Smaller Streaming Services Jump On Sports Rights To Drive Viewership

Forbes

a day ago

Despite skyrocketing prices for TV rights from name-brand sports leagues, even smaller streaming services know their future will be driven in part by that particularly sticky tune-in driver for audiences.
For evidence, look no further than this week's news. First, Paramount Skydance followed up last week's deal-closing merger by announcing Monday that it had signed a whopping $7.7 billion, seven-year deal for all UFC North American rights. That helped send share prices soaring Tuesday and Wednesday by roughly 60%.
Then on Tuesday, Comcast and the U.S. Golf Association announced a set of deals to carry the USGA's many championships on its various outlets, some of which are headed off to become a separate company.
All this comes days after ESPN and Fox unveiled new sports-focused streaming apps that will debut in a week, at premium prices ($30/month for ESPN app, and $20/month for Fox One).
Fox One will also feature entertainment, business and news content from across Fox's broadcast and cable operations, but live sports (NFL, Big 10 college football, Major League Baseball and Nascar) is almost certainly the big draw, given the app's pricing and sports' appeal to the biggest possible audiences.
Under the USGA deal, Comcast broadcaster NBC and streaming service Peacock will continue to carry the U.S. Open, U.S. Women's Open and U.S. Senior Open. But Comcast also announced what will be a separate deal to carry 11 championships of the US Golf Association on the Golf Channel and USA Network, which are among the Comcast cable nets being spun off into a separate company called Versant.
The deal kicks in beginning in 202y and will run 'through at least 2032,' USGA CEO Mike Whan said in a CNBC interview.
Perhaps having such a deal is near-existential for the Golf Channel, given its niche focus. But golf also figures into broader audience-retention strategies as Comcast prepares for the Versant spinoff.
Media companies have been investing heavily in live sports, particularly the NFL and college football, which remain the most-watched programming on traditional linear television.
Comcast CEO and controlling shareholder Brian Roberts said he will maintain a 30-percent stake in Versant, while promising the company will be a well-funded player in the looming reconfiguration and consolidation of U.S. media companies as they shift from cable distribution to streaming.
Whan said interest in golf has swelled in the five years since the pandemic lockdown, when the sport became a safe way many people could get outside, socialize and get some modest exercise and competition.
'Five years ago, I would tell you there are 30 million golfers and 6 million more who want to take it up in the next year,' Whan said. Now, those numbers are 47.2 million players, and another 24 million who want take it up soon.
It's a valuable niche too, given the elevated household incomes of traditional golf audiences, with lots of corporate and finance advertises lined up to buy time.
Comcast also cross-promotes upcoming golf coverage onto its business-news network CNBC, which is also heading off as part of Versant. That's cross-promotion is a no-brainer, given the huge overlap between business executives and golf players. Now it'll be more important than ever as Versant heads to an uncertain new independent existence.
Comcast and Versant won't be completely sundered after the split, as the USGA deal demonstrates. Under the deal, Golf Channel's USGA championships will also appear on Peacock, which remains roughly half the size of Paramount Plus (and perhaps one-seventh of Netflix's subscriber base). Comcast has moved to expand its sports holdings, adding rights to weekly NBA games this season.
'Peacock is a big part of this,' Whan said.
Peacock already has NBC's weekly Sunday night NFL game, which is the most-watched show on linear television, and Big 10 football and other college sports. Peacock also features the Olympics, English Premier League soccer, Tour de France cycling, and other pro sports.
Comcast ponied up to keep its golf rights, despite a number of other bidders. Whan said the USGA was 'enthused and impressed by the breadth of interest' among rights bidders, reportedly including Netflix.
Paramount Skydance shares jumped notably this week, opening Monday at around $10 a share, briefly topping $16 apiece before settling today to around $14. The UFC deal may have contributed to the big jump, though it's also likely due to a short squeeze that briefly turned the company into a meme stock this week like AMC Entertainment.
Only 30% of the company's shares are available to the public (the rest controlled by new company chief David Ellison and his partners). Those shares included a notably large number of shorts, reportedly as many as 89 million of 300 million available, according to Barron's.
Regardless, the UFC deal with TKO Holdings is a big one, bringing one of the premier combat-sports leagues to Paramount Skydance as Ellison tries to reinvigorate and build a company hobbled for years by boardroom intrigue and inadequate resources. Combat sports, featuring both men and women, have proven hugely popular with younger audiences, especially compared to the aging followings of sports such as baseball and even football.
The $PSKY deal with UFC is notable for more than its girth. Company executives said they hope to extend the deal to international territories as they become available in the future, befitting Ellison's global ambitions for Paramount Plus and CBS.
UFC matches also will no longer be pay-per-view, as they've been for many years, including with current rights holder ESPN. Instead, dozens of weekly fight nights and four big events a year will be freely available to all Paramount Plus subscribers. The big events will also be available on Paramount's CBS broadcast network.
Both maneuvers should dramatically increase visibility and reach for UFC and for its fighters, though some have voiced concern that it will further erode leverage of the biggest-name fighters. Typically with PPV, ticket sales were driven by the biggest-name competitors, such as Irish star Conor McGregor, who was part of the four highest-selling cards in UFC history.
Paramount Plus currently has around 77 million subscribers, a notably low churn rate, and a batch of third-party customer surveys that suggest it's one of the more well-liked omnibus subscription services in the market. Credit that to all those CBS and Taylor Sheridan shows, the Star Trek franchise, and NFL and college sports.
But Ellison now has flexed his family's ample bank account (father Larry is ranked among the planet's very richest humans) to shore up viewership even further, first with a $1.5 billion deal announced last week with the creators of South Park, and now with UFC.
There aren't many other packages of notable sports rights in the market right now. ESPN walked away from its $500-million-a-year deal with Major League Baseball after this season, though it and other media companies reportedly are interested in smaller possible packages.
And Apple is reportedly in talks to double what Formula One is making from its North American rights to show the races on Apple TV+.
Apple recently collaborated closely with the racing circuit on F1: The Movie, starring Brad Pitt. That film has generated $575.6 million in worldwide box-office gross, according to BoxOfficeMojo.com, and spurred Apple's development of in-car camera technology that could be used to create compelling real-world race footage in the future.