Image source: Federation Internationale De L'Automobile. 

The lines between media distributors and content creators have been blurring for years as cable companies, networks, content providers, and even cellphone companies have merged. Comcast's acquisition of NBCUniversal is probably the best example of all the segments of the media industry being rolled up into one big ball.  

Quietly, John Malone has been building a global media empire at Liberty Media Group (NASDAQ:FWONK) (NASDAQ:FWONA) with TV stations, cable companies, cellphone networks, a major stake in Sirius XM (NASDAQ:SIRI), and the Atlanta Braves. But no media company has made a move as bold as buying an entire sports league or racing series. That's exactly what Malone did this week when he announced an $8 billion deal to buy Formula 1. And it's big news for the entire media landscape. 

The biggest racing series in the world

NASCAR gets the lion's share of attention from race fans in the U.S., but Formula 1 is the world's favorite auto racing series. Its races are held in Canada, the Middle East, Europe, and Asia, and they take over entire cities when they come to town. And it's not a blue-collar pastime like NASCAR; Formula 1 is a place for billionaires and supermodels to see and be seen. That means a lot of money is flowing through F1 and everything associated with it.

Image source: Federation Internationale De L'Automobile.

It's also a huge draw to fans around the world, although not in the U.S. NBC Sports, which has the TV rights for Formula 1 in the U.S., says it gets just over 300,000 viewers for Formula 1 races, about 1/10th of the viewership of a Nascar race. But globally, Formula 1 has over 400 million viewers, according to the series. That's a huge number of eyes coming to its live events -- and live events are where TV networks and advertisers are focusing their dollars right now.

It's not clear how Malone might expand Formula 1's reach given Liberty Media Group's current assets. Sirius XM could be a growth platform, and the company owns networks in the U.S. as well as cable and cell networks in Europe and Latin America. He could increase visibility of the series in those regions through deals within the Liberty Media family, or squeeze as much as he can out of partner networks. But I would expect to see more Formula 1 coverage now that Liberty Media owns it. 

How Liberty Media will take control of Formula 1

As with all of Liberty Media's moves, this deal will be complex for investors.

Liberty Media is paying $8 billion in total for Formula 1, but not all at once. The first transaction happened on Sept. 7 when Liberty Media bought 18.7% of Formula 1 for $746 million in cash.

A second transaction, anticipated in the first quarter of 2017, will bring ownership up to 100% and involve paying $1.1 billion in cash and $2.9 billion in newly issued shares of Liberty Media Group series C stock. The company will also take on Formula 1's $4.1 billion in debt. New shares will be 65% of the company's equity value and Liberty Media Group will then change its name to Formula One Group.   

In essence, Liberty Media is buying the company with new shares in an effort to expand its empire. 

Will this be the new formula for media companies?

As the cost to acquire content of all types has gone up -- particularly in the live sports world -- media companies have been in an arms race. But buying an entire racing series takes it to a new level. This would be like Disney buying the NBA or Fox buying the NFL. It's a huge move for Malone and Liberty Media. 

What shouldn't be questioned is that Malone has an eye for value in the media landscape, and he has taken a longer term view of the industry than many competitors. He may see ways to unlock value in Formula 1 that others haven't, and that could lead to gains for investors. No matter how you look at it, this is a big gamble on racing that few others in media could pull off today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.