MSG to Spin-Off Sports Franchises


Madison Square Garden Co. has filed with the SEC to spin-off its professional sports franchises into a new publicly traded company, with its live entertainment remaining under the MSG ticker. The division of assets (expected to be completed in H1 ’19) will “enable investors to more clearly evaluate each company’s assets and future potential, while providing both companies with increased strategic flexibility.” The filing reiterated the company does not intend on selling either of its marquee sports franchises (see: Knicks, Rangers), though it plans on unloading the WNBA’s New York Liberty.

Howie Long-Short: We’ve been waiting for this shoe to drop since the rumors first started flying in June. Upon the deal closing, MSG will consist of Madison Square Garden Arena, the Hulu Theatre at Madison Square Garden, Radio City Music Hall, Beacon Theatre, the Chicago Theatre, the Wang Theatre, the L.A. Forum, the Radio City Rockettes and the Christmas Spectacular, MSG’s booking business (think: college basketball, boxing), their majority stakes in Tao Group (62.5%) and Boston Calling (a festival/concert promoter), the company’s JVs (Azoff-MSG Entertainment and Tribeca Enterprises) and the planned Sphere projects in Las Vegas and London. “New” MSG will own 1/3 of the shares in the newly formed sports company and will retain $1 billion in cash. Legacy shareholders will control 2/3 of MSG Sports. Shares declined -3% on the news, closing at $300.62 on Friday 10.5.18.

In August, the company reported the percentage of revenue generated by its sports teams had dropped from 60% (last 3 years) to 50% in fiscal 2018, indicating Dolan’s diversification plan is working. MSG shares are up +42.5% YTD.

Fan Marino: The newly traded public company will be comprised of the New York Knicks (and their G-League affiliate the Westchester Knicks), the New York Rangers (and their AHL affiliate the Hartford Wolf Pack), their majority stake in Counter Logic Gaming, Knicks Gaming and a training facility in Greenburgh, NY. Dolan intends on running both companies, so fans shouldn’t expect many (if any) changes to team operations.

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Juventus Shares in Free Fall with Ronaldo Under Investigation


Italian football club Juventus has decided to publicly defend Cristiano Ronaldo despite allegations (and some damning evidence) that the Portuguese star raped a woman in 2009. The allegations, filed as part of a civil suit, have since prompted Las Vegas authorities (site of the allegations) to re-open a criminal investigation. Ronaldo has dismissed the accusations as “fake news”, but has yet to explain the $375,000 settlement the American woman received (in exchange for signing an NDA) or the document detailing the night where he admitted “she said no and stop several times.”

Howie Long-Short: When Juventus (JVTSFlanded Ronaldo shares rose +42% (to $1.40). By mid-September the stock was up +135% (to $1.95) on the Ronaldo effect (see: kit sales, club increased ticket prices by 30%), so I’m not surprised to see the share price in free-fall with news of allegations that could end his career. Shares are down -20% since the allegations first surfaced on September 29th, dropping -10% on Friday (to $1.33).

It’s easy to understand why Juventus has been so vocal in their support of Ronaldo, they need him if they’re going to win the Champions League for the first time since ’96 and there’s a fortune riding on his availability. Aside from the broadcast revenue Juventus could claim by going deep in Champions League competition and the increased interest from sponsors, Serie A broadcast rights (both domestic and international) expire at the end of the ’20-’21 season and it’s been estimated that they are upwards of 30% more valuable ($500 million, $25 million/club) with Ronaldo playing for Juventus. It’s worth noting that a $25 million boost to the bottom line would increase the club’s revenue by +5% ($442 million in ’17).

Fan Marino: Ronaldo continues to play for the Juventus as the allegations and corresponding investigation hang over his head. On Saturday, he scored his 4th goal of the season leading the club to a 2-0 win over Udinese. While his club team continues to run him out on the pitch, his country is not; Ronaldo has been left off the Portugal national team for 2 upcoming matches and Head Coach Fernando Santos said the player would not return for a series of international matches in November.

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UFC 229 to Smash Records for PPV Buys, Attendance and Gate Receipts


Conor McGregor will fight (Khabib Nurmagomedov) inside of a UFC Octagon on Saturday night (Oct. 6) for the first time since November ’16 (against Eddie Alvarez), setting up the most anticipated fight night in UFC history; the mixed martial arts promotion expects the card to post 3 million plus PPV buys (at $64.99), which would be a company record (more than $195 million in revenue) and the 3rd biggest event in PPV history (behind Mayweather/Pacquiao and Mayweather/McGregor). Current trends reflect UFC 229 will also post highs for both in-arena attendance (20,000) and gate receipts ($17 million) for the promotion within Las Vegas. While McGregor is the massive draw, UFC President Dana White said Nurmagomedov hits “two huge audiences” (Russians and Muslims) that the UFC has not traditionally drawn from; which explains the record projections.

Howie Long-Short: Back in 2010, Flash Entertainment acquired 10% of the UFC for $200 million. The company maintained their minority stake (as did Dana White with his 9%) when Endeavor bought the mixed martial arts promotion from the Fertitta brothers for $4 billion in 2016. White recently said the UFC’s valuation had risen to $7 billion. If true, the Abu Dhabi government owned sports promotion experienced an astounding 250% return on their investment.

The UFC has not disclosed McGregor’s purse for the fight, but it is reported to be the largest in MMA history. According to White, whatever the number is it’s likely to be far less than what he earns from his whiskey brand (see Fan below); projecting, “the whiskey thing is probably going to make this kid a billion dollars.”

Fan Marino: While most of the headlines leading up to the fight have focused on McGregor, Nurmagomedov is the undefeated (26-0) defending light heavyweight champion and the favorite (-160) on Saturday night.

Must Watch: Just before his 9th birthday, Nurmagomedov’s father brought him into the woods to wrestle a bear cub that he had chained to a tree. There’s video, you need to see it to believe it.

You’ll notice Proper No. Twelve (an Irish whisky label) prominently displaced inside the Octagon on Saturday night. If you’re wondering how a start-up liquor company could afford to advertise on the canvas, the company’s founder, chairman and majority owner is headlining the card. Sold in Ireland and the United States, McGregor created Proper No. Twelve in partnership with the world’s oldest whisky distillery, Eire Born Spirits.

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NHL Experiences Growth in Non-Traditional Markets, Seeks Growth in China


NBC Sports has decided to add NHL regular season games to its programming schedule. Between NBC and NBCSN, they’ll carry 109 regular-season games during 2018-2019 season (which got underway Wednesday evening), the most in any single season since the company acquired league broadcast rights back in 2005-2006. As part of the expanded coverage, the peacock network’s sports division will introduce “Wednesday Night Hockey” (on NBCSN); featuring earlier start times (7p or 7:30p EST) and a record 17 broadcast double-headers. 13 games, including the league’s marquee events (see: All-Star Game, Winter Classic, Stadium Series), will air on the NBC broadcast network; the January ’19 NHL All-Star game will mark the first time the annual showcase has been carried live on broadcast television since ’97.

Howie Long-Short: NBC Sports (CMCSA) executive producer and president of production Sam Flood said it was viewership growth in “non-traditional NHL markets” and the “emergence of a number of rising stars” that drove the company to expand its programming schedule. By starting games earlier and carrying 17 double-headers, they’re able to air more games involving teams from the Western Conference; meaning more opportunities for fans to see emerging stars like Connor McDavid (Oilers), Patrik Laine (Jets) & Nathan MacKinnon (Avalanche).

If you’re not getting your hockey fill from NBC/NBCSN, (the league’s OTT subscription service) has added 50% more “local broadcast pre-game and post-game shows” plus “intermission shows”, in addition to 180 out-of-market league games; content drawn from team RSNs. Disney Streaming Services (operates offers the service on a full-season, monthly and single team basis; unlike with NBA League Pass, fans do not have the option to purchase individual games or periods. It’s worth mentioning that in addition to, ESPN+, Disneyflix and BAM-Tech Media all fall under the Disney Streaming Services (DIS) umbrella.

NBC Sports is paying $2 billion (over 10 years) for the league’s exclusive media rights (through the ’21-’22 season). Last season, games that aired on NBC experienced a 4% YoY rise in viewership (to 1.34 million), but across all platforms (includes NBCSN & digital) the audience declined -12% (to 417K); NBCSN broadcasts really dragged the average down, averaging just 302,000 viewers/game.  Starting games earlier, showing a wider variety of teams and showcasing the league’s best players should help NBCSN post better ratings during the 2018-2019 season.

Fan Marino: While non-traditional hockey markets (think: San Jose, Las Vegas) have given a boost to viewership here in the U.S., the NHL appears to perceive China as the next horizon; in fact, the league played a few preseason games in the country (and will in 4 of next 6 seasons) in September and recently opened a youth hockey school in Shenzhen.

President Xi Jinping’s plan to have 300 million winter sports fans in the country by the start of the ‘22 Beijing Olympics has served as a catalyst for the league’s Asian growth efforts. Of course, the NHL isn’t participating in the ’18 Olympic Games and should they decide to pass on the ’22 Games, it could alienate the Chinese government and halt the league’s progress in the country. Commissioner Gary Bettman disputes that notion arguing that one tournament would not define the sports long-term growth prospects in China.

Speaking of non-traditional hockey markets, on Tuesday the NHL’s expansion committee recommended adding Seattle as the league’s 32nd franchise, the formal vote will occur in December. The David Bonderman/Jerry Bruckheimer ownership group hopes to play the club’s inaugural season at a redeveloped KeyArena in ’20-’21, but ’21-’22 may be more realistic with a player lockout pending in ‘20.

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Experiential Marketing: “Go Big or Go Home”

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New York Advertising Week kicked off on Monday October 1st (runs through Thursday 10.4) at the AMC Loews Lincoln Square. Russell Silvers (COO, AEG Global Partnerships) and Joao Chueiri (VP Consumer Connections, Anheuser Busch) were featured on a panel (hosted by JohnWallStreet) entitled “Go Big or Go Home” that explored experiential marketing trends within the world of sports sponsorships. Below is a transcription of a few of the highlights. Make sure to check out Friday’s newsletter for Joao’s insight on successful Anheuser Busch’s Dilly-Dilly and Cleveland Browns refrigerator campaigns.

JWS: Can you share you share your “high level” philosophy on sports sponsorships?

Joao: I think 5, 10, 15 years from now, we’re going to remember the experiences that we’ve lived, more than the advertising that we’ve viewed. We live in an experience economy, brands are being built by experiences. When we talk about sponsorships, events and activating the assets that we have, I believe experiential marketing is the most profound way to establish a meaningful connection with the consumer.

JWS: Why is a successful experiential marketing campaign more effective than a traditional sports sponsorship?

Russell: The fan ultimately become an ambassador for the brand and it occurs in such an organic way because the fan isn’t doing anything other than lending himself/herself to have an experience like no other. Then the fan shares their experience through social and becomes that brand ambassador when talking with their peers; a lot of people base their decisions off their friends’ opinions.

JWS: How does data help Anheuser Busch ensure fans have a positive experience while enjoying their products at a sporting event?

Joao: We’ve partnered with AEG on multiple technologies designed to enhance the consumer experience at sporting events because we’re trying to solve fan pain points when people are enjoying our product. We hear that concession lines are long, so we’ve done things like mobile ordering, in-seat delivery and have given fans the ability to preload a beer on their ticket before they got to the venue. We use consumer data to identify the things that we can create, innovation that we can pilot and then we work very closely with our partners to implement them. When we do that, we see great results not only in terms of the consumer experience but also in terms of sales for us.

JWS: If the product is the experience, do attendees expect that the activation will be a small taste of that experience? Should they always be planning on it?

Russell: I think they should now. No matter how big or small the event is, the experience must be either on par or greater than the actual event in and of itself; that’s kind of where we’re at now in the world of sports and entertainment. You’re going get some events like the Super Bowls that obviously supersedes all, but even with the Super Bowl going on the country could not help but think about the activation that Bud Light was doing (free beer for city). It’s cliché, but it’s go big or go home; that’s kind of where we’re at now.

Howie Long-Short: The World Advertising Research Center (WARC) has indicated that companies will spend $65.8 billion (+4.9% YoY, $24.2 billion spent in North America) on (mostly sports) sponsorship deals in ’18, but few are monitoring their efficacy. Research by MKTG revealed that just 19% of the 500 corporate sponsorship executives surveyed have a way to measure returns on their sponsorship investments. While surprising, 73% of those polled in MKTG’s survey said that “brand awareness”, not ROI, is the “main point of sponsorship.”

One company that is wisely measuring ROI is Anheuser Busch (BUD) and the increase in access to data has led to more efficient spending. In fact, BUD has begun using incentive-laden contracts (think: on-field performance, social media views on co-branded content, market share growth within city), as opposed to signing long-term pacts with fixed fees, for its pro sports partnerships. For the 73% of corporate execs content with brand awareness (from their sports sponsorships), I would say “those audiences can be found in less expensive ways, like through targeted digital media, which do not come with multimillion-dollar sponsorship fees”. 

Fan Marino: American Express had a memorable experiential campaign at this year’s U.S. Open, an interactive tennis gaming experience (entitled Super Rally) featuring Venus Williams. Using custom-designed 3D printed rackets, fans stood in front of life-sized transparent monitors returning virtual tennis balls in augmented reality against physical targets with the goal of collecting the most points. Here’s video of JohnWallStreet exhibiting some rare athleticism and working up a sweat playing the AR game.

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NBA Plans to Ban Yeezy Basketball Sneaker


The NBA intends on banning players from wearing Adidas’ Kanye West basketball sneaker during league games, over concerns surrounding the shoe’s design; the league believes the sneaker’s “gleaming, reflective material heel” would be distracting to fans both in the arena and to those watching at home. The 2018-2019 season will mark the first NBA season where players are not required to wear sneakers that match their team uniform, but 3M (the reflective material) remains on the leagues footwear color restriction list. Several Adidas endorsees had planned to wear the Yeezy basketball sneaker during the ’18-’19 season.

Howie Long-Short: The NBA’s decision to ban players from wearing Yeezy’s won’t impact sales, but Adidas’ decision to sell the label’s products in mass will. The company’s latest Kanye drop (a mass release of the Yeezy Boost 350 V2 “Triple White” on September 21st) “still has not sold out” and the “resale price is barely above MSRP” ($230 is lowest ask on Stock X). That’s not necessarily unexpected, celebrity collaborations historically fail with commercial releases (see: Jay-Z, 50-Cent, Pharrell Williams). As we wrote last week, the paid endorser model is broken in the U.S.

The reason West’s label has always been highly sought after is because its products “could be flipped for multiple times the initial price” (due to their limited availability), not because the consumer wanted to wear them. As Matt Powell, NPD Group retail analyst explained, “if the reason people are buying this shoe is to flip it, and now you can’t flip it, are you ever going to come back and buy another (pair)?” The answer is no, you’re not. That’s a problem for Adidas because as we’ve seen with Jordan Brand, “it’s a long process to build back that credibility.”

Adidas (ADDYY) issued Q2 earnings back on August 9th, reporting sales rose 10% YoY (to $6 billion) during the most recent quarter; North America (+16%), Greater China (+27%) and the e-commerce sector drove the growth. ADDYY’s has managed to grow the top line without resorting to discounts to sell shoes, reporting gross margins rose +2.2% (to 52.3%) in Q2 ‘18. Shares are up +11% (to $123.02) since the company reported.

Fan Marino: The league’s decision has nothing to do with Kanye’s bizarre SNL appearance last weekend. In fact, the league hadn’t even formally reviewed the sneaker as of Monday’s initial ESPN report; assumptions were made based on photos West posted of the sneaker on the Instagram. If Adidas were to redesign the shoe (removing the reflective material), it’s likely the league would approve the design and it’s possible NBA players could still wear them this season.

While possible Adidas basketball stars could wear Yeezy’s in an NBA game this season, it won’t happen before December. That’s because the league reviews new sneaker models 2x/year, once in August (for the start of the season) and again in December (for the balance).

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U.S. Sports Memorabilia Market Estimated to Be Worth $5.4 Billion Annually


David Yokun (founder of has estimated that the total value of the U.S. sports memorabilia market is worth an estimated $5.4 billion annually, a figure that includes “the total gross merchandise volume from eBay ($4.7 billion), independent auction houses ($290 million), auction house private sales ($62.5 million), online retail venues and other sources ($400 million).” Fan apparel, products produced in mass and modern trading cards (even the rare ones) were excluded from the calculations. It’s possible (if not likely) that modern trading cards will be included in future estimates (in aggregate their value is significant), but pricing volatility makes it difficult to include them.

Howie Long-Short: Vintage baseball jerseys (pre-1972) are drawing record bids at auction due to their “extreme rarity and demand” (particularly when compared to cards and bats); a 1964 Mickey Mantle World Series jersey recently sold for 3x the previous high ($1.32 million). Curious as to why jerseys worn after the early 70s aren’t as highly sought after? Through the disco era players would receive up to 6 uniforms per season, but by 1980 teams were assigning players additional uniforms with the intention of re-selling them later to collectors (i.e. they were no longer rare).

Fun Fact: The most expensive sports collectible ever sold was a 1920 Babe Ruth game-worn away jersey, selling in ’12 for $4.416 million; it’s now estimated to be worth $10 million.

Fan Marino: The NFLPA Panini trading card index (released quarterly) ranks the top-performing football players in the licensed trading card industry, on factors ranging from secondary-market transactions to collectability based on rookie hype and collector speculation. The newest ranking, released on September 18th, indicates that Saquon Barkley remains the most valued rookie (Darnold was 2nd), while Tom Brady (up from #3) finished ahead of Aaron Rodgers and Patrick Mahomes II to top the veteran list.

Wondering what rare modern trading cards are worth? During the most recent quarter, an autographed 2018 Origins Football Barkley card (limited to 2) sold for $5,500. While that sounds like a lot, it’s just a small fraction of the $40,000 that a 2000 Contenders Football Tom Brady autographed rookie card (limited to 100) went for. $40,000 sounded like a lot for a card with 100 copies floating around, so I checked in with our resident card expert Jason Howarth (VP of Marketing – Panini America) to get his thoughts.

Jason: Cards numbered to 100 are still very rare. A Brady Autographed Contenders Rookie Ticket is definitely one of the cards you’d want from his rookie year and the value of that card continues to hold and could go up as Brady continues to perform.

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NFL Exploring Exit from Sunday Ticket Pact with DirecTV


The NFL is exploring the possibility of exercising an exit clause in their pact with DirecTV, a move that would revoke the satellite provider’s exclusive rights to broadcast Sunday Ticket (i.e. all out of market games) at the completion of the 2019 season. The current contract (signed in ’14) calls for DirecTV to pay the league $1.5 million/year through ’22. If the league opts out of the current agreement, many believe it could package satellite rights with global streaming rights and continue to grow the revenue pie. Sunday Ticket has never had another home, DirecTV has held the NFL’s satellite rights since 1994.

Howie Long-Short: Should the NFL opt out of the existing agreement, it’s feasible a technology player like Google or Amazon could win the rights; Google previously bid on the rights to NFL Sunday Ticket. Considering neither company has satellite capabilities, if one of the tech giants were to acquire exclusive rights, it’s more than likely they would carve out the satellite broadcast rights and re-sell them.

NFL Sunday Ticket has always been exclusive to DirecTV because if it were to be more widely available, it would diminish the value of the games for the league’s cable and over-the-air television partners; of course, the NFL generates far more revenue from the likes of ESPN, CBS, FOX and NBC than they do from AT&T. Exclusivity hasn’t hurt DirecTV though, it’s helped turn the company into the largest pay-TV provider in the country (following AT&T acquisition, which was contingent upon the renewal of the NFL deal in ‘14).

DirecTV is a subsidiary of AT&T (T). As noted in yesterday’s piece on HBO, cord cutting and the shift to internet video had AT&T’s Entertainment division (see: DirecTV) reporting a -8% YoY revenue decline (to $11.7 billion) in Q2 ‘18.

Fan Marino: NFL television ratings were on an uptick again (at least compared to ’17) in Week 4, with 3 of the 4 Sunday time slots (CBS 1p, CBS 4p, NBC 8p) posting double-digit YoY increases. The time slot that did not experience a YoY rise in viewership (FOX 4p), still reported the best single-header rating of the season (11.7). Sunday’s ratings come on the heels of Thursday night’s highly competitive game between St. Louis and Minnesota, a contest that posted an 8% YoY increase (10.7 on FOX and a 19 on NFL Network).

Wait, it’s 2018 and DirecTV satellite subscribers still can’t stream games shown on NFL Sunday Ticket? Under the terms of the existing deal, only college students and those able to prove the inability to place a dish on their home have access to NFLSundayTicket.TV. The NFL’s take it or leave it offering is the polar opposite of the NBA’s new fan friendly NBA League Pass.

If you’re considering buying NFL Sunday Ticket, but unable to afford the $293.94 subscription price (if you want Red Zone it’s $100 more) AND live in the Los Angeles, Phoenix, Boston, Philadelphia, San Antonio, Hartford or Louisville areas, consider DIRECTV Now (streaming service) as an alternative to the satellite service. For just $55/mo. you can now (i.e. it’s new, not a pun) get access to the league’s entire out-of-market schedule. If the package expands, one must think it’ll have as positive of an impact on DirecTV Now subscriptions as it did for the satellite provider in the 90s.

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HBO Throws in the Towel on Live Boxing Programming

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HBO has announced it will drop live boxing from its programming calendar after 45 years and 1000+ fights, following its October 27 card (featuring Daniel Jacobs); declining ratings (their Sept. 8 card was the lowest rated in network history) and increased competition (both from within the sport and MMA) were catalysts in the network’s decision. HBO Sports VP Peter Nelson said, “this is not a subjective decision. Our audience research informs us that boxing is no longer a determinant factor for subscribing to HBO.” HBO Sports will continue to produce “unscripted series (think: The Shop), long-form documentary films (think: Andre the Giant), reality programming (think: Being Serena, Hard Knocks), sports journalism.”

Howie Long-Short: For all the increased exposure that DAZN and ESPN+ bring to the sport, DAZN’s entry into the U.S. market and ESPN’s introduction of the live streaming platform have significantly raised the costs associated with carrying fights. HBO decided it would rather spend on developing original programming (think: Game of Thrones), than compete with DAZN, ESPN+, Showtime and Fox Sports for fights; Nelson added, “from an entertainment POV, it’s not unique. There’s plenty of boxing out there.”

Boxing’s impact on HBO’s success as a network is undeniable. By the early 90’s, fights on the network were attracting 1/3 of the company’s +/- 15-million-person subscription base. That percentage declined to +/- 2% (820,000 of the company’s +/- 40 million subscribers) ’18, which explains why boxing is no longer a profitable endeavor for Home Box Office.

There’s no doubt that AT&T’s acquisition of Time Warner (HBO’s parent company) expedited the network’s decision to drop boxing, “once the merger went through, there was pressure on HBO to overhaul its model with a great focus on profits.”

Speaking of which, T issued its first earnings report (Q2) with the Time Warner properties under its umbrella. The WarnerMedia division (former Time Warner assets) reported a +7% YoY revenue increase to $7.8 billion (HBO “delivered strong subscriber revenue growth”), $1.1 billion of which was included in AT&T’s consolidated results; accounting for the 16 days between closing and the end of the quarter. The news wasn’t all positive though, cord cutting and the shift to internet video had AT&T’s Entertainment division (think: DirecTV) reporting a -8% YoY decline (to $11.7 billion). Earnings rose 15% YoY (to $.91/share), but the mixed results had share prices falling -4.5% on the news; they’ve since recovered and will open at $33.58 on Monday 10.1.

Fan Marino: HBO’s impact on the sport should not be underestimated. The premium cable network offered boxing a platform at a time when broadcast television was unwilling to assume the risk of carrying fights (see: ’82 death of Duk Koo Kim from injuries sustained during a nationally televised fight), but before PPV truly took off (’91); and the network remained the sport’s premier network through the 2000s.

While the network had been surpassed by Showtime in recent years, it had Canelo Alvarez/Gennady Golvkin II on HBO PPV on September 15th, which did 1.1 million buys. Those 2 fighters, the marquee names within the HBO stable, will become free-agents permitted to sign with another network (or streaming service).

Fun Fact: HBO’s first card (’73) concluded with George Foreman knocking out heavyweight champion Joe Frazier. Here’s the footage!

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Comcast Takes Control Sky PLC, to Challenge Netflix, Amazon Overseas


Comcast emerged triumphant in its effort to take over Sky PLC (Europe’s largest pay TV provider) after outbidding Twenty-First Century Fox (on behalf of Disney), by +/- $3.6 billion, in a rare settlement auction; Comcast’s bid valued the company at +/- $39 billion. Disney, which will take over most of Fox’s film and TV assets, subsequently announced it would sell Comcast Fox’s existing 39% stake in Sky at the auction-winning bid price of $22.54/share. The addition of Sky expands Comcast’s distribution outside of the U.S. (to UK, Ireland, Germany Austria, Italy, Spain and Switzerland) and increases their global footprint to +/- 53 million customers; existing infrastructure that puts the company in position to effectively compete with Netflix (+/- 29 million subscribers across Europe in 2017) and Amazon outside of North America.

Howie Long-Short: Selling its 39% stake in Sky PLC (SKYAY) at $22.54/share ($15.6 billion) must be considered a win for DIS considering it valued control in the company at just $20.44/share during the blind auction and Comcast didn’t need their stake (i.e. little leverage) to gain control over the British pay-TV group.

The +/- $15.6 billion price tag greatly reduces the financial leverage DIS needs to close the $71.3 billion Fox (FOXA) acquisition and when you consider the revenue that’s expected to be generated from the sale of FOXA’s 22 RSNs (valued at +/- $15 billion-22 billion), it’s feasible net acquisition costs could drop all the way down to +/- $35 billion. Significantly reducing the financial debt load is important to Disney with costly broadcast rights renewals on the horizon (see: NFL 2021, MLB 2021, NBA 2025) and the company undergoing the capital-intensive transition from legacy wholesale model to a direct-to-consumer business model (Disneyflix). Disney shareholders seem to be on board with the decision, shares are up +/- 6% from the morning of the tender announcement (9.26); they’ll open at $116.94 on Monday 10.1.

Fan Marino: While some might believe that Comcast’s acquisition of Sky (EPL’s most valued media partner in U.K.) would ensure NBC remains the Premier League’s U.S. broadcast partner beyond the ’21-’22 season, historically, the EPL has ignored affiliation between rights holders and taken the highest offer; back in ’16, Sky in Germany lost EPL rights to then-newcomer DAZN (unproven, yet deep pocketed), despite have the rights of 126/128 games in the U.K.

Across the pond, U.K. soccer fans must be wondering if there will be any changes coming to Sky’s broadcast coverage in the wake of the ownership change. English futbol fans aren’t going to want NBC’s “Americanized” version, so Comcast would be wise to let Sky run their EPL coverage autonomously; focusing on the distribution of non-sports entertainment assets instead (see: Universal Pictures).

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