In a landmark $7.7 billion deal, Paramount+ is ready to grow to be the unique house to the UFC beginning in 2026, but it surely seems a just lately accredited merger performed the largest half in getting throughout the end line.
Simply days in the past, Skydance — an leisure firm run by CEO David Ellison — formally closed a deal to buy Paramount for $8 billion, and it didn’t take lengthy for the corporate to start out making strikes. First was a $1.5 billion streaming cope with the creators of South Park to maintain the favored sequence on the community and now this new $7.7 billion cope with the UFC, which sees the tip of conventional pay-per-view with all playing cards airing completely on Paramount+ for a month-to-month subscription value.
TKO Group Holdings, the father or mother firm to the UFC, was in talks with quite a few potential companions, however firm CEO Ari Emanuel revealed as soon as Skydance formally bought Paramount, the deal moved reasonably shortly.
“It was {the marketplace} that was the bidder and many alternative configurations,” Emanuel informed CNBC about how the deal obtained achieved. “It got here collectively in 48 hours after it was a number of gamers for various configurations of our content material, pay-per-views, Struggle Nights. We now have 13 pay-per-views, 30 Struggle Nights and as soon as [the Skydance] deal closed, they jumped in in a short time and Mark and group after we form of found out the economics, all the opposite stuff, Mark and group found out.”
Early predictions had the UFC probably splitting up its bundle with Struggle Night time occasions doubtlessly going to at least one outlet after which the larger, marquee pay-per-view occasions touchdown with one other distributor. Emanuel and TKO Group Holdings chief working officer and president Mark Shapiro confirmed that gave the impression to be the path negotiations have been heading till Paramount+ successfully got here in with a suggestion too good to refuse.
As a part of the deal, UFC occasions may also find yourself being simulcast on CBS, which was an enormous sweetener for the general broadcast rights — particularly now with pay-per-view going away.
“We have been at all times, after all, going to take a look at two elements of the technique,” Shapiro defined. “One is monetization, maximizing the worth of our rights. However the second simply as importantly, what’s the proper house and platform for the longer term progress of our model and our enterprise? So if we could be in a single place on the proper worth on this situation, as you mentioned an AAV (common annual worth) of $1.1 [billion] per yr, which is 2 instances what we obtained on the final deal, we test the field on the monetary a part of this.
“By way of the model, it was vital to us to have CBS play a giant part on this. As they’ve laid out, that is Paramount+ completely however CBS will simulcast on most of the fights and sure the entire numbered occasions, that are previously the pay-per-view occasions. We’re going Tiffany community. We’re going old-fashioned right here. Jimmy the Greek, Brent Musburger, CBS Sports activities, all that nice historical past. They’ve the Masters, they’ve the Tremendous Bowl and NFL, they’ve the Last 4. We like that.”
“Tiffany community” is the nickname CBS brandished years in the past after the community was lauded for a popularity of top of the range programming in the course of the tenure of William Paley.
Whereas Paramount+ stays the first house for all UFC occasions, Emanuel mentioned maximizing viewership with a conventional community like CBS was an enormous bonus for the promotion. It’s one thing the UFC needed to discover extra whereas below contract with ESPN with the homeowners at Disney additionally controlling the ABC community.
“For us, we needed the attain of CBS and the Tiffany side of CBS,” Emanuel mentioned. “So this will likely be simulcast. Once we have been at ESPN and Disney, we at all times really have been asking for somewhat little bit of ABC as a result of we would like the broadest attain.”
Getting away from pay-per-view was an enormous a part of the brand new broadcast deal because the UFC exits a method that buoyed the corporate’s backside line for many years. Based mostly on present prices, Paramount+ fees $7.99 for a model of the streaming service with advertisements and $12.99 for no advertisements — and there’s no further value to observe the larger UFC occasions, which at the moment value $79.99 every on ESPN+.
“It’s simply an antiquated mannequin,” Shapiro mentioned. “What’s on pay-per-view nowadays? On occasion a giant time boxing match that begins in the midst of the night time and/or perhaps some films on DirecTV. It’s an antiquated mannequin. It’s a wall, it’s a barrier on the finish of the day for our followers to get our product. This will likely be properly obtained by our athletes, by our followers and that was crucially vital to Dana White.”
In fact it could actually’t be ignored that William Morris Endeavor — the expertise company arm of Endeavor, which is the one largest shareholder in TKO — represented Ellison for a few years. Add to that, Emanuel just lately spoke out about his help for Skydance buying Paramount — a deal that was ultimately finalized after the FCC gave its approval in July.
That approval got here after Paramount agreed to pay $16 million to President Donald Trump to settle a lawsuit he filed towards the community over a 60 Minutes interview with former vice chairman Kamala Harris.
So far as Paramount+ goes, the service at the moment boasts round 77 million subscribers — a dramatic leap up from the roughly 24 million on ESPN+ — but it surely was Ellison’s general technique transferring ahead with the corporate, together with a large payday, that satisfied UFC to maneuver its complete broadcast bundle there.
“On the finish of the day, his technique — streaming, sports activities and studios. It’s proper in our wheelhouse,” Shapiro mentioned. “He sees media, David Ellison right here, he sees content material, he sees storytelling by way of the prism and lens of expertise. That concept, that technique, finest advert tech resolution within the enterprise, that’s what he’s aiming for. A unified platform. Extra personalization. Extra customization. Integrating sports activities betting, which is a giant a part of our fan expertise relating to the UFC.
“That was all of the stuff that was very engaging to us, approach past the value. You want CBS to essentially drive that attain. Give it some thought, his purpose is get extra [subscriptions]. Take that 77 million as much as 300 [million] and preserve them there and the truth that we’re yr spherical, the truth that each month we now have a giant premium battle, that will likely be an antidote for churn.”
On the subject of Paramount really earning money off this deal, Emanuel sounded assured that the value being paid goes to work out for the community in the long term. With a mean of $1.1 billion being paid out per yr below the phrases of the 7 yr deal, Emanuel believes driving subscriptions and general curiosity to Paramount+ and CBS goes to work out properly for everyone.
“Right here’s what I’d say to you: All people has a special reasoning,” Emanuel mentioned concerning the worth Paramount paid to land the UFC. “Netflix needed stay occasions to construct their promoting mannequin. Different individuals needed the pay-per-views. On this scenario, we now have proven previously with our ESPN deal, we drive [subscriptions], which is essential to David’s technique.”
