Welcome back to The Varsity, my twice-weekly private email on the
sports media industrial complex. I’m in San Francisco today for NBA All-Star weekend, where Warriors owner Joe Lacob is finally getting to show the industry his $1.5 billion Chase Center, which opened in 2019. (Did the team’s vaunted and self-professed management acuity play a role in
its success? I kid, I kid…)
🚨🚨 Pod alert!: On Sunday, multihyphenate legend Grant Hill joins The Varsity pod to offer his perspective on the basketball business. Hill, of course, isn’t merely a former Duke star, NBA Hall of Famer, and credentialed analyst—he’s now a front office type who holds ownership stakes in several teams, including the Baltimore Orioles,
Atlanta Hawks, Orlando City SC, and Orlando Pride. Subscribe here and here to make sure you don’t miss it.
P.S.: For those of you who enjoyed my enlightening
chat with scoop machine Shams Charania, you’ll want to check out a forthcoming episode of my partner John Heilemann’s Impolitic podcast. In addition to regularly booking political newsmakers, John also chops it up with luminaries from other fields. Tomorrow he’s sitting down with Woj for a candid conversation about his old life on the relentless NBA beat and his new one as a college administrator of sorts at his alma mater in the era of
N.I.L. Check out Impolitic here.
Meanwhile, if you want a full recap of my Super Bowl week diary, listen to my conversation
with my peerless Puck colleague Peter Hamby on his great daily podcast, The Powers That Be. We excluded the part about Marchand operating his rickshaw livery cab from Bourbon Street to the Ritz. (Andrew, please leave my beignets outside the office door. I don’t have time to hear about your one-man musical!)
Now, let’s get to it…
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Player of the Week: Eric
Shanks
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The Fox Sports C.E.O. had a hell of a week. The Super Bowl eclipsed records with
127.7 million viewers, $800 million in advertising booked and served, and even 13.6 million viewers on Tubi—an all-time high. All for a game that was effectively over in the first quarter. It’s Fox’s world these days…
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Down to the J.V.: Nico
Harrison
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We’re living in an age where the president’s prior opponents are serving in his cabinet and an
avowed anti-vaxxer is running the U.S. Health Department, but no one is buying the Mavericks G.M.’s assertion that trading Luka Dončić for Anthony Davis was some sort of perverse upgrade. Harrison wasn’t prepared for the fallout, and the organization inadequately predicted the reverberations. The team ejected fans for holding up “Fire Nico” signs, including one fan who mouthed “Fire Nico” on the Jumbotron. A couple of days ago, fans resumed the “Fire
Nico” chant when Harrison attended an SMU game. This has turned into a P.R. disaster for a team that went to the NBA Finals last year.
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- The new era of ESPN discipline: ESPN is getting out of the F1 business. Bristol executives told the racing series that they will not renew the company’s rights package, meaning the racing circuit will have a new U.S. media partner next year. ESPN has carried F1 races since 2018, and its current $90 million per annum deal for U.S. rights ends this year. For its part, F1 is looking for a big increase, based on three new U.S. races (Austin, Miami, and
Vegas) alongside a surge in popularity fueled by the Netflix series Drive to Survive. F1 executives took several meetings during Super Bowl week in New Orleans, including with Netflix and NBC, which carried F1 races from 2012 to 2016 and would be a natural landing pad, since the sport could help drive Peacock’s subscription business. Netflix presents an interesting opportunity, given that it could loop live F1 races around Drive to Survive. But Netflix’s current sports strategy
is focused on big, one-off events, and F1 would have to convince the streamer that its races are elevated or special enough to fit into that category.
Meanwhile, ESPN’s decision to sit this one out represents its new financial restraint as it focuses on launching Flagship and top-tier leagues: the College Football Playoff, NCAA, NBA, WNBA, USTA, SEC, ACC, and Inside the NBA. In the past few years alone, ESPN has passed on similar deals with the Pac-12 and MLS, and did not engage
NASCAR in any meaningful way. (See more on this below.) ESPN liked being in business with F1, but decided that a price increase did not make business sense for programming that averages about 1.1 million viewers per race.
- YouTube’s cable problem: All of these cable-adjacent streaming services—YouTube TV, Hulu + Live TV, DirecTV Stream, etcetera—were a breath of fresh air when they launched. They carried smaller bundles and were more affordable than the
traditional cable and satellite distributors. Sadly, the realities of the business, like the ever-increasing cost of programming, have come to them, too. A month after YouTube TV increased its monthly subscription price by 14 percent (from $72.99 to $82.99), the service is telling subscribers that they may lose Paramount programming as of 11 p.m. tonight. (I can’t imagine Paramount’s ask is even close to the 14 percent hike…)
YouTube TV, a service that has been leaning into sports
in a big way recently, now faces a scenario where it won’t have CBS during the NCAA Men’s Basketball Tournament (CBS carries both the Final Four and the title game) or the Masters, creating some leverage for Paramount. It’s hard to handicap whether the Paramount channels will actually go dark tonight. Deadlines usually lead to creative negotiations, and these disputes usually end with some sort of extension or deal.
- Shams on the Luka trade: I
love hearing about how reporters get their scoops, so I asked Shams Charania how he got the Luka-A.D. trade, which he broke
on X after midnight on Sunday morning. “As you get closer to the trade deadline, everything becomes heightened,” Shams told me on The Varsity podcast. “Your conversations become heightened. The rumors you hear become heightened. Parts in between fact and fiction become heightened. I had gotten word on maybe Wednesday that the Mavs and Lakers were talking about a specific player. I’m not going to name the player. He wasn’t involved in this trade. But there were rumors and there was
chatter that they had a deal close with a player. I checked: No deal.”
Shams continued: “Then, Sunday night, I got pinged by one person who told me that there’s a Lakers-Mavs trade going on. Another person texted, This player is in the trade—it wasn’t Luka or A.D. You get a tip from one person and get in front of the person. In a total of about five minutes, I confirmed it with five different sources. My hands were shaking. I couldn’t believe it myself.”
- LIV Golf talking with EverWonder: Don’t expect Fox Sports execs to be sweating the tiny viewership numbers for LIV Golf’s first foray on the network—it attracted fewer than 50,000 viewers for weekend morning golf on FS1 and FS2. After all, while Fox pays a nominal rights fee, LIV produces all of the events via an in-house team. Meanwhile, I’ve learned that LIV C.E.O. Scott O’Neil has been talking to EverWonder Studio, a Jeff Zucker investment,
about taking the reins of those productions. The two sides aren’t close to an agreement yet, but this would increase EverWonder’s live sports portfolio. Netflix hired the company to produce its Mike Tyson–Jake Paul fight and executive produce its Christmas NFL games. On the golf front, EverWonder produced the Crypto.com match for WBD and Max.
- The NFL’s Bluesky headache: My partner Eriq Gardner has
uncovered a new antitrust lawsuit against the NFL. At issue is the league’s refusal to let teams register social media accounts on the Bluesky social media platform.
As Eriq messaged me: “The plaintiffs are challenging a reported league directive that centralizes control over breaking social media news and framing it as a
‘refusal to deal with Bluesky, in favor of X.’ They add that some fans ‘do not want to have to follow their teams on Elon Musk’s X platform. As consumers, they should be free to decide that they do not want to do business with a particular outlet or brand.’ The irony is hard to miss, given how Musk is pursuing a similar claim against major advertisers over the way the industry is freezing out his platform. That said, the NFL could be particularly vulnerable to this type
of litigation following both the American Needle decision at the Supreme Court, a merchandising case that
established that teams are capable of conspiring; and the Sunday Ticket verdict, which is now on appeal.”
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The worthies in Bristol are starting to feel that they’re wildly overpaying for
Sunday Night Baseball, especially given Apple’s and Roku’s far more frugal deals, and they’re threatening to exercise their out clause. Meanwhile, Netflix, Amazon, and others are warming up in the bullpen.
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A new, more fiscally conservative era has dawned under ESPN’s Jimmy
Pitaro. Sure, he agreed to dig deep to pay the NFL $2.7 billion, the NBA $2.6 billion, and the CFP $1.3 billion (and that’s just the annual cost of those gargantuan media rights deals). But Pitaro has also passed on rights when he couldn’t make the numbers work, unsentimentally ending the network’s relationship with MLS after nearly 30 years and deciding against a deal for Pac-12 rights despite ESPN’s big investment in college sports. He recently told F1 executives that ESPN
wouldn’t renew their $90 million U.S. rights deal, either, after the racing circuit asked for more money. (F1 executives have started talking to Netflix and NBC, among others, instead.)
Alas, as I’ve previously reported, ESPN’s belt-tightening has put Pitaro in an awkward spot with Major League Baseball. Under commissioner Rob Manfred, the league has instituted a pitch clock, banned
the defensive shift, and pushed through other rule changes that have boosted viewership and attendance. People are feeling good about the sport again. Manfred, from his conversations with other media executives, believes the league’s media rights will get a lot of interest when they come up.
Judging by what I’m hearing inside both ESPN and MLB, that may be a lot sooner than expected. ESPN
executives have told MLB that as early as next month, the network is likely to exercise an out clause in its contract to try and negotiate a better deal. MLB, for its part, has made it clear that it would respond by shopping the package to other partners. (Either way, any changes would take effect starting in the 2026 season.)
The two sides are so far apart right now that it’s hard to see a middle ground.
ESPN pays around $500 million for its MLB rights, which include Sunday Night Baseball, the Home Run Derby, the Wild Card Series, and assorted digital and highlight rights. That’s comparable to MLB’s other big broadcast deals with Fox, which pays $730 million per year, and Warner Bros. Discovery, which pays $535 million. But Bristol is more interested in other media rights comps that MLB cut more recently. To wit: Three years ago, Apple secured a package of Friday night games for just
$75 million per year. And last year, Roku spent just $10 million for its package of Sunday morning games.
It’s a tricky situation all around. ESPN is arguing that MLB reset the market with these streaming deals, and it wants to move well below $500 million annually. MLB counters that the Apple and Roku packages aren’t in the same ballpark in terms of quality. In fact, MLB created those
packages from rights that ESPN passed on.
Anyway, there’s no hostility on either side, I’m told—Pitaro remains a die-hard Yankees fan. But MLB has begun talking with other mediacos, including Netflix and Amazon, to gauge their interest in taking over ESPN’s rights if things go south. Those talks have mainly focused on 2028, which is when all of the league’s media deals are up, but the conversations have
naturally and informally turned to ESPN’s rights package, which could be available as soon as next year.
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Perhaps the main reason why MLB isn’t likely to retrade ESPN’s deal comes down
to the simple fact that ESPN already dropped its annual payout to them, by more than $200 million, during their last round of negotiations. Manfred would have a hard time selling his owners on any scenario in which ESPN dropped its rights fee again… especially after they watched the company back up the Brink’s truck for the NFL, NBA, and CFP.
Some have suggested that MLB would
rather let ESPN walk than take less money for a second time in a row, particularly as it heads into the 2028 negotiating cycle. In a report yesterday, LightShed analyst Rich Greenfield wrote that “if [ESPN opts] out, we believe MLB will seek a deal with another distributor that accomplishes other strategic objectives, even if it means less total dollars than the current package or the inclusion of additional rights beyond what ESPN has today.”
Those “strategic objectives” refer primarily to MLB’s potential future on streaming, where the sport could find a much larger potential audience than it has now on cable. The popularity of MLB’s international players, in particular, could be a draw for global streaming companies like Netflix, which has plenty of room to grow in Asia. Japanese viewership for last year’s World Series, won by Shohei Ohtani’s
Dodgers, eclipsed 12 million viewers and set records, even though the games were broadcast in the morning. The World Series even topped the average of the five most-watched Paris Olympic viewership windows in the country.
Ultimately, Greenfield believes that ESPN should not exercise the out in its MLB contract, especially considering its planned launch of a direct-to-consumer service—dubbed Flagship—this fall. ESPN’s
streamer will need year-round programming, and “without Sunday Night Baseball and the Home Run Derby,” Greenfield wrote, “ESPN’s summer programming would be underwhelming.”
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On Fox’s Bourbon Street set: “As a native New Orleanian and resident,
I was curious about one aspect of Fox’s pregame coverage. This year, they had their entire set on Bourbon Street. This struck me as unique. In past years, most broadcasters have had their main sets in Jackson Square. Do you know if Fox had always planned to have their sets on Bourbon Street for this Super Bowl? Or was this a change in response to the terror attack?” —A Varsity subscriber
[Ed
note: I reached out to Fox Sports and learned that network executives planned to produce the pregame show on Bourbon Street all along. Lady Gaga’s performance, though, was added in response to the terrorist attack on January 1. This is believed to be the first time Bourbon Street has ever been shut down for a Super Bowl pregame show.]
On Hubie Brown: “A personal Hubie story for you: I
was born in Philly but my family moved around a couple times. When I was around 9 years old, I was living in Louisville and we went back to Philly over the holidays to visit family. When we went to fly back, my dad looked over and noticed Hubie Brown was sitting there at the Philly airport. My third grade class had given us a winter break assignment to prepare a speech on any topic we wanted and I had chosen Wilt Chamberlain. So at the airport my mom and I
walked up to Hubie and asked him about Wilt. He spoke to us for a good 10 or so minutes, giving nothing but praise for Wilt (he must be a Wilt > Russell guy because it all felt genuine). After I gave that speech, my mom had to confirm to the teacher that we had actually met Hubie Brown and I wasn’t just making up these very complimentary Hubie quotes about Wilt. I like to think of it as the best speech ever given by an elementary student, but I may be biased. It was at least probably better
than whatever incoherent monologue Marchand could have managed.” —A Varsity subscriber
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Have a great weekend,
John
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Ace media reporter Dylan Byers brings readers into the C-suite as he chronicles the biggest stories in the
industry: the future of cable news in the streaming era, the transformation of legacy publishers, the tech giants remaking the market, and all the egos involved.
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