John Kosner Spoke with Alex Silverman of The Sports Business Journal about The Dallas Stars New Free Streaming Service
Original Article: Sports Business Journal, by Mollie Cahillane, July 8th, 2024
SBJ Media: Sports will be ‘critical’ for Skydance-Paramount
Happy post-holiday weekend! If anyone expected any sort of summer slowdown in sports media, they would be mistaken. But that means it's a good night to roll out the first official SBJ Media with Mollie Cahillane -- and many more to come! I’ll be taking over SBJ’s media newsletter responsibilities full-time, and I can’t wait to bring news, analysis and insights to SBJ's incredible audience.
With Paramount and Skydance (finally) agreeing on a deal, let's get into it. ...
Sports likely to remain a 'cornerstone' of merged Paramount-Skydance
While there are a number of questions surrounding assets in a proposed Skydance-Paramount merger, the future of sports at the company won't be one of them.
Jeff Shell, the former NBCUniversal chair who is expected to be the new Paramount president, during a call with investors on Monday used words like "critical" and "cornerstone" when describing what sports will mean to the company's future. “When you look at the CBS Sports portfolio, it is really pretty formidable,” Shell said. “So while we’re going to be managing the cash flow of the business, sports is the foundation of our business."
Shell lauded the leadership of David Berson, who recently took over for Sean McManus as president of CBS Sports. He also alluded to CBS continuing to be a player for sports rights as those come up. "If there’s compelling rights in the future that we think can bolster us, we are a buyer, probably, rather than a seller.”
Some rights within Paramount's portfolio include a wide array of soccer assets, like the NWSL, UEFA Champions League, USL, Concacaf World Cup qualifiers and Serie A (for now). The company also has the Masters, PGA Tour golf, PGA Championship, Professional Bull Riders, Big Ten, Mountain West and Army-Navy game, among others.
But the biggest CBS property partner remains the NFL, whose rights may be coming up sooner than some expected. CBS and many other networks are in the middle of deals that originally were intended to go through 2033. However, many suspect the NFL will exercise an opt-out clause in its deals with Amazon, CBS, Fox and NBC after the 2029 season (as well as ESPN in 2030) in order to get more value out in the market.
Would Skydance balk at such an ask? Not likely. Skydance is now deeply intertwined with the NFL, part of a 2022 deal that also saw the league's 32 Equity investment fund make a sizeable investment into Skydance Sports, which began ideating on scripted TV, movies, game shows, cooking and travel shows, anime and other animation works and foreign-language productions for The Shield.
That has already bore fruit with various projects, including an upcoming Jerry Jones documentary that went to Netflix for $50 million and a Chiefs-branded feature film that will air on Hallmark this holiday season. David Ellison, CEO of Skydance, said that the merger will create an “incredibly compelling” offer for NFL fans and build a new “robust, interactive” vertical within Paramount.
Shell also expects to continue leaning heavily into the reach of broadcast TV. "We thought broadcast would decline along with cable five years ago. That just simply hasn't happened," he said. "Broadcast is declining much, much more slowly than cable is, making broadcast relatively a lot stronger.”
Another reason to be bullish on sports within a Skydance-run Paramount is Gerry Cardinale's RedBird Capital, which is a major financial backer for Skydance. Cardinale is deeply committed to sports, backing efforts like the UFL, SpringHill Entertainment and YES Network (along with his ownership of Serie A club AC Milan).
The Paramount-Skydance deal is expected to close in September 2025, pending regulatory approval, or if Paramount finds a better deal (in which case it would pay a $400 million breakup fee to Skydance).
Experts point to exposure, tech as concerns for Stars’ new local media plan
The Stars are taking their local broadcast rights into uncharted territory, creating a new ad-supported streaming platform called Victory+ that will be the primary home of all in-market telecasts. Today's news sparked discussion about whether the Stars' model makes sense -- and if other sports properties may follow suit.
The most notable element of the model is that, as of now, there is no linear TV distribution to complement the free streams. Stars President and CEO Brad Alberts said the team is exploring the possibility of bringing a “small package” of games to an over-the-air network, but that's not a sure thing.
Octagon EVP/Media Rights Advisory Dan Cohen, who advises teams and investors in the RSN space, called the Stars’ shift to ad-supported streaming a “bold move," but he expects growing pains associated with leaving linear TV altogether (except for nationally televised games).
“I hesitate to say this will be a quick commercial success given sponsor visibility challenges with a growth platform vs. an established [albeit challenged] linear channel,” Cohen told SBJ. “I would strongly urge the Stars to carve out a package of local OTA [games] to help balance the reach and exposure concerns I have for this approach in the short term.”
That sort of model would be reflective of MLS, which has a primary media deal with AppleTV+, but also a simulcast deal carved out for Fox Sports.
Will the tech work? Will the money come?
Veteran media consultants John Kosner and Ed Desser each stressed the importance of ensuring that A Parent Media Co., the Stars’ tech partner on Victory+, is well-equipped to provide fans with a high-quality viewing experience (see the D.C. United-FloSports deal from 2019 as an example of what could go awry). “The technology is not trivial,” Desser said. “One has to really be sure that you put the necessary resources behind the app development, the infrastructure, quality control, testing load management. Don't assume this stuff is all so routine that it can't be a problem.”
While APMC’s prior experience largely involves serving on-demand content, APMC President and CEO Neil Gruninger expressed confidence in the company’s ability to stream live games. “We don't have the problem that the Super Bowls of the world do, because that's 100 million people at once,” Gruninger said. “We're solving the local problem with 100,000 people watching at once. That is completely different.”
Perhaps the biggest question is whether ad revenue alone without a subscription fee can come close to generating the revenue the Stars earned under their previous deal with Diamond Sports Group that saw games air on its Bally Sports Southwest RSN. The Fort Worth Star-Telegram reported the team was being paid $25 million annually under that agreement, which had one year left before it was mutually terminated in bankruptcy court last week.
“It's kind of hard to see, at least initially, how the numbers are going to add up if your source of revenue is advertising sales against these live streaming games,” Kosner said.
Alberts said the financial modeling conducted by the team and APMC suggests the team won’t take a hit financially as a result of the move, but he acknowledged there’s risk associated with moving to a new model. “It'll be almost an experiment to see how this all goes,” Alberts said. “Do we meet expectations, do we exceed expectations, or do we miss those? And if we miss, we'll have to understand why and then come back in the second year, make improvements and see if we can improve on the business.”
NFL Media continues thinning the herd with latest podcast move
NFL Media continues to perform a significant offseason overhaul to its content and talent ranks. The latest move hit the popular “Around the NFL” podcast, which will cease to exist in its current form. Two of the pod’s three co-hosts -- Dan Hanzus and Marc Sessler -- are also no longer with the NFL. The third co-host, Gregg Rosenthal, will stick around to launch a new weekly podcast -- “NFL Daily" -- featuring appearances from well-known talent like ESPN’s Mina Kimes and The Athletic’s Jourdan Rodrigue.
That started back in early March when NFL Network’s flagship morning show, “Good Morning Football,” saw its production shipped from N.Y. to L.A. That move would go on to impact several members of the show. Jason McCourty is out, Kyle Brandt is staying on the East Coast for a hybrid role and Peter Schrager has yet to announce his plans (Jamie Erdahl is headed west to stay with the show).
Then later in the spring, NFL Net axed “NFL Total Access” after 21 years, followed by high-profile exits/non-renewals for talent like Melissa Stark, Andrew Siciliano, Will Selva and James Palmer.
Sources tell SBJ that the latest moves were part of the league’s normal offseason planning process. Nevertheless, the moves are the latest in some high-profile belt-tightening for NFL Media -- moves that sources told my colleague Ben Fischer are simply being dictated by the need to cut costs (vs. getting NFL Media in better shape for a potential equity swap deal with someone like Disney). Those sources also told Fischer that the financial return of programming on NFL Net -- beyond live games -- is simply not justifying high production costs.
Fewer original shows. Less marquee talent. Even fewer games these days (hello Netflix package!).
As the future of cable TV continues to look less and less secure, NFL Network is certainly feeling that pinch. The league is putting internal efforts into platforms like NFL+ and also making external pushes on original content plays with the likes of “Quarterback” and “Receiver” for Netflix or “Bye Bye Barry” and “Kelce” for Prime Video (not to mention tie-ups with content outfits like Skydance and Omaha Productions).
Speed reads
Messi-mania was bigger for Univision than Fox during the Copa America quarterfinals on July 4. Argentina's win over Ecuador in penalty kicks drew 2.7 million viewers on Univision/TUDN, while Fox drew 1.87 million for the match (which was the best Copa semifinal without the U.S. on record for English-language TV). Check out more on how Copa America is performing in tomorrow's SBJ Daily.
"Banana Ball" got a prime-time ESPN slot on Friday night, with the Savannah Bananas and Firefighters drawing 259,000 viewers, notes my colleague Austin Karp. How does that compare to some recent Friday night ESPN programming in that slot? ESPN had the NHL Draft two Fridays ago, drawing 502,000 viewers. Three weeks ago, it was Pro Fighters League with 226,000. But the Bananas game also wasn't exclusive, as YouTube aired the game for free for fans.
Threads, the Meta-owned text-based social network, just celebrated its first anniversary, and Threads chief Adam Mosseri said he would like to see the platform "make progress and go even deeper on key verticals." Mosseri: "I would like to gain on NBA Twitter. I would like to see more in the world of European football."
