The newest company in the media sector is getting ready to tackle some of the most lucrative properties in the business.
Versant Media, the company that was spun off from NBCUniversal earlier this year, believes it may get a chance to intercept some of TV’s biggest sports rights as the NFL prepares for what many believe will be a reshuffle of the rights deals it cemented in 2021. Those contracts, set with NBCU, Paramount, Disney and Amazon and slated to be in effect until 2033, could be rewritten thanks to an opt-out clause the league struck that could be exercised after 2029.
As the NFL comes to market, said Mark Lazarus, Versant’s CEO, during a call with investors Tuesday, the company expects “a rebalancing of sports portfolios” that could have media rivals dropping winnowing down their sports portfolios to have cash on hand to pay what will likely be a hike in NFL costs. That said, Lazarus, could create new opportunities.
Versant is counting on sports to help fuel its engines. While its best-known properties include news outlets like CNBC and MS NOW, Versant also owns Golf Channel and uses USA to showcase a broad array of sports. Versant’s USA Sports on Monday extended its media rights deal with PGA of America through 2033, and is expected to continue to help NBCU air Olympics telecasts via USA and CNBC. USA Sports also holds rights to NASCAR, Premier League, WWE, WNBA and League One Volleyball. among others.
While any restructuring of deals by the NFL is four years away, the prospect of the league taking action is a hot topic on Wall Street, which sees football rights as a key component of the businesses of Fox Corp. and Paramount Skydance, which both thrive on revenue generated from Sunday-afternoon NFL telecasts.
Fox Corp. CEO Lachlan Murdoch on Monday indicated that his company has not yet held “material” talks with the NFL, but suggested there could be a limit to how much Fox can pay. “We think we’re paying market price for the NFL today. The prices were renegotiated only three years ago. They went up, I think, more than 100% three years ago, so we think we think our current pricing is at market,:” he said. ” But to the extent that there was any incremental cost for that NFL programming, I think the key thing for people to realize is that incremental cost would flow through to local affiliates, to our distributors, and ultimately, to consumers and to fans.”
Paramount Skydance President Jeff Shell seemed more sanguine about staying in business with the league last week during an investor call. “We feel pretty confident we’re going to be in business with the NFL for a long time, and we have properly accounted for what we expect to be whatever impact of that negotiation in our kind of internal forecast going forward,” Shell said. He suggested there could be new value in using CBS local stations to help “maximize the viewership in each market for the best game,” which would be “to the benefit of the NFL and to us and really maximizes the reach on any given Sunday.”
Disney may have fewer concerns. It recently struck an alliance with the league that gives the NFL a minority stake in the business of ESPN.
All the media companies are paying top dollar for NFL rights, and in an era when the economics of traditional TV are in flux, paying more might be difficult. Estimates from MoffettNathanson have Fox paying $2.3 billion for its NFL rights, and Paramount paying $2.1 billion. The NFL may be encouraged by the willingness of NBCUniversal to pay more for a new NBA package — valued at $2.5 billion — than it does for rights to “Sunday Night Football,” valued at $2 billion.
Big media companies have already proven willing to find new financial arrangements as sports costs continue to hike. Paramount and Warner share rights to the NCAA March Madness men’s basketball tournament, a landmark annual event previously controlled by Paramount’s CBS. And Disney’s ESPN last year opted out of its deal with Major League Baseball to show Sunday-night games in favor of a package that gives ESPN the ability to sell access to out of market local and regional games on MLB.TV.
