The announcement last month that TNT would sublicense College Football Playoff games from ESPN in each season from 2024 through 2028 was something of a surprise.
Arriving at a moment that became clear Warner Bros. Discovery was likely to lose NBA rights following next season (although that’s still not 100%), this somewhat-out-of-nowhere news seemed to soften the blow and make it clear that WBD wasn’t just going to take its losses laying down.
However, one note about the financial arrangement between ESPN and TNT Sports over the games shows just how much WBD might have been willing to bend to make sure it remained in the game.
In the initial reporting about the deal, financial terms between ESPN and TNT were not known, but it was clear that ESPN would get to choose the first two first-round games and produce them, though TNT would be able to produce ancillary programming.
While we still don’t know exactly what WBD paid for the sublicensing rights (ESPN had put a $25 million average value on the first-round games), according to Puck’s John Ourand, ESPN is keeping all of the advertising revenue generated during the games in 2024 and 2025, and potentially beyond.
“Not only was it worth hundreds of millions of dollars per year, but it afforded ESPN control of production and all advertising revenue for at least the first two seasons. (WBD C.E.O. David Zaslav must be looking at the games as a way to maintain leverage over cable distributors in carriage fee negotiations.),” wrote Ourand in his most recent The Varsity newsletter.
TNT gets two first-round games in 2024 and 2025 and then, between 2026 and 2028, they will air two quarterfinals in addition to the two first-round games.
Ourand also writes that the arrangement between Disney/ESPN and WBD, who are partnering along with Fox on the upcoming Venu Sports streaming service, could end up sparking interest from government regulators
“For what it’s worth, ESPN made clear from the outset that it wanted to sublicense some CFP games and would have taken calls from any broadcaster that showed interest. I’m told that Paramount and NBC, the two main players not in the [Venu] deal, did not call,” said Ourand. “This deal has the look and feel of business as usual to me. But with the Justice Department looking into Venu, not to mention Fubo’s pending lawsuit, it will likely receive a lot more attention in the coming months, even if there’s no there.”
Without knowing how much WBD paid for the sublicensing rights, we can’t say for sure how much of this was good business and how much was ESPN and WBD scratching each other’s backs. While Ourand is probably right that this was a simple business decision for ESPN, it also doesn’t hurt to know those CFP games stay put on Venu Sports when that launches, and they’ll reap all the revenue benefits.
