The Venu Legal Nightmare, Bezos-Celtics Chatter & the NFL’s Private Equity Play

Welcome back to The Varsity, my twice-weekly private email about the egos, deals, and personalities that define the sports media business. Thanks to everyone who sent attaboys and notes of encouragement regarding my new Marchand-free podcast, The Varsity, launching on August 28. Early episodes will feature long-form interviews with three of my favorite protégés: Peyton Manning, whom I taught how to call an audible; ESPN chairman Jimmy Pitaro, who still calls me for Bristol restaurant recommendations; and Cathy Engelbert, who has long been a devotee of my 1-2-2 half-court trap defense. It may be late August, but as Tim Walz says, we’ll sleep when we’re dead. I have a jam-packed issue tonight featuring NFL news, Beantown rumors, and Venu dish. Let’s jump right in… 🏈 At deadline: I noticed today that YouTube is making Sunday Ticket available via the Apple App Store, but was shocked by the price. Consumers who sign up through the YouTube app on their iPhone or iPad will pay $679.99 annually. If they want to bundle NFL Sunday Ticket with NFL RedZone, it will cost $739.99 annually. Those prices via YouTube TV are $379 and $419, respectively. I reached out to the NFL to see what was going on, and this was the league’s response: “The NFL does not control the pricing of Sunday Ticket and does not set or receive any additional fees associated with its sale.” Apple notoriously takes a 30 percent cut of anything sold in their store, which is the main reason these prices are so high. 🏈🏈 Also at deadline: I’m hearing rumblings that ESPN is going to resuscitate The Sports Reporters, the sports talk show that turned ink-stained wretches like Tony Kornheiser and Michael Wilbon into bona fide TV stars. ESPN had hoped to have an episode ready within the next few weeks, hosted by Jeremy Schaap and featuring NFL play-by-play announcers, like Joe Buck and Al Michaels. There’s a lot that’s still in the air with this—nothing has been confirmed. The show won’t have a regular daily or weekly time slot, I’m told. But it will be produced under The Sports Reporters banner for ESPN’s YouTube channel, with various segments made available via linear, digital, and social. Any plan that involves such a popular brand is certain to garner some positive press.

The Starting Five: Big Money Edition

Private equity push: Everyone knows that the NFL is on the cusp of allowing team owners to sell positions in their franchises to private equity companies—but now, at last, we have a commencement date. According to Sportico, owners are expected to vote on the proposal during a special meeting in Minneapolis on August 27, and “a handful of teams already have term sheets ready to execute should the rules allow… with others in the market discussing potential stakes with both individual and institutional backers.”Of course, most other leagues have already welcomed the influx of private equity with open arms, and enjoyed both the soaring valuations and the liquidity events. And, for private equity, pro sports are a perfect investment given their baked-in scarcity and annual recurring revenue channels. As it stands, the NBA, MLB, MLS and NWSL all allow teams to sell as much as 30 percent stakes to private equity companies, but the NFL is expected to vote on a proposal closer to 10 percent—though my sources expect that to grow to 30 percent within a couple of years. As usual, the NFL is taking a wait-and-see approach, but the money may be too good to pass up. And, don’t forget, there are plenty of owners who would enjoy the cash while maintaining control.
Beantown Bezos?: My ears perk up whenever Bill Simmons dishes on NBA rumors, especially when those rumors pertain to his beloved Boston Celtics. And today he delivered a doozy when he suggested on his pod that Jeff Bezos was in the mix to buy the C’s. “In the last few days, there’s been some legitimate buzz about Jeff Bezos buying the Celtics,” Simmons said. “And I think it’s real. I think he’s going to be one of the suitors.”This isn’t totally out of the blue. Just days after hoisting the Larry O’Brien Trophy, in June, the Celtics ownership group announced it was selling the team. Wyc Grousbeck, the controlling owner, said he was looking to sell “for estate and family planning considerations.” On today’s podcast, Simmons said that he thought the league wanted the team to sell for at least $6 billion, a similar number to what I’ve been hearing. Bezos, of course, has flirted with the idea of buying sports teams over the past couple of years, and kicked the tires on the Washington Commanders before that team sold to Josh Harris for slightly more than $6 billion. Perhaps Bezos heard about Steve Ballmer’s new $2 billion Intuit Dome for the L.A. Clippers and he decided he wants one, too. “Is the play for him some sort of Amazon Stadium?” Simmons speculated. “Is the ultimate play for this to build some sort of state-of-the-art stadium that’s never been done before for concerts and for basketball?”
On NBC’s Cable-pocalypse at the Olympics: Last week, after I reported on NBCU’s declining Olympics cable viewership, one subscriber reached out with an interesting observation. This person noted that NBCU had an extra cable channel back in 2021, NBCSN, which might have explained why the Olympics viewership dipped so much—ahem, 33 billion minutes— this year from the previous Games.I pointed out, however, that the NBCSN viewership probably showed up this year within the broadcast and Peacock numbers. Anyway, the back and forth led my pen pal to this smart observation: “It strikes me how eerily similar the parallel is between the rise of cable in the ’70s/early ’80s, and the rise of streaming now,” he wrote. “The promises are the same, the risk to the incumbent is the same, etcetera. You already see streaming going down some of the same pathways as cable did—initially, it was subscription only, now they’re charging for ads, for example.”
Bronfman’s Paramount fantasy: If Edgar Bronfman Jr. actually submits an official last-minute bid for Paramount, upsetting the Ellison/Skydance apple cart, it will be—at the very least—a long shot. My partner Bill Cohan, author of Puck’s Dry Powder private email, explained it this way: “I have no doubt that Bronfman would like to get his hands on Paramount, whether by buying NAI, the Redstone family holding company, or buying both NAI and Paramount Global (or a big chunk of it), but I don’t really see what Bronfman can do to get the special committee of the Paramount Global board of directors to change its recommendation by next week, or to extend the go-shop period, unless Shari Redstone is supporting the Bronfman incursion, which I doubt she is. By the way, I thought Bronfman had shown up to the party with Bain Capital as his money source. What happened to that?”
R.I.P. Breakfast at Wimbledon: Sports business veteran Bob Basche, the former NBC executive who coined the marketing pitch “Breakfast at Wimbledon,” died earlier this month at the age of 80. Terry Lefton wrote a good obit for SBJ today, reflecting on his long and impactful career.My favorite Basche story involved the 1979 Wimbledon final. Until that point, the network had carried the final match on tape delay, six hours later. (With no internet in those days, sports fans were in much less danger of spoiler alerts.) Basche’s boss, Don Ohlmeyer, convinced NBC honchos to carry the final live, which is when Basche coined “Breakfast at Wimbledon” to convince viewers to tune in. One problem: Ohlmeyer wanted to start coverage right at 9 a.m. with an establishing shot of the two players, Björn Borg and Roscoe Tanner, walking onto the court. But the All England Club wanted them on the court earlier, so that the first serve could occur at 9 a.m. As Basche later told me, he and Ohlmeyer convinced Tanner’s agent, Donald Dell, to have his player stall in the locker room. NBC carried his walk onto the court live.

He’s Just Not That Into Venu

Unscrambling the legal quagmire over the service formerly known as Spulu.

JOHN OURAND

Venu has become one of those products, like New Coke or Quibi, that has been tortured and haunted almost from birth. Back in February, the arrival of this three-headed, strange bedfellow sports streamer mini-colossus seemed almost perfectly designed to frustrate the industry, confuse consumers, and stupefy the broader media.On the one hand, Fox and Disney and WBD deserved credit for trying to disrupt themselves, similar to the effort taken years earlier by Disney, Fox, and Comcast to stand up Hulu—a history which explains Venu’s ever-so-catchy Spulu nickname. And yet here were these large legacy mediacos, all of which had very different market caps and strategic interests. Disney seemed likely to use Venu as an R&D lab for its ESPN flagship streaming service planned for next fall. Fox, once the smallest of the three companies, presumably saw it as another way to monetize its NFL rights. Warner Bros. Discovery was along for the ride. In the end, the project may have caused more harm than good. For consumers, Venu promised to be expensive at $42.99 per month—although still priced too low to be profitable, at least until a series of planned price hikes were to kick in. As I have previously reported, top NFL execs were caught off guard by the announcement. Also, Comcast executives’ fury over being blindsided by the deal provided one of the motivations in their decision to bid $2.5 billion per year for NBA rights—a decision that will end TNT’s 40-year broadcast relationship with the league after next season. Meanwhile, smaller distributors were aghast that the big guys would partner on a skinny bundle that they would never allow any distributor to create on their own. FuboTV’s decision to file for an injunction threatened a coup de grâce. And then, of course, came the mother lode: On Friday, U.S. District Judge Margaret M. Garnett granted Fubo’s preliminary injunction, which will prevent Venu from launching on August 23rd. It was a head-spinning decision, and perhaps the only person who saw it coming was my partner Eriq Gardner. Anyway, not only is Venu cooked for this NFL season, but it might not be viable next September. The joint venture’s future will hinge on a laborious appellate process. Unless appellate judges agree to expedite a review, or unless Fox and Disney and WBD reach a settlement with Fubo, expect these proceedings to become a protracted affair. In the meantime, Disney, Fox, and Warner Bros. Discovery will have to negotiate with distributors who remain supremely pissed but are also newly emboldened over Garnett’s decision. All throughout the Spulu journey, distribution executives have remained aggrieved about the prospect of this skinny sports bundle. Notably, I received emailed comments from DirecTV and the American Cable Association after the Friday afternoon ruling, well before I saw anything from Fubo or Venu. DirecTV, for its part, applauded the Venu ruling, pointing to “the potential harms of allowing major programmers to license their content to an affiliated distributor on more favorable terms than they license their content to third parties.”

Deal Time

With Venu up in the air, pretty much all of WBD, Disney, and Fox’s dealings with distributors will take on a new flavor. I’ve already spilled a lot of ink on WBD’s forthcoming negotiations with Comcast. The company’s legacy Discovery and Scripps channels are up with Comcast at the end of this year, and its Turner channels—minus the NBA—are up at the end of next year. But another, less discussed future renewal is Disney’s deal with DirecTV.Disney and DirecTV signed a five-year deal back in September 2019 following a heated negotiation that featured Disney channels running crawls that warned DirecTV subscribers that they could be going dark. (They never did.) This deal is up in a few weeks. Last year, around this time, Disney channels went dark on Charter’s Spectrum systems over a carriage dispute. They eventually worked out a deal that saw Spectrum drop several little-watched Disney channels, like Disney XD, FXX and NatGeo Wild. Will DirecTV also be out for revenge this time around? After all, Charter, DirecTV, Comcast and others would love the flexibility to offer the same kind of sports-only skinny bundle that Venu had planned. But they also recognize that scenario—a skinny bundle for sports, say, or another for entertainment or another for kids or another for lifestyle content—represents a pipe dream. Disney isn’t going to cut a deal for ESPN’s channels without also requiring a distributor to take other Disney channels. The same dilemma applies for Fox and FS1 and Fox News. Plus, the powerful National Association of Broadcasters lobby would ensure that politicians opposed this plan. Indeed, distribution executives have long maintained that the cable-pocalypse has descended so quickly because they are unable to innovate away from the bloated packages that they have offered for the last quarter-century. In reality, it would take an act of Congress to make this change. “No matter what happens in the Venu case, we are still required to have broadcast basic buy through,” one distribution executive said, pointing to federal laws that mandate that distributors have to sell a package with expensive broadcast networks before they start to sell any other channels. Given the high cost of broadcast channels, that’s the main reason why bundles have remained so bloated. “That's what inflates the price of the bundle,” the executive continued. Alas, the great irony of all this is that cable was such a great business model that the industry essentially wound itself into knots and has since largely prevented its biggest companies from disrupting themselves. Cord-cutting may be increasing, but those bundles aren’t going away, and the fate of Venu suggests that Disney, WBD, Fox and others have to be increasingly creative regarding how to make the bleeding stop.

From the Cheap Seats

On Eriq Gardner’s spot-on reporting from the Venu trial: “I have to admit that your guy was the only one who saw it coming. Stunning. I thought he was nuts.” —A broadcast executiveOn my report about NBC logging more Olympic viewer minutes than its cable channels: “Despite people predicting the death of broadcast TV, it will be increasingly prominent and important for sports.” —Another broadcast executive On the college sports upheaval: “Hope you’re going to be covering the insanity of the college conference shuffle in the coming weeks. How does UCLA’s cross country team go to Rutgers? Will UCF’s golf team go to Utah for a three-day collegiate? (I have no idea whether these schools have those sports, but you get the gist.) Is the money around consolidation enough to make up for the expenses? Will teams get shut down? What’s the long term prognosis, because Stanford in the ACC is dumb, right?” —A Varsity subscriber who is on his last nerve Great questions for another day. See you Thursday, John

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Bronfman’s Overture

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The Biden-ing of Trump

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JOHN HEILEMANN

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Trump is bringing familiar faces back into the fold.

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