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ESPN’s financial collapse ensures that Fox Sports is the only major TV player for UFC

By Zach Arnold | April 26, 2017

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About WME-IMG’s plan of spreading UFC programming in the future on multiple networks…

ESPN overspent on NBA and NFL programming packages. They built a business plan based on outbidding everyone else for sports programming. Then cord-cutting started. In response to cord-cutting, the network became more political and more infatuated with both social media & popular culture. The spiral downward accelerated. Unable to break free from the massive television contracts they’ve signed, ESPN is in firing squad mode to get rid of their reporters and television personalities. At least the professional ones.

This is why Fox Sports has and will remain the one major television partner for UFC in the future.

Without UFC, there is no major justification for cable & satellite networks to keep Fox Sports 1 in programming bundles.

Fox Sports is the only television network that truly understands how the MMA industry operates. They’re the only television partner willing to work hand-in-hand with UFC on how to market and hype events. Fox has the money to pay WME-IMG to keep UFC. The question is whether or not WME-IMG’s gamble on tripling or quadrupling UFC’s TV rights fees will pan out. I say no. This has a similar feeling to the showdown between USA Network and WWE a couple of years ago that resulted in WWE only getting a modest increase in rights fees.

Rather than go the WWE route of going all-in for their own streaming service, it feels like (from the outside-looking-in) that WME-IMG is intent on packaging Fight Pass as part of the next TV rights deal package and letting the future TV partner manage or navigate the Fight Pass business model. Think: Turner Sports and NBA TV.

ESPN, meanwhile, is in a disadvantageous position to negotiate becoming the main home of UFC programming. They got rid of Todd Grisham. The Al Haymon/PBC experiment imploded. ESPN continues to do a piss-poor job of hyping programming that isn’t NBA or NFL-related. You don’t even see ads for future Golden Boy shows on the network. If you’re UFC, are you going to sacrifice your hype machine to the mercy of ESPN management? Not a chance in hell.

And just how much demand is there for the “new” UFC? I think a lot of the ‘new’ UFC sucks. The Ultimate Fighter franchise is as desirable as stepping on a rusty door nail. UFC shoulder programming on Fox Sports 1 is a dreadful watch, especially with Karyn Bryant getting so much air time. The cards for Fox network television events aren’t treated with importance or significance. UFC continues to highlight Mighty Mouse on network television despite not having a real plan on how to market him to the masses or push the right buttons to make him somewhat of an attraction. The inability of UFC to treat Cris Cyborg like a human is grating. UFC has failed to capitalize on making the right deals to cash in on Nick & Nate Diaz post-McGregor re-match. The matchmaking for the women’s 135 pound division is an unholy mess. How many champions can the average UFC fan name right now?

Most important of all – the massive debt load that WME-IMG is trying to manage. Perhaps that’s all they will have in common with ESPN when it comes time to negotiate a new television deal.

Topics: Media, MMA, UFC, Zach Arnold | 5 Comments » | Permalink | Trackback |

5 Responses to “ESPN’s financial collapse ensures that Fox Sports is the only major TV player for UFC”

  1. 45 Huddle says:

    For people who are not familiar with how cord cutting is hurting ESPN….

    Before the internet, the only way to get cable channels was through your cable provider. ESPN currently gets about $5 per cable subscriber based on the deals they have made with these companies. At the time, whether a cable subscriber was a sports fan or not, they were basically subsidizing sports by signing up for cable. So if you had cable to watch news and MTV, you were still paying money towards ESPN whether you liked it or not. In a way, the previous system was unfair.

    All of this has changed since cord cutting has taken off. Those non-sports fans are more likely to cancel cable and either subscribe to a skinny bundle (like PS Vue or SlingTV) or only have services like Netflix and Amazon Prime. As cable subscriber rates go down, ESPN’s revenues go down.

    To make matters even worse….

    1. Rights fees for sports have been going up.
    2. Viewership numbers (even when taken into consideration the smaller potential audience) is going down. This is happening in the NFL and NBA. It is also happening in the Premier League in England.

    All of this makes for a perfect storm that is hurting ESPN big time. Will they be out of business soon? Absolutely not. But their business will look a lot different in 10 to 15 years. It will be slimmed down version. The remaining sports fans will most likely have to pay more money in order to watch the sports they want. Without non-sports fans subsidizing, all of the cost will lay directly on the actual sports fans. This is really a more fair system, although I don’t think sports fans will see it as such.

    Disney (owners of ESPN) have actually been proactive in this shift of viewership. They are getting all of their channels into these skinny bundles. I’m not sure if their rights fees less for these bundles, but the fact that it is easy to cancel at any time means increasing prices is not as easy an option as it was with cable.

    How this all relates back to the UFC…..

    At some point these outrageous sports rights fees are going to decrease. There is no way they can continue to increase like they have. The UFC’s fees are small compared to most sports, so they are unlikely to see a decrease. However, it is also highly unlikely they can double or triple their rights fees in the United States.

    As for Fight Pass…. they really should have followed Vince McMahon’s lead and ripped the band-aid off of PPV and went to a streaming only service. Sure, they will have a few major PPV’s this year like GSP fighting. But the rest will continue to suffer.

    The UFC is not looking good right now. The new owners don’t know what they are doing and are making mistakes the previous owners did over a decade ago. This is not the time to be messing up everything….

    • 45 Huddle says:

      I should also add that the liberal politics that ESPN spewed over the last decade has also hurt their ratings.

      Keep in mind that they are located in Connecticut. The same state the has a Governor, 2 Senators, and 5 House of Reps who are all democrats. The pool of people ESPN is pulling from are located in that state.

      Personally, I am more liberal (I don’t buy into the Rep/Dem garbage). And the problem is…. even somebody like me who is more liberal…. I don’t want politics and my sports intermingled. If I want to watch baseball, I don’t want to hear the words gender, race, equality, title 9, discrimination, or any other viewership baiting word. I just want to enjoy my sports. I can spend the rest of my life listening to the politics of life.

      ESPN failed to realize this, and it has hurt them big time.

  2. Zach Arnold says:

    ESPN gutted their NHL crew today in the bloodbath.

    ESPN is preparing to outsource MLB coverage to MLB Network.

    They even fired their Golden State Warriors writer (Ethan Strauss).

    They could fire every single personality and still not make a dent in how much they overspent on TV rights for the NBA & NFL.

    Every more reason why UFC and Fox Sports need each other.

    • 45 Huddle says:

      The internet wrecked the music industry. It has changed the movie/tv industry (in many ways for the better). It has wrecked the newspaper industry. Sports is now the next one shake things out. It took a little while longer to catch up to sports because of bandwidth limitations in the past.

      NFL contract doesn’t expire until 2022. They have a lot of contracts that expire that year. NBA contract doesn’t expire until 2025. The next 5 years are going to continue to be a bloodbath for the entire channel.

      It is easy to predict the sequence of events in the future:

      1. Contracts come up and sports leagues get less money then before.

      2. Teams are stuck with big player contracts based on larger TV contracts.

      3. Teams start to see financial strain. They greatly increase ticket prices to partially make up for this shortfall of funds.

      4. Ticket prices just become too much for many sports fans, and it decreases the overall fanbase. Backlash ensues.

      5. Things finally even out as players make less money (still great money), ticket prices come back down to an equilibrium point, and some fans return from the chaos.

      Obviously ESPN will continue to shrink up until a point. There are enough sports fans to keep them afloat for a long time. But those fans will have to pay more for their sports like they should have been all along.

  3. […] the reality: ESPN’s financial collapse ensures that Fox Sports is the only major TV player for UFC. It was very interesting to see Dana White acknowledge that reality during a recent interview with […]

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