Endeavor Group Holdings and TKO Group CEO Ari Emanuel predicted Wednesday there will be just five or six major streamers or content providers left when the media industry consolidation dust settles.
“I think you’re in a situation where you have Paramount, Warner, Disney, Comcast; there’s other players. I think there will probably be five or six remaining streamer or content providers. Netflix, Amazon, we’re all going to see what happens with Apple, YouTube,” Emanuel said during the IMG x RedBird Summit. “Then we probably have two remaining over the next five years from that group, and for some people that supply them — whether they be actors, writers, directors, non-scripted or sports. That’s a very good, healthy ecosystem with people that will have very big and deep pockets. That will take approximately two to three years to play out.”
Emanuel’s comments, which came during a panel conversation with Paramount Global’s incoming owner and RedBird Capital Partners co-founder Gerry Cardinale, comes as traditional media giants have seen viewership in their linear TV businesses erode at a rapid pace as consumers cut the cord in favor of streaming services and YouTube. As a result, pay TV operators have pushed programmers in carriage negotiations to collaborate on more flexible offerings for consumers, which have resulted in programming blackouts as the two groups disagree on the best solution.
But Cardinale argued that everyone panicking about the state of linear TV is “jumping the gun” on those assets, arguing broadcast has 30% more reach than streaming and that the value proposition in sports media is the bundle.
“Everybody’s jumping the gun on linear assets, saying ‘It’s all over. Everything’s binary.’ More people tonight will watch CBS than Netflix, and that is going to continue for the next 20 years. You’re going to have different modulations in that trajectory, and it’s going to be this convergence,” Cardinale said. “The reality is that most people aren’t going to subscribe to 18 different streaming services. That’s why there’s a value proposition in the bundle. There will be some that will. So the whole point is to have linear right alongside streaming and offer a menu of opportunities to economically get the IP holders what they need, get the distributors what they need. And obviously you’re going to keep having these skirmishes.”
Emanuel emphasized that every media company in the streaming industry are going to need sports to stay competitive.
“Whether Netflix goes in or not, they’ll figure that out. But there’s other players that need it and want it because they’re building their AVOD services, as we’ve seen with Amazon, etc. The greatest content for the AVOD services is sports,” he said. “So, I think that’s going to drive pricing across the globe. And whether Netflix is in or out, that’ll be their strategy. The rest of them will play, and that will be good value creation for rights holders.”
But he also argued that “ideas matter more than they’ve ever mattered” and that bringing those to an established organization can create greater value.
“If you’re just going to stay at the normal pace that you go at and not ruffle feathers, you will never create any economic value. And I think that’s what [Gerry’s] trying to do. And I think that’s what David [Ellison] will do with Jeff [Shell] at Paramount. That’s what we’ve tried to do at the WWE and UFC and some of our other assets that we own,” Emanuel said. “It’s easy to go down the path of what you’ve been doing, because then you know you can’t get hurt. Nobody can say you screwed that up. If you’re trying new things, you are going to fail sometimes.”
Cardinale, who will control 22.5% of Paramount when Skydance Media’s $8 billion merger with the studio closes in the first half of 2025, said he’s a “huge believer in building a career on monetizing the best intellectual property.”
“All I’ll say about Paramount is that great intellectual property will rejuvenate itself. You’ve just got to pay attention and adapt to the times, and that’s what we’re going to hope to do,” he added.
The remaining 77.5% will be controlled by Oracle co-founder Larry Ellison, while his son David will serve as chairman and CEO of new Paramount.
“He’s curious and he cares about the movie and television business. He cares about sports. He’s grown a business, for a guy his age, significantly over the last seven years. He now has all the content from the NFL. He’s built a great movie business. He built from scratch an animation business. And he’s built a television business, and then gaming etc. So you can’t take anything away from him,” Emanuel said of the Skydance Media CEO. “And I think now that he’s got a bigger place to play, and he’s curious, and they’ll take some chances that you need to take in those jobs, I think that place is going to be successful.”
When asked about the valuations of sports rights, Emanuel said that there’s a bubble for those that “don’t command the ratings.”
“To command the ratings, you have to do a bunch of things to create [engagement]. I think one of the great things about Netflix is they’ve created stories and characters and storylines behind sports so that you become a fan of it, whether you’re young, old, it doesn’t matter,” he said.” Sports that don’t command those storylines are not going to get the premium that they want, sports that do and the characters in those sports, will. But when you have great competition and great storylines, that drives ratings, and so the price will go.”
Cardinale argued that while there will always be commercial licensing revenues and agent-based and fee-based economics in sports media, there needs to be a “transition from being principles to owners, and distributing that ownership across the entire value chain of the constituents that feed into it.” While he’s bullish on future valuations for media rights, he sees “asset inflation” around valuations of specific sports teams.
“The secret in sports is that you’ve seen more and more bifurcation between the haves and the have nots, the big guys in the small markets. You’re seeing it everywhere. You’re seeing it in America, in baseball, you’re seeing it in Europe between the Premier League and the continent, and that’s why you saw the phenomenon of the Super League effort. What the NFL has done is really the model, because they put that all together,” he explained.
“College football is the second most popular sport in America, but it’s highly fragmented. They haven’t had the ability to go to market for their intellectual property monetization as one continuous whole,” he continued. “And I would say that what you’re going to have to see in Europe, once streaming gets absorbed, you’re going to have to see some form of bundling. But again, it can’t just be the top teams, it can’t just be the best in the biggest markets. It’s going to have to take care of the rest of the ecosystem, because that competitive tension is what makes sports so valuable.”
Leave a Reply