PPV Boxing Card Featuring YouTube Celebrities Reports 800,000 Buys

Last Saturday Night, a YouTube PPV boxing card featuring 4 “YouTube celebrities” (headlined by KSI vs. Logan Paul) reported 800,000 buys at a cost of $10. If you count those who watched the action on pirated streams, it’s been estimated that upwards of 2 million viewers tuned in for the event. An additional 15,000 fans bought tickets to catch the fights live at Manchester Arena.

Howie Long-Short: 800,000 buys is impressive considering UFC 226 (Miocic vs. Cormier) did less than 400,00 PPV; of course, the UFC event was priced at $64.99, not $9.99. With that being said, only 2 UFC events over the last 2 years have reached 800,000 PPV buys and there have been none thus far in 2018.

Comparing the UFC to an amateur boxing card isn’t exactly apples to apples, though. A better comparison would be to compare the YouTube (GOOGL) card to Barstool’s amateur boxing series Rough N Rowdy (RNR), which also streams their events. While I don’t have data on Rough N Rowdy 3 or 4, this past weekend’s event destroyed RNR 2 (February ‘18); a card that only drew 41,000 buys (between $9.99-$15.99).

Tiger vs. Phil is going to be priced at $24.99. Alan Shipnuck, Senior Writer at Golf.com wrote before that price was disclosed that “this ain’t the freakin’ Ryder Cup — I’m not sure there’s that much demand. For $19.99 only the lunatic fringe will buy in. Any more than that and it’s full-blown insanity.” Well, it’s full blown insanity and I’m not certain it’s going to post more buys than recent RNR events. For contextual purposes, in April 1988 Jack Nicklaus, Lee Trevino, Greg Norman and Ian Woosman competed in a similar event called the “Desert scramble”. The event cost fans $12.95 ($30 today). Less than 65,000 people tuned in and the event failed to break even. With a $9 million prize, AT&T will need at least 360,000 PPV buys to break even; I wouldn’t think there are 360,000 on the lunatic fringe.

Fan Marino: While it’s likely you’ve never heard of these people, the two fights on the card featured Jake Paul (16 million YouTube followers) vs. Deji Olatunji (9 million followers) and his brother KSI (19 million followers) vs. Logan Paul (18 million followers). If you’ve heard of Logan Paul, it’s likely because earlier this year he made headlines for broadcasting a dead body in Japan’s suicide forest (i.e. he’ll do anything for views) on his channel. Jake Paul won his fight before challenging Chris Brown (of Rihanna infamy) to a match; KSI and Logan Paul fought to a draw (6 rounds) before announcing a rematch.

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Comcast Preparing to Divest 22 Fox RSNs, To Submit 2nd All-Cash Bid by July 27th  


Comcast (CMCSA) is reportedly lining up buyers for 21st Century Fox’s (FOXA) regional sports networks to alleviate anti-trust concerns, as it prepares a bid that would be favorable to The Walt Disney Company’s (DIS) $71 billion dollar offer (cash and stock) for FOXA film & TV assets. CMCSA is open to divesting all 22 RSNs, but believes just 8 overlap with the existing Comcast sports footprint. Reuters is reporting that the company has held conversations with publicly-traded buyout firms Apollo Global Management (APO) and Blackstone Group (BX). Just 2 weeks ago, the U.S. Department of Justice approved DIS’ bid after reaching a settlement with the mouse house to rid itself of the regional sports networks.

Howie Long-Short: It’s been assumed that the RSNs will fetch $20 billion+ (Comcast’s first bid placed a $24 billion valuation on them), so selling them off will help Comcast coffers as the company prepares to submit a 2nd all-cash bid (no dollar amounts given). FOXA shareholders are scheduled to vote on the DIS bid on July 27th, Comcast will submit their bid prior.

Rumors of P.E. firms taking down the RSNs is relatively surprising as most of the discussions surrounding potential landing spots having focused on telecom and media companies. Everyone from Amazon (AMZN) and YouTube (GOOGL) to AT&T (T) and Dish Network (DISH) has been mentioned.

I asked T.K. Gore, sports media consultant, advisor and professor, for his thoughts on who lands the RSNs?

T.K.: The RSN world is a tricky business and experience — coupled with deep pockets — matters. Look for groups like Liberty Media and AT&T to get involved given their experiences.

MSG is among the companies that has been associated with having interest in the regional networks. James Dolan has said that he’d be interested in acquiring the assets “at the right price”, noting they’re highly profitable now but a “slow, declining revenue stream.”

Fan Marino: The 22 RSNs collectively control exclusive broadcast rights to 44 NFL, NBA, MLB & NHL franchises, including teams in Detroit, Southern California, Dallas, Cleveland and Miami. The YES Network is the most valuable of the lot, worth an estimated $4 billion; the Yankees are likely to re-acquire that network.

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NBA 2K League Finds Media Rights Partner, Viewership for Inaugural Game Disappoints


The NBA and Twitch have agreed to a multi-year partnership that makes the video streaming service the league’s first official media rights partner. The agreement ensures that the inaugural season of the NBA 2K League will be broadcast live, in its entirety (up to 199 games); with all games featuring live commentary and updates from around the league. Twitch has announced plans to introduce “Extensions” to increase viewer engagement during broadcasts (they’re going to need to draw viewers first, see Fan below). Twitch is a Founding Partner (i.e. they’ll have an equity stake) of the upstart league.

Howie Long-Short: Twitch was acquired by Amazon (AMZN) for $970 million, back in 2014. The company increased concurrent viewership +21% during Q1 ’18 (to 953,000), growing its already large lead within the game streaming market over 2nd place YouTube Gaming (GOOGL, -12% to 272,000). Facebook (FB, +103% to 56,000) and Microsoft’s (MSFT, +90% to 9,500) also reported significant growth with their streaming audiences last quarter.

As for AMZN, the company posted its most profitable quarter ever in Q1 ’18. It grew revenue +43% to $35.7 billion, while net income rose 121% to $1.6 billion. Cloud computing (+49% YoY to $5.44 billion), subscription services (+60% YoY to $3.1 billion) and ad revenue (+139% YoY to $2.03 billion) all contributed to the record quarter.

Fan Marino: The NBA 2K League’s inaugural season kicked off yesterday, with Bucks Gaming and Pistons GT participating in the league’s first ever game (Pistons won 49-44). Just 9,000 watched the contest, a particularly disappointing total considering OWL’s opening day drew 408,000 concurrent viewers. This league is far from the slam dunk predicted following last month’s successful gamer draft.

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YouTube TV, Hulu Engaged in Sports Sponsorship Arms Race


A brand awareness campaign is among the ways (exclusive content and user experience are others) that an MVPD, OTT live-streaming service or VOD platform can distinguish itself from the competition and drive growth. Over the last month, rivals YouTube TV and Hulu have announced noteworthy sponsorship transactions (without disclosing financial details) surrounding marquee sporting events. Below is a brief each deal:

  • YouTube TV will remain (was in ’17) the presenting sponsor of the World Series, (“World Series Presented by YouTube TV”) through the 2019 season. As part of an expanded partnership, the subscription streaming service will also add MLB Network to its base package. For an additional fee, YouTube TV subscribers will eventually have the option to add MLB.tv (provides regional broadcasts of games) to their package. “On-air callouts”, a national advertising campaign and in stadium signage are also included within the deal.
  • YouTube TV will become the first-ever presenting sponsor for the NBA Finals. The deal, which runs through at least ’19, will also make the company the presenting sponsor of the WNBA and G-League Finals. On-court and in-arena signage, ABC ad spots, “in-game callouts” and branding across the league’s digital and social channels, are also included within the pact.

It must also be noted that YouTube TV has also landed exclusive streaming rights to Los Angeles FC and Seattle Sounders games.

  • Hulu has signed on as an official partner of the NHL & NHLPA for the 2018 Stanley Cup Playoffs and Stanley Cup Finals; a “comprehensive partnership” that will “cross all league touch points including NBC Sports, the NHL’s digital and social channels, as well as camera-visible, in-stadium inventory within all U.S. venues.”
  • Hulu also signed a deal with Turner Sports, to sponsor NBA playoff games on TNT. A “Presented by Hulu” graphic will be prominently displayed on “opening graphic cards, custom billboards and scorecards” throughout all first-round coverage, Conference Semifinals action and Western Conference Finals broadcasts. NBA on TNT talent will appear in ad spots promoting the streaming service.

Howie Long-Short: The success YouTube TV had using live telecasts of the 2017 World Series to drive subscriptions initiated this competition between rivals; but, YouTube TV isn’t the leader in this space. In fact, the size of its subscriber base (300,000+) has the company competing with Hulu (450,000) for a distant 4th place. The oldest service, Sling TV, leads with 2.22 million subscribers; while AT&T’s (T) DirectTV Now comes in second with 1.2 million. Sony’s (SNE) PlayStation Vue is 3rd with +/- 500,000 monthly subscribers.

Fan Marino:  For reference purposes, Sling TV is a subsidiary of DISH Network (DISH). Google (GOOGL) owns YouTube TV and The Walt Disney Co. (DIS), pending final approval of its 21st Century Fox acquisition, controls 60% of Hulu; Comcast (30%) and Time Warner (10%) own the balance.

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“The Next Lululemon” Raises $34 Million


Outdoor Voices (OV), an “activity and sports” brand, raised $34 million in a Series C round; led by Alphabet (GOOGL) owned GV. The company will use the capital to expand its “physical presence” (currently has 7 stores, to add 5 more in ’18), believing brick and mortar retail (and hosting events nationwide) will help them to “unlock markets online.” Often referred to as “the next Lululemon”, the digital first company has been able to stand out in a crowded athleisure sector by developing a loyal social media following (200,000 followers on IG) and effectively using pop-culture influencers (see: Harry Styles, Frank Ocean), as brand ambassadors.

Howie Long-Short: Outdoor Voices’ direct-to-consumer online platform and the R&D behind their “technical apparel” is what’s drawn the interest of venture capitalists. To date, the company has raised $56.5 million; with General Catalyst leading the prior 3 rounds. In August 2017, former Gap and J.Crew CEO Mickey Drexler was named Chairman of the Board; Drexler is credited with turning Gap into a “global megabrand” in the 1990s.

Fan Marino: 2017 was a milestone year for athleisure, as “women’s elastic knit pants” outsold blue jeans for the first time. While sales of blue jeans have been on a steady decline since 2010, at an average annual rate of 3.9%, it’s been the fast rise (avg. of 25.7% per year) of elastic knits that have enabled the versatile pants to overtake the American staple.

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MLB Takes “Next Great Leap” in Sports Broadcasting


Facebook (FB) has landed the exclusive broadcast rights to stream 25 Major League Baseball day games (primarily on Wednesdays) during the 2018 season; the first time a “big 4” U.S. sports league has awarded exclusive distribution to a social network. Industry consultant Lee Berke called the deal “the next great leap” in sports broadcasting, comparing the milestone to the migration of games from network to cable television in the mid-to-late 1980s. It’s been reported that the social network paid $30-$35 million for a package that includes; the live games (MLB network will produce the broadcasts), on demand highlight packages (for every game) and weekly recaps of all 30 teams. The first Facebook Watch broadcast will be on April 4th (Mets vs. Phillies).

Howie Long-Short: While this is a landmark deal in sports broadcasting history, it’s premature to call it a “great leap”; it’s more like a big step. A “big 4” sporting event appearing exclusively on a digital platform is noteworthy; it’s just not the game-changer that Berke implies. All 4 leagues have broadcast rights tied up through at least the balance of the decade and none are expected to forego linear television money in the next round of negotiations. There may be a day when FAANG companies control exclusive NFL, NBA, MLB, NHL broadcast rights, just don’t expect it to come anytime soon.

Fan Marino: In the hours following the announcement, Twitter (TWTR) and MLS announced their own streaming partnership; a 3-year deal gives TWTR the exclusive English broadcast rights to at least 24 live matches/season that air in Spanish on Univision (plus on-demand highlights). A week prior, AMZN announced a deal with the UFC to stream PPV events (cost $64.99) on Amazon Prime Video (do not have to be Prime member); while YouTube TV (GOOGL) locked up exclusive live streaming rights to the Seattle Sounders FC, it’s 2nd MLS deal (L.A. FC). The arms race between digital companies seeking to lure users with sports, is officially on.

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Twitter, Amazon, YouTube and Verizon Bid for TNF Streaming Rights


Twitter (TWTR), Amazon (AMZN), YouTube (GOOGL) and Verizon (VZ) are all interested in acquiring Thursday Night Football streaming rights; with the NFL reportedly seeking a multi-year deal, for the first time (since the package was introduced in ’16). Among the remaining companies, only YouTube has yet to broadcast a league game; though, CEO Susan Wojcicki has stated she would “love to stream the NFL” and her platform may be able to offer the league, the greatest potential for viewership (AMZN drew 370K for 1st ’17 game, TWTR 240K drew for 1st ’16 game, YouTube drew 1.5 million for a recent SpaceX launch). It’s unclear if its status as an existing league partner, with some TNF mobile streaming rights, will give VZ a leg-up in the competition.

Howie Long-Short: The NFL received a 47% YOY increase in the value of their newly signed TNF contract, worth $3.3 billion over 5 years; though, Fox will also get rights to broadcast the NFL draft and may receive another playoff game. If the league receives a comparable return on mobile rights (expect the percentage increase to be higher, they increased 400% from ’16 to ‘17), the new deal will be worth more than $72.5 million/year.

Fan Marino: Fox’s TNF deal touts the potential addition of a playoff game as a benefit, but the game they would likely get (Wild Card, early slot, Saturday) has been a loser for its existing rights holder (ESPN). The game has consistently drawn the lowest ratings of Wild Card Weekend since ESPN started carrying playoff games in ’15 and the network has yet to turn a profit on those broadcasts.

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Hulu May Be Growing Too Fast for Success


For 3 straight nights (Friday 2.16 – Sunday 2.18), Hulu experienced widespread log-in issues that prevented subscribers from viewing NBA All-Star Weekend and the 2018 Winter Games. The glitch on Sunday night occurred around 9p EST, the scheduled tip-off time for the All-Star Game (on TNT) and during NBC’s prime time Olympics coverage. It hasn’t been a strong month for the live streaming service; technical issues during the Super Bowl, including blank screens during the last 2 minutes, forced Hulu to offer one-month credits to those affected. No other live streaming service (i.e. DIRECTV Now, Sling TV or PlayStation Vue) reported issues during Sunday evening’s events.

Howie Long-Short: Research by the Boston Consulting Group indicates a striking correlation between revenue growth and company mortality (read about Compaq); in other words, the faster a company grows, the shorter its expected lifespan. Moderate growth is proven to be lower risk; Hulu is growing quickly (here’s a story headlined, “Does Hulu’s Rapid Growth Spell Trouble for Netflix and Amazon?”). While subscribers are up 41.6% (to 17 million) over the last 18 months, the company is now spending over $1 billion/year on advertising and lost $920 million in 2017 (up from $531 million in ’16). Losses are expected to increase 80% to $1.7 billion in ’18. CMCSA, FOXA, DIS & TWX will be investing another $1.5 billion into the company this year. Shareholders should be concerned about the cost of customer churn; companies that fail to deliver when most desired, don’t stay in business long.

Fan Marino: While on the topic of live streaming services, YouTube TV (GOOGL) announced it would be adding TNT, CNN, TBS, MLB Network and NBA TV to its service; while subsequently increasing the cost of the offering from $35 to $40 (note: Hulu’s 50 channel package is also $40). The average cost of a broadband plan in the United States is $66.17; tack on $40 for YouTube TV and you’re now paying over $100/mo. What exactly is “skinny” about that?

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Intersection Streaming Olympic Coverage on “Thousands of Digital Screens” in NYC, CHI & PHI


NBC Olympics, a division of the NBC Sports Group (CMCSA), has announced a partnership with Intersection that will bring exclusive content from the PyeongChang Games to “spaces where the American audience now consumes media”; throughout New York, Chicago and Philadelphia. Beginning tomorrow February 9th (and running through February 25th), NBC Olympics will produce custom content to keep urban residents up-to-date on the Winter Games. Intersection, operating at the forefront of the smart city revolution with products like LinkNYC (information/advertising kiosks that offer free wi-fi), will air morning highlights, medal counts and real-time alerts on “thousands of digital screens across our cities and transit hubs.”

Howie Long-Short: Intersection was founded in 2015, when Sidewalk Labs (GOOGL) acquired Control Group and Titan Outdoors and merged the companies. In November, Intersection closed on a $150 million venture round for the global expansion of its advertising supported Wi-Fi network (NYC and London were their first 2 cities). Graham Holdings Company (GHC, former owner of the Washington Post) led the round; Sidewalk Labs did not participate. On November 1st, GHC reported Q3 profits declined .4% YOY; despite a 6% increase in revenue. Struggles within their education (i.e. Kaplan, -3% to $376.8 million) and television segments (-10% to $101.3 million) offset the growth in their other businesses (+46% to $179.1 million).

Fan Marino: If you can catch a last-minute flight to PyeongChang, you can still get seats to the opening ceremony (unheard of, ALWAYS sells out). Of course, there are several reasons why; it’s outdoors, the temperature is projected to be in the 20s and tickets start at +/- $400.

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OTT Streaming Service Lands Exclusive Sports Broadcast Rights for 1st Time


Fox (FOXA) outbidding CBS & NBC for Thursday night football (does not include digital rights), with an eye-raising 5-year $550 million/year commitment, received much of the fanfare; but, there was another broadcasting deal announced on Wednesday that deserves more attention. YouTube TV has secured the exclusive rights to broadcast L.A. F.C. (MLS) games, marking the first time a streaming service has landed primary (as opposed to television simulcast) broadcast rights. The wide-ranging partnership also gives the GOOGL-owned OTT pay-TV service naming rights on the jerseys of the expansion club. An exclusive YouTube TV channel will show +/-18 L.A. FC games (only within L.A. market) in their inaugural season, with the balance of the schedule available on ESPN & FS1 (both included within a YouTube TV subscription); there are no additional fees to access the games beyond the $35/mo. subscription cost. Financial terms of the deal were not disclosed.

Howie Long-Short: Never has a sports team chosen to forego broadcast television (affiliate stations, RSNs) in favor of live-stream exclusivity, so this partnership could shake up the industry. The proliferation of cable alternatives surely has other teams/leagues evaluating their options; teams like the Clippers, Trailblazers and Wizards are reportedly already discussing/exploring self-distribution following the expiration of their existing local rights deals. The NFL isn’t going down this route anytime soon, as they still draw massive television audiences that warrant lucrative carriage agreements (see: TNF deal); but, you can expect this trend to continue for teams/leagues playing to niche audiences.

Fan Marino: Fox is paying more ($100 million+) annually for TNF rights than NBC & CBS combined to pay last season, and both lost money; so, Fox isn’t expecting to make a profit (FOXA shares closed -4%, to $36.90 following Wednesday’s news) on the games. They did this deal to win the ratings war on 11 Thursday nights and to prop up the balance of their lineup. I had a chance to speak to San Francisco 49ers President Al Guido on Wednesday morning and asked him if Fox should have overpaid for the TNF package?

Al: You use the term over-paid. I can’t speak for Fox and how they valued the product, but Fox has valued NFL football for a long period of time and I think they would probably tell you that their business has been successful because of their purchasing of NFL football. The margin of victory (on Thursday night) has been as close as it’s been on Sundays, generally speaking the health and safety has been equal to Sundays and 37 of the top 50 programs are still NFL programs. I’m a big believer that Fox having all of the games on one network, will help them going forward.

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