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Investing.com -- Morgan Stanley analyst Benjamin Swinburne said in a note to clients on Monday that Liberty Formula One’s (NASDAQ: FWONK) new five-year U.S. broadcast deal with Apple TV marks a calculated bet for Formula One, offering global visibility and platform expansion but limited near-term financial gain.
“While the F1-Apple deal had been expected, the 5-year term and inclusion of F1 TV were surprises,” Swinburne wrote, adding that the net financial impact is “immaterial to our published estimates.”
The firm said that when combining U.S. media rights revenues with foregone F1 TV revenues, “the effective AAV and CAGR is roughly 1.1x and ~3%.”
Under the new deal, Formula One will move its U.S. coverage from ESPN to Apple TV.
Morgan Stanley noted that “moving from ESPN to Apple presents viewership risk,” though “F1 is betting that Apple will lean into promoting the sport at levels beyond what Apple has done with MLS.”
Apple’s growing role in live sports, from Major League Soccer rights to its hit Formula One film, which grossed roughly $630 million globally, likely informed its decision to pursue the deal, the analyst said.
Morgan Stanley reiterated its Overweight rating on Liberty Formula One, saying its investment thesis rests on the company’s ability to” compound FCF/share growth at a 20% CAGR through 2028E.”
The firm added that sports assets like F1 and MotoGP remain “particularly attractive” because they are high FCF conversion businesses and “insulated from the disruption coming to the Entertainment industry from Generative AI.”
“Apple brings unique opportunities to F1 as a global consumer tech platform,” Morgan Stanley said.