Unofficial Partner Podcast
Unofficial Partner Podcast
UP523 The Bundle: Paramount's Relevent entry; Sky's UEFA return; Apple's MLS exit; Netflix, TNT, WTF?
The Bundle is our long running series on the sports media and streaming marketplace with co-hosts Yannick Ramcke, General Manager of OTT at the streaming service OneFootball and Murray Barnett, founder of 26West Sport and formerly of F1, World Rugby and ESPN.
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Through exceptional creativity, deep sponsorship expertise, and flawless on-site delivery, they help brands, sponsors, and rightsholders unlock their full potential in sport - most recently picking up a Leaders Sports Award for their work with Lidl at UEFA EURO 2024.
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Hello there. Welcome to Unofficial Partner. My name is Richard Gillis and. Today is an episode of The Bundle, which is our long running series on the sports media and streaming marketplace with my regular co-hosts, Yannick Mka, who is general manager of OTT at the streaming service one football and Murray Barnett, who is founder of 26 West Sport and formerly of Formula One, world Rugby and ESPN. This episode of the Unofficial Partner Podcast is brought to you by Sid Lee Sport. Sid Lee Sport is the fame making, creative and sponsorship agency for brands in sport through exceptional creativity. Deep sponsorship expertise and flawless onsite delivery. They help brands, sponsors, and rights holders unlock their full potential in sport. Most recently picking up a Leader's sports award for their work with Little at Uafa Euro 2024. Everything they do is driven by a culture of effectiveness because in sport performance matters not just on the pitch, but in the work too. So whether you wanna build Buzz, connect with audiences, or do something that actually cuts through Sidley Sport knows how. Visit sidley sport.com where brands become champions.
Richard Gillis, Unofficial Partner:so the main bit, one of the big stories that everyone has been talking about in the sports business over the last period of time since relevant took hold at or relevant uc. Three, we should say, this is UFO's First Champions League tender under the new relevant uc three model. And the headline is a 20% uplift across the big five markets, annual value rising from 2 billion euros to approximately 2.5 billion Euros. But there is stories below that, particularly in the uk and. Germany. I'm gonna Murray just set this up for us. What is, give us a bit of context for this.'cause we'll go market by market in a minute, but it's, there's quite a lot going on here.
Murray Barnett:Well, the big thing here really is, is the emergence of Paramount in because without them would've been flat or modest increases in, in most markets. But Paramount has sort of really thrown the cat amongst the pigeons in certainly the UK and Germany. and then also another story to that is. Sky coming back into the fold in the uk, if you like, with certainly rights for Europa League and Conference League, and about whether they also, which undoubtedly they did put in a bid for Champions League as well, and whether what they've ended up with has been what they were hoping for, or whether they actually wanted everything. But there's kind of a lot to unpick, but it's, it's mainly around Paramount's entry into the market. Thought. There's some quite interesting reasons why Paramount may have decided to really go all in on this.
Yannick Ramcke:Yeah, I think it's one more glaring example for the fact that the single most determined for any marketplace is the competitive scenario or to create a competitive scenario. To which extent this was now a, a function of peak export. And or uc. Three, doing a tremendous job to steer up such scenario, or it was very good timing for a new player coming into a market, willing to pay a premium to establish a presence in the market. That's everybody can make their guesses, but simply spoken in terms of outcome. I think it's not like, or I think it's fair to say that team marketing, when they went to market for the current cycle, they already applied many of the recent best practices, how to go to market, how to drive market price, how to appreciate the intrinsic value of the inventory offered. So they effectively had to fully. Media optimized product, stretch out schedules, year round, engagement driver, more exclusive, broadcasting windows more matches. So they a lot of the buttons that you can that you can push. I think peak sports sent the bar high because they need to set the bar high in order to get the mandate, otherwise you don't cancel like a decades long partnership for, for nothing or for like a percentage point more. But I agree with Murray. I think the competitive scenario primarily driven by a new market entrant may have been the deciding factor for, in the headline numbers. You see quite an impressive
Richard Gillis, Unofficial Partner:So when we talked before at. Sport. And in previous times, the global rights package, that got a lot of airtime, a lot of people say, okay, well this is the new bit. This is the relevant, this is what, this is what relevant are bringing to the table. And all of the expectation was that Netflix, this was aimed primarily at Netflix and that didn't happen. Do we know why or can we, can we work out why? And was paramount a surprise in this round?
Murray Barnett:Well, I think that's, that's quite a big question. I think maybe to see, let's look at why Paramount may have decided to do this. And I think, and I'd be curious to know what Yannick thinks about this. I think one is. You've seen them be successful with entertainment properties, and that's captured the first round of sort of, let's call it easier to reach subscribers, then you are always fighting for what's that next level of subscriber that you are able to bring into your service. And so. I wonder if there's a little look that they had at what Disney has done, for example, with L Liga and Women's Uafa and so on and thought actually, you know, traditionally sports has been a great driver of subscriptions and, and retention in general entertainment bundles. So, you know. We keep talking about the unbundling and the rebundling, and this is a li like almost a little bit of a, sort of a, a rebundling under paramount of, of that, but also seeing it in the context of. Most of Paramount's top shows are Taylor Sheridan shows, and Taylor Sheridan is leaving Paramount in 28. So I wonder if that was also a, a thing which made them think, Hey, look, we need to have something a, a big eye catching thing out there. And by the way, we're saving a ton of cost if we, if we think of it as losing him and having to pay him as opposed to you know, having money in the coffers then to, to buy something else.
Richard Gillis, Unofficial Partner:Sheridan is the guy behind Yellowstone Landman.
Murray Barnett:Exactly, yes. Tulsa King and all the Yellowstone spinoffs.
Richard Gillis, Unofficial Partner:And he's going to Amazon, isn't he? Is that right?
Murray Barnett:going, no, he's going to he's going to NBCI
Richard Gillis, Unofficial Partner:Okay.
Murray Barnett:And you couple that with whether you like the, what, what CBS have done with with Uafa in the us. I, I think you can't overplay that there's a lot of hype going on about their coverage in the us and so it's given them an number one A and obviously a great relationship with Uafa already, and a great familiarity with the product, but also a feeling that, hey, this is something that they, that they can crack in terms of the way that they cover it. And indeed, they've claimed in the states that that UA four is one of the top five drivers for, for their subscriptions, which. I, I think it's a pretty bold claim and it may well be, but it shows that they have a lot of confidence in it. And then you couple that with the fact that obviously they, they are backed by the, the world's richest man or one of the world's richest men. And so, you know. the kind of fees that they need for major markets in Europe, like the UK and Germany is not something which they're scared to do. You know, they've just paid 1.1 billion a year for u UFC, so it's not in the us So it's not like they're scared of writing the big checks. And as a, and I'm going on a bit, but like, it's interesting how there's this doing these big deals becomes a drug when you're in these big companies, you know, and having been. At some of the companies that have done these kind of things, every time you do one, you're looking for, what's that next big one? Because you've effectively lined everybody up internally to be able to do it, and it becomes a sort of a, a, a bit of a sort of an emotional thing that you keep wanting to add the next big thing to it. So I think there are a number of factors in there which, which make it. Makes sense for, for, for Paramount to want to bid heavily for it. Although I do think that obviously, you know, relevant Uafa have to be given a lot of credit for getting them to the levels that they, that they've got to.
Yannick Ramcke:Yeah, I think from the mc Paramount perspective, and as you said, there was a lot in there, but I think from a paramount perspective, we can. Quote unquote, dump this down or make it more straightforward in the sense of, I mean, sports and especially top tier live sports is one of the few, very few programming that have guaranteed audience deliveries. So with even the shows that you mentioned, like it can be a hit or miss but the sport is pretty much, you know, what you have, you pretty much acquire and buy. audience when acquiring top tier programming locally speaking like the Champions League in Germany and the uk. So I wouldn't consider it a zero sum game between, okay, this is a general entertainment budget here, which is saved and then shifted. I think industry consensus by now is that a pure sports proposition is difficult. A pure general entertainment proposition is difficult. I think. Everybody is aiming, especially when you, when you want to become the mass market option is aiming for this four quadrant proposition from young, old women and men. And sports plays a key role and ultimately paramount. Obviously, in hindsight, after UFC, after Champion Secure, has decided to answer the question of, are you subscale or. Not that go big or go home, it was obviously stuck in the middle. If you don't reach the scale required to run a sustainable and profitable business, are well sized but not good enough. you are a seller or you are a buyer, and I think Paramount has clearly decided to buy both in terms of ip, if not even in entire companies, which might be a different topic.
Murray Barnett:Well, there was a nice quote from Paolo Pescatore, who's a media and telecoms analyst in the in the States, and he says sports and particular. Particularly live sports is the last genre that really drives people to tune in and drives value, which is people buying subscriptions. think that's it in a nutshell.
Richard Gillis, Unofficial Partner:So, Yannick, who's won and lost in Germany in terms of Champions League on the other side of this?
Yannick Ramcke:I think actually Germany is one of the most intriguing cases in the sense of there is a lot of budget that is up for grabs or that. Massive budget shift will come because ultimately there was enormous amount of capital freed up, both at the zone and to a lesser extent at RTL, at the right shoulder of the second and third year or if club competition, that might be the most intriguing point to it that. They have, but they would have to reallocate. Otherwise, you can't hold the top line obviously, because there will be some audience attrition and subscriber attrition just by losing. I mean for RTL it was actually the top property, the most relevant sports property in Germany. The zone, you can argue whether it's the local German BUN Liga, of which they have a sliver or the being the majority broadcast of the Wafi Champions League. capital will have to be redeployed if they don't want to set their entire revenue forecast for the next few years. So I think that's an intriguing case to look at. as said, sports is comes with build and a guaranteed audiences like none. No other programming comes. Will I sign up to Paramount Plus. Starting once the cycle kicks in. Absolutely. Did I consider this under this news? Absolutely not. So I think that shows a little bit the drawing power that that kind of property still has. And as a new market entrant, you pay a premium. This is always what it has been and always what it will be. And as long as a new market entity comes around, willing to pay a premium above intrinsic value of the IP that you are buying. for the rights owners, so you can say two C3 together with peak sports did their job. One point I wanted to call out regarding peak sports role is actually that it's not specific to them, but it was yet another example. It seems like that current best practice is to bring the market consultation phase. Which you normally do before issuing a tender, bring this market consultation phase into the tender process. I think also the global rights package was, was just something to provide maximum flexibility because nowadays it's really about to accommodate as many as possible because no one is willing to pay for everything and for food exclusivity because just the business case is hard to justify, to pay this premium, to have everything and all, all exclusive. So the other approach is to accommodate a maximum number of parties. That feel like they get their money's worth and hence alo. I think this global package was also a lot about just banking flexibility. So whatever the market demands, the packaging structure allows
Richard Gillis, Unofficial Partner:That was something that Simon Deya, who o obviously owns Peak. That was a point he made on our podcast when he came on a couple of months ago. Murray just do the same thing.'cause Sky's relationship with this is quite eye catching. For the UK I'm talking about.
Murray Barnett:Yeah. Yeah. It, it is. I wonder, and I, and I don't know this, but I wonder if there's a lot of pressure inside TNT with, with obviously the WBD sale, which we'll go on to talk about in a second, if that influence the tool, the way in which they approach the process. I, I think it's a. It's a big signal from Sky that they. Conventional wisdom says that they had to put in an offer for all three competitions, but because of the way that the auction is structured, it means that that, to a certain extent relevant uc three can, can sort of pick and choose the elements of each offer that they like. I, I think if you're Sky, you wouldn't be that unhappy to end up with Europa League and, and conference league, because traditionally British teams have done well in, in those competitions, obviously my beloved Tottenham Hot Spur the Reigning Europa League champions. But you've had West Ham win the conference league and You know, it is perhaps less of a risk when you think about the, the national, the, the, the teams from the UK that are gonna get far in those tournaments and building a broader church of interest rather than the inverse of only having the biggest teams in the world. In terms of Champions League, bearing in mind that Sky already have, you know, a slice of Bundas League and you know, under the majority of the Premier League game. So if you, like, if you are a Chelsea you know, a Liverpool, you are already getting those on a regular basis through, through, through the, through the Premier
Richard Gillis, Unofficial Partner:Do you think there's people who, I mean, I'm just trying to think of a subscriber. Who an additional subscriber that would say, yeah, okay, I'll get Sky now. I, I mean, if you ha, if you, if you're a football fan in the uk, you don't get Sky. You've made a decision. It's too expensive,
Murray Barnett:It's, it's a subscriber retention. I think this is really subscriber retention for Sky
Richard Gillis, Unofficial Partner:it's not new subscribers.
Murray Barnett:Yeah.
Yannick Ramcke:Yeah, I am.
Murray Barnett:churn.
Yannick Ramcke:really torn whether this was a dedicated effort by Sky to get back into the UFA Club competition business, or whether they just lucked out. With, because obviously uc three wanted to accept the bid from Paramount for the top tier for the Champions League, they lucked out a little bit with leak and European Conference League. Because in hindsight it's. as and framed as a big deal. But I think in pure money terms, I think it's quite neg negligible for, for Sky, which confirms what you said, Murray, in terms of drives much incremental acquisition. It is retention, it's good. A nice to have for retention, I would say, but for a nice to have retention tool, you can't go overboard in terms of the money that you are paying. And if historical. Proportions remain in place. We're talking about like 10% of the Champions League value that we are talking about here, which would be outside looking in and given what also you said, the success of the British teams as of late for 10% of what paramount plus, pays for the Champions League be pair or good value for money and nice to have.
Richard Gillis, Unofficial Partner:Yeah, I.
Murray Barnett:you gotta think about it like that, that Paramount have, have an exclusive tie up with with Sky in terms of retailing of Paramount Plus, sorry, not exclusive, but they bundle the rights for Paramount Plus with the general Entertainment channel. So, or with the general entertainment package that Sky have, so to a certain degree. They were probably happy either way, so long as it ended up being paramount. I, I think that the worst case scenario for Sky would've been TNT retaining it, whereas this is actually quite a nice, cozy thing for them where, know, they, they, they've effectively got all of the champions league closer, closer to them than it was previously
Yannick Ramcke:I, I mean, it goes back to the role of an aggregator, even though I would, not pencil in that this agreement, this distribution agreement for Paramount Plus goes forever or just take it as a given that this continues, because obviously leverage has significantly changed as soon as this deal is up for grabs because I mean that's a reason why Paramount. Got into enhancing the UK content portfolio because or still today is pretty much just the global library that they have which might be locally not super relevant.
Murray Barnett:are, you're right. But I, you know, Mike Darcy was, was sort of speculating that there was some kind of pre-deal and certainly, you know,
Yannick Ramcke:I.
Murray Barnett:does that quite frequently in terms of, Hey, if you buy this content, this is what a future deal might look like. So there's a good chance that it was fairly de-risked for Sky as a platform, it went to Paramount or whether it went to Skyport.
Richard Gillis, Unofficial Partner:And, I mean, just before we move on to the next one there, I think it's 75 quid a month. If you wanna watch all European football across UK channel, I mean, it's, it's an old. Question, but this is like a recruiting sergeant for piracy, isn't it? I mean, just this, the disparate nature of these subscriptions, the way in which they're being carved up, it's very clever, but it's not, and I'm sure it make, you know it as of the money that comes in, but people we'll pirate if they, if they go that route. But the other thing is you just lose a sense of thing. I've, I've lost touch with Champions League.
Murray Barnett:You've got the highlights on, you know, certainly in the UK you've got the highlights, uh uh, retained by the BBC, so you could argue that there's a fair amount of sort of free to air exposure for it. I, I, you know, I just think as always the, the viewer is perhaps the last consideration in these, and it is just about what's maximizing revenue. And I'm not sure that anybody that's in these negotiations gives a lot of thought to, you know, how it's going to actually affect the, the, the viewer. And, you know, we've seen that in, in every discussion that we've had over the last, whatever it is, five years of the bundle, is that nobody's ever looking at it through the lens of what's the right thing to do for the fan.
Richard Gillis, Unofficial Partner:Yeah. Yeah.
Yannick Ramcke:I think, I think it's certainly not maximizing consumer surplus. I think that's fair to say both or, or neither in the uk nor in in Germany. Ultimately just one more point on this global package, it might have just done its job. As a decoy or like, I mean, just not disregarding the process, but just looking at the outcome. I think they can be happy with it even if it didn't materialize in what they put out there as a characters global player coming in. But I think it just also provides further evidence that content, including sports. doesn't travel well or is not global in nature. It is just what's locally relevant because again, as a consumer in the, based in the UK. I couldn't care less whether this player also has the same rights in all other markets or in country A, B, and C. I think it's about the local proposition and being attractive there and buying rights globally might not be the most cost efficient, but also just effective strategy to be a locally relevant player.
Murray Barnett:there's two more points on this. You know, the, I, and I'd be curious to know, Janet, what you think, but I, I struggle with understanding why the, the exclusive game a week makes sense for Amazon. I, I get it a little bit, the sense of being in the game, and you can argue that. With Prime has a, you know, it's another reason to have Prime as it were bearing in mind that they won't be able to pick off the best ga, you know, only round Madrid games or whatever it is. It just, I, I struggle with understanding. Kind of what the real value for them is. And then the second point, and I dunno if this is true in, in Germany as well, but I, I struggle already with League and it'll be the same with Uafa now about knowing what's on what service and sort of trying to navigate between it. And that's probably more, you know, my own issue. But I, it's already difficult to work out what's on which, which service.
Yannick Ramcke:Yeah. So, I mean on the letter, I think even we and the filter bubble seem to struggle to navigate. The landscape, let alone once you understood the landscape, to overcome cost barriers or any other barriers, technology barriers to cost, barriers, whatever, to actually So fully, fully agree there. We might have reached a point where, I mean, it's not a tipping point because especially for the top end of the properties, it's still going directionally in the right direction when it comes to media rights, income, but. It's getting closer. I think, and in terms of what's the point for prime video with the first pick on Tuesdays or Wednesdays? I honestly think it works because especially Germany, UK are highly saturated markets for Amazon. So the incremental subscriber acquisition for the ecosystem becomes more and more expensive, difficult, and so on. I still think, and I think they see it in the numbers, that this is a effective subscriber acquisition driver. Forget about retention. All of this, I don't think that's the point. It's just to get the incremental guy or goal into the ecosystem, and this is expensive. Given the level of saturation penetration that they already have. It might must be as big as the best that they don't. That's the best, second, best or third best game of the week. But the one of the best games of the most premier football club competition might take this. So I still understand the, the.
Richard Gillis, Unofficial Partner:Okay. Right. We didn't mention, we didn't go into too much on TNT, but obviously this, they come in very central to this next story, and this is a story which is the Netflix bid for Warner Brothers discovery and has entered an exclusive negotiation period for Warner Brothers Discovery Studio and streaming assets, including HBO Warner Brothers and TNT Sports International, which includes the Olympic rights. Plus the Olympic rights. The framing from industry observers is, this is sports last m and a as in sport was the last thing they were thinking about, I think is how that's explained. In an era where we've been trained ourselves to view every deal through a sports first lens, which is one way of looking at it. Now, this is a story which is moving as we speak. This is Monday afternoon on the 8th of December. Already we've got. Rumors of counter bids, and again, talking back to Paramount and got an interesting share on our Unofficial Partner WhatsApp group, which was Ian Whitaker, who is City AM's Analyst of the Year, saying he doubts whether this will ever happen, but we'll talk about that in due course. But just Murray, can you just sort of. Take us through the main parts of this, and again, everyone I'm listening to this podcast is interested in where sport is. This is a massive media story. It's, it's a huge finance story. It's all about management of debt and all the rest of it, but within it, I think it's, it's saying something quite interesting about sport and where that sits. Give us an idea of it.
Murray Barnett:Well, you started off by saying that this deal is a sports last deal, and I think that that is exactly the point, is that they're not looking at sport as being the driver for this. I mean, know, certainly for Netflix, it's very much about the acquisition of the Warner Studios. and those are the sort of two attractive things I'm sure they took. One look at Amazon, having bought MGM and, and needing to control not just a great archive, but also a pipeline of ongoing content. Uh uh, and it's, you know, however much we think that there's an arms race on the sports side, it's also true of what's happening in the entertainment world. So. I, I suspect that there'll be a bit of shaking out of what the sports assets that sit within this if the, if the deal gets approved, which, know, everybody seems to think it's very, very unlikely at, at a minimum is gonna take 18 months to get done. That's obviously, if it happens with Netflix, it's slightly different if it's paramount, because I think that the paramount value the sports assets much more highly than than than Netflix do. You know, we've talked in, you know, ad nauseum about Netflix and adv, eventize sport and so on, and. could see how they could shoehorn this in so that it makes sense for them, but it doesn't feel like that this was something that was front and center in their thinking when they went into this. And you know, there still remains a whole bunch of possibilities in for Netflix happens that, that, that, you know. of the sports assets could get spun out of that into, you know, whether that's back to, back to WBD global networks or, or just completely spun off into a separate division or sold to somebody else. There's still a lot of moving pieces if Netflix is successful.
Richard Gillis, Unofficial Partner:Yeah. Yeah,
Yannick Ramcke:No, I think we can agree that for once, this is not about Netflix ambitions in sports which is a nice change since this has been about been.
Murray Barnett:By the way, there'll be a ton of a ton of people that on LinkedIn and across the sports media industry that will be telling you that this is a another, another dawn of the great age of sports on Netflix.
Yannick Ramcke:No, I really think that could mean all or nothing for sports because I honestly and personally, I really needed to. Read up on the separation that is scheduled for Warner Brothers Discovery, which is still supposed to happen and be executed before the acquisition actually takes place into Warner Brothers. The studios and streaming. Part and discovery Global, which is like the linear TV assets kind of things. But interestingly and this was new to me and news to me that the t and t Sports UK and the Euro sports assets, so pretty much all international sports assets are actually in the studios and and streaming division. Via the domestic sports. So t and t sports, US Bleacher Report and all these kind of assets are in the discovery global division. So, and given that this process not done yet and has also not been informed by. The likely acquirer in the form of Netflix, I still think there might be moving pieces where the one or other puzzle one or other puzzle piece might be moved around across those two divisions because this is pretty much the delineation line now between what is acquired by Netflix and what is not. I considered it super surprising that, international sports assets are in studios in streaming. The part of the business that Netflix is acquiring via domestic sports assets are in the Discovery global, where the, I'm not saying it's the bad bank, where the linear TV assets are host, but. These are in that part of the post separation split, and I think that is something worth worth watching. Other than that, I think we can just conclude don't believe, uh uh. Anything that Netflix says it's all gospel until it's not. I think there are now it's a recurring theme, right? With advertising, with passport sharing and crackdown with sports, with not being interested in m and a. It's instead of buying all these kind of things. I would say start to say that there's a theme, a recruiting theme to, to be observed.
Richard Gillis, Unofficial Partner:I think there's a whole thing to be done separately. I was talking about this differently. You've got this story, but also running in parallel completely, unrelated in many ways, which is the um, Omnicom IPG merger in the market, you know, a marketing agency side, and it's, it's. One of the problems with these massive mergers is just living through that period. It's a really horrible experience for everyone who's working there, and it also completely destabilizes. People's idea about what the company is and who's doing what to who. And there's a sort of huge amounts of duplication, which has to be worked through. And you, you know, you're very aware that it's a just sort of financial engineering instrument where you are, we are moving, you know, ZLA is making how a however many millions, hundreds of millions from the deal and, and those personal incentives, your Ellison, who's worth, God knows how much, you know, hundreds of billions. And it's sort of quite dispiriting, you know,'cause you sort of lose you sense that any of the narratives that we talk about in, you know, sport can be just repurposed and bunged in front of the stories at some point. But it's quite a difficult, you know, it's very difficult to live through that period.
Yannick Ramcke:No, I think it would be very, a very bold assumption to say that. Netflix will do business as usual over the next year or two. While this is going through the process and through the authorities, this might be the intention, but practically and in reality, it's just not possible. I think actually Warner Brothers is like a textbook example for this. Since they, to put it lightly, they have changed hands more than once and.
Richard Gillis, Unofficial Partner:are a sort of, you know, a conglomerate of, you know, it's a debt upon debt upon debt, and that's why they exist in the first place. So it's sort of, again, it's so far from any working out what the media strategy is gonna be. Even gen, you know, the general media strategy, let alone the sports rights strategy so far down the chain. Because at the moment all they're doing is looking at this stuff and repurposing it. And this is Wall Street. You know, selling to itself.
Murray Barnett:The key thing for the sports world is that there is some clarity by the end of 26 certainly when you look at it through a very UK lens. gonna start looking at a Premier League auction, and the last thing that they want is a lack of clarity about who the bidding partners could be because, I guess you could argue that in the gray, that that gives some opportunity to create a a new structure to it in terms of bidding partners and so on. But I would think, think the conventional wisdom is. it's important to have clarity for everybody as quickly as possible in order to, to be able to understand what it really means in in certain individual markets.
Richard Gillis, Unofficial Partner:think, Murray, just on that just, and it goes back to the first story, do you think that, that the Premier League will look at the U AFA and the global package and the, you know, the luring of the streamers? Is that, do you think what they will now be looking to do that they'll try and isolate some of their inventory for a. Global streaming package, whether it's a Netflix or a Paramount, whoever, you know, we don't know. But given that proximity of that right cycle, which again is massively important in terms of the, the just iconic moments in the media, right cycles, what do you think? Do you think they're gonna, I, I guess the lessons, it's too early to take lessons from it, but they will be looking and analyzing this very carefully, presumably in terms of what went right for UFA in this and what the lessons are of it.
Murray Barnett:Yeah, I mean, it's really difficult when you, when you see a lot of the sort of drought that is out there that's been reported about how successful this be, this this has been or not, that, you know, the narrative is incredibly positive, but you peel the skin back on it a little bit. And as we talked about earlier, you know, without Paramount, it wouldn't necessarily have seen the big increases that, that everybody was hoping for, and even the global streaming package. It doesn't seem to have been. A completely, you know, hit outta the park home run. But you'd be crazy if you weren't the Premier League and looking at every option that was out there. And I think, you know, a global streaming package could be something, you know, that there aren't many properties that are gonna be really that interesting for, for the global streamers. But Premier League is certainly right up there with it. I could imagine a scenario where you'd get a game a week on there, but when I was preparing for this or when I was thinking about talking to you guys, I was thinking there's this really interesting thing about partnership with rights holders, right? If you look at the most successful relationships. Or the most successful commercially successful leagues. They're all the ones that have built with their rights owners. So there is a symbiotic relationship between the Premier League and Sky Formula One and Sky, when you talk about it in a, in a UK context, and I'm sure that there'll be a lot of conversations that are going on with Sky as the biggest incumbent for Premier League about. What makes the most sense for you? Where can you, where can you take some pain? That's, that might help us in other areas. also, don't forget like the only league that is fairly evenly balanced between its international revenues and its domestic revenues. And. You know, that makes it that much more interesting for, for them to perhaps carve out a global streamer package. But then you also have a regulatory issue, which does a Global Stream package get past the, you know, inability for Sky to acquire Premier League on an exclusive basis. And I guess the answer is yes, it does. And is that more palatable for Sky to have an Amazon as a partner than it is to, for them to have. T or a Premier sport, or whoever it is, or aone as a partner in the uk, and those will be the conversations which are happening right now.
Yannick Ramcke:Yeah, I think, just answering the question regarding if will there be such a package? I think as is said, Marie, premier whoever is consulting or advising them, if any, wouldn't do their job. If such an option would not be available as a pure measure to increase choice and options for the potential bidders. Do I think that. Fast forward once bits have concluded and packages have been assigned, that there will be a global package acquired and assigned. I don't think so, but maybe it's just it's a trick. Back to what's your core and what's the job to be done, create a competitive scenario, and if that increments. The competitive tensions to give that options that option to the market, then it's pretty much a done deal that this will happen. And the Premier League will be the measuring stick for such kind of package. Because exactly for the reason that you mentioned, and I think we can even form put this more straight to the point. is the only leak that makes more money internationally than domestically. I think hence it might be the most or the best fit for such a package. But again, do I think it'll happen for that kind of international league rather than domestic league? I don't think it'll happen.
Richard Gillis, Unofficial Partner:It is interesting that in terms of that, that percentage number, you keep bumping back into it. We talk about it, you know, the Indian market with the IPL, I think it's 2% international rights, and the NFL is 3%, and so it's a really, is an outlier in that sense in terms of just when you look across the marketplace, which again, is sort of trying to work out. We keep coming back to these themes of the global fan, you know, who is watching the Premier League internationally, and whether it's club driven, whether it's league driven, all of these questions are wrapped up in it. I am no further forward about what Netflix wants than I was six months ago.
Yannick Ramcke:Point on each regarding international world is national or domestic. I think the case of the National Football League, domestically speaking, and the case of the English Premier League, internationally speaking, has created Paul's illusions in the marketplace because. Especially on the football side, it was always, okay, domestic market is saturated, let's move. And beyond the domestic borders, international is the big growth area, but it does not have, or it has not materialized because you are not the premier league. It works for the Premier League. Just like slicing and dicing the domestic rights packages 10 different ways. It worked for the National Football League. In the United States. That doesn't mean that this works for any other, league because they are not the National Football League. I think there's a lot of faults in the market among rights owners because laws, I guess, apply to the very top tier of the pyramid, which is the Premier League and the NFL and last point on Netflix. I really think that no one is happy right now, not even Netflix, because this for me, just zooming out. It's more playing defense instead of offense. It's more like a reactive move than a proactive move this entire. Acquisition. It's more like something that has been accelerated by paramount, by aggressively bidding. I am pretty sure Netflix would have preferred to have that kind of discussion and that kind of m and a consolidation like down the road in two, three years time. But it's pretty much buying competition. Of the market. I think, and even if they have to pay the breakup fee, which is in absolute terms, enormous with more than 5 billion US or not, I think. But if this now goes through a one or two year process and it is not greened, like the landscape looks so differently, it might have even been worth it to spend the 5 billion on on the breakup
Richard Gillis, Unofficial Partner:Well, that's one of the running theories, isn't it? That they, they, it's never gonna happen because they've essentially hedged 8 billion quid, whatever the write off fee is against, they're worried about paramount more than anyone else, and therefore that's a way of keeping them out of the game, keeping their, keeping it locked up in regulation for a couple of years. Ellison is 81 and will die soon. And the the thrust, strategic thrust of the company will dissipate. That's, that's one, you know, that's today's theory that, you know, we've just seen sort of banded around. Again, there'll be others as the thing goes on. There's these stories just generate narratives, you know, very easily. I, I, and it's good fun. I've got, I'm very conscious of time. We're gonna move on to D Zone and European football.'cause again, you mentioned this. Murray as in you mentioned the sort of these conversations between right partners and rights holders does of of risk, what is happening, what and D zone there, there are sort of echoes here of the NFL and ESPN's relationship in the states, but just take us, what, what is actually happening with D Zone.
Murray Barnett:What what piqued to my interest about this was actually a long piece by Kala DeMarcus about what's happening in Italy where there are apparently very early stages between the league Syria, art and D Zone, about the possibility of. A number of Syria are clubs taking a stake in D zone in lieu of fees, which very much looks like it's aping the discussion that happened between, or, or the deal that's happened between ESPN and NFL. you know, it comes at the backdrop of. Straight rights deals that dis zone have done with LFP, which got terminated with Belgian League that got terminated, they've renewed the rights for Syria are, but now they're coming back and saying what, know, one interpretation of is help us, let's share the upside together. Or let's take away some of our immediate cash flow issues. Or, or, or needs by. you some stock instead. And it's kind of an interesting sort of thing going back to this whole thing about partnership rather than sort of very transactional relationships. And perhaps also talks a little bit to this idea of of of, know, I was speaking to PMS, who's one of the sort of commentators on Belgian and, and French football businesses. And, you know, he, he, he reminded me that, you know, Zone. Doesn't want to be the Netflix of sport. It wants to be the Spotify of sport, which is to effectively pick up. Assets that are relatively low risk for them, but to create a great platform for them. And I think that's a really important distinction to make.'cause I think we talk a lot about, the shorthand of D Zone being the Netflix of sport. And that is just not proving to be the case because they have acquired. You know, intellectual property in terms of rights, we've now got two cases where it's not worked out for them, for whatever, you know, slightly different reasons in each market, but the point being is they're now turning around and saying to Syria, well let's, let's look at something where there's a bit of shared risk between us and we are kind of in it together, as opposed to sitting on opposite sides of the table.
Yannick Ramcke:Yeah, I think you can quote me either from the last episode or the one before that this has the potential for very dangerous precedent setting what the zone is currently doing. Just pulling out of media rights agreements for, not random reasons, but reasons that I think everybody could make if they really force or want to make reasons like of support by the clubs rampant piracy yada, yada yada. So I think that can set a bad precedent or a risky precedent for rights owners. And I think we see a couple of other examples that are tending towards same or similar scenario in. The Netherlands and India, we have a couple of g rumors or reports. So, that's one. By the way, Italy, they have already negotiated or had negotiated or renegotiated the media right agreement last summer where they were asking for make goods, which they got in the form of friendly matches and so on. So, what's happening there now? It's not the first time that. They don't tries to address this problem. And the second point is, and I fully agree and I have said this, I think by now, five years ago, we will move towards a more, call it partnership, but partnership might be the wrong word. Call it cooperative model, or simply. More revenue and risk sharing, which it ultimately is between rights owners and rights holders. Whether that is always underpinned by like a corporate structure, like a jv, I don't think that has to be the, the case because minimum guarantees are pretty much a full transfer of economic risk from the right owner to the temporary right owner, and I think. it's the Zone or anyone else it's not the most pleasant situation to be in, to be at the full risk of that that business, especially in the uncertain environment that we are navigating right now. Zone. I think you see a blueprint or like a strategy with the zone from a little bit like from publisher to platform, with the general store business carrying like a multitude of third party streaming services that are sold as premium add-ons to the base, the zone subscription. I saw it, I think to see a shift in business strategy and it almost looks like that they want to shift their. Media rights acquisitions to this new model of operations to be more a distributor revenue share sharing
Richard Gillis, Unofficial Partner:I can, I can see this from, I can see this from D Zone's point of view, a broadcaster's point of view. I mean, I think the lessons of the French market are, this idea of partnership is nice in theory until someone comes with a bigger check and then all bets are off. And then I think that though that type of relationship is very vulnerable to just the next paramount, the next, whoever it is that comes with a checkbook that needs to make a big statement. That's what sports writes to your point, right at the very beginning, Y. Is that it's all about creating a market at a, you know, come the time. Then you bring your rights to market. So I think I get it. I understand it, but I don't think the real world works like this. I if.
Yannick Ramcke:let me be clear, this is not the preferred model for the rights owners. This is why I'm saying dangerous. The rights owners has a huge fixed cost base, primarily in the form of or athlete salaries. They have no interest at all to share the economic risk otherwise, like budgeting and all of these kind of things, this is not what the sports model. Is compatible with, as a sports model is with fixed salaries and so on, is organized as of today.
Richard Gillis, Unofficial Partner:Yeah.
Yannick Ramcke:is the last thing that leagues prefer. They will always take the biggest, most guaranteed check available under it is not available.
Murray Barnett:There's always one, one more sucker rule, isn't it? And you know, you've seen that churn through in, in France where they've basically gone through. Everybody that's willing to pay for pay for rights a standard rights agreement until there's nobody left, and that's why they're in a situation where they're having to go go and do it themselves.
Richard Gillis, Unofficial Partner:Yeah.
Yannick Ramcke:And I think they do a tremendous job and they're outperforming business cases, business plans and everything. They are still at around maximum 50% of the money that they earned before in a guaranteed way. And those 50% that they're getting right now is very hard earned in terms of producing and distributing everything in-house via the multipliers that are take, that are the zones one footballs and others in the world.
Murray Barnett:I, I did a very back of an envelope analysis and the entire revenue that that's currently being generated gross for the French for, for French li is about the same as goes to one Premier League club in terms of their distribution. I mean, that's the quantum that we're talking about, that it's fallen if you
Richard Gillis, Unofficial Partner:Wow, that's incredible. There's a, I think the next story again. The Apple and MLS go their separate ways is a story that I think pulls together quite a few of these themes because again, a few years ago or even less, we were, a lot of people were talking, well, look, here is a global deal with a streamer, a massive brand, the biggest brand in the world getting into football. All of these things, and it's not worked. So are there anything, is there anything that we should know about this? Is it, or is it specific to Apple and the MLS?
Yannick Ramcke:I think it says much much more about Apple than about the MLS. I mean MLS is what it is, right? A Midtier sports property especially in the us not the favorite participating nor spectator sports. Um, so I think we knew, and we know what app the MLS is. I think it says more about apple and speaking of a more cooperative. Set up or model just a few minutes ago? I think it pretty much is admitting the failure of proving the concept of such more cooperative approach, selling MLSA single property proposition as a other card option in the apple ecosystem. And I think it proves the point. Or Unpro, the point that you can just plug in any sports property into the Apple distribution engine. And it's it's getting sold. I think the learning, and this is now also why I think it was a decision preempted by the Formula One right acquisition is that they don't even try the same concept which they wanted to prove with Apple oil to then scale to bigger and even greater properties in the future that they don't even try the sell through. concept, they just collapsed their entire video inventory pretty much into one single Apple tv proposition. And here I actually think that can be a pivot to a turnaround to actually make Apple tv. Best case scenario, the mainstream streaming service. but the learning is that, those sell-ons, add-ons, sell-throughs for sports despite this huge distribution engine and ecosystem that Apple is, doesn't work. So they focus on one single streaming proposition and I'm actually quite excited what. We can do both with the MLS, but also with Formula one to lower or lesser extent with MLB because it's only one game per week and it's domestic only. But what they can do in terms of innovation by owning actually the flow from glass to glass, so from production to play out, and I think there's a. A lot of innovation in there. But I think the initial hypothesis, which with which they started is pretty much uh, dead.
Richard Gillis, Unofficial Partner:Okay
Yannick Ramcke:and now they are just another streamer, quote unquote, including
Richard Gillis, Unofficial Partner:Murray.
Murray Barnett:We've talked a lot about how Netflix is looking at adv, eventize sport and, and how Eventize Formula one is, and the fact that you've got a limited number of exclusive assets and you've got, you know, three to. Days of Formula One leading up to the race. I think it sets it up for the reasons that Yannick said, but also the fact that it's more evented and a more rare commodity to be much more successful than perhaps MLS was. also I think you, you know, not just the learnings about the structure of, of Apple tv, but also about what's required in terms of the promotion and development of sport. And I know that that was a big factor in in, in, and why. Formula One went with Apple was that they, the Apple presented its entire ecosystem as being something that they would, that they would put behind Formula One. Whereas if you remember back when the MLS deal was done, it was a little bit more transactional in terms of the way that they, that they positioned the deal. And, you know, we keep using this word partnership. This is very much more being positioned as a partnership between the two to. Fully unlock all of the Apple assets. You've obviously got the F1 movie, which I dunno how spirit it is. I saw that the second one has already been green lit so that there's another movie coming down the pipe and it, it, it makes it, it sets the sets the stage for a lot, a lot more success with Formula One perhaps than they, than they could have achieved with
Richard Gillis, Unofficial Partner:Sort of, I mean, just to finish this off, it's quite interesting. It will, you know, we will see what happens, won't we, in terms of it, it, it sometimes feels it's, and there's an echo, one of the themes of this, it's sort of like a how big is sport really in the context of the strategy. So you've got these enormous companies, it, you've said this in the past, Murray, it's not like dealing. Sky sports or Fox Sport or a sports channel where sport is everything and they're throwing the kitchen sink at it. They don't need to do that. And if the focus isn't on it, it very quickly drops down their agenda. That's the sense that I get because it, if it doesn't work, great, okay, fine. We've learned that and we'll move on. But from a sports point of view, it's very hard to have any confidence that they are gonna, you know, who does, who wouldn't wanna be across the Apple ecosystem. But it just, whether it works or not.
Murray Barnett:Well in, in business in general, cultural fit is such an important thing. And you know, I mentioned this when we talked about the F1 MLS F1 Apple deal before is the, you know, they've been working together for two years on the movie. So I think that there is a, you know, they've, they've done all of the dating, if you like through the movie process. And they, they have a shared common vision, so it's. Probably stands a lot more chance of being successful than than MLS did, which was, as we talked about, quite transactional.
Richard Gillis, Unofficial Partner:they're into the minefield, that is the marriage.
Murray Barnett:Yes, yes. There's a prenup.
Yannick Ramcke:but, but I think it's fair to say that sports has not been inherent to the DNA of Apple, and I think
Richard Gillis, Unofficial Partner:Yeah,
Yannick Ramcke:some growing pains, but they seem to rise
Richard Gillis, Unofficial Partner:it still, it still feels weird. It still feels weird, doesn't it? Just to feel, you know, I, you know, I just think it, it's odd.
Yannick Ramcke:I think they're sharpening, fine tuning the strategy. And I think this is really like a fundamental pivot that they're doing right there. But including things like, it was probably or almost a non-negotiable until recently that if we get into sports, we in the form of Apple, it must be all inclusive. It must be global. It must be 100% of the game inventory. But if you look at what they did, for example, with the MLB where they have one game per week, there was some recent data actually where MLB is by far single week, the biggest acquisition driver that Apple TV Plus ever had like the past two seasons. So sports is a CO in the machine. It's a part of their content portfolio and strategy. And I think. Moving from Apple TV plus, plus add-ons to simply Apple TV and collapsing the entire proposition in one single streaming service that you probably continue to get free when you buy a new iPhone, iPad, MacBook, or whatever, I think has actually a path towards mainstream relevance. And I look forward for uh, how this evolves.
Richard Gillis, Unofficial Partner:Brilliant. Okay. As ever, thank you both and we'll meet again. Have a good Christmas and we'll do the first bundle in January. See what the stories are. Well, yeah, there's predictions. It's always gonna be predictions. Right? Till next time.
Murray Barnett:Happy
Yannick Ramcke:Thank you.
Murray Barnett:See guys.