[CNBC]TKOの成長と未来を語る—WWEとUFCの合併戦略とスポーツメディアの行方

"You guys are fresh off
earnings. Tell me what stood out to you this quarter and
sort of what's driving the growth of your company? Well,
I'll tell you, it starts with the fact that we're roughly a
year, just a year, from the formation of TKO, WWE and UFC
coming together, and a lot of doubts about how that was
going to work. But our strategic execution
and the integration has allowed us to financially
outperform our original forecast. And at the same
time, with our announcement last week, we've now
initiated a robust capital return program, including a
quarterly dividend. And at the same time been
able to acquire three super strategic, pure play sports
assets. So we feel like we're in a
good place. Our third quarter, keep in
mind this is the second time now in just a year, that
we've raised guidance on both top line revenue and adjusted
EBITDA. And with the third quarter
performance, we are guiding now to the upper-end of that
third quarter. So, sports events are hot,
sports experiences are hot, sports premium content is
hot, and we're sitting dead center. All right, definitely want to talk about
the hotness element of that. We'll get to that in a
second. Let's talk about the deal you referenced first. So like you said, three
different businesses going from endeavor to TKO, a
hospitality business, PBR, a sports league, and then a
media rights consultancy business in IMG. What does that say to you
about the future of TKO? Because at least from a
layman's perspective. TKO, oh, that's a fighting
company, but clearly it's more than that. Yes, and it was always
intended to be more than that. TKO just reflects that the
combat sports nature of UFC and of course the scripted
WWE. But look, we are building the
moat. That's what we're doing here. We are piling up, if you
will, assets that will fuel our growth. Very consistent
with what we've been saying on earnings, which is we're
looking for sports leagues out there, few and far between. I wish I got in on NWSL or
something in the women's space, and maybe that's to
come one day. But we're looking for sports
leagues and PBR provides that. That's analogous to what we
do, right? It's the whole sports
ecosystem, revenue generating areas, from live events, to
media rights, to consumer products, to site fees, that
are right in our wheelhouse. It's what we do every day. And PBR is a proven
commodity, and we know it well because of our days at
Endeavor. The other two assets, I mean, IMG is a
stalwart. I mean, it's a legendary
asset. It's been around since Mark
McCormack started it in 1960. And we're newsflash at 11,
we're in the sports rights business. We will use IMG
globally to help us get the kind of increases we expect
to get for both UFC, WWE and soon to be, PBR. And then finally on location
by far, it's not even close, the market leader in sports
experiences and hospitality, everything from the Super
Bowl to the Olympics to now FIFA's World Cup. So having that company come
into the ecosystem, which, by the way, already supports WWE
and UFC in a big way, all that's going to do is
accelerate, fuel, and strengthen the growth of TKO. Well, let's talk about the
league ownership one, because what is the art of the
possible in terms of league ownership? In other words, do
you think you could buy into the PGA? Do you think you could buy
into tennis? Are those things you've
started to look at? No, I'll tell you. Look, we're
not we're not looking at tennis, and LIV's got enough
problems trying to buy into the PGA tour, so we're not
going there. The fact is, there aren't a
lot of sports leagues out there, so we won't be looking
at acquiring anything because we don't see anything coming
on the horizon. PBR was there, most folks
questioned why it wasn't in TKO at the start. That's another story related
to Vince McMahon, but anything we do from an ownership
perspective, or a new league perspective going forward
will probably be organic. I mean, boxing is something
that Dana White has consistently brought up. We're not going to go buy or
acquire any kind of boxing agencies, or boxing
federations, if you will. But could we organically
start something and or bring on a partner that fuels that,
that financially fuels that. So we take no risk? That's something we're really
attracted to. What is the Vince McMahon PBR
story? Just Vince didn't want to
start TKO with anything more than two sports. He saw these
two as juggernauts. He's right about that and he
just didn't want to confuse the message. He was on board
with PBR long term, but from the get-go he wanted just the
two. And frankly, you know, it's a
compromise. You're putting a deal
together. You're bringing two assets together. We had to do some things that
Vince wanted, and Vince had to take some things that Dana
White, Ari Emanuel, and myself wanted. Since we're talking about
Vince, one question about Vince, he's not a part of the
company anymore. He's he's sold out. Do you still hear from him at
all? I had breakfast with him a few
weeks ago, just to check in. Been a long time. Haven't heard from him at
all. Obviously, the series on
Netflix came out. I wanted to see kind of where
he was, by the way, he couldn't have been more
cooperative. He couldn't have been, he
couldn't have been nicer. I mean, he was a total pro at
breakfast, if you will. It's a one-on-one get
together. But he's out of the business
entirely. He doesn't make decisions,
he's not on the board, he doesn't opine, we don't
consult him. He's got some litigation that
he's working through, and frankly, he wants the privacy
and the time to work through it, which is great because in
the meantime, we're going to keep building TKO and WWE and
expanding the horizon, expanding the opportunities. And by the way, he's still a
shareholder, not the shareholder he once was, but
he's still a shareholder. But he's supportive of the
direction WWE is going in and has gone. Couldn't have been, couldn't
have been more positive, but I wasn't asking for his
opinion. Let's talk about some of the
WWE aspects, which are exciting. The big one being,
you guys announced a little while ago, there's a Netflix
media rights deal that's coming up, starts at the
beginning of 2025. Do you feel like this is the
start of something transformative in the
industry? In other words, that the big
tech companies YouTube, Apple, Amazon, Netflix, will become
the dominant players in owning sports rights. Look content is strong. Everybody loves to write
about the demise or the squeezing of the content
spend. The fact of the matter is,
between the six biggest spenders, globally, $126
billion in content will have been spent in 2024, which is
up 300 basis points from last year and expected to grow
another 9% next year. So, content spend from the
Netflix, and the Amazons, and the Disney's, and the Warner
Brothers, and the Googles, it's hot, right? It's meaningful, and Sports
rights is driving a lot of that right now. That's what's
more amazing than anything else. Sports used to be, 'oh,
by the way, oh, something on the weekend'. Now it's
leading the way. Sure, there are a lot of
scripted series. Sure, there are a lot of
docs, and features and films that are out there. Sure, the
movie business is coming back, and folks are investing in
all kinds of different windows, but sports rights is
leading the way. Whether it's the NFL, the
CFP, our WWE deal on Netflix. Content spend in sports is
strong and healthy, and yes, I believe you will see more
players, new players, looking to expand their content
portfolio when it comes to sports. For like 30 years, people have
talked about this idea of is, are we in a sports bubble? That has not proven to be the
case. As you said, if anything, we
appear to be hotter now, than ever before, in terms of
sports associated interest, media rights. But let me give
you a scenario and I want to hear your thoughts on it. We also talked about peak TV
maybe five years ago, and that has borne out that five years
ago, when all the streaming services jumped in, a ton of
shows were made, and now we're in the post-peak TV era where
you're seeing a pullback. Is it possible, that the
reason sports are so hot right now is you have new streaming
players that want subscribers, and an old legacy media
industry that's dying, and holding on to sports for dear
life. And these two factors that
have married to each other right now have led to a
number of different bidders that absolutely want and need
sports, and that five years from now, after we see
consolidation within the media rights,  the further death of
cable TV. We have fewer buyers, and
this dynamic doesn't exist anymore, and the demand for
sports rights actually comes down. I love it. How many different
ways can we try to write the story that the sports bubble
is going to burst? Here's the way I look at it. Sports rights are always hot
in some form. The temperature is up there. Let's just be clear about
that. Sometimes, it's really super
hot. And if you catch it in that
wave, in that moment, in that frame, you're going to fully
capitalize on getting the kind of increases you're looking
for as a content rights owner. Sometimes it's just warm, so
you'll get an increase, but it may not be record breaking,
but it's always going to be in demand because sports unify
us. That's what it does. Sports
is argument. There's history, there's
equity, there's tradition, there's folklore, there's
stars, there's personalities, there's rivalries, there's
rooting interests. Name your sport. You've got it. I walked into
the office today to I don't even know, 400 foot blow up
dolls of Mike Tyson and Jake Paul. Right outside the windows area. You got it. I mean, and by the
way, hundreds of people standing in front of them
taking pictures, I'm texting Bela Bajaria in Netflix. Like, you nailed this
activation, you got the weather, right. You got the big, earned media
moment. And there's there's going to
be two sides of that fence. Who's cheering for Paul, and
who's cheering for Tyson? And there's a curiosity
factor. And that also plays in
sports, that's going to continue globally. Look at
soccer, soccer didn't even exist when I was running
ESPN. I mean, come on, it was MLS,
and there was a World Cup every four years that we were
interested if the U.S. did well. Now Women's soccer
has two leagues globally. MLS has grown so much under
Don Garber and the fantastic job he's done, The World Cup,
The Euro Cup, has been a super communal event. And then of course NFL still
going strong, college football going stronger than ever with
a 12 team CFP. And then UFC's now become a
mainstream. WWE has carved out its own
niche. The World Series is coming
off the best ratings since 2017. This isn't slowing
down, it's just a question of catching it as a content
rights owner when it's peaking, because it will have
some dips. You mentioned ESPN that you
used to work there. They are about to launch a
full on direct-to-consumer product for the first time,
likely in August of 2025. Is that the right strategy
for them and will it work 100%? I'm so glad they got out of
the venue business, whatever that was going to be. Look. Are they out of it? I mean,
they're at least temporarily out of it. Yeah, the judge has put them on the
sideline, but I think it's going to be tough for that to
be resurrected. And I didn't agree with the
strategy in the first place. Having said that, this is
absolutely the way to go. And I love the way Jimmy
Pitaro has been positioning it. All kinds of bells, and
whistles, and sports betting, will be integrated and
e-commerce will be integrated. Keep in mind, they have to do
a mirror of what the linear ESPN is. If they didn't have
to do a mirror, I think they'd be off to the races. If it
was just direct-to-consumer in a different way than ESPN+
was, meaning they could program it differently than
ESPN, I think they'd be off to the races. Really, what you
have here is a mirror, so they've got to find bells and
whistles, extra feeds, extra camera looks, the sports
betting as we talked about, more personalization, more
customization, more fantasy. So you feel like I am really
getting something different here, even if the programing
mirrors ESPN. But I'm getting a
personalized experience and that's why I'm going to pay
for it. And I'll tell you, as someone
that delivers content to their pipe in the name of the UFC,
that's something that's attractive to us. And they have to do a mirror
because of the existing contracts they have with TV
distributors. Yeah. Last year, I reported
that the WWE was interested potentially in
sports betting and having people bet on matches which
are scripted. Haven't heard much about it. Not happening. It's not happening. We're not
doing that. We're scripted. We're look,
years ago, I ran Dick Clark Productions. We had enough
time, enough challenge keeping the American Music Awards in
the Golden Globe winners under wraps. Exactly, with an
auditor that was there. We're not going to be asking
Triple H, Paul Levesque, who runs our creative, to keep
his scripts, you know, so under wrapped that we can
start sports betting. It just doesn't jive. We'll do it with the UFC. We are doing it with the UFC,
and it's really growing. And keep in mind, it really
lends itself to sports betting. Think about UFC long
card, multiple fights, multiple rounds, submissions,
grappling, the way someone's taken down, the way somebody
knocked out, so many props you can bet on. And and the
youth, young men specifically, love it. You have a UFC media rights
deal that expires next year. Can you update us on sort of
the state of talks there? I think it's going to be a
busy first quarter. To your point earlier, we've
got the PLEs, the Premium Live Events, for WWE. Our deal with Peacock ends
during the next year. And of course, our UFC deal
with Disney and ESPN ends at the end of next year. So
we'll be negotiating on all fronts, if you will. Ari and
I will have a pretty big first quarter as we go around the
merry-go-round, if you will, to talk to the different
players who are were interested in potentially
splitting the packages. We've got linear, we've got
digital, we've got pay-per-view. I mean, there's
there's a lot of options here. We're going to explore all of
them. But let's be clear, we have
an exclusive window with Comcast, on the plan for WWE. And we have an exclusive
window with Disney, ESPN, on UFC. And we intend to honor
that. And frankly, there are two
fantastic partners who are very passionate about these
two sports, their sports and entertainment leagues and
committed to growing them. You mentioned the hotness
factor. We talked about it briefly
there, about how this sort of idea of a sports bubble is
continuous. It never really pans out. Is there a particular aspect
of investing in sports business? This goes beyond
even media. Because you're not just
investing in media properties. That is maybe, uh,
specifically undervalued today that you're looking at. Nothing specifically. Look, we keep our eyes out on
what's hot? What's next? What's trending? Right. Our eyes are always on
the rear view mirror, right? Who's close to us? Who's catching up to us? What can we do to separate
ourselves? So, innovation, extremely
important to us. What I can tell you from an
acquisition standpoint, we have our portfolio. We're committed to what we
have. We have a lot of work in
front of us. Remember, we still have to
finish up on the integration of TKO itself, right? We message to the street that
we would do 100 million in net cost synergies. I'm proud to
say we're ahead of that curve. We're continuing to find ways
on the top, and bottom line, to save money, and generate
new revenue. That's a good story for us,
but we're not done. And now all of a sudden,
you're bringing in three new assets IMG, PBR, on location. We need to focus on reaping
the rewards with these three assets. Educating the street
on the promise and the story. Delivering on the returns,
increasing our margins. We're laser focused as a
company. At the same time, we'll look
for new areas, whether it's cricket, or it's boxing, or
it's women's sports, or what might be hot or next, that
might be able to have some kind of association with TKO. As you think internationally,
look, we've seen WWE matches in China. UFC is all over the
globe at this point. How important is geopolitics
when it comes to your international strategy? Well, significantly important. I mean look we're out there. IMG, for example, sells the
UFC rights around the globe, everywhere from Australia to
Vietnam. I mean, door to door, country
to country. We have fortunately IMG in 35
different countries, and they manage or sell the rights to
almost 160 different sports properties. So it gives us a
great view. And we have personal
relationships in these regions. We're able to really
see around the corner, right? See in front of where things
are going, how they're trending, what's maybe fading
a little bit. What seems to be on the rise? That's huge. When you're
negotiating sports rights. That's huge when you're
negotiating with different players who financially are
all in different states, right? Streamers kind of on
the way up. Big investment, linear, being
challenged, trying to figure out how to pivot their
business model. So I would tell you that
whatever happens, whether it's the Mideast, or it's Ukraine,
or it's China, Taiwan, our eyes are on this all the
time. And frankly, when Russia
first invaded Ukraine, that posed problems for the UFC. What were we going to do with
our sports betting partners? What were we going to do with our media feed? What were we going to do with
our athletes who are having a tough time getting out of
wherever they were in the corner of the Earth to be
able to get into The Octagon or travel on a plane. So we get impacted all the
way around. Comcast just announced it's
contemplating spinning off its cable networks. Yeah. What A, what do you
think of that? And B, what does that tell
you about where we're headed from a media standpoint? Look, I think everybody's
being pretty candid and articulate about the good and
bad assets that they, that they have, right? Now
remember, these are all, still even some of these cable
networks that you and I may not watch every day, they're
still cash flow cows, similar, by the way, to TKL, which is
a— Reason why these media
companies have held on to them I would say. Exactly. Tough to let them go. But
remember, Disney went down this road as well. And decided to pull back. Exactly. Or temporarily pull back. We'll see how that plays out. And I think that's what
you're finding across the board. I like the fact that
Cavanagh, Mike Cavanagh, introduced it, at Comcast as
a potential path. And now they're going to sit
back. Fortunately they can. They're in the driver's seat. There's no gun to their head. They're doing well still on
audience. They're doing well with their
video providers, and they're doing well with cash flow,
that they're not forced to make a sale. But if there's
something that makes sense, or there's some kind of
aggregation that could happen that they could feed into,
it's another platform. It's another tier, it's
another option for viewers, and it cleans up their story. Okay, do me a favor. Prediction time, five years
from now, who's still around among the big media guys? I think the big guys are all
around. They're all still hanging
around the hoop and— You say big guys. Or leading the way. Disney, Amazon, Netflix,
Google, Warner Brothers, Comcast, Paramount, CBS is
there too. And maybe there's a Warner
Brothers play. Who knows what happens,
right? There's all kinds of
different scenarios out there. And I would never bet against
John Malone. Let's say that. But I mean YouTube's earnings
insane, quarter-to-quarter. These guys are doing 12.5
billion of advertising every quarter. That's a head
spinner. Netflix spending $17 billion
in content. Not afraid to spend more for
the right thing. Tiptoeing in sports with the
NFL Christmas games. Viewership engagement, off
the charts. Amazon, hey, one stop shop,
I'm going to the marketplace, I'm going to shop, and I'm
also going to take in some content and a real player now
in sports. And by the way, doing it
very, very well. And you can never bet against
Disney. I mean for me, the best, most
prolific brand in all of content. So I think they'll
all be around, but they'll definitely look for ways to
shed some archaic assets. Just one thing, because you
probably have more insight into Netflix in terms of
their, uh, future sports plans than most, considering you
guys struck this sort of landmark deal with them. What did they tell you? What is their grand plan? Are they using you as a
guinea pig for a broader world takeover? I think they've already taken
the world over. I mean, they're almost at
300. Sports? Yes, they're almost at 300
million subscribers. You know, they make very few
mistakes. Across the board, from
rom-coms to games, to scripted fare, dramatic scripted fare,
to docs. You know, they are just a
great place to go sample. And they have the the
greatest, broadest, fullest offering. And their play to
us, was we want something that's episodic. Now it's sports, but it's
quasi sports, and it's going to be every week, and we're
going to bring in the marketing powerhouse that we
are, to the table, to back this up. And we're going to
use you as an AVOD player for us. Think about that. Advertising is so important
to the growth of Netflix, and we're going to see how they
do with live events. The Tyson Paul fight will
tell us a lot. How many folks come to the
table to watch that? How many folks sign up for
Netflix or claim that they stayed with Netflix because
of that. The NFL games will also tell
us something on Christmas Day, and then right following
that, will be the January 6th premiere of Raw on Netflix,
and then week-to-week, they're going to drive that. Now in
the first year, they're not going to be ready to
personalize their advertising. So no dynamic advertising if
you will. They don't have that tool in effect. And we knew that when we
signed up, they'll have it for a year or two. But they will
have advertising that they'll kind of manually put in as
the old days. And it's filled up. I can tell you that. Is it possible that they're a
UFC partner? I think absolutely. They'll be at the table on UFC. I mean, they get the UFC,
they're fans of the UFC, they've been to the UFC,
their kids watch UFC, and they're looking for those
leagues, those brands, those kind of power sports content
factories that can go global. And UFC is very much a global brand."