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« | Home | »

Why Fox Sports is a lock to retain UFC television rights after the $4 billion sale

By Zach Arnold | July 10, 2016

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The long-rumored sale for UFC has finally happened. Lorenzo Fertitta and the Fertitta family is cashing out. Dana White will remain as the public face of the company. Joe Rogan is likely out as well. The price tag of sale is estimated to be $4 billion dollars. The Fertittas always win. Onto the NFL and Las Vegas next.

As for what it means to new ownership, the television landscape UFC encounters is a far different one than the landscape UFC cashed in on years ago with super agent Ari Emanuel. Emanuel helped the UFC land on Fox and now he’s part of William Morris which has taken over ownership of UFC.

There are two major stories of interest that will impact the future of UFC on American television.

UFC is the only program that consistently draws six-figure ratings on Fox Sports

According to a recent report from Awful Announcing, the UFC is the only program that consistently draws six-figure ratings on the fledgling Fox Sports 1 channel.

Chael Sonnen started out with a bang on Fox Sports 1 and ever since then it’s only been the UFC that has drawn good ratings on the network. Fox Sports poached away Debate King Jamie Horowitz from ESPN and has pushed talk format with Katie Nolan, Clay Travis, Colin Cowherd & Jason Whitlock, and now the new duo of Skip Bayless & Shannon Sharpe. Bayless may be the first non-UFC personality to crack six-figures consistently on Fox Sports but that remains to be seen. Nobody else has been able to accomplish this.

This is both remarkable and scary. UFC fans obviously had little trouble finding Fox Sports. It’s the rest of the network that is a mess. The network has shifted more towards live programming in an attempt to attract more consistent viewers. Copa America viewership was great. The problem is that the live TV audiences are not carrying over to Fox’s shoulder programming. Fox shifted away from Sportscenter-type shows and has now moved to Embrace Debate in order to bring internet flame wars to television. Fox Sports banked on Colin Cowherd’s interview with Donald Trump a few months ago drawing eyeballs and instead they got 81,000 viewers. A Trump speech on a Youtube live streaming channel gets that same number.

Which means UFC is *the* cornerstone for Fox Sports 1 and will remain the cornerstone. Fox needs UFC for its survival to remain on cable & satellite packages if it wants any shot of getting carriage fees. Deals are coming up soon for both Fox and UFC. They need each other badly right now.

The other problem is that UFC is running out of competitive alternatives to Fox Sports 1.

ESPN is shedding households at a scary rate and lost nearly 500,000 households in one month

In a sports weekend full of drama and activity, one story flew under the radar that will carry far more importance than any NBA Summer League game or UFC PPV.

According to Nielsen, ESPN lost over 450,000 TV households in the last month. ESPN still is in 89 million US TV households but the trajectory of their household numbers is declining. Losing 450,000 households in a month is not simply a decline — it’s a five-alarm fire.

Youtube is now expected to get into the sports media landscape by streaming their own sports programming. ESPN has desperately tried to capture cord-cutters through their ESPN App and Sling TV but is losing the overall war. Awful Announcing cites a report claiming that ESPN will try to go Over the Top but without access to NFL or MLB content. What’s the point?

ESPN’s financial model is based entirely on rights fees from cable subscribers regardless of how good or bad their ratings are. They make at least $6 a month from each cable subscriber. $72 a year. Losing a million households in a year equals a loss of more than $70 million USD. If ESPN loses more than a million households in a year, the long-term financial prospects are brutal. If ESPN lost three million households a year, the losses would be over $210 million USD yearly. There is no amount of production cutting that Bristol could do to save costs. They’ve already done their blood letting. They’ve created a preposterous imbalance of paying “talent” like Stephen A. Smith $3 million a year while paying interns on the cheap. At some point, something has to give.

Thanks to ESPN’s profligate spending on the NBA, the NBA salary cap is exploding and marginal basketball players are getting huge contracts because NBA owners thought that installing “max deals” with a salary cap would keep mega-stars from mega-bucks. Instead, ESPN is paying out the ass to keep the NBA and guys like Tim Mozgov are the ones cashing in. Only in America.

The long and the short of it is that ESPN, despite Disney ownership, is suffering from a depressing long-term prognosis. It still makes a lot of money but the gravy train is going to come to an end. It means the golden age of sports league getting monster TV contracts is over. ESPN ditched their boxing series in order to take Al Haymon’s money for an awful televised product. ESPN wants in on UFC but is no longer in a position of strength when compared to Fox Sports. Fox Sports is on a murder-suicide pact with ESPN and will spend Murdoch mad money to keep the UFC.

The next shoe to drop is Disney ownership of ESPN. Do not be surprised if Disney sells ESPN soon.

Conclusion: The sale of the UFC to Ari Emanuel’s enterprise combined with ESPN’s declining fortunes makes Fox Sports largely a lock to retain the television rights to UFC programming.

Topics: MMA, Media, UFC, Zach Arnold | 28 Comments » | Permalink | Trackback |

28 Responses to “Why Fox Sports is a lock to retain UFC television rights after the $4 billion sale”

  1. Pluc61 says:

    I remember reading in “These guys have All The Fun” that Disney was big on owning content. This is why they tried original programming like Playmakers and all the debate show.

    Then there News Corp that basically created a Rugby League in Australia in the nineties, just so they could own the content. You make a great case on how they are dependant on the UFC.

    Why didn’t these guys made a bid for Zuffa?

    And if these guys don’t think 4,2$B for Zuffa is worth it, how can WME think is worth it?

    This is not gonna end well.

  2. rst says:

    “…ESPN, despite Disney ownership,…”

    I didn’t know that. I knew there was something creepy about espn, now that explains it.

  3. DIAZ'S PACKED BOWL says:

    repost
    DIAZ’S PACKED BOWL says:
    May 14, 2016 at 2:52 pm

    I would exclude china as buyer since ONE championships is the Asian show already and could be bought for a fraction of the ufcs price.

    Blackstone has no reason to buy it, since they seem to be more of a real estate investment group

    UFC has a lot of value to the morris agency. Including cross promotion across the board, and using the ufc to promote more military invasions around the world. Using ufc to promote war has always been a top priority for them and Morris which is run by Ari brother of Rahm the corrupt Chicago governor, both of whom are sons of the Irguns Israeli terrorist leader responsible for the King David hotel bombing(among others)during a zionist terrorist campaign to gain control of Palestinian land. So with the frattatas being sons of criminals selling to another criminal brotherhood seems like a good fit.

    • Robert says:

      Not sure why you bring toxic politics into this article especially when you have no idea what your talking about. Palestinian ONLY meant Jew since the Romans renamed the area following the second Jewish revolt until 1964. Never been an independent Palestinian Arab/Muslim nation in the land of Israel and the Jews didn’t steal any land.

      Please do your research before spouting nonsense about serious world issues.

      • DIAZ'S PACKED BOWL says:

        YOU are speaking nonsense.
        “Morris which is run by Ari brother of Rahm the corrupt Chicago governor, both of whom are sons of the Irguns Israeli terrorist leader responsible for the King David hotel bombing(among others)during a zionist terrorist campaign to gain control of Palestinian land.”

        FACT, look it up.

        zionism is fact, irgun is fact…So you are saying that the irgun wasn’t trying to further the goals of zionism while conducting waves of terror?
        Then why have Pals had the majority of their country stolen from them? Why are they still being bulldozed out of the land their forefathers lived on? Ethnic cleansing there buddy. Its called fascism buddy and america supports it… what else would YOU call it?

        To explain why “politics” were brought into this article to you is easy…

        Ari is bringing politics into the ufc, to a greater extent then was before. He says who gets produced or distributed in hollywood. His brother ran Obama, and is currently covering up corruption in Chicago! Both brothers are political entities!
        If you think the Emanuel brothers powerful positions CONTROLLING MEDIA AND POLITICIANS aren’t somehow connected with their father HELPING TO FOUND A NATION WITH SUPPORT OF THE RICHEST PEOPLE IN THE WORLD, then there’s not much I can do to help you connect the dots.

        • Sam says:

          So you think the mayor of Chicago wants to control the world via his talent agent brother and be UFC by proxy? Okay.

        • DIAZ'S PACKED BOWL says:

          You said it, I didn’t. Why not read what I wrote again, you obviously missed the point and didnt research anything in it.

        • DIAZ'S PACKED BOWL says:

          I picked Ari to buy UFC months ago. I reposted to brag about it because I did a little research and came to that obvious conclusion based on their already close relationship etc….
          His agenda as a hollywood power and zionist is the same as UFC… to inject violent ideologies into new markets. He can inject UFC into whatever media he wants now/
          Ari and his brother, their political and media clout gives them unprecedented power to determine what you watch and talk about.
          One of their main jobs is to cover up what their criminal associates are doing around the world. So no, they aren’t controlling the world, just what the world talks about.

        • Sam says:

          I read what you wrote buddy. I just think it’s stupid.

        • DIAZ'S PACKED BOWL says:

          Hey mma fans are not the brightest bulbs. I dont expect you to have any knowledge of world history, I do expect you to come up with some type of logical reasoning for why you think its stupid. Just because you are stupid and can’t understand anything outside of your personal stupidity, is no reason to simply project your stupidity on others.
          Sorry if I seem rude, but ignorance and stupidity bring out the worst in me.

        • Sam says:

          I understand exactly what you wrote and am very familiar with the facts. Some of your facts are accurate but your theory is completely unfounded and unsupported by evidence. Sorry if seem rude but accusations of stupidity and ignorance from a complete moron kind of bother me.

        • DIAZ'S PACKED BOWL says:

          Well Sam, you are stupid. You can’t even write a coherent sentence. Try using some commas and maybe put an “I” and an “S” in there and you’ve got something I can understand.

          So whats my theory smart guy?

          Before you object to facts or theories you have to…
          #1 Know what the theory is that you are refuting.
          #2 Provide a counter, or alternate theory.
          #3 Provide your own set of facts to prove your theory.

  4. Seth says:

    If ESPN is struggling to get content, why wouldn’t they make a bid for the TV rights when the fox deal is up?

    • Zach Arnold says:

      ESPN isn’t struggling to get content — they’re struggling under the weight of the content arms race from the last few years and are now paying the price for it.

      They’re shedding households which means they’re losing guaranteed money on carriage fees.

      They’re losing talent, like Mike Tirico & Brad Nessler, left and right. Talent used to swallow their pride and relocate to Bristol. Now they demand to go to Los Angeles or NYC or Miami.

      ESPN management made a huge gamble with the new NBA deal. Ratings are way up and the Warriors super-team will help. But it doesn’t fix the underlying math problem with ESPN’s core business. Cable bundling is their business model. Cord-shaving has hurt but on the edges. Cord-cutting is the ball buster and losing 450,000 households in a month is cutting.

      Disney is not in a great spot with ESPN. I am almost certain that they would love to get rid of ESPN in a hurry if they found a buyer. If they get stuck long-term, they will gut the channel from big content agreements.

      • 45 Huddle says:

        Zach, ESPN has lost 10 Million subscribers since 2013. The pace of the losses is only increasing. At it’s peak, they were almost at 100 Million subscribers.

        Now that online viewing is becoming more popular, the days of ESPN getting $500 Million a month from cable subscribers is over.

        Disney’s future is Pixar, Marvel, & Star Wars. As each year passes, ESPN is making Disney less and less money.

        • turd says:

          huddle you are right , i read that espn when making there deals with the nba , nfl, mlb, was counting on there subscriptions increasing every year. which isnt happening

          i hate espn i refuse to watch them

        • 45 Huddle says:

          I’m not a big fan of ESPN either.

          Big sports in America have taken advantage of the general public. It is corporate welfare at it’s worst.

          ESPN used its leverage to get $5 per month per subscriber on cable. People who didn’t even like sports still had to pay it so they could watch their HGTV.

          Major stadiums have been built around the nation using taxpayer dollars. Many of those people will never even step foot in the stadium due to the ticket prices being so high.

          The internet has truly disrupted the status quo, and I love it.

  5. 45 Huddle says:

    1) If Rogan leaves, it is not a huge loss. They have been grooming Brian Stann for a while. He has the look, voice, and fight experience to be just as good as Rogan.

    2) I agree that the UFC is in the great position with FOX Sports 1 right now.

    3) I would love to see the new owners get it down to about 6 PPV’s maximum a year and the rest of the fights on television. Perhaps a weekly live show? That would be great.

    4) For cord cutters, Playstation Vue is now a great place to get FS1 & FS2 (along with a lot of other channels) for about $30 a month.

    Overall, I’m just interested to see what the new owners can do with the UFC. I feel like Fertitta was running out of ideas the last few years. It will be nice (or bad?) to see a new set of people see where they can bring the sport.

  6. 45 Huddle says:

    UFC paid out around $9 Million in disclosed payouts this weekend. Most likely paid out closer to $20 Million.

    A few noted items….

    1) All fighters were paid at least $10,000 per fight.

    2) A lot more of the established fighters don’t have win bonuses anymore. I like this trend.

  7. turd says:

    hey zach i could have swore i read, that when espn was making all these deals to the nba mlb, etc, they were pretty much counting on increasing there subscriber base every single year.

    could you imagine if cable companies actually gave people the choice if they wanted espn, they would probably go out of business, i havent watched espn in nearly 15 years.

    i really believe these ricicoulous deals espn made with the nba and mlb and nfl are going to hurt them in the long haul

  8. Sam says:

    Zachary,

    What do you think the chances are of the UFC making a non exclusive deal where they can be on multiple networks (eg FOX and ESPN)? That seems like it would be most profitable for them. Since they seem to have Fox by the balls and ESPN is desperate, couldn’t they pull this off? And maybe YouTube as well? (In conjunction with fightpass of course).

    • Uzmaki says:

      but does UFC even have enough content? remember its a weekly live program granted they have like 6 to 8 hours of content per week how many slot can you fill with that and who gets what… also it not like they can stretch their product anymore than they’ve already did 10 divisions and even if fighters are better than 2006 its still hard to get quality guys past #10 ranked outside of the 155 division… do wonder tho 1st Take rating have been going up in harder than ciallis numbers, maybe a partner ship with UFC to have tv content and a debate model could be a solution… but I sincerly think UFC would spread themselves too thin if they did

  9. DIAZ'S PACKED BOWL says:

    Ari founded endeavor agency in 1995! Ari then initiated a take over of WM in 2009 not after he got ufc on fox.
    He’s not “part” of WM he controls it.
    Ari purchased IMG in 2013. He has the same goals as the frattatas did with the ufc, namely to buy it all and control it all, and put everyone else out of business.

    “Over the past two decades, Ari Emanuel has climbed — brashly, ruthlessly — into Hollywood’s power center with one position in mind: king.”
    http://dealbook.nytimes.com/2013/12/17/william-morris-said-to-have-won-auction-for-sports-and-talent-agency/?_r=0
    In 2011, Emanuel was quoted in a Financial Times profile about the company, saying “We built a culture where people are rewarded for taking risks.”

    Think maybe he got that philosophy from his Dad Ben? You know, the guy who took risks running guns and planting bombs with the zionist terror organization to achieve the greater goal of establishing a nation?

    Fertittas and Emanuels fathers were both known criminals.

  10. [...] Arnold at Fight Opinion points out that UFC programming is the only thing on FS1 that consistently draws over 100,000 [...]

  11. [...] Arnold at Fight Opinion points out that UFC programming is the only thing on FS1 that consistently draws over 100,000 [...]

  12. [...] Arnold at Fight Opinion points out that UFC programming is the only thing on FS1 that consistently draws over 100,000 [...]

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