January 23, 2024

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After years of anticipation, Netflix finally makes its big move into live sports, and its impacts are certain to be felt for years. … Big numbers surround both the NFL and Stephen A. Smith. … And even some of the foremost figures in college sports don’t seem to have a firm grasp on the complexities facing that part of the industry.

— Eric Fisher [[link removed]]

Netflix Finally Makes Its Big Move Into Live Sports—in the Most Logical Way [[link removed]]

The Des Moines Register

Netflix’s first major move into live sports is happening with likely the most natural and favorable set of circumstances for the dominant streaming platform.

On Tuesday, the company completed a 10-year deal [[link removed]] with WWE to stream its flagship weekly show, Raw, beginning in January 2025, and building massively upon Netflix’s modest steps in live sports to date, such as the in-house golf tournament The Netflix Cup [[link removed]] and the similar tennis tournament The Netflix Slam [[link removed]]. Valued at more than $5 billion, the WWE-Netflix agreement will not only see the streamer show Raw in the U.S. but also pick up international rights for other major WWE properties, such as SmackDown, WrestleMania, SummerSlam, and Royal Rumble. A behind-the-scenes WWE documentary airing on Netflix is also being discussed.

Closely following Netflix’s announcement [[link removed]] of a NASCAR documentary project, the WWE agreement includes a Netflix option to extend for a second decade, as well as an opt-out option after the initial five years. Raw will exit its longtime home at the NBCUniversal-owned USA Network, where it has enjoyed a status as the cable network’s top show and frequently attracts 1.5 million to 2 million viewers per episode.

Investors quickly cheered the agreement, as stock in TKO, parent of both WWE and UFC, soared nearly 16% Tuesday, and shares of TKO majority owner Endeavor increased more than 3%. Netflix shares were comparatively flat, rising just 1% Tuesday, but financial analysts still applauded the move and how it helps expand the company’s advertising business to supplement core subscriptions.

“We think Netflix’s No. 1 focus is driving scale in ads as it needs reach and frequency to carve out a seat at the top table with U.S. ad buyers,” said Wells Fargo analyst Steven Cahall.

Seamless Switch

Prior to today’s deal, Netflix had been largely satisfied making its name in sports around documentary programming, with company co-CEO Ted Sarandos famously saying in 2022, “we’re not anti-sports, we’re just pro-profit.” That comment seemed to reinforce Netflix’s long-held belief that escalating sports rights fees existed outside of the company’s business plan.

The $5 billion-plus commitment to WWE obviously denotes a very different thinking. But from a programming standpoint, the WWE live rights are not at all a radical departure for Netflix. The pro-wrestling promotion is scripted and serialized—elements core to its other entertainment content. To that end, Netflix chief content officer Bela Bajaria called Raw “the best of sports entertainment, blending great characters and storytelling with live action 52 weeks a year.”

WWE will continue to handle production for Raw and the other events, as it has been doing in its existing rights deals. That frees Netflix from the burden of producing events in sometimes challenging conditions, such as extreme weather [[link removed]], a responsibility carried by most other linear networks and streamers.

“Raw is year-round, which is part of what makes it such an attractive property,” Tom Richardson, Mercury Intermedia senior vice president and a longtime influential voice in digital sports media, tells Front Office Sports. “It delivers a ton of content.”

Seeing the Future

The Netflix agreement also marks a clear statement by WWE and TKO about where they see the media business going. USA Network is currently in more than 72 million U.S. homes. But that number is dropping, having already fallen 20% between 2018 and 2023, and it will continue to do so—likely at accelerating rates—as cord-cutting extends its attack [[link removed]] on the traditional cable television business.

Netflix, conversely, has more than 260 million global subscribers, [[link removed]] tops of any streaming network, and that number is still growing. That large and expanding audience helps explain why there has been so much interest in Netflix’s sports aspirations, even as it previously balked at paying large-scale rights fees.

If successful, Netflix’s WWE move will also raise further questions about whether the company will make a move for rights for the WWE Network, WrestleMania, and other top events, currently held in the U.S. by NBCUniversal’s Peacock, but expiring in 2026.

“I respect any property that’s experimenting. WWE is definitely doing that, and has been for some time with their premium live events, whether it be their pay-per-views, going to Peacock, and now this,” Richardson says.

I Am a Rock

TKO, meanwhile, has made a separate deal with Dwayne “The Rock” Johnson to add the entertainment icon and former WWE personality to its board of directors. One of Hollywood’s most bankable film stars, a senior figure with the reworked UFL spring football league [[link removed]], an active entrepreneur, and one of the most-followed personalities globally on social media, Johnson will regain full legal ownership of “The Rock” name, which had been held by WWE.

The pact will also see Johnson enter into an additional services and merchandising agreement with the company in which WWE will license Johnson’s name, likeness, and other intellectual property for up to 10 years. Johnson, who appeared with TKO CEO Ari Emanuel on CNBC Tuesday to herald the new relationship, will be paid $30 million in TKO stock, vesting in four batches between now and the end of 2025.

“My crazy life is coming full circle,” Johnson said.

#️⃣ ONE BIG FIG

That’s a Lot of Eyeballs 👀

50.4 million

Average number of TV viewers who tuned in to watch [[link removed]] Sunday’s Kansas City Chiefs-Buffalo Bills game on CBS Sports, making it the most-watched NFL divisional playoff game in history. The previous record of 48.5 million viewers was set in 2017 in a game between the Green Bay Packers and Dallas Cowboys.

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In this free, three-lesson course, you’ll learn the history [[link removed]] behind legalized sports betting in the U.S., FanDuel’s rise as an industry leader—and most importantly, the tools, resources, and partnerships within the FanDuel ecosystem that help foster a culture of responsible gaming.

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📺 TUNED IN

Stephen A. Smith … $20 Million Man?

Will Cain, the former First Take guest debater, tells Front Office Sports senior writer Michael McCarthy that Stephen A. Smith will cash in big when he hits free agency.

“He is the most valuable name and personality in sports media,” says Cain. Smith’s negotiation with ESPN will be the most closely followed talent deal of the year. If the four letters don’t make an offer of at least $20 million annually, they could risk losing the face and voice of the network.

Read more of McCarthy’s Tuned In column [[link removed]] on Smith and on how the meteoric rise of Travis and Jason Kelce has led some TV people to ask: Is broadcasting in the works for the brothers after the NFL?

👂 FOS PULSE What We’re Hearing: NCAA Trial

Kirby Lee-USA TODAY Sports

Amanda Christovich here; I’m back in Los Angeles this week covering a trial [[link removed]] over whether USC football and basketball players should be considered employees—a case that could ultimately spell the end of NCAA amateurism. This week, lawyers arguing in favor of the employment model are calling adverse witnesses to their case in an attempt to establish the strict control that USC exercises over athletes, which USC’s witnesses clearly want to dispute. The official from yesterday’s testimony made several eyebrow-raising statements [[link removed]], including that USC does not currently maintain an athlete handbook, despite handbooks being ubiquitous across college sports. Today’s witness, who also works in the athletic department, has claimed to be unaware of whether the NCAA has a written policy to prohibit NIL recruiting inducements.

I’ll be reporting all week from L.A. You can find my courthouse play-by-play on X [[link removed]], and on Front Office Sports [[link removed]].

Conversation Starters TCU’s women’s basketball team was forced to host open tryouts in the middle of their season because of multiple players going down with injuries. The Horned Frogs were pleasantly surprised [[link removed]] and, as a result, have signed a few walk-ons. Formula 1 has launched the world’s first F1 karting experience. Three tracks have been built in London. Check [[link removed]] out the experience. In football, Ohio State has lost to Michigan three straight years—and now had to watch its rival win a national title. See [[link removed]] how the Buckeyes are trying to rectify the situation. Editor’s Picks Former USM President: Brett Favre Agreed to Pay for ‘Entire’ Arena Project [[link removed]]by A.J. Perez [[link removed]]Lawsuit alleges Favre entered into “handshake deal” to “personally guarantee the funds” for volleyball facility. Lions Watch Party at Ford Field Sells Out in Just Hours [[link removed]]by Margaret Fleming [[link removed]]More than 20,000 fans are expected in the lower bowl. Arizona’s AD Is Out Amid University’s Financial Struggles [[link removed]]by Margaret Fleming [[link removed]]The university heads to the Big-12 in the fall. Advertise [[link removed]] Awards [[link removed]] Learning [[link removed]] Video [[link removed]] Podcast [[link removed]] Sports Careers [[link removed]] Written by Eric Fisher [[link removed]], Amanda Christovich [[link removed]] Edited by Matthew Tabeek [[link removed]], Peter Richman [[link removed]]

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