This article has been written by Vasundhara Thakur, pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.

Introduction

Formula one commonly known as F1 is an international auto racing sport that is governed and sanctioned by the international organization Fédération Internationale de l’Automobile (FIA) or the International Automobile Federation. It has been highly recognized as the world’s most popular and prestigious motor racing competition and annual sporting series since the outset of the Formula One World Championship in 1950. The term Formula 1 comes from the set of rules that the participating candidates (drivers) and cars need to follow. It is the highest level of single-seat, open-wheel, and open-cockpit professional motor racing contests. The “One” represents the top racing category in the Fédération Internationale de l’Automobile, consisting of the most advanced and fastest racing cars which are equipped with two wings (front and rear) and an engine that is located behind the driver. All the rules, regulations, contests, and other details of F1 racing are set up by the FIA. Formula One races are conducted over a period of time, usually over a year called the “Formula One World Championship season” Each race in a season is called a ‘Grand Prix’ or GP, and all the races in a season combined are called ‘Grands Prix’. Each Grand Prix is named after the hosting country, like if the race is conducted in Australia then it will be called the Australian Grand Prix, if it is conducted in Spain then Spanish Grand Prix, and so on. 

Commonly, people prefer to go out and see the matches and races live, however, with the waves of pandemics hitting us for yet another year, it has changed the way of watching sports and races. Now we are keener to watch our favorite races by sitting in the comfort of our homes at our own pace, be it recorded or live stream. Given its popularity, F1 has been partnered with several broadcasters from all around the world to broadcast the Formula One Championship on different networks like Sky Sports in the United Kingdom and Ireland, ESPN for the United States of America, Hotstar for India, and so on.

Recently, F1 has been in talks with one of the major internet broadcasters Amazon for the future streaming deal of the Formula One World Championship on its ‘Over the Top (OTT) platform and through this article, we will try to establish what must have been the crux of the licensing agreement between F1 (Formula One) and Amazon Prime, the possible terms of this agreement, what is licensing agreement and the purpose for such licensing, various rights that involve and assign through such licensing agreement and the conclusion thereof.

What are broadcasting rights and how can they be distributed? 

Broadcasting means (also called streaming rights)  the distribution of audio-visual content via any electronic media like television, over-the-top platforms, and so on. OTT (Over the Top) is a term used to refer to the content providers who distribute streaming media as a standalone product directly to the viewers over the internet bypassing telecommunication, multichannel television, and broadcast television platforms that traditionally act as controllers/ distributors of such contents. Generally, a broadcaster or broadcasting organization signs a licensing deal or licensing agreement with the producer of the content. This license grants permission to use a broadcast in a specified territory for a specific period of time. These rights govern the distribution of copyrighted content and allow the distribution of content at the given time.

In India, Section 2 (dd) of the Indian Copyright Act, 1957 defines the term broadcast. Whereas, Section 37 specifies the Broadcasting Rights. 

Plausible terms of the agreement 

As mentioned in the above paragraph that a broadcaster (licensee) and a producer (licensor) come into an agreement to exclusively or non-exclusive use the rights so granted in the licensing agreement. Accordingly, in this case, a few rights which must have been granted by F1 to Amazon could be: 

• Broadcasting and live streaming rights: Amazon will acquire regular broadcasting rights from F1 to broadcast live as well as recorded matches. This clause could be drafted as “That the licensor (F1) comes into an agreement with the Licensee platform (Amazon prime videos) to grant the rights to acquire broadcasting/streaming of live races in the platform which includes traditional rights package and F1 TV on Amazon channels (Amazon channel is the OTT offerings by Amazon Prime Videos) with regards to the actual races and host of the already existing F1 TV”. 

• F1 TV: The main intent behind F1 is entertainment which could reach more people across the world. With this deal, F1 wants to be one of the smart channels on the Amazon Prime platform and for this, they will be acquiring both linear as well as non-linear channel rights. A linear channel means when a program follows a definite schedule, whereas a non-linear channel is concerned with the on-demand programs where one can watch the races at their pace on any device, time and place. So, F1 will come to an arrangement with amazon where F1 has already signed a new deal with its on-demand cloud computing division Amazon Web Services (AWS), which will serve as the official cloud and machine learning provider of F1. 

• On-demand rights: That F1 grants the digital rights to provide licensed viewing of live races on the F1 channel that should only be SVOD (Subscription video on demand) basis. This means that similar to traditional TV packages it allows subscribers to consume as much content as they want at a flat monthly rate or yearly subscription, which will be included in the package when the subscribers subscribe to Prime videos. F1 has launched its own SVOD (Subscription video on demand) platform in 2018. Having it directly available on Prime Video would open the platform up to more than 100 million Prime members.

  

• Controllability of contents: That Prime video will put on relevant disclaimers such as the viewership, age, and contents to the viewers regarding the showcase of races before each match. 

• Subtitle rights: F1 grants a non-exclusive license to acquire subtitle rights in any language at Amazon’s cost, rights in subtitles should be ‘as in’ basis without making any changes and be the owner of such rights.

• Distribution rights: That F1 grants an exclusive distributor/broadcaster license to Amazon to stream or/and broadcasts F1 TV channel only on Amazon Prime Videos, during the term of the license and within the territory where Prime video is available and in permissible language as provided under the license. The service would be made available to Prime subscribers in countries where the local broadcaster has given up its exclusive rights under new or renegotiated deals.

• The Right to sublicense: That F1 grants the rights to sublicense limited rights, including the rights given to the language translators, audios for commentary in recorded races, sub-title rights. 

• Payments: The platform shall have the right to collect payment for its digital platform from the subscribers and will be eligible to get the distributor’s fee. 

• Copyright for the original production with F1: F1 will be the copyright of the original production of races and F1 TV. 

• Excluded rights: Any rights which are not specified under the agreement in favor of the Prime videos shall remain with F1.

Whether F1 can license them to other platforms at the same time and what are the implications of this license?

With the growth in competition among the digital platforms, it is well settled that Amazon would want to sign an exclusive license when it comes to digital rights of broadcasting F1 races and the streaming F1 Channel on the platform. While from the perspective of F1 it would want to keep offering this deal to other digital platforms/players to increase the viewership and to exploit whichever platform possible keeping in mind the subscribers. F1 can license these digital rights to other platforms, but it entirely depends on the deal with amazon which wants to keep it exclusive. There is a fair chance that this might create a viewership monopoly, however, keeping in mind the viewers’ response to the platform and change in its number of subscribers after this deal, F1 might keep a clause under the agreement making such conditions to decide on whether to grant the exclusive rights only to Amazon or to offer it to other platforms to exploit these digital rights making F1 channel no.1 across the digital platforms and to further expand the extent and duration/ term of the license.

Conclusion

The main objective of this deal is to make available the TV rights to stream through the platform. The basis of this concord is the pre-existing partnership with Amazon Web Services and to make available F1 TV on the platform by not only providing the broadcasting rights to the world championship but also being the host of the ‘OTT’ streaming service on F1 TV. This deal not only makes the F1 races accessible to more viewers but also creates a market for digital exploitation for live races. 

References

1. https://www.fia.com/fia.
2. Planetf1.com, F1 in Amazon talks over the future streaming deal,  (Mar. 17, 2021), https://www.planetf1.com/news/f1-consider-amazon-streaming/.
3. https://www.racefans.net/2021/03/03/will-liberty-turn-to-streaming-to-replace-ecclestones-record-1-1-billion-sky-f1-deal/.
4. https://wiki2.org/en/List_of_Formula_One_broadcasters.
5. https://www.skysports.com/f1.
6. https://www.motorsport.com/f1/news/f1-explains-talks-amazon-tv/5686692/.
7. https://www.primevideo.com/help/ref=atv_hp_nd_cnt?nodeId=G202064890.

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