Everyone knows that UFC owner Ari Emanuel does an amazing job of getting big money deals across the finish line, but did he go too big when he convinced Paramount CBS to pay $7.7 billion for the combat sports promotion’s broadcast rights?
Paramount CBS recently merged with Skydance Media, and one of the first things CEO David Ellison did was announce the seven year UFC deal, which moves all numbered events and fight nights to Paramount+. That’s a great way for the company to pump up its subscriber numbers, as UFC fans are excited to pay just $14 a month and will stick around all year unlike off-season sports fans.
But the $7.7 billion price tag caused a decent amount of heartburn amongst the PSKY investor class, with many noting the company paid too much … and some wondering if the extra cream on top was grease on the wheels for Ellison and the Trump administration. That grease was needed not just so Skydance could merge with Paramount — it’d be needed if Paramount manages to buy Warner Bros. Discovery.
Snapping up WBD is a key part of Ellison’s plan to become a dominant figure in the US media landscape, but WBD head David Zaslav would rather Netflix buy them out. Zaslav’s board of directors released an extensive document laying out why stockholders should reject Paramount CBS’s hostile bid to buy the company, and UFC’s media rights were mentioned in a not-so-subtle way.
“PSKY has recently entered into multiple programming commitments that may further stress its financial performance,” the WBD document read (via Awful Announcing). “In the short period since the completion of the Paramount/Skydance transaction, PSKY has signed above-market, multi-year programming and sports licensing deals, both domestic and international. Despite limited visibility into their long-term performance, PSKY will begin to bear significant fixed financial costs related to these agreements in the future.”
“This, together with potentially higher costs associated with NFL rights given the league’s right to renegotiate early, could create further headwinds to PSKY’s financial profile.”
All of this is just part of the bigger problem WBD has with PSKY’s offer: they just don’t think Ellison has the liquidity to make things work. Netflix, they noted, has a market value of $400 billion to Paramount’s $15 billion, and PSKY has ‘a credit rating a notch above junk.’ Purchasing WBD would leverage PSKY to the hilt with a debt ratio of 6.8, leaving them with no operating capital without massive cuts.
So blame those rough numbers if the deal doesn’t go through … although as WBD pointed out, UFC’s massive $7.7 billion deal is part of that.
