Why Paramount Thinks Paying $7.7 Billion for Rights to UFC is a Heavyweight Winner

Big money and sports go hand in hand. The question is how much is too much and will anyone ever admit they overpaid for a big sports rights deal?

One of the most recent big-bucks sports deals is taking the UFC from Disney’s ESPN to Paramount Global’s Paramount+ and CBS, starting in January. 

Paramount, recently taken over by David Ellison, son of one of the world’s wealthiest men, is paying Dana White’s MMA outfit $7.7 billion over the life of a seven-year deal.

Last week, Ellison went on Paramount’s quarterly earnings call and explained where the UFC fits in the company’s plans in general and its sports strategy in particular.

Ellison noted that in addition to signing the UFC, it also grabbed Zufa Boxing.

“Those two deals obviously makes Paramount plus really the home for combat sports,” Ellison said. 

The price for Paramount+ will be going up next year, partly because of the UFC deal. It now costs $7.99 a month with ads or $12.99 without.

Even at the higher price, it might still be a bargain if you’re a UFC fan because as part of the new deal, all UFC events — including the numbered pay-per-view events — are going to appear exclusively on Paramount+ and subscribers will get to see them all.

There are about 100 million  UFC fans in the U.S. and they are very loyal. They will find UFC wherever it is, even if they’re not subscribers to Paramount+  now. That will help Paramount with its goal of increasing the number of Paramount+ subscribers and driving subscription revenue.

Ellison said that UFC was a unique property within the sports world. 

Paramount doesn't have to share the UFC, unlike the NFL, which is on a half-dozen networks or the  NBA, which is on three. Exclusivity is valuable in terms of subscribers and advertisers.

“When you also look at the UFC, it is the largest sport that is not basically split off across multiple platforms. And so it really is a unicorn sports property, and we think it's going to drive a tremendous amount of value in terms of both subscriber growth and engagement across Paramount plus as well as CBS,” Ellison said. 

UFC is also live year-round. That makes it harder for subscribers who sign up to watch fights to drop the service. Right now, people drop Paramount+ when the NFL season ends and re-subscribe in the fall when the NFL kicks off again. That won’t happen as often with UFC.

“We had a real desert of sports that ended at the end of the masters and started again in the NFL, and we saw lots of churn over the summer as people turned off the service and then turned it back on for NFL. And this is a year around sport, which is very unusual for major sports,” said Jeff Shell, the new Paramount president.

Shell added that the big-event nature of UFC was another benefit worth paying for. “Sports are not homogeneous. They're increasingly bifurcated with sports that are kind of regular and sports that are events,” he said. 

With the NBA, for example, there are a lot of regular season games, and then there is the post-seaons, where games are more intense and viewership is higher.

“With the UFC, there is no regular season and postseason,” Shell said. “Every one of these numbered events tis an event and the ability to have events throughout the year is exactly where we think sports is going.”

UFC programming will also strengthen the CBS broadcast network. CBS has a lot of women viewers for its procedural dramas. UFC will bring younger men to the channel.

The deal will also be good for UFC, increasing its potential fan base, With Disney and ESPN, UFC events were behind a pay wall and still grew 25%.

“We think when you eliminate the double pay wall, it's going to become much more accessible, and we think that growth rate will increase. Additionally to that, we think we're offering to our subscribers at Paramount+ really significant value in the fact that for approximately pay-per-view, you basically can access all of the UFC across Paramount plus. And so from that standpoint, we think it's a great value for consumers,” Ellison said.

“Having an asset like the UFC is going to increase engagement on platform. It's going to drive subscribers, and we're feeling incredibly confident in the investment that we just made,” he said. 

INTRODUCING USA SPORTS

There’s a new name for sport fans to know and that’s USA Sports.

Comcast and NBC are spinning off their cable networks into a new company called Versant. Versant knows that if it’s in the TV business, it’s got to be in sports and its using its USA brand in the same way Warner Bros. Discovery has TNT Sports.

Versant is not getting a piece of NBC’s NFL or NBA deals, but its new USA Sports unit has a bunch of other stuff, including NASCAR, PGA golf, Premier League soccer, WNBA, WWE, Atlantic 10 college basketball and League One Volleyball.

At the same time, NBCUniversal is launching a new cable sports channel, NBCSN. 

If that sounds familiar, you’re not nuts. Comcast shut down NBCSN in 2021 and moved most of its sports programming to streaming on Peacock.

YouTube TV, which reached a large carriage deal with Comcast/NBCU a few months ago, has agreed to carry NBCSN. That’s the same YouTube TV that’s got ESPN blacked out.

Who wants a cable channel at this point? I don’t know. But if you need to watch three hours of The Dan Patrick Show, well there you go. Plus, NBC is working on a deal with Major League Baseball, so if you haven’t cut the cord, you might see some of those games on cable.