Norby News, The Zaz-NBA Discovery Timeline & Venu Confusion

Welcome back to The Varsity, my twice-weekly private email about the never-ending sports media olympiad. Enough with the forwarding, people. If you’re paying for Peacock, you can afford The Varsity. The next person I catch will, and I mean it this time, be subject to Marchand’s own Nedoroscikian pommel horse routine. We’ve officially entered the dog days of August, where half the sports business seems to be in Paris and the other half is on Nantucket. I am writing this from my hometown of Washington, D.C., where Mark Ein is warning anyone who will listen that our annual tennis tournament—the Mubadala Citi DC Open—may be looking to move out of Rock Creek Tennis Center. “At some point, if the facility doesn’t match the level of the event, we’re not going to be able to keep it here,” Ein, the tournament’s chairman, said. These types of complaints are common among owners, like Ein, who are looking for public money. But in this case, he has a point. The facility, owned by the National Park Service, is outdated and dilapidated. It’s hard to fathom that it’s been a regular stop on the professional tennis tour since I was a kid. Let’s get to it…

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The Starting Five

Sunday Ticket fallout: Days before Judge Philip Gutierrez made the stunning decision to throw out the $4.7 billion Sunday Ticket judgment against the NFL, I was talking to a league source about the case. I expected to hear more than a little bit of panic, especially considering the league was potentially on the hook for $14 billion-plus in damages (the penalty can triple under antitrust law). Instead, this source methodically poked holes in the jury’s reasoning in reaching the $4.7 billion number. Still, I considered it pure bluster when this person raised the possibility of Judge Guttierez tossing the jury verdict altogether. Clearly, I was mistaken.But this is not the end of the saga—expect appeals and the filing of similar cases. Judge Guttierrez, meanwhile, has announced his plan to retire in October, increasing the possibility that the plaintiffs slow-walk their appeals to get in front of another judge. For what it’s worth, my sources expect settlement talks to start.
This week’s NBA non-update update: David Zaslav and Adam Silver may have spent the bulk of last week cheering on Team USA in Paris—Zaz, in particular, was hanging out with Travolta, Bobby Flay, and Guy Fieri at Roland Garros (WBD’s Eurosport holds Olympic rights, and WBD just picked up the French Open media rights in the U.S.)—but here at home, the wheels of justice have not slowed. The NBA must respond by the end of next week to Zaslav’s lawsuit alleging breach of contract over the highly chewed-over matching rights issue.Expect the league to ask the court to dismiss the case entirely. In the event that the judge moves forward with the case, the discovery process likely will start early next year… which is why we should expect some sort of negotiated settlement this fall. No, TNT is not going to wind up with live games in the U.S. But Zaslav can still extract something that will help him save face, even if other league commissioners may view this whole episode as a cautionary tale.
More Norby succession news: As I reported on Thursday, veteran media executive Jim Bell, who spent three decades at NBC, is one of the finalists to replace Norby Williamson, ESPN’s once-powerful production executive who was defenestrated back in April. I’m hearing that Bell’s biggest competition comes from an internal candidate—Mike McQuade, a vice president and executive producer at the network. McQuade, who has been at ESPN since 1987, has overseen MLB and NHL as well as SportsCenter, golf, tennis, and boxing productions. (Another internal candidate, senior vice president of production Mark Gross, had early talks about the opening, but has apparently opted to stay put.)Whoever lands this job will report to ESPN president of content Burke Magnus, who is conducting the interviews. Word is that Magnus hopes to have someone in place by October at the latest.
The Pete Rose redemption tour: The four-part Max documentary Charlie Hustle & The Matter of Pete Rose may be a warts-and-all look at one of the most infamous baseball players of all time. But it also clearly seems to be part of a persuasion campaign to recast the legacy of the Hit King and degenerate gambler in time to afford the 83-year-old Rose one last shot at gaining entry into the Hall of Fame. Sure, he’s been banned since 1989, but times have changed—sports betting is now legalized in 38 states, and MLB has become cozier with gambling companies. (FanDuel is MLB’s official sports betting partner.) Yes, yes, none of this excuses Rose from the grievous sin of betting on the games he managed—he bet on his Reds 52 times (and what about the times he didn’t bet on the club?). But could the MLB or the Hall be softening on Rose in his old age?I asked around to various sources, and the consensus was clear: No. Don’t look for MLB to reexamine Rose’s status, at least so long as Rob Manfred is commissioner… and his deal is up in January 2029, at which point Rose would be 88. With the legalization of gambling, the league is under pressure to crack down even harder on players betting on games. And in the current reality, Rose’s sin looks more grievous than ever.
Sneakerheadaches: The Varsity has spent a lot of time mocking Nike’s 2024 performance, from MLB’s see-through pants to its much-derided All-Star Game uniforms. Last week, a former marketing executive posted a screed on LinkedIn detailing Nike’s problems. And my partner Lauren Sherman followed with a must-read piece detailing the litany of recent missteps at the House That Jordan Built. Here’s the part that really stood out to me:

John Donahoe, who has been C.E.O. since 2020, decided to divide the business by gender, which essentially turned the company from a performance brand that emphasized sport into a lifestyle brand that emphasized gender. “This manifested in ways large and small,” Lauren noted. “For years, Nike and its legendary advertising agency, Wieden+Kennedy, were marketing to teenagers, many of whom considered themselves serious athletes, in the hopes that they would hook them for life. Now, they are marketing to the people those 16-year-olds have become after their dreams have crested. The new Olympics campaign, heralded by some as a return to form and lambasted by others, states, ‘Winning Isn’t for Everyone.’ Uh. But isn’t Nike about being a winner?”

Men Are From Mars, Women Are From Venu

News and notes on the NFL’s CBS deal, Venu’s nine-year tour, and NBA rights with MoffettNathanson’s Michael Nathanson and Robert Fishman.

JOHN OURAND

Last Friday, I spent an hour on a roundtable with two of the most respected analysts in the sports media business: MoffettNathanson’s Michael Nathanson and Robert Fishman. Of course, there was plenty to discuss between all the tectonic and industry-defining M&A and platform evolutions that have transformed the market over the past year—cost-cutting at Warner Bros. Discover, the sale of Paramount Global, the battle for sports rights, etcetera. MoffettNathanson, one of the leading Wall Street research outfits covering the industry, has had a front seat to it all. Herewith, an excerpt of our rollicking conversation, about David Zaslav’s botched NBA deal process, the strategic thinking behind Venu, and whether David Ellison will renegotiate CBS’s deal with the NFL. (This conversation has been edited and condensed for clarity.)

Zaz Thoughts

John Ourand: At just about every step during these negotiations, it seemed like David Zaslav made a tactical mistake. Early on, he said that Warner Bros. Discovery didn’t need the NBA. Then he allowed Amazon to enter the exclusive negotiating window. And during the window, he didn’t close a deal, even when it looked like there was a deal to be had. Zaslav is not an inexperienced negotiator. Do you think he actually wanted the NBA?Michael Nathanson: I don’t believe the words out of Warner Bros. Discovery. I believe the actions. And the fact that they scrambled so hard to get back into the NBA after letting it walk? To me, that says that they’re scared. The talking points were that they don’t need it. But now they are scrambling like crazy. That says something about their level of concern, especially when they have to renew TNT’s affiliate deals with Comcast, DirecTV, and Dish Network. It sounds like you’re suggesting that he eventually came to that realization. Nathanson: Going into it, I think that he thought he didn’t need it and would negotiate it down. Then when it all settled, he realized how badly it turned out for him. I do think this is going to be a challenge. Sure, TNT has March Madness and baseball playoffs, but it’s really repeat TV. [As in, it’s a network that runs repeats—Charmed, NCIS: New Orleans, etcetera—in many windows throughout the rest of the calendar.] Why is TNT $3 per month when USA is 50 cents or AMC is $1? I’m looking forward to seeing what happens in the next year or two. I really am. The Comcast talks will be the ones to watch. Comcast’s negotiations with Diamond were fascinating because, essentially, there was no negotiation. Comcast opened by saying they would put Diamond’s R.S.N.s on a digital tier right away, and they didn’t move off of that. Comcast has become a much more difficult negotiator with these types of deals over the past few years. I wouldn’t want to be on Turner’s affiliate team next year. Nathanson: What about NBC? Do you think they really wanted the NBA? Or were they trying to bid it up for Warner Bros. Discovery? They’ve typically not chased deals like this. It goes against what we heard from people ahead of negotiations who believed Brian Roberts would bid on it until the end, and someone in corporate finance would show him a spreadsheet and then corporate finance would win. That’s the reputation, and Brian Roberts has a history of doing that, but I do know this: The people who were involved in the negotiations are thrilled to have it. And we shouldn’t overlook the whole Peacock aspect of this. They are trying to get year-round sports programming to make the streaming subscribers stickier after the NFL season ends. Robert Fishman: The NFL clearly is still the biggest driver in media. One interesting development is that even though their media rights are locked up through the decade, they have a change-of-control provision as part of the Paramount sale to Skydance. Could David Ellison renegotiate the CBS deal or give them concessions? Could the NFL, maybe, force CBS into a Netflix production deal, or something like that? I appear to be in the minority on this opinion, but I don’t see the NFL opening up the overall deal with CBS. Skydance already has a great relationship with the NFL. Of course, when the NFL has leverage, they always use it. And the NFL took note of the NBA deals and how much NBC and Amazon and Disney are paying for those rights. Nathanson: The NFL has been trying to sell NFL Media, NFL RedZone, NFL Network—that could be part of possibly reopening the rights with Skydance. They could make a deal where they get Skydance to manage these assets for them, right? That’s exactly the type of deal that could happen. By the way, it probably couldn’t have happened under Shari Redstone’s Paramount because that's not how CBS is set up. But with Skydance and Jeff Shell coming in, they want to build out sports. Fishman: You’ve also reported on ESPN potentially partnering to have these leagues become equity partners. Where are those conversations? Every few weeks, I get a call saying that ESPN and the NFL are close to a deal. And every few weeks I check and find out that they are still talking. I would think that if there was an NBA equity position to be had, that deal would have happened during this rights negotiation. Honestly, I expected something to happen by now, and I’m surprised that it hasn’t.

The Birth of Venu

What do you think of Venu’s price of $42.99 per month?Fishman: I thought it was a good opening price given the rights that they have. We still think that missing from Venu today is the CBS NFL package. From our reporting, we think that those conversations are ongoing and likely to happen before they actually launch. But without CBS NFL games, I think it will still be a very limited offering. I don’t think Venu needs CBS or NBC. They’re gonna market it in such a way that people can subscribe to Peacock and Paramount+ on their own and still cost less than, say, YouTube TV. Ultimately, I don’t see Venu as competition for people who already subscribe to the cable bundle. But Jimmy Pitaro does expect to gain subscribers, which is worth noting. ESPN is now in around 65 million homes. It continues to drop. This can be a way to at least get that line to flatten, or possibly go up… especially if you add in ESPN’s “flagship” as well. Nathanson: My fundamental challenge as a massive sports fan is that I need a bundle of sports apps. So if you give me a virtual M.V.P.D. that’s a bundle of sports apps, that’s a higher priority to me than getting ESPN’s flagship direct-to-consumer service. I have a hard time, fundamentally, with that flagship strategy because it’s not part of a bundle with other flagships. I never understood it because, yes, I need ESPN. But I need CBS, NBC, and Fox, too. We’re waiting for someone to slim down the bloated virtual bundle into a skinner virtual bundle. Don’t you think that’s what Venu is? Nathanson: Yes. And I would skip the whole flagship service. I’m not sure who needs ESPN+ only, or ESPN only, versus the bundle that has other sports.

From the Cheap Seats

On the NBC Sports campus in Stamford: “The next time you speak with Molly Solomon, please ask why the coverage is crap? Why do ads roll over live play? Have they addressed this? And why are her announcers in Stamford?” —An annoyed Varsity subscriberMore Olympics feedback (You hearing this, Hughes?...): “I’m not as ready to offer plaudits here. For instance, can we please (!) do without the incessant celeb sightings at swimming and gymnastics? All I see are V.I.P.s, possibly given free tickets, preventing others from earning entry. Then there are all of the other medalists (whether American or not) who don’t get mentioned during the primetime show. Are their achievements less worthy than those who are? And can someone please tell the gymnastics producers to drop the colored score icons they’ve been using for years? We can tell bigger numbers from smaller ones by sight, thanks. Those icons are as official as the Weather Channel naming winter storms like they’re hurricanes.” —An opinionated Varsity subscriber, via X The Snoop discourse: “Whichever NBC executive decided to hire Snoop Dogg to be the star of their Olympics coverage deserves a raise and a promotion. Inspired, and makes the coverage so much more fun. I would like it if they showed a wider variety of sports on linear channels, but Peacock is far better than it was for Tokyo or the last Winter Olympics and deserves credit for learning and evolving.” —A correct Varsity subscriber Pour one out for BDSSE: “Long live Best Damn Sports Show Ever! An innovative show that brought product placement and brand integrations into sports television.” —A former Fox Sports executive who used to sell ‘Best Damn.’

Back on Thursday, John

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