Media Corp-F1 deal.

CVC and Liberty Media Corp declined to comment on Thursday.