John Skipper

The UFC’s media rights had a somewhat long and surprising journey to May’s contract with ESPN, with limited initial bidders thanks to the hike they reportedly wanted (from $116 million to $400 or $450 million), WWE’s also-expiring contracts, and uncertainty over the AT&T-Time Warner deal. Fox held the UFC TV rights heading into this, and had some interest in retaining them, but offered only a small increase while focusing on a WWE deal, and numerous other bids either didn’t materialize or didn’t come in at the level the UFC wanted.

In the end, the UFC struck a streaming deal with ESPN for $150 million annually in early May and then sold them the other half of the package for another $150 million annually a couple of weeks later. John Ourand has a deep dive into how the UFC and WWE TV deals went down over at Sports Business Journal, and the most notable takeaway may be about the key players that got this done on the ESPN side.

As per Ourand, new ESPN president Jimmy Pitaro (who took over in early March, following John Skipper’s abrupt December resignation) was on board with the UFC in a way Skipper wasn’t, but it also wound up being key that some areas Skipper used to control (in particular, ESPN+) now report to Disney exec Kevin Mayer (chairman of international and direct-to-consumer products), and that Mayer and Disney CEO Bob Iger were interested in the UFC rights.

Here’s more on that, starting with a breakfast meeting between Pitaro and Mark Shapiro (co-president of WME-IMG, which owns the UFC and was negotiating their deal).

During Skipper’s reign as president, ESPN showed little interest in a UFC deal. Skipper wasn’t a fan of the sport and didn’t believe it fit into ESPN’s schedule.

Watching Pitaro’s reactions that morning, Shapiro — for the first time — truly believed that a deal with ESPN could be possible.

Shapiro, though, didn’t realize that Pitaro wasn’t the one calling the shots, at least not when it came to ESPN+, the streaming service where ESPN envisioned putting most of the UFC fights. Instead, those decisions would run through Burbank and Kevin Mayer, chairman of Disney’s direct-to-consumer and international groups.

Pitaro may have replaced Skipper as ESPN’s president, but he inherited fewer areas of responsibilities. The ESPN+ streaming service that had reported to Skipper was shifted to report to Mayer, along with ESPN’s ad sales group.

Any UFC deal would need Pitaro’s buy-in, of course, but Mayer would run point.

The piece goes on to discuss plenty of interesting ins and outs of the negotiations. For example, WME-IMG’s Ari Emanuel was initially being asked to represent WWE as well as the UFC before networks protested about negotiating with the same agency for both, leading to WWE retaining CAA. And Pitaro and ESPN executive vice president (programming and scheduling) Burke Magnus were talking with Mayer, Shapiro, and Emanuel in cross-continent phone conversations from the NFL Draft in late April (many of which saw Magnus having to leave ESPN’s suite, as CAA’s Nick Khan was there with client Jason Witten to negotiate Witten’s Monday Night Football deal with Pitaro).

Eventually, a deal was struck for 15 UFC events on ESPN+ annually for $150 million a year. Shapiro and Emanuel then set up a meeting with Mayer and Iger to celebrate the streaming deal and float the idea of ESPN taking the other half of the package. As per Ourand, Mayer initially said the other half was too expensive, but Emanuel offered it for another $150 million a year; Mayer and Iger showed interest, and they eventually agreed on a deal a few days later, mostly by cross-country text and WhatsApp conversations.

The key overall takeaway here may be about the difference ESPN’s leadership changes made for these rights, though. It’s conceivable a UFC deal could still have happened under Skipper if they were offered the right price and packages, but Ourand’s reporting suggests Skipper wasn’t all that interested either in the sport or how it fit into ESPN’s schedule. That was different under Pitaro and Mayer.

And the Mayer material here is notable, especially for its discussion of how certain key ESPN areas like ESPN+ and ad sales now report to him rather than to Pitaro. Given that Pitaro also came to ESPN from a senior role at Disney (he was previously chairman of consumer products and interactive media), there’s a case to be made that corporate parent Disney is now much more involved in the regular runnings of ESPN on several levels than they were during Skipper’s tenure.

All in all, this seems to have worked out pretty well for ESPN. They’ve landed a significant property in the UFC, and have landed the rights to put a lot of it on ESPN+, one of the first really major signings for that service. They control the whole UFC TV package now, and they do so for less than they thought would be needed, based both on those UFC revenue projections and on that May meeting about the other half of the deal.

There are some challenges ahead for the UFC, and some questions about its ability to create new stars (which is part of why WWE wound up with a more impressive deal in terms of annual financial return, pulling in $470 million annually versus $300 million, albeit with that split over two networks), so how this looks could change over the five-year term. But for now, this move seems like a pretty good fit for ESPN, and the leadership changes may have been crucial to making it happen.

[Sports Business Journal]

About Andrew Bucholtz

Andrew Bucholtz is a staff writer for Awful Announcing.