Did Amazon pay £160 MILLION to sign Top Gear’s Clarkson, Hammond & May?

The Financial Times is reporting that Amazon has paid Top Gear’s Jeremy Clarkson, Richard Hammond, James May and Andy Wilman $250 million for their car show.

The rumours and counter rumours about the future of Top Gear’s Jeremy Clarkson, Richard Hammond and James May – and producer Andy Wilman – have ended this week with the news that the former Top Gear presenters have signed a deal with Amazon Prime.

Clearly, we all realised that the pay packets of the three plus one would be significant – after all, the BBC Top Gear had worldwide audiences of up to 350 million – but did anyone expect the sum on offer to be £160 million?

We certainly didn’t, but the Financial Times is reporting today that the deal is worth $250 million for a three year deal to deliver 36 episodes of a new car show (which could be called Drive 2 or Drive 2 Prime, judging by the hashtag Amazon used with the news of the deal). But how can that make sense?

Well, on-line broadcasting is all about subscription numbers, rather than having to generate revenue per episode from advertisers. So if on-line broadcasters think a show could lift subscription numbers significantly, then there’s mileage in paying big bucks.

It’s a logic Netflix applied when they reportedly paid $100 million for House of Cards, with the expectation that subscribers would sign-up just to see it.

Apply the same logic to Amazon Prime, and you’re only looking at less than a million new subscribers to Amazon Prime paying the £80 a year to cover the cost of the deal for the Top Gear four, and leave more than enough for production and marketing. More than that, and Amazon are on a big winner.

So in the slightly barmy world of on-line broadcasting, £160 million could be a bargain.