Why John Malone Put Chase Carey in Charge of Formula One

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Liberty Media is paying $4.4 billion for the motorsports giant, which will be overseen by Rupert Murdoch's longtime lieutenant as he remains vice chairman at 21st Century Fox.

John Malone has taken the checkered flag in the race for ownership of motorsports giant Formula One, with his Liberty Media making a $4.4 billion bet that it can grow its global appeal and financials.

For Hollywood, the real news though was who is coming along for the ride. Former DirecTV boss and longtime Rupert Murdoch lieutenant Chase Carey, 62, will serve as Formula One chairman while remaining vice chairman and a nonexclusive consultant at 21st Century Fox.

Wunderlich Securities analyst Matthew Harrigan said Murdoch likely “at least grudgingly went along” with Carey’s decision to work with Malone, 75, who has been called a Murdoch frenemy and who bought DirecTV from Murdoch when Carey was CEO, but a source says Murdoch supported the move. Carey's Fox role also doesn't require a big time commitment.

Some also immediately wondered whether Malone could down the line look to tap Carey, maybe once his Fox involvement ends (his current Fox arrangement runs through mid-2017 with the option for another year), for a broader content business role. After all, Malone was a driving force behind Lionsgate’s deal for Starz and has spoken of the need for increased scale that could see him push for further consolidation.

“He has often used talent he trusts and shuffles them around as appropriate,” Macquarie Capital analyst Amy Yong said about Malone. “The fact that he brought him back from a previous relationship with DirecTV is a sign of confidence in Carey’s ability to execute.”

But Harrigan said: “I think Formula One is the right project for Chase,” who is known as a big New York Yankees and overall sports fan. “I view Chase more as a sports than an entertainment guy.” He added: “Chase is the maestro of sports rights monetization.”

That’s why Carey seems to have had the pole position when Malone needed someone to oversee Formula One. Liberty's acquisition, which puts an enterprise value of $8 billion on the racing franchise, gives it the chance to own one of the most profitable sports brands in the world, and Carey's job will be to take it to the next level. Notes Yong: "Formula One is one of the few remaining undermonetized sports franchises complete with global recognition and a loyal, high-income fan base." She added: "We believe it can reach its full potential under the leadership of chairman Chase Carey and Liberty."

During a conference call, Carey and Liberty Media CEO Greg Maffei mentioned such opportunities for F1 as increased promotion and marketing, digital distribution of content, an expansion of commercial partners and a possible expansion of the race calendar. "Markets like the U.S. and key Asian markets are an opportunity for us to develop," said Carey.

Formula One’s 2015 revenue amounted to $1.70 billion, with earnings before interest, taxes, depreciation and amortization after team payouts reaching $464 million, according to Liberty’s conference call materials.

Observers say Carey, who oversaw the lucrative Fox Sports properties, knows how to promote the value of sports and its ability to reach a huge live audience. But his biggest challenge might be keeping Bernie Ecclestone, who will remain CEO of Formula One, in check. The 85-year-old Ecclestone, who is as colorful and headline-grabbing as some of F1's star drivers, has effectively controlled the sport since the late 1970s and never has seemed to play well with others nor been willing to groom a successor.

Carey gave Ecclestone credit, but also made clear the new owners feel more can be done. "I greatly admire Formula One as a unique global sports entertainment franchise," Carey said. "I see great opportunity to help Formula One continue to develop and prosper for the benefit of the sport, fans, teams and investors alike."

This story first appeared in the Sept. 23 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.