THU, NOV 07, 2024

Alexander Sherman

CNBC MEDIA & SPORTS REPORTER

The Kickoff

Could Netflix take on UFC?

UFC's Deiveson Figueiredo and Brandon Moreno match up on June 12, 2021. Credit: Louis Grasse | PxImages | Icon Sportswire | Getty Images

UFC media rights are up for renewal next year, and TKO Group Chief Operating Officer Mark Shapiro tells me he thinks Netflix could be getting in the ring.

“I think absolutely, they'll be at the table on UFC,” Shapiro said in an exclusive CNBC Sport interview. “They get the UFC. They're fans of the UFC. They've been to the UFC. Their kids watch UFC, and they're looking for those leagues, those brands, those kind of power sports content factories that can go global. And UFC is very much a global brand.”

TKO owns both UFC and WWE. TKO shares have jumped more than 45% this year but fell slightly in after-market trading Wednesday after the company released its earnings after the bell.

At this stage, the Netflix interest is purely speculative. UFC can’t negotiate with anyone other than its incumbent partner, Disney, until April 15, when the MMA league’s exclusive negotiating window ends.

Netflix declined to comment on its potential interest.

But if Netflix does strike a carriage deal for UFC, it will cement the world’s largest streamer’s status as a competitor for any live sports package moving forward.

That wasn’t the case just two years ago.

“We’ve not seen a profit path to renting big sports,” Netflix co-CEO Ted Sarandos said in December 2022.

Netflix seemed to back off that stance with a deal to be the exclusive home of WWE’s “Raw” in the U.S., U.K., Canada and Latin America beginning in Jan. 2025.

Still, even with the WWE deal, Netflix didn’t fully embrace its new role as a platform for live sports.

“WWE is sports entertainment,” Sarandos clarified in January after reaching the groundbreaking deal with the WWE.

While WWE would be broadcast live, it’s also scripted and episodic. Netflix has experience marketing dramas. WWE is “quasi sports,” Shapiro noted.

In May, Netflix agreed to stream Christmas Day National Football League games for the next three years. While there’s nothing squarely more “sports” than NFL games, the deal is only for a day’s worth of games. It fits Netflix’s event-driven strategy of getting people to tune in for a water-cooler event, such as a live comedy special or the upcoming Jake Paul vs. Mike Tyson boxing match, which takes place on Nov. 15.

Bidding for a full package of UFC events would be different. There’s no way Sarandos could still argue Netflix hasn’t changed its tune on the value of sports – which makes sense. Netflix is pushing its advertising tier now, and there’s little that entices advertisers more than live sports.

“Advertising is so important to the growth of Netflix, and we're gonna see how they do with live events,” Shapiro said. “The Tyson-Paul fight will tell us a lot. How many folks come to the table to watch that, how many folks sign up from Netflix or claim that they stayed with Netflix because of that.”

Landing a package of UFC events seems like a natural evolution for Netflix. It’s not scripted like WWE, but it’s just a series of live events. That’s what sports are!

On the Record

Some other highlights from my interview with Shapiro:

He had breakfast with WWE co-founder Vince McMahon “a few weeks ago just to check in.” McMahon was TKO’s executive chairman and a board member until January, when he resigned from the company amid allegations of sexual misconduct.

“I wanted to see kind of where he was,” Shapiro said. “By the way, he couldn't have been more cooperative. He couldn't have been nicer. I mean, he was a total pro at breakfast, if you will. It's a one-on-one get together. He's out of the business entirely. He doesn't make decisions. He's not on the board. He doesn't opine. We don't consult him. He's got some litigation that he's working through, and frankly, he wants the privacy and the time to work through it, which is great, because in the meantime, we're going to keep building TKO and WWE, and expanding the horizon, expanding the opportunities. And by the way, he's still a shareholder – not the shareholder he once was, but he's still a shareholder. He's supportive of the direction WWE has been going in and has gone. He couldn't have been more positive, but I wasn't asking for his opinion.”

Shapiro also said WWE is no longer considering pushing gambling legalization on its matches. It was something the company considered before the merger with UFC, but now Shapiro says it’s off the table.

“It’s not happening,” said Shapiro. “We're not doing that. We're scripted. Look, years ago I ran Dick Clark Productions. We had enough challenge keeping the American Music Awards and the Golden Globe winners under wraps with an auditor that was there. We're not going to be asking [WWE Chief Content Officer] ‘Triple H’ Paul Levesque, who runs our creative, to keep his scripts so under wrap that we can start sports betting.”

While TKO is interested in league ownership – and just acquired Professional Bull Riders from Endeavor – it won’t be making a play to acquire the PGA, LIV or a professional tennis association.

“We're not looking at tennis,” Shapiro said. “And LIV's got enough problems trying to buy in the PGA Tour, so we're not going there. The fact is, there aren't a lot of sports leagues out there, so we won't be looking at acquiring anything, because we don't see anything coming on the horizon. PBR was there. Most folks questioned why it wasn't in TKO at the start.”

But Shapiro did say he had interest in starting a new boxing league.

“Boxing is something that [UFC CEO] Dana White has consistently brought up. We're not going to go buy or acquire any kind of boxing agencies or boxing federations. But could we organically start something and or bring on a partner that fuels that so we take no risk? That's something we're really attracted to,” he said.

Shapiro also offered his thoughts on Comcast’s consideration of a cable network spinoff, if we’re eventually heading toward a sports investment bubble, and which media companies will be around five years from now.

WATCH THE FULL INTERVIEW

The Four Questions

Shohei Ohtani celebrates with Dodgers CEO Stan Kasten after their 7-6 victory in Game 5 to win the 2024 World Series. Credit: Daniel Shirey | Major League Baseball | Getty Images

A bonus newsletter item this week – we’re bringing back The Four Questions because I had a chance to speak with Dodgers CEO and part-owner Stan Kasten this week, fresh off his team’s World Series victory. The interview has been lightly edited for clarity.

1. From a revenue perspective, how meaningful is it to win a World Series? What are the tangible business effects?

Kasten: Obviously there are ticket sales, which get eaten up a lot in the first four games. Tickets, food and beverage, merchandise, etc. This year, We had the extra glow of the Shohei Ohtani phenomenon. So yeah, we made some more than that, but we had a good season economically, even before the postseason. The postseason was just an awful lot of icing on top of the cake.

2. OK, let’s talk about Shohei. What does having a Japanese star of his caliber mean to both the Dodgers and the league from a business perspective?

Central baseball is in the midst of a very aggressive international globalization program, both with live events and for viewing our games. And this was a huge shot in the arm. We could not have had an event with this kind of impact without the Shohei phenomenon. For us, it has the after-effect for next year, in the years to follow, because we are getting a lot more business done with sponsors in Los Angeles. I will tell you, teams around the league even sold to Japanese sponsors when we were on the road in their home stadiums, just to get some advertising behind Shohei. It’s been a great positive for everyone, especially for central baseball, and we are all sharing in those proceeds.

3. I spoke with NBA Commissioner Adam Silver a couple weeks ago, and he told me the data in the NBA was clear: More parity leads to more interest in the league. Major League Baseball is set up in a way, without a salary cap, that is anti-parity. Obviously it’s good for big-spending, big-market teams like the Dodgers – so I’m curious, do you think parity is good for baseball?

I think greater parity would be a benefit, and selfishly, I would still say that, because whatever the rules are, we will compete with whatever the environment is. I agree with Adam. There are very few people in sports smarter than Adam. I do think greater parity would help. It doesn't help that our revenue per game is 10 times that of a team on the bottom. It really isn't good for anyone. We have revenue sharing in our league, so we hope to close that gap. I think there are other ways to achieve that. We see a lot of examples in the other sports. I'm not going to get into labor. That's not a thing that we talk about, but I believe that there are even better ways to maximize the benefit for teams and players than we have landed on yet.

4. Speaking of lack of parity, are you going to make a run at New York Yankees outfielder Juan Soto?

We can't talk about free agents publicly. Nice try. We'll say this. I predict we're going to be good again next year. I don't know what form that will take. I do know, and I say this all the time, whatever team we think we have in December, January, February will be different than the team that we open the playoffs with next October. So it's a constant state of revision and updating and getting stronger. This year, the most important thing we did after getting Shohei was the really important mid-season trades we made. All of the players that we acquired had a major role in us winning the World Series. So I can't talk about any individual players, not here, yet, but I do predict we'll be good again.

WATCH THE FULL KASTEN INTERVIEW

Quote of the Week

“Shohei Ohtani Undergoes Successful Arthroscopic Surgery to Repair Labrum Tear in Left Shoulder.”

That’s the headline of a Dodgers press release this week, suggesting Ohtani will be a full go to pitch for the 2025 season. I guess that’s why Kasten is confident they’ll be good again.

The Big Number

1.066

Another fun Ohtani stat.

I asked Kasten if he thought Ohtani’s record-setting 50 home run and 50 steal performance was partially due to the fact that he didn’t have to worry about pitching this season. Here was his response: “I’m going to tell you something that will blow your mind: He had a higher OPS last year than he did this year.”

Fact check: True. Ohtani’s OPS in 2024 was 1.036. In 2023, when he pitched? 1.066.

“We know what a 50-home-run hitter looks like. We know what a 50-stolen-base guy looks like. Those are not the same bodies, OK? And yet, Shohei does them both, and he pitches. So throw out all historical comparisons,” Kasten said.

CNBC Sport Highlight Reel

The best of CNBC Sport from the past week:

Want more Ohtani? Check out this hotel room located inside the baseball stadium of Ohtani’s former team, the Hokkaido Nippon-Ham Fighters. Guests of the Tower Eleven Hotel don’t need tickets to the game because they can watch it live from their rooms, which overlook the field.
CNBC's parent company, Comcast, topped third-quarter earnings expectations, buoyed by the Summer Olympics’ effect on both advertising and Peacock subscriptions. Still, most investors zeroed in on the company’s plans to potentially spin off its cable networks, which could divide NBC broadcasting from cable.

Around the League

Tennis anyone? Tennis everyone! The Tennis Channel is launching its own direct-to-consumer service that includes all of its linear cable programming. That’s welcome news to tennis fans who have cut the cord. The product launches Nov. 12. Consumers can choose between a $109.99 annual package or a $9.99 monthly option.
New England Patriots president Jonathan Kraft told Sportico’s “Invest in Sports” event that he expects private equity funds will get a return on their NFL investments that beats the stock market in a six-year time horizon. “You probably won’t get 3-4x your money, but my guess is you’re going to get returns that beat the stock market over that period and without taking that much more risk,” Kraft said.
The first expanded College Football Playoff bracket has been released. Unbeaten Oregon is the No. 1 team. Boise State sneaks in as the No. 12 seed. The top 12 teams will compete in the playoff for the first time ever this season.
A $3 million Babe Ruth card is going up for auction on Fanatics Collect today. The auction will last until Nov. 21. It’s a 1933 Goudey Babe Ruth #149, PSA 8.5. The card, initially sold in a pack that cost a penny, is also called the “Red Ruth.” The anonymous current owner of the Red Ruth is only the second-ever owner of the card.

That’s it for this week. The 49ers are back in action against the Tampa Bay Buccaneers. The march to the playoffs begins.

Go Niners,
Alex

Follow me on Twitter (X) at @sherman4949

Have a tip or feedback for Alex? Email him at Alex.Sherman@nbcuni.com