Paramount Ponies Up $7.7 Billion to Win UFC Rights

David Ellison is going from UFC ringside to UFC ringleader.

After being spotted in front row seats at multiple UFC events this year, Ellison’s newly acquired Paramount (now technically called “Paramount, a Skydance Corporation,” though we’ll stick with the old name to remain within our self-imposed length constraints) agreed to a seven-year, $7.7 billion deal to become the mixed-martial arts competition’s exclusive US rights-holder. It’s the first (or, well, maybe second) significant move of Paramount’s new Ellison era.

Elbow Strike

Live sports rights remain the lifeblood of media companies, and UFC’s time on the market provoked nothing short of a bloody cage match. Paramount’s final offer ultimately beat out fellow competitors Netflix, YouTube, Amazon and ESPN, according to a Bloomberg report over the weekend. The agreement, which runs from next year through 2032 and includes a payment schedule weighted more toward the back end of the deal, also trumps UFC’s current rights agreement with ESPN, valued at $550 million annually. After spending big on an NFL rights re-up, which even included giving up a 10% stake in itself to the league, ESPN appears to be paring back elsewhere; the Disney-owned company similarly backed out of renewing rights to Formula 1 Racing earlier this summer.

For Paramount, the deal could help transform its struggling streaming division. For UFC-owner TKO Group, it’s just the second blow in a recent one-two rights-sale punch:

• The deal gives Paramount the rights to 30 “Fight Nights” per year, as well as 13 “marquee events.” All content will stream on Paramount+, with some being simulcast on CBS; Paramount+ accounts for just 2.2% of all streaming usage, according to a recent Nielsen report.
• The deal puts an end to UFC’s pay-per-view era, while bringing it into the streaming age. WWE, TKO’s other fighting brand, just signed a five-year, $1.6 billion deal to stream marquee WWE events (such as WrestleMania) on ESPN’s forthcoming streaming service; WWE’s weekly show, RAW, began airing on Netflix in the US this year as part of a 10-year, $5 billion deal.

Wall Street had a mixed reaction to the mixed martial arts news: TKO’s stock soared more than 10%, while Paramount’s (now trading as $PSKY) fell 3.7%.

In a Corner: TKO may soon score a third leg in its ring-corner stool: boxing. Last month, a bipartisan group in the House of Representatives introduced legislation that would allow new ventures in the sport to launch outside of existing sanctioning bodies. (In news to us, boxing has been regulated by the US government since the organized crime-filled days of the 1950s.) That comes as TKO looks to launch a new boxing promotion as part of a joint venture with funding from Saudi Arabia.