Meltzer: additional info on the ESPN/UFC deal & NBC & CBS put in bids against Fox

[FrankieNYC]

In his newsletter, he mentioned that both NBC & CBS put in bids to steal UFC from Fox (who still have their offer at $225-250m per) & that is the delay in announcing the rumored Fox deal.

But fox is still supposedly the heavy favorite.

Regarding ESPN+:
The new shows will be called UFC on ESPN+ Fight Night.


In addition, ESPN+ subscribers will get other original content from UFC, access to UFC’s full archive of programming as well as Countdown shows, press conferences and weigh-ins.


Even though there is some overlap in content, UFC will be keeping Fight Pass. The plan for 2019 is still to produce five or six Fight Pass exclusive shows and original UFC content, as well as streaming a number of other promotions live and taped events from around the world.


ESPN+ will be able to put up all UFC events from 1993 to 2018 up for archives. From 2018 on, they will be able to add their events, but not the events from another partner, nor PPV events, which Fight Pass will have. ESPN+ also won’t have access to the non-Fight Pass library of boxing, kickboxing and other MMA promotions like Pride, Strikeforce and WEC.


There will also be a second tier ESPN+ deal that would allow fans to order the individual Fight Pass live events.


In addition, the ESPN+ deal is only for the United States, so UFC has the rights to sell these shows internationally or put them on Fight Pass outside the U.S.


ESPN+ will stream the entire shows from start-to-finish meaning no prelims. Without television time cues, they won’t be stalling to fill time and only do one fight every 30 minutes, like FS 1 does.


If we go with the idea the average UFC fan that subscribes to ESPN+ will go monthly rather than annually, that would mean the average viewer would be $60 per year. To make that make economic sense, ESPN+ would need 2.5 million regular UFC fans purchasing the service, a ridiculous number since Fight Pass has hovered between 400,000 and 500,000 subscribers for not quite as many shows. It’s also ridiculous because UFC rarely gets 2.5 million viewers these days for shows that are free on FOX.

Nevertheless, part of this is ESPN trying to establish a new service and thus were willing to pay a figure that can’t be economically justified by normal business value, and were willing to because everyone is getting into streaming at some level. UFC is in a good place. WWE is in a good place as well, as while they haven’t fallen into this level of a sweetheart deal, they did get the Facebook Watch deal earlier this year (WWE received a number slightly below $1.6 million for the 12 week

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I like the idea that the ESPN+ cards will have less downtime.
Seems like you will need both FP & ESPN+ for full UFC archives & events though.

Botter reported that if you have ESPN+, you get FP for $5.
That seems tough to do since the merchant processing will not be the same.
But Dave said that FP events can be bought through ESPN+

 

[member 3289]

@FrankieNYC currently, for non-cable subscribers who want to order PPV, they can order through FightPass. You don't have to be a FP subscriber to order a PPV.

Any idea if this will still be possible? And will it still be through FP, through ESPN+, or both?

 

[FrankieNYC]

@FrankieNYC currently, for non-cable subscribers who want to order PPV, they can order through FightPass. You don't have to be a FP subscriber to order a PPV.

Any idea if this will still be possible? And will it still be through FP, through ESPN+, or both?

I am assuming nothing will change through FP & that it will be an option for ESPN+ as well.
They would want as many opportunities to buy a PPV as they can get (like Amazon etc)

 

[Wild]

Sub

 

[Chromium]

Interdasting. 15 shows a year, probably with a few title fights (considering how much ESPN paid for this deal), the Tuesday Night Contender Series (I think?), and a shitton of UFC archival footage, all for $5 a month. I cancelled my FightPass subscription, but this is tempting.

I think I'll wait to see what sort of cards we get tho.

 

[FrankieNYC]

In what "might" be a sign that Fox & UFC are continuing.
NBC-UNI had their upfronts today in NYC & WWE was heavily promoted. They even had a ring set up & Ronda on-stage.
Seems like NBC is very confident they will keep RAW. Last time they were the only one to bid, this time Fox was suspected to go into bidding if UFC left.

 

[FrankieNYC]

Meltzer summed up what I was saying in another thread about UFC changing from a fight promotion to content provider

How the UFC’s deal with ESPN changes the company’s business
But in the end, this a new and completely different business. It is no longer based on presenting big fights that people want to pay to see, with success and failure depending on how successful the company is at selling fights to consumers.

It’s now about providing as much content as possible, and selling it to media providers. Stuff like building big fights and creating new stars are still important, but no longer a make-or-break issue.

 

[LawFitz]

Really wish they'd wrap everything into one monthly subscription, including PPVs. All these different platforms make following the sport prohibitively expensive and confusing for the average fan. We already had too many platforms. Going the wrong direction here IMO.

 

[FrankieNYC]

Really wish they'd wrap everything into one monthly subscription, including PPVs. All these different platforms make following the sport prohibitively expensive and confusing for the average fan. We already had too many platforms. Going the wrong direction here IMO.

They will never make the money off a subscription service that they do on a decent to big PPV

ESPN will need well over 2.5m UFC only subs to come close to breaking even on this deal & that will NEVER happen.
The money is in different deals and that is what UFC is in 2018 ... content.

 

[IschKabibble]

Really wish they'd wrap everything into one monthly subscription, including PPVs. All these different platforms make following the sport prohibitively expensive and confusing for the average fan. We already had too many platforms. Going the wrong direction here IMO.

I'll just go to the one streaming site I know of instead of hopping around from paid channel to paid channel like a monkey. Fuck UFC and their selfish business practices.

 

[RaginCajun]

They will never make the money off a subscription service that they do on a decent to big PPV

ESPN will need well over 2.5m UFC only subs to come close to breaking even on this deal & that will NEVER happen.
The money is in different deals and that is what UFC is in 2018 ... content.

Will they make the money back on sponsorships and ads?

 

[FrankieNYC]

Will they make the money back on sponsorships and ads?

Not at $150m per a year
It is a loss leader.
they are doing it to get a jump on other OTT services for sports, plus Disney as a parent company wants to rival Amazon & Netflix

 

[FrankieNYC]

@RaginCajun
To give you an idea:
a 400k PPV buy brings in $15m+ in just PPV dollars alone
So a Conor PPV would be $50m+
No way to recoup that by subscriptions

 

[RaginCajun]

@RaginCajun
To give you an idea:
a 400k PPV buy brings in $15m+ in just PPV dollars alone
So a Conor PPV would be $50m+
No way to recoup that by subscriptions

Any idea how much they make from the ads during a Conor PPV?

 

[LawFitz]

They will never make the money off a subscription service that they do on a decent to big PPV

ESPN will need well over 2.5m UFC only subs to come close to breaking even on this deal & that will NEVER happen.
The money is in different deals and that is what UFC is in 2018 ... content.

Thx for the posting that Meltzer article. It really helped clarify what the UFC is thinking, but I still think it's short term gains at the expense of long term growth. They're basically putting the screws to inelastic demand hardcores while alienating elastic demand newbs, who are the lifeblood of growth for the company and the sport. The sport is SO much better when you know the fighters, in terms of personality and fight style. This model makes that extremely difficult.

A corollary would be govt taxation. A famous economist named Laffer showed a long time ago that govts can actually increase overall revenues by reducing taxes, as that stimulates economic activity, leading to more tax dollars rec'd (even with lower rates). I think something similar would apply here. Make the UFC cheaper and easier to follow if you want mass adoption for the sport. Or do the exact opposite and maximize revenues now, but watch interest continue to wane over time. Premium tier cable + PPV + FightPass + ESPN+ = WTF IMO.

 

[FrankieNYC]

Any idea how much they make from the ads during a Conor PPV?

If you mean sponsorship money?
no idea at all

 

[FrankieNYC]

Thx for the posting that Meltzer article. It really helped clarify what the UFC is thinking, but I still think it's short term gains at the expense of long term growth. They're basically putting the screws to inelastic demand hardcores while alienating elastic demand newbs, who are the lifeblood of growth for the company and the sport. The sport is SO much better when you know the fighters, in terms of personality and fight style. This model makes that extremely difficult.

A corollary would be govt taxation. A famous economist named Laffer showed a long time ago that govts can actually increase overall revenues by reducing taxes, as that stimulates economic activity, leading to more tax dollars rec'd (even with lower rates). I think something similar would apply here. Make the UFC cheaper and easier to follow if you want mass adoption for the sport. Or do the exact opposite and maximize revenues now, but watch interest continue to wane over time. Premium tier cable + PPV + FightPass + ESPN+ = WTF IMO.

I agree with most of what you put the effort into posting
I'm no Tax guy so some of it went over my head.

But when the sale was finalized, i said (not here obviously) that the way we consume UFC in 2019 would be very different & that I had no idea if that would be better or worse for fans.
Looking like worse IMO

WME from the get-go discussed UFC as "content" & that the future is in content ownership.
I never saw the ESPN+ deal coming at that price tag though.

Thing is things change so quickly these days. WTF knows what it will be like in 2024?

 

[LawFitz]

^^^ Great point about things potentially changing again in 2024. Nothing is forever. If this new model results in stagnation or loss of viewership, the next deal(s) will be reflective of that and hopefully steer the ship back towards the fans.

 

[FrankieNYC]

^^^ Great point about things potentially changing again in 2024. Nothing is forever. If this new model results in stagnation or loss of viewership, the next deal(s) will be reflective of that and hopefully steer the ship back towards the fans.

I believe it will result in both
But that is a reality of any fringe (non major) sport.
From a business perspective, they need to ride whatever wave they have at the time.

Last WWE deal, they fought not to have RAW at 3hrs. They felt it hurt the popularity to do a 3hr TV show every week & have another 2 hr one.
but USA insisted & a majority of WWE profit came from that added hour.
If ESPN+ wants to pay what is basically similar to a 285k PPV for 15 cards a year guaranteed, any business will jump on that.

my hopes are Fox gets better cards & PPV is cut to 6-8 per year.
Also ESPN network will be promoting the F outta UFC now so those combinations could possibly ease the gap of garnering interest for newer stars, etc

 

[psychicdeath]

I've had Fight Pass from the beginning. Now they're taking some of that content to another streaming service, expecting another $5 a month from me. That's in addition to the $10 a month for Fight Pass, the extra cost of ensuring I have Fox Sports 1 on my TV package, $65 for pay per views, etc. They're nearing the point of blatant gouging where I not only refuse to pay the additional $5, but stop giving them my money for some or all of the rest of it as well.

 

[FrankieNYC]

I've had Fight Pass from the beginning. Now they're taking some of that content to another streaming service, expecting another $5 a month from me. That's in addition to the $10 a month for Fight Pass, the extra cost of ensuring I have Fox Sports 1 on my TV package, $65 for pay per views, etc. They're nearing the point of blatant gouging where I not only refuse to pay the additional $5, but stop giving them my money for some or all of the rest of it as well.

Hold off on being pissed about FP.
We don't know exactly how it will be played yet (as far as ESPN+).
There are rumblings that if you are stateside with ESPN+, you will get FP for $5.
There will be some price cross-over for sure in 2019, but nothing concrete released yet.
But you are certainly not the only person feeling the way you are & thinking of just saying "f-em"

 

[member 3289]

@FrankieNYC Not sure if you can answer this, but do you know why PPVs, when purchased, are only temporary purchases?

If I buy the PPV, shouldn't I have access to it forever?

Imo giving temporary access (currently 24 hours for PPVs ordered through FP, not sure about cable) only encourages piracy.

 

[FrankieNYC]

@FrankieNYC Not sure if you can answer this, but do you know why PPVs, when purchased, are only temporary purchases?

If I buy the PPV, shouldn't I have access to it forever?

Imo giving temporary access (currently 24 hours for PPVs ordered through FP, not sure about cable) only encourages piracy.

I'm guessing due to Fight Pass now having the content in a month
When PPV first started it was due to video tape rights

 

[lueVelvet]

Hold off on being pissed about FP.
We don't know exactly how it will be played yet (as far as ESPN+).
There are rumblings that if you are stateside with ESPN+, you will get FP for $5.
There will be some price cross-over for sure in 2019, but nothing concrete released yet.
But you are certainly not the only person feeling the way you are & thinking of just saying "f-em"

While it's a hassle, it's really a net neutral proposition if ESPN+ and FP is the same price as just FP. My gripe is that you still can't watch it all in one place. We would still need an additional service if we wanted ALL UFC content which is a hassle and will probably scare folks away (as evident by the vast majority of the folks reacting to this).

 

[SongExotic2]

I was just reading this posted on the UG by mmalogic. Does it sound about right?

spn is paying an average of 150m/yr for up to 15 fight nights, 1 season Of the contender series, non exclusive library rights and shoulder programming.

that places the value of the remaining inventory at around 240m/yr (24 fight nights, etc...) plus whatever they can get for the ppv prelims (which they’ll likely shop at the end once everything else is sold and they boil down the number of ppv’s)

fox and nbc have bid on the remaining package and meltzer is the first to report that cbs has now bid on it as well.

you could also push the value of the remaining package up to 300m/yr by removing 6 ppv’s from the schedule and turning them into fight nights (30 fn’s)

The conundrum wme now has is do you accept the best bid while turning away up to 400m from the other 2 (turner can also be in the mix in June)?

or do you expand the package even further, decrease ppv’s even more and try to get an even bigger total sum?

obviously they are going to try the latter

ufc can stage a contender series every week which would give you over 5 seasons you can sell.

the espn deal set a very healthy market price for ufc content making most ppv revenue obsololete for most events.

you can maybe stage 3 or 4 ppv events that would monetize better than the tv deals. Max 6.