Welcome to The Varsity, back in D.C. after a quick New York trip. I love all the civic
pride that comes from local teams advancing through the playoffs. Montreal is in the middle of a buffalo-wing boycott as the Habs battle the Sabres. And good luck ordering a cheesesteak in New York as long as the Knicks are
playing the Sixers.
Today is Thursday, so this issue, with my exclusive reporting on the NFL's media rights negotiations, is available to Inner Circle readers only. Upgrade here to read.
Pod alert: Business Insider’s Peter Kafka joins the Varsity podcast this weekend to dish on everything from Disney’s decision not to spin off ESPN to the NFL’s media rights negotiations. Also, make sure to check out yesterday’s episode, where the Premier Lacrosse League’s Paul Rabil previewed his sport’s Caitlin Clark. Listen
here and here.
Also mentioned in this issue: Roger Goodell, Bela Bajaria, Ted Turner, Tarik Skubal, Michael Rubin, Dan Hajducky,
Steve Phelps, Don Garber, Gianni Infantino, Jonathan Kandell, and more… |
Player of the Week: Ted Turner
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For two days, my social feeds have been filled with remembrances of the TBS and TNT founder and
onetime Braves and Hawks owner Ted Turner, who died on Wednesday at 87. The eulogies all depicted him in the same way: funny, caring, eccentric. Make sure you find time to read Jonathan Kandell’s novelistic obit in The New York Times, the best in the genre this week amid strong
competition. |
Down to the J.V.: Gianni Infantino
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It’s one thing to defend FIFA’s absurdly high ticket prices for World Cup games—the cost for
all live entertainment has skyrocketed in recent years, and the main beneficiary has been the gouge-ready resellers—but Gianni Infantino, FIFA’s president, didn’t win any fans this week at the Milken Institute’s annual conference in Beverly Hills by staunchly defending the organization’s pricing strategy, which has included adding whole tiers of higher-priced seats as the games approach. “We have 25 percent of the group stage tickets, which can be bought for less than
$300,” Infantino said. Somebody get our guy some new talking points. |
- Spirit of ’76: By now, you all know that the NCAA will expand its men’s and women’s basketball tournaments to 76 teams—instead of the First Four, the tournaments will have a first round of 12 games over two days (six on Tuesday and six on Wednesday). The NCAA said that it will get an extra $50 million per year, on average, for rights paid by CBS and Warner Bros. Discovery over the next six years.
The networks have generally been lukewarm toward tournament expansion,
but the addition of a handful of first-round games would largely not have a major effect on the overall deal. The expansion is not without some upside, too. CBS and Turner picked up added sales and sponsorship rights; the NCAA, for example, now will allow the media companies to sell what it calls Corporate Champion and Partners Program sponsorships to beer, wine, spirits, and hard seltzer—and, of course, more in-game advertising. ESPN will also be able to sell these categories around the women’s
tournament, but the network is not paying an added rights fee because that increase was baked into the eight-year renewal it signed just two years ago. - Trading spaces: A big deal hit the collectibles business today: FIFA agreed to let Michael Rubin’s Fanatics produce trading cards, trading card games, and stickers for the World Cup, starting in 2031. This is another step in Rubin’s march toward building out his company’s collectibles
business, which will post revenue “approaching $5 billion,” per ESPN. It also marks the end of an era for Panini, which has produced World Cup trading cards and stickers since 1970. Last year, Panini hired Citigroup to explore a full or partial sale, with a valuation of $5.8 billion. ESPN’s Dan Hajducky had a good piece on
the deal.
- R.I.P. Main Street Sports: I heard from several Main Street Sports employees who were laid off earlier this week. The cuts were wholly unsurprising—they were part of a skeleton crew that remained to guide the company’s R.S.N.s through the end of the first round of the NBA and NHL playoffs. I’m told that only 75 or so employees will remain until mid-summer, tying up loose ends before everything goes dark; the company’s full headcount recently
numbered around 750. For the next three months, Main Street’s feeds will consist of national shoulder programming. Even if a white knight were to swoop in to buy the assets, nobody will be around to run them.
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And now, the main event... |
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News and notes on the latest machinations surrounding the NFL’s highly coveted,
obscenely expensive rights packages. |
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If anyone needed another sign that the NFL was approaching an inflection point this summer—staring
down congressional scrutiny over its streaming deals, dispatching league officials to Washington, etcetera—the usually press-shy commissioner Roger Goodell recently appeared in Vanity Fair to further plead his case about the league’s inevitable flight to streaming. “You can make an argument that [Netflix’s distribution] is bigger than some of the networks,” he told the eternally fedora-clad Lachlan Cartwright.
The timing was notable, of
course. Goodell and his apparatchiks have been telegraphing this pitch for months. Obviously streamers exist in more homes than do cable channels, like ESPN, and leaning into those partnerships better serves consumers on virtually all actuarial tables. And now, I’m told, the league and Netflix are close to a deal for at least five NFL games next season, including the two Christmas games already under contract. The additional games are likely to include the league’s Week 1 game in
Australia, a new Thanksgiving Eve game, and a Saturday game on the final week of the season, which would lead into ESPN’s doubleheader.
Also, I’m told that this development is slightly different from today’s reports that these orphaned games will be distributed between Netflix and YouTube. In fact, it’s possible that YouTube—which was once favored to pick up a new five-game package—will wind up with nothing. To wit, sources have told me that the league has started shopping two
extra games, which would have been part of that package, to its broadcast partners: CBS, NBC, ESPN, and Fox. Yes, negotiations are ongoing, the deals aren’t signed, and YouTube has more capital than anyone else. But it’s a stunning result for a hyperscaled streamer that seemed to be in pole position for a package.
The NFL is ready for any regulatory blowback that results from doing a deal with Netflix, especially since some of the games are coming from linear TV channels—namely, ESPN and NFL Network. In theory, that could invite even more scrutiny from Capitol Hill, where the F.C.C. and Justice Department have already started looking into the number of NFL games sold to streamers. NFL lobbyists, for their part, will stress that those games likely moving to Netflix are coming not from broadcast television, but from cable channels that are decidedly not broadcast—ones that have seen their distribution figures drop considerably over the past decade. After all,
people pay much more for cable channels than for streaming services.
The NFL will also emphasize that its media strategy remains rooted in broadcast television. For context, in 2013, 88 percent of NFL games were on broadcast TV, with the remaining 12 percent on cable. Last year, the breakdown was 87 percent on broadcast, 7 percent on streaming, and 5 percent on cable. Those stats suggest that the league is trading one paid service (cable) for another (streaming). |
In many ways, the deal feels like a coup for Netflix, which started to covet more NFL
windows after meeting with the league to renew its three-year deal for two Christmas NFL games. Indeed, the Australia game and the pre-Thanksgiving contest align with Netflix chief content officer Bela Bajaria’s strategy of hosting big, one-off events—or eventizing, as Netflix executives call it.
But it was a circuitous route getting here. At first, I’m told, the NFL wanted to sell the Australia game on its own. But when the league’s equity deal with ESPN closed
earlier than expected, it put the Australia game in a package with four games that it was taking back from the network, as per the terms. However, it didn’t specify which five games would be part of the deal—TV networks and the streamers made bids based on five of 12 possible games, thereby allowing the seven left over to revert back to NFL Network, satisfying the league’s affiliate deals. But the only way to add games to Netflix’s schedule required breaking up the five-game package that YouTube
was eyeing.
The NFL looked at splitting up a seven-game package, including the two Christmas games, between Netflix and YouTube. But YouTube balked at the strategy, which is why the league is now trying to sell those games to broadcasters. Of course, there’s still a possibility that YouTube could wind up with the rights to carry games this season—it has a deep relationship with the NFL via its Sunday Ticket deal, and is still negotiating—but the odds keep dwindling.
Meanwhile, much
has been made about the league’s attempt to renegotiate its current deals with broadcasters and Amazon. Naturally, it’s hoping to reopen those deals early to take advantage of the frothy media rights market and push its longtime partners to pay more to extend their terms. And while Paramount has had talks due to a change-of-control provision in its rights deal, none of the other media partners—Amazon, ESPN, Fox, or NBC—have entered formal negotiations yet. There’s a growing sense among
broadcasters that they still have four years left on their deals, and nobody has any idea how the media market will look then. |
On Don Garber’s successor: “MLS should give a long look to Steve Phelps,
but I keep hearing it’s Larry Berg’s to lose.” —A sports business executive
On Tarik Skubal going on the injured list: “MLB is becoming a complete injury crapshoot. Forget about robot umps. We need robot pitchers.” —A media executive
On Paul Rabil as a podcast guest: “A Gonzaga guy interviewing a DeMatha guy. Who says we can’t all get along?” —A journalist
More on Rabil: “I mean, Paul Rabil
has some really great hair and everything. But come on… do you really think pro lacrosse is a thing?” —A media executive |
Have a great weekend and see you Monday,
John |
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Puck founding partner Matt Belloni takes you inside the business of Hollywood, using exclusive reporting and insight
to explain the backstories on everything from Marvel movies to the streaming wars. |
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Ace media reporter Dylan Byers brings readers into the C-suite as he chronicles the biggest stories in the industry:
the future of cable news in the streaming era, the transformation of legacy publishers, the tech giants remaking the market, and all the egos involved. |
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