The BBC will show half the races live in 2012 as well as highlights for all races © Sutton Images

The BBC has defended its decision to split Formula One's UK broadcasting rights with Sky in 2012 and revealed it will save £150 million over the next seven years as a result.

The BBC announced its deal with Sky at the Hungarian Grand Prix, provoking a largely negative reaction from UK fans and raising questions about how it was reached.

BBC director general Mark Thompson appeared in front of MPs from the Culture, Media and Sport Committee during a meeting for the BBC Annual Report and Accounts last week, and towards the end of the session was questioned about how the deal with Sky came about.

"The idea of sharing the rights under the remainder of the current contract and of potentially extending that contract was our idea," Thompson explained. "There was a negotiation that led to all the parties involved in the conversation being happy with the idea. The effect will be to save the BBC well over £150 million between now and the end of the contract-money that obviously means that only half of grand prix will be live on the BBC, but it has enabled us to keep a very good position in Formula One, and to make savings that otherwise might have meant deeper cuts in other services."

Under the agreement the BBC will show ten races live and ten races as highlights, while Sky Sports will have a dedicated channel for all 20 races. Thompson argued that it was the best deal UK fans could have hoped for as there was a danger that all coverage could have gone onto a pay-to-view channel.

"We know that Formula One has only fairly recently come back to the BBC; it has been very popular on the BBC. Secondly, we know that Formula One fans ideally do not want Formula One to be interrupted by advertising, because of the character of the sport. Nor, of course-for the subset of Formula One fans who do not have Sky subscriptions-would they, ideally, like Formula One to go entirely behind a paywall. I believe that the arrangements that we have reached offer very good value to the licence payer, and the experience of Formula One on the BBC will still be very rich. The first grand prix next season, when this new arrangement starts-the Australian Grand Prix-will be live on Sky in the very early hours of the morning. There will be a 75-minute highlights package in peak time on the BBC, which we would expect to reach many more people than the live coverage."

Asked why the BBC did not approach another free-to-air channel in the UK to share the rights, such as Channel 4, Thompson said: "We were quite clear that, to get the economics to work for us, it was going to have to be a pay partner, and this was the only pay partner, credibly, whom we thought we could involve in it-indeed, a pay partner who had expressed interest in this very topic of conversation previously. It was an example of a free-to-air pay partnership, which is not by any means unknown in the market."

When pushed on why he didn't ask Channel 4 at all, Thompson added: "It seems to me that it was not required of us, and given that, in a sense, what we were trying to achieve on behalf of the licence fee payer was a significant saving, actually keeping the confidentiality of the process until it was clear whether the thing was viable and whether all parties to it-including, of course, the rights-holder-were happy, militated in terms of doing it the way we did it."