The deal is currently on hold as the European Commission completes an in-depth investigation into the proposal following concerns about the impact to consumers.
Liberty Media announced its plan to acquire an 86 percent stake in Dorna, the company that owns MotoGP’s commercial rights, last April.
At the time, the deal was valued at AUD $6.9 billion and would have handed the American company control of the world’s two leading motorsport properties.
Requiring approval from several bodies globally, including foreign investment clearance in Australia, the proposed deal caught the eye of politicians in Europe.
The European Commission was obliged to assess the proposed sale due to the size of the players involved and the potential impact on the European market, a process which has identified areas of concern.
That saw the transaction progress to Phase II investigation with the European Commission amid antitrust concerns, specifically that it would drive up costs for licensing and broadcasting rights.
While Liberty Media had hoped to conclude the deal by the end of 2024, the EU investigation delayed that until May 2025.
Speaking at the time, Teresa Ribera, executive vice-president of the European Commission for clean, just and competitive transition, and commissioner for competitiveness, said: “We need to more carefully assess whether this acquisition could negatively affect European broadcasters, for example in terms of increased license fees, and ultimately European consumers and motorsports fans through higher prices.
“We will at the same time openly consider any substantiated claims by the parties about possible benefits this acquisition might bring, for fans, the industry and for consumers.”
As Speedcafe revealed, the delay triggered a clause in the purchase agreement, forcing Liberty Media to pay AUD $225 million in penalties to keep the transaction alive until June.
There are three potential outcomes from the Phase II investigation: unconditional clearance, approval subject to remedies, or rejection.
According to a report by Reuters, the transaction is poised to gain unconditional approval.
Given the European Commission’s concerns about the deal and its progress to a Phase II investigation, unconditional approval was considered the least likely outcome.
Previously, CVC Capital was forced to divest its interest in MotoGP after it acquired the commercial rights to Formula 1 in 2006.
Indeed, comments from Liberty Media’s executives when the deal was first announced highlighted the need for separation between the two businesses due to antitrust considerations.
“The CVC decision, which is almost 20 years old, was never really followed up on in terms of any kind of in-depth investigation or appeal process – they chose to just quickly close and move on,” said Renee Wilm, Liberty’s head of legal, last April.
“We’re pretty confident we can get this done quickly and get the transaction cleared.”
In the same investor call, then-CEO Greg Maffei added: “We are very confident we will get this through regulations because we believe there is a broad market for sports and entertainment properties of which both Formula 1 and MotoGP are only a small subset and the market has continued to change from the time from when this was previously reviewed in a major way.
“We are going to not treat these as a bundle; we are not trying to bring them together to market. These are both separate properties.
“The things we bring to the table here are not in any way leveraging the two.
“I think it’s pattern recognition and leveraging some of the learnings we’ve had from F1 and some of the opportunities we see to expose MotoGP – not in any way to leverage the two.
“We’re very confident in the regulatory side.”
Since first announcing its intention to acquire MotoGP, Liberty Media has undergone a significant restructuring.
That has seen Maffei depart the organisation in a move widely linked to a United States Department of Justice investigation into the rejection of Andretti Global’s attempts to join the F1 grid.
It has also spun off several other businesses, reducing its assets to little more than Formula 1 Management in a significant simplification of the organisation.
Liberty’s stock price fell from record highs of over USD $80 to trade at USD $62.16 on Wednesday, a six-month low.
Following the Reuters report, the stock bounced back to close just under USD $70.
The European Commission is expected to make its decision in the coming weeks, while Liberty Media will announce its first-quarter earnings on May 7.
Discussion about this post