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March 6, 2023

Boxing Safe Amidst Paramount+ Showtime Consolidation–At Least Through ‘24

Paramount Global recently announced plans to fully integrate Showtime into Paramount+. Both the streaming service and the linear network (in U.S.) will be rebranded as Paramount+ with Showtime later this year.

Media observers and fans alike are wondering what the corporate restructuring means for Showtime Sports, and specifically its 37-year-old boxing program.

Some

 have taken the company’s failure to explicitly address the sport in internal memos outlining Paramount+ with Showtime’s future as an indication its days on the platform are numbered.

But it seems premature to begin writing about boxing on the network in the past tense. Showtime has assembled a loaded 2023 schedule (9 events over the next four months) and is the first year of a new multi-year deal with Premier Boxing Champions.

“We have the green light to go ahead and continue doing what we do best,” Stephen Espinoza (president, Showtime Sports) said.

Paramount’s decision to merge Paramount+ with Showtime is about right sizing its investment in distribution vehicles. “They were effectively running two [streaming] businesses that were competing with one another for time,” Mike Morris (Senior Managing Director, Guggenheim Partners) said.

The company used to believe the two platforms served different segments of the population. It has come to understand that if a viewer is watching one, it is not watching the other.

Competition in the streaming marketplace has also made it increasingly difficult for a stand-alone service, like Showtime, to thrive. It simply does not have the volume of content needed to compete.

Paramount’s goal moving forward is to create the single most powerful subscription streaming offering, with the most pricing power, that it can. It will work to efficiently nourish the platform with a mix of Paramount+ and Showtime content–if not necessarily with all of the existing programming on those services.

Consolidation will result in layoffs and changes to the programming budget. The company has already canceled a trio of original shows including 

American Gigolo

.

It is expected to be business as usual at Showtime Sports through ‘24. It’s less clear if all the boxing content currently on the network has a place in the combined offering long-term.

But there are reasons to believe the sport will continue to play a role in the company’s future.

Live sports have proven valuable within the pay TV landscape. “In a hyper-competitive content market, live sports [are] one of the few media properties that is still able to cut through the clutter and regularly attract mass audiences,” Espinoza said.

“Moreover, fans’ passion for and emotional connection to their chosen sport/team means [they] are lifelong customers, and the immediacy and unpredictability of live sports makes it virtually the only “appointment viewing” programming left in the content space,” the network executive added.

Boxing seemingly fits Paramount+’s content strategy too. The streaming service offers a mix of entertainment, news, and live sports programming. 

Boxing is also a relatively inexpensive live sports proposition. “The audience is only slightly [smaller] than some of these big sports [leagues], the rights are a fraction of the cost and it drives a very reasonable business,” Espinoza said. 

Despite all of that, HBO chose to exit the boxing business in 2018.

But the Showtime competitor made the decision in part because it wanted to appeal to a more upscale audience. 

Paramount has a different agenda. The company seeks to attract the largest audience possible for its newly combined streaming service. So, having programming that appeals to a diverse and multi-generational audience would seemingly be viewed as advantageous. 

Paramount also has ambitions to build a global streaming service, and boxing is a sport that resonates with fans in countries across the world. Espinoza said the company is “uniquely positioned to be able to capitalize on this interest through its combination of linear and digital outlets, including terrestrial and cable networks in Chile, Argentina, the U.K. and Australia, the SkyShowtime joint venture, and digital distribution via Paramount+ internationally.”

Of course, Showtime only currently controls the domestic rights to PBC fights. Paramount+ with Showtime would have to license the content internationally to offer it as part of its service in markets abroad.

McCarthy said in an internal memo that the company would reallocate funds from underperforming assets that “account for less than 10% of our views.” Some media observers took that to mean boxing. But Espinoza insisted the viewership data suggests otherwise. 

“Showtime has been in the boxing business for nearly 40 years, and that wouldn’t be the case if the sport didn’t bring value to the network. Year in and year out, boxing helps drive our business. Whatever the chosen metric is –new subscribers, total viewership, subscriber retention, earned media, subscriber surveys– the value of boxing to the networks is evident,” he said. 

The consolidation process will give Paramount a chance to take a fresh look at the content investments it is making. 

Showtime’s boxing programming will need to drive enough incremental subscription, advertising, and pay-per-view sales revenue to justify future spending. However, Paramount’s commitment to carry fight cards for at least the next two years should put it in a position to make the correct value analysis when the time comes. 

“In the streaming environment, the content provider has pretty extensive information on who is deriving value [from] and compensating them for the content,” Morris said. 

In the meantime, look for Paramount to explore ways to maximize the value and broaden the reach of Showtime’s live sports content. 

That could include the use of the CBS. As we recently wrote, premium sports content has been increasingly finding itself back on 

broadcast television

 over the last decade. 

Building an independent media brand is a heavy lift. We use this space to shine a spotlight on some of our favorite sports, media and finance content creators. We hope you will check them out. 

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