Did Paramount pay too much to land the UFC’s broadcast rights in a historic seven year, $7.7 billion deal that kicks off in January?
Well that’s at least part of the reason why the Warner Bros. board of directors rejected an offer from Paramount to buy the entire company after already accepting a separate offer from Netflix. In a letter filed with the Securities and Exchange Commission, Warner Bros. outlined a number of reasons why the company was rejecting Paramount’s offer, which included a poor credit rating as well as uncertainty about funding — with billionaire Larry Ellison now personally guaranteeing some of those financials to back his son David Ellison, who serves as the CEO over Paramount.
But Warner Bros. also specifically pointed towards the new regime at Paramount Skydance (the combined company that emerged after Ellison’s Skydance merged with Paramount) allegedly overpaying for some rights fees including sports.
A section from the letter filed by Warner Bros. below:
“In the short period since the completion of the Paramount/Skydance transaction, PSKY has signed above-market, multi-year programming and sports licensing deals, both domestic and international. Despite limited visibility into their long-term performance, PSKY will begin to bear significant fixed financial costs related to these agreements going forward. This, together with potentially higher costs associated with NFL rights given the league’s right to renegotiate early, could create further headwinds to PSKY’s financial profile.”
While UFC is never mentioned by name, it’s obvious that’s part of the risk that Warner Bros. is referencing after Paramount agreed to pay $7.7 billion for the broadcast fights, which now includes all pay-per-view events airing at no additional cost on the Paramount+ streaming service.
The massive deal was worth more than double what the UFC was making from ESPN after previously signing a seven-year contract to move all of the company’s events to the Disney-owned network after a deal with FOX expired.
Paramount has also inked lucrative deals with South Park creators Matt Stone and Trey Parker as well as stealing away Stranger Things creators Matt and Ross Duffer from Netflix.
Prior to Paramount becoming a last-minute suitor to obtain the UFC’s entire broadcast rights package, the company was deep in negotiations with Netflix with the streamer trying to land the 12 to 13 marquee “pay-per-view” events per year.
The UFC was then working on a separate deal for the numerous Fight Night cards that take place each year but ultimately Paramount came in with a blockbuster offer to obtain the entire broadcast rights deal.
Ultimately only time will tell if Paramount actually overpaid to land the UFC’s broadcast rights with the deal not even kicking off until the New Year with the first event scheduled on Jan. 24.
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