Welcome back to The Varsity, my twice-weekly private email on all the money, power, and influence sloshing around the sports media business. I spent the long weekend on one of the smoky mountains somewhere in Great Smoky Mountains National Park, in a cabin with no electricity, no running water, no cell service, no Wi-Fi, and no Marchand.

Thanks for all the kind words on last week’s launch of Puck’s sports podcast, The Varsity. We’ve had a rollicking start, featuring provocative, in-depth conversations with fledgling media mogul Peyton Manning and ESPN chairman Jimmy Pitaro. This weekend, WNBA commish Cathy Engelbert will make her Varsity debut. Tomorrow morning, Jon Kelly, who John Heilemann recently described as “Puck’s editorial Boban Marjanović,” and I preview the NFL season media subplots and try to resolve the DirecTV-Disney battle.

Let’s get to it…

1. Amazon on year three: While streamers have deeper pockets and younger audiences than their linear TV counterparts, they can’t compete on domestic reach—at least not yet. That’s why I’m intrigued by the third season of Amazon Prime’s Thursday Night Football, which kicks off September 12, and may provide something of an inflection point. Last year, Amazon posted a 24 percent year-over-year viewership increase. It will be hard to keep up with that pace, especially in an election year, when otherwise indomitable NFL ratings tend to soften. And the election is likely to compete for mindshare with the older audiences that TNF has struggled to land in its first two seasons.

   The good news: Amazon Prime appears to be following the same trajectory with NFL ratings as it did with the Premier League and Champions League in Europe, both of which continued to grow steadily across demographics in year three. Also, their schedule opens with three coveted intra-division games: Bills-Dolphins, Pats-Jets, and Cowboys-Giants.

2. Pitaro on McAfee: Before Pat McAfee’s epic meltdown in Bristol last week, when he castigated a roomful of reporters (including me!) about his portrayal in the press, I asked chairman Jimmy Pitaro about what he’s learned from ESPN’s deal with the mouthy former Colts punter. In a unique arrangement, ESPN licenses McAfee’s show and allows him to stream it live on YouTube. Pitaro’s answer, from The Varsity podcast on Sunday, cited internal research suggesting that McAfee resonates with younger viewers. “Pat is really helping the broader ESPN brand with younger people,” Pitaro said.

   That fits with one of ESPN’s priorities, which is to expand its audience by “attracting and speaking to the younger demographic,” Pitaro told me. The YouTube audience “is a big part of our strategy,” Pitaro explained. “I totally understand why the focus is on the linear side. But for Pat’s show, you have to look holistically. … When we look at the value that Pat is bringing to ESPN, it has to be looked at through a multiplatform lens.”

   Pitaro also noted that McAfee’s deal could become a template for other ESPN talent. “We have to get away from this idea that we are going to value ourselves or our success based on linear ratings,” he said. “It is a piece of the puzzle, and it’s important—and it will continue to be important—but it's just one piece. We will judge ourselves based on the totality of people that are accessing ESPN across various platforms. I do think that what we're doing with The Pat McAfee Show could apply to other programs.”

3. ESPN bullish on A.I.: During ESPN’s media day last week, Pitaro made an interesting comment about how he thinks the sports giant will evolve over the next decade. “A.I. is not the awful, terrible disruptor that many people think it will be,” he said, pointing to A.I.’s “ability to clip and generate highlights at scale” as one example. “I’m not talking about NFL highlights, I’m talking about highlights from Ivy League lacrosse,” he said. “All this content that we have, all these live games that we have on ESPN+, you get to a point where hiring more people to cut highlights is not efficient.”

   Pitaro mentioned closed captioning and personalized SportsCenter experiences as other areas where ESPN plans to deploy A.I. “A.I. will help significantly … not just in terms of personalization and clip generation, but also the narration,” he said. “We saw this coming out of the Olympics in terms of what NBC was able to generate, which I thought was quite good.”

   As far as text-to-speech, Pitaro said: “Having the ability to just click play and hear the narration of a long-form investigative story is incredibly valuable to me as a commuter,” he said. “We see A.I. as nothing but positive for the sports fan and the business.”

4. ManningCast: The Musical: My social feeds blew up today with people enamored with Omaha Productions’ annual schedule-release video, which features more than 40 cameos, including Roger Goodell, Snoop Dogg, and the Backstreet Boys. This marked the third year in a row for this promotion—last year’s video featured bold-faced names auditioning for the show, and the ’22 edition was an Emily in Paris parody. I rang up Omaha to see how this year’s star-studded effort, which includes a Bob Iger cameo, came about.

   Omaha started production at the Pro Bowl in February, getting a dozen players and coaches on camera. In July, the skit’s lead producers—Jamie Horowitz and Therese Andrews—shared a rough cut with Iger and Pitaro. After seeing the video, Iger agreed to appear in it, and Horowitz and Andrews filmed him at his Burbank office in August.

5. The Max sports surcharge: Lucas Shaw had an interesting nugget in his Screentime newsletter last night: Later this month, Warner Bros. Discovery will start charging Max subscribers who want to stream sports an extra $10 per month. That was always the plan behind adding MLB, NHL, and (for now…) NBA games to Max. But WBD waived that fee when it launched a sports tier last fall. Nobody has heard much about that fee in the ensuing months, and Lucas reported that “negotiating for the rights with all of its partners has been a challenge.”

   The timing is interesting if WBD adds the fee this month. Of course, MLB playoffs are right around the corner, as is the start of the NHL and NBA seasons. But WBD is also about to enter negotiations with Comcast for its legacy Discovery and Scripps networks. (As I’ve reported before, the Turner network deals with Comcast are up next year.) And, as we’ve seen with DirecTV, distributors are loaded for bear as the Venu partners’ affiliate contracts come up for renewal. It’s entirely possible that WBD is making this move with one eye on the distribution deals that it has to cut in the next few months.

For leagues and network executives, the hardest of hard feelings have at least somewhat dissipated over the past seven months, and they’ve largely made peace with the prospect of the service. But for distribution executives, the late-winter announcement engendered a level of fury I have rarely seen in my many years covering the business of sports. Even now, as Venu’s future teeters in the face of an antitrust challenge from FuboTV, distribution executives remain unequivocally irate.

For these distributors, it’s not simply that Disney, Fox, and WBD were attempting to launch a multichannel video service that would existentially challenge their own businesses. It’s that those companies decided to create the kind of sports-focused skinny bundle that cable and satellite companies have been requesting—and fantasizing about—for at least a decade.

Given the ongoing implosion of pay TV, DirecTV execs felt the best—maybe only—way to slow down the cord-cutting phenomenon would be to make smaller, less expensive bundles available to their subscribers. But DirecTV isn’t simply irritated by the lack of flexibility afforded them by the content providers to create these cheaper packages. Executives are particularly furious about some of the internal comments, which came to light during the trial, that Venu partners made about their subscriber ambitions—namely, that they saw an “ocean of opportunity” for a service that carried these lower-cost skinny bundles. These comments contradicted their public positions that Venu would only target “casual” sports fans and thus didn’t pose an existential threat to distributors.

While DirecTV’s grievances might be legitimate, the satellite distributor’s public negotiating strategy with Disney has also started to raise eyebrows. In its Sunday night release, the company griped about how “Disney demanded that to reach a deal, we must waive all future legal claims that its behavior is anti-competitive.” Today, the company held an investor call, even though it is not publicly traded. (TPG, an investor in DirecTV, is also an investor in Puck.) There’s also been some speculation that DirecTV is trying to make as much noise as possible in order to shame Disney during the week leading up to the NFL season.

Could DirecTV be emitting messages to the legal system, too, about what the company perceives as the unfairness of being forced to carry the Disney bundle? That’s a distinct possibility, according to several of my sources. Nevertheless, the consensus among my sources is that, bat signal or not, a deal will be cut within the next 10 days. After all, it will be too hard for DirecTV to live without ESPN during football season.

Nevertheless, DirecTV’s cri de coeur underscores the harsh reality that Disney holds most of the leverage in this fight. Recall that, in a dispute last year, Charter only managed to last 10 days without ESPN and Monday Night Football before reaching a deal with Disney. The NFL regular season, of course, kicks off in two days, and the Week 1 Monday Night Football game features teams from the New York and Bay Area markets. Then there’s more college football on the horizon, plus the MLB playoffs, NBA season openers, and more NFL. In short, ESPN has popular programming throughout the fall and, ergo, pricing power.

In any case, a very blunt MoffettNathanson report, published this morning, reiterated the powder keg moment of it all. After years of the two sides politely getting pissed at one another during carriage renegotiations, Venu has introduced an era of ill will that may sink cable bundles faster than many experts predicted. “Not only is it likely that Venu will never see the light of day,” the report read, “it’s possible that Venu’s ham-fisted go-to-market strategy has started the ball rolling toward the complete collapse of the pay TV model as we know it.”

On the Disney/DirecTV negotiations over Labor Day weekend: “It might not be New Year’s, but it is a three-day holiday weekend, which is way more painful for everyone!” —A former Fox Sports executive

On my Labor Day weekend in the Smoky Mountains: “Go check out a Tennessee game while you are in the Smokies. It won’t be a power matchup (Chattanooga), but football time in Tennessee is something to witness. Your first pod guest would agree with me!” —A financial executive

[Ed. note: No electricity and no Wi-Fi for me this weekend, but somehow everyone on the mountain knew about the Vols’ 69-3 win over Chattanooga.]

On my Puck-branded thesaurus: “I can’t tell if ‘defenestrated’ is a Puck in-joke or house style, but it’s the WORST only-in-journalism word. It makes my teeth hurt. Please stop. Otherwise, A+ column!” —A soon-to-be-defenestrated Varsity subscriber