Fight Club: Endeavor Is Ready to Rumble in Media With $21 Billion UFC-WWE Merger

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For decades, sports on television was a bulletproof business. Live games, airing on local stations or national networks, reliably brought in big audiences and even bigger advertising hauls. Inside …

For decades, sports on television was a bulletproof business. Live games, airing on local stations or national networks, reliably brought in big audiences and even bigger advertising hauls.

“These are highly engaged, global fan bases who are young, diverse and incredibly passionate,” Shapiro says of the UFC and WWE demographics. “They’re seeking sports, entertainment, music, live events and premium experiences — all of which we specialize in.” “Endeavor remains our top pick across [media and entertainment], given its portfolio of assets across sports and live events and its industry-leading talent agency business,” Benjamin Swinburne, Morgan Stanley’s top media analyst, wrote in a research note last month. “We remain bullish on the unique value of sports, including the UFC and WWE, which we expect will translate into strong [earnings] growth for Endeavor.

The biggest challenge for sports on TV in the near term will be adjusting to the new economics of pay TV. Sports has long been shielded from the pressures of economic downturns and network cost cutting because it has been so profitable. But the same factors that have fueled Hollywood’s ongoing writers and actors strikes are in play when it comes to sports.

The great un-bundling from cable to streaming has taken an even bigger toll on regional sports networks. Those regional services that carry hometown teams also historically commanded high fees that were passed on to all consumers. Now, with subscriber rates declining every quarter, an increasing number of cable operators say they are ready to cut the channels business entirely and focus on providing the broadband and Wi-Fi services that consumers need in order to watch their favorite streamers.

Meanwhile, older sports buffs who have come to think of access to ESPN as a birthright are frustrated by all the changes across the TV dial. Netflix has famously vowed to stay out of the sports business because of the challenge of monetizing sky-high rights fees on its platform, which is built for on-demand viewing . Amazon and Apple have tiptoed into sports with limited rights deals: “Thursday Night Football” for Amazon, a cluster of Major League Baseball games for Apple.

The last time UFC and WWE were in the market with big TV-rights packages, both caught lucky breaks in hitting just as studios and streamers were in a mad scramble to acquire content for new programming ventures. UFC fights and pay-per-view events became a pillar of ESPN and its streaming sibling ESPN+ under a rich contract.

That sparked probes of WWE’s handling of the situation and questions about the disclosure requirements to shareholders around the payments. McMahon, meanwhile, made more than $110 million from the cash distribution to WWE shareholders following the closing of the deal. Going forward, McMahon owns 16.6% of TKO. Khan oversees day-to-day operations and has become a respected leader since joining WWE in 2020.

 

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