Spotlight: Disney just bumped Netflix out of the F1

by

Jack Derwin

July 1st 2022 3 minute read

Formula One has gone from being a niche sport to one of the hottest properties in streaming in the space of just three years. While the rights to it are still dwarfed by more mainstream sports, some powerful marketing and a rapidly growing audience is making broadcasters sit up and take note. These are the five big stories from the week that was.

1. Fast cars

This week Disney secured the streaming rights to the Formula One for at least US$75 million a year, or 15 times more than the last deal.

It’s a bitter pill for Netflix which lost the bidding war despite being largely responsible for reinvigorating the F1 with its series Drive to Survive.

It’s still small change. For perspective, the NBA rights are valued at US$2.6 billion annually or 520 times more than the Formula One was last year.

Yet the NBA only rakes in 5 times more views on TikTok (87 billion) while the F1 is growing its TV audience at 50% and making serious in-roads into the U.S.

2. Sneaker heads

Nike beat earnings this week despite falling U.S. sales and Chinese lockdowns as Europeans went on a shopping spree this quarter.

Yet getting shoes on feet is proving more difficult. Shipping costs have risen 5x since 2019 while US$8.4 billion of stock piles up due to supply disruptions. 

It means buyers are waiting an extra two weeks for purchases to arrive as Nike cuts out retailers like Footlocker and goes direct to customers. 

As inflation rises and with a possible U.S. recession on the horizon, its next test will be whether consumers continue to wait and continue to buy.

3. Social harm

Social media apps have created a trillion-dollar industry by creating the most addictive platforms possible. Now they potentially face lawsuits for it.

A new bill being debated in California could open the likes of Meta, Snap and TikTok up to enormous fines if their apps are found to harm kids.

While social platforms will fight to protect themselves, it points to increasing scrutiny on the sector as we ask who is ultimately responsible when it goes wrong?

4. Finger lickin’ good

As economic dark clouds gather, investors are looking for resilience and they may have found it in an unlikely place: fried chicken.

Collins Foods, which operates 261 local KFC stores, soared after beating market expectations – with net profit up 47%.

Rising menu prices and a lack of lettuce hasn’t stopped Australians queuing up for fast food. The CEO of CKF says tightening belts might actually make those lines even longer.

5. Zoom Out

The S&P 500 is off to its worst start since 1970 and the Dow Jones since 1962, today’s headlines read, wrapping up the first half of 2022.

Yet to provide some context: the S&P is still up about 12% on its pre-COVID all-time high. In fact, over the last five years it’s up 56%.

During that time period, it’s rarely been smooth sailing with markets moving up and down month to month. As a long-term investor sometimes it just helps to zoom out.

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