In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about Endeavor's $21 billion dollar merger between Ultimate Fighting Championship (UFC) and World Wrestling Entertainment (WWE), now called TKO Group Holdings (TKO), and what it might mean for the future of the entertainment, media, and sports industries.
You can read the full column below.
Sports and entertainment group Endeavor (aka William Morris Endeavor) has closed a $21 billion dollar merger between the Ultimate Fighting Championship (UFC) and World Wrestling Entertainment (WWE), forming a new combined company called TKO Group Holdings (TKO). TKO will present both live mixed martial arts fighting and entertainment wrestling under one corporate roof, but the properties will continue to be displayed separately. For example, there is unlikely to be a UFC vs. WWE match-up soon unless for marketing purposes where one athlete might be utilized to promote an event of another athlete-entertainer.
The merger is significant for several reasons. First, it is commendable that Endeavor-owned UFC saw value in WWE where others did not. ESPN, Amazon, and a number of studios, streamers, and cable providers could have purchased WWE when it was for sale and with less stress and more assets than Endeavor. Many corporate buyers balked at the idea either because they ignored the significant viewership, fandom, and dollars from WWE or because they were scared to add an asset that did not necessarily fit traditional sports and entertainment programming.
Second, Endeavor has positioned itself to provide a wide variety of content to many households and public venues for years to come, not to mention its underlying talent representation business in entertainment, media, and sports.
Third, with existing, but separate, WWE and UFC television deals set to expire and the recent news that Disney and Charter were able to broker a deal to display ESPN channels, TKO will be in a better position than most if not all sports and entertainment licensors in the next five years to sell their copyrighted broadcasts for distribution to a cable provider and streamer. The sale figure will easily reach multiple billions of dollars. In fact, the Disney-Charter deal highlights two important points that: (1) linear channels will further serve as marketing windows to streaming platform packages either as included ad-based options or premium options for a higher purchase price, and (2) television is still important to the distribution of content, but lessening in importance especially among younger generations who are continuously more removed from watching or knowing about traditional cable.
While Disney loses on charging double for licensing its channels and getting full scale on separate streaming options, specifically the addition of ad-based Disney+ in the Charter cable package for customers, it can still market its premium Disney+ without ads to existing and new subscribers. This means TKO will have the opportunity to not only sell a combined and significant live sports asset with UFC and WWE, it can do so on traditional cable, streaming, and social media platforms. The Disney-Charter also paves the way for the National Basketball Association (NBA) and other sports leagues to follow a similar dealmaking pattern. If Disney-owned ESPN failed to reach a deal, it would have meant a more difficult path ahead for live sports rights.
TKO may still have one further trick up its sleeve. First, it may look to pickleball or another niche or growing sport for purchase. TKO’s pathway to purchase a pickleball tour just got easier as Major League Pickleball (MLP) and the Professional Pickleball Association (PPA) merged. The growth of pickleball has been tremendous and the move to add additional, but not astronomically expensive content like the live sports rights for the big five American sports leagues (NBA, NFL, NHL, MLB, and MLS) might be a winning ticket for now.
Second, as Endeavor’s main competitor Creative Artists Agency (CAA) just showed with the purchase of Lockerverse, a move into owning an-NIL platform with NFT and metaverse opportunities for college and professional athletes might present an place to further assist in growing its represented athletes and entertainers bank accounts.
TKO as a publicly traded company will look to be a leader in entertainment and sports for years to come as long as UFC and WWE stay popular with viewers.
About Jeremy M. Evans:
Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
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