Stock Groups

Formula 1, WWE and UFC are potential acquisition targets for streaming services


Conor McGregor, Ireland, punches Dustin Poirier (L-R), during a lightweight bout at UFC 257 in Etihad Arena. The event was held on January 23, 2021 in Abu Dhabi.

Getty Images| UFC | Getty Images

Before Ultimate Fighting Championship was sold to the company for $4 billion in 2016, Endeavor GroupThe mixed martial arts league almost got taken over by DisneyYou can find out more.

According to sources familiar with the matter, Disney and UFC had reached broad agreements in which they would buy the combat sports organization for $4.3 billion.

One person said that Disney has been considering buying leagues over the years since it owns ESPN’s majority. Bob Iger, then-Disney CEO, was a model executive who made brilliant intellectual property acquisitions such as buying Pixar and Lucasfilm, Marvel, and Marvel.

Iger ended up scrapping the UFC agreement. The people spoke on their behalf, not wanting to be identified because negotiations were confidential. They felt UFC’s bloody, violent brand did not mesh well with Disney. The Disney spokesperson did not immediately respond to our request for comment.

Disney’s ESPN launched in 2002. paid $1.5 billion for UFC TV rights in a five-year deal.This deal immediately increased the value of UFC to $7 billionAccording to UFC CEO Dana White. Disney’s ESPN+ also signed a $150 million per year dealUFC fights can be streamed in an agreement which expires in 2025.

Disney will be paying more licensing fees if ESPN renews UFC rights than it paid $4.3 billion in 2016. Popular sports broadcast rights fees continue to rise rapidlyThey offer advertisers unique viewing options and attract large audiences.

As a result, streaming companies have found professional entertainment and sports leagues like UFC, NASCAR and Formula One to be attractive targets. This allows them to charge ever higher rights fees for live programming, which still attracts advertising dollars.

Rich Greenfield of LightShed said, “Disney would rather spend that much money to license UFC.” The costs of licensing are increasing rapidly. It makes great sense to own a league.

It’s not often that anything is available for sale but streaming technology has made it more appealing to acquire sports leagues as competitors seek exclusive content in order to gain a competitive edge. A league is a better option than multiyear renewals which lead to bidding wars and can improve branding.

Lewis Hamilton (Mercedes AMG Petronas Motorsport) celebrates clinching 2019 FIA Formula 1 World Championship. He won the F1 – U.S. Grand Prix race at Circuit of The Americas, November 3, 2019, in Austin.

Icon Sportswire – Getty Images| Icon Sportswire | Getty Images

Disney was adamant about UFC’s image but it is easy to imagine WWE- and Formula One-branded rollercoasters or theme park rides that are owned by media companies. Amazon can tie in clearly to its merchandise. Netflix has the option to use own IP. nascent video gaming division.

Formula One, WWE, and UFC all have global appeal because they are not dependent on language. Formula One is a sport that has races from all over the world. This league announced last weekThe company has now added another U.S. grand Prix, starting in 2023 in Las Vegas.

This could be a major win for streaming service providers that require global subscription growth such as Netflix or Disney to maintain investor satisfaction.

Sean Bratches, the former managing director for commercial operations at Formula One said that “streaming companies are worldwide.” He was responsible for the creation and production of Drive to Survive, a Netflix series that covers all seasons of Formula One. The primary objective of a sport such as F1 is to improve your global media rights.

There have not been any talks about acquiring Formula One, UFC and WWE.

Sparse inventory

Although sports and entertainment leagues might be attractive targets for big streamers looking to buy them out, they are scarce. The largest professional sports leagues – the National Football League, Major League Baseball, the National Basketball Association – aren’t feasible buyout targets. There are many smaller leagues which could or might not be available for purchase at any one time.

World Wrestling Entertainment Inc. Chairman Vince McMahon (L) and wrestler Triple H appear in the ring during the WWE Monday Night Raw show at the Thomas & Mack Center August 24, 2009

Getty Images| Getty Images Entertainment | Getty Images

WWEThe potential candidate for a takeover is based on the fact that it is a publicly traded company and has an elderly controlling shareholder. Vince McMahon ownsHe holds more than 80% voting power, and is now 76 years of age. He and his family will need to make a decision about whether they want to retain control or sell the company to the highest bidder. McMahon’s daughter Stephanie works as the chief brand officer.

Nick Khan, president of WWE, stated, “We are open for business.” said last monthThe Ringer’s Podcast “The Town”

One buyer might be a legacy media firm, like Disney. Fox, Paramount GlobalOder ComcastNBCUniversal was founded last year. struck a five-year deal with WWE for more than $1 billionTo be the only direct-to-consumer home of WWE

Khan said, “If we look at the needs of NBCU/Comcast, and it is a factual statement that they do not have the intellectual properties that other companies have, then you can see that they are lacking in some areas.” I think that they see us as an entity which has lots of intellectual property. Many of this intellectual property has yet to be monetized. We now have to show it to the community and properly monetize it.

Unable to comment immediately, a spokesperson from NBCUniversal was not available.

If a potential acquirer does make McMahon an offer, it could come before the company’s next rights renewal — likely to be announced in mid-2023. McMahon could then decide whether to sell or sign another multiyear contract.

Disney and NBCUniversal both have theme parks. But large tech companies are able create their own. Apple and AmazonPotentially interested parties in acquiring sports and entertainment IP have also been identified. Each have signed multi-year contracts. broadcast MLB gamesOn their streaming services. Amazon also acquiredExclusive Thursday Night Football Rights, starting this season Even NetflixAlthough it has so far avoided live sport, he is willing to buy Formula One rights following its series “Drive to Survive”. broke out as a global hitReed Hastings, co-CEO said last year.

There are potential drawbacks

Khan from WWE said that while Disney has proven it can exploit and grow existing intellectual property like Marvel and Lucasfilm’s, creating new characters requires a completely different skill set. McMahon’s skill set is not evident in a streaming or entertainment service.

Brock Lesnar and The Undertaker were pictured wrestling during WrestlemaniaXXX in New Orleans at the Mercedes-Benz Super Dome on Sunday April 6, 2014.


The content of smaller sports organizations may also be lost in large streaming services that don’t offer everything. Star Wars and Marvel spinoffs are often the top-billed content on Disney+. However, intellectual property may get overlooked. McMahons must decide whether WWE will be able to grow its universe with a larger company or lose cache.

Bratches stated that buying a smaller league of sports may not appeal to a major streamer large enough to buy a multibillion-dollar deal. He was also a former Formula One executive. worked for ESPN for 27 years.

Liberty MediaJohn Malone, a billionaire, bought Formula One in 2016 for $4.4 billion. Liberty has been investing for F1 over the last five-plus decades and earning revenue from different media outlets by playing off one another by selling licensing rights and splitting global rights.

If one media company owned the league, this business model could be wiped out. Bratches stated that any seller who cares about what they’re selling wants to be confident in the health of its acquiring streaming service. A streaming service that is owned by a single league can cause viewers to abandon it, which could have an independent impact on the quality and popularity of the league.

Bratches said that although these properties are nice to own, it is not like buying the NFL. Bratches stated, “There is not enough content for the needle to move.”

Disclosure: CNBC is owned by NBCUniversal.

WATCH: Liberty Media Announces Formula 1 Grand Prix in Las Vegas