The 4th Quarter: Deep Dive Into The Sports Media Mayhem, Why You Should Care

Our first deep dive into a new monthly edition on sports-innovation, New Job Board

May 04, 2024

Monthly Deep Dive: Mess Behind Sports Media Rights

One of the early members in our community happened to be John WallStreet, the leading sports business newsletter juggernaut who loves what we’ve been putting together every week: an aggregation of sports-tech startup news!

After setting up a Zoom call with him, he recommended us to start incorporating our opinions and deep dives into certain topics, rather than just compiling news from various sources. In addition to our weekly staple Latest in Sports Tech This Week, we’re inspired to also start a monthly business breakdown & deep-dive on sports-innovation topics. We’ll break down WHAT is happening in the market, WHY these companies are doing what they’re doing, and HOW it impacts YOU.

We encourage you to drop us a comment or give us your honest feedback in the survey poll on whether you like this type of deep-dive writing piece. We’re still experimenting on content, and while this deep dive is around a trend, our future pieces will be us partnering with up-and-coming sports-tech startups.

Without further ado, let’s see how there is a brewing monopoly in the Sports Media Industry, and what startups are breaking through to innovate in the closing white space.

Where All The Money Is: Media + Licensing Rights

Sports streaming rights is the new golden ticket that everyone is fighting for. Streaming platforms are constantly in bidding wars with each other to secure popular league rights:

NFL signed media right deals with CBS, NBC, Fox, ESPN, and Amazon worth $110B
ESPN signed a $7.8B deal for college football playoff rights
NBC Universal bids $2.5B for NBA rights that were TNT’s

These deals typically provide a very lucrative revenue-sharing agreement where advertising, sponsorships, and subscriptions are split between streaming platforms and leagues. Streaming platforms and broadcast companies can take advantage of these rights by licensing their content to others in this space. For example, Paramount Global and Comcast recently agreed to renew a carriage deal that allows Paramount+ viewers to access CBS Sports Network.

Licensing is what makes a consolidation of media rights so powerful for streaming platforms. If a streaming player owns a majority of league rights, then other streaming platforms will have no choice but to pay a significant fee to license this content; a cost that will only get pushed onto the viewers.

The sports licensing and media rights is a very small club, and we’re not in it. Innovation should be forcing companies to offer the best value for customers, but consolidation only seems to be offering higher prices to us end users.

Latest Market Activity in Sports Media:

There’s a sports streaming monopoly brewing right in front of your eyes and nobody is talking about it. Disney is planning to take the sports streaming industry by storm through a variety of initiatives:

Launching an ESPN Deluxe: Last week, Forbes reported on a new ESPN streaming service dropping in 2025 where subscribers will have full access to ESPN’s Sports Content Network including Major Rights Deals to: NFL, NBA, MLB, NHL, and its 40 college sports championship deals, a much larger package that ESPN+ currently has to offer

“So what? Disney owns all these different platforms, they aren’t doing anything alarming.”

We’ll let you decide: the proposed subscription to this new bundle will be $25-30/per month! Damn expensive.

Acquiring NFL Media: ESPN is in talks of taking a controlling equity stake in NFL Media - the media arm of the league office which includes NFL Network, Redzone, NFL+, and NFL.com. In exchange for ESPN’s controlling interest, NFL will supposedly take an equity stake in Disney.

How is this not on the front page of every sports business publication?! This deal would give ESPN a gigantic presence in the NFL ecosystem by supplementing the content on ESPN+ streaming service in addition to the Monday Night Football & playoff games they already broadcast. By acquiring NFL Redzone and mobile streaming rights from NFL+, ESPN will also solidify themselves as a strong streaming player for Sunday football.

Lastly, this deal could potentially give ESPN preferential treatment into future broadcast rights negotiations with the NFL.

FuboTV suing proposed Streaming Behemoth Joint Venture from ESPN + FOX Sports + Warner Bros: The leading sports-first live TV streaming platform, FuboTV, has filed an antitrust lawsuit against the vertically integrated companies claiming they have engaged in anti-competitive practices for years.

A month ago, we covered in The 4th Quarter that there was a joint venture proposal between ESPN, FOX, and Warner Bros - each owning a 33% stake in the business. Between the three broadcasters, they transmit virtually every nationally broadcasted MLB, NHL, and NBA game! In the lawsuit, Fubo is stating that it is forced to carry expensive non-sports channels and imposing higher content licensing rates - passing the costs on to its subscribers (you and me).

If Disney executes on consolidating media rights and becoming the behemoth in sports streaming, competitors and new entrants will ultimately get squeezed out in the long-run. Where will new innovation in sports streaming come from?

Is There Any Innovation Left For Startups?

Short-form Content Disrupting The Status Quo: Traditionally, fans watch sports through streams or broadcasts, but now social media is the #1 platform for sports consumption:

90% of Gen Z viewers go to social media to access game clips & player updates
32% of sports fans are active on social media while watching live games
Our favorite startups building in this space: ScorePlay & Greenfly

This shift towards social media really shows the appeal towards short-form content. Every major sports team and league have invested heavily in social media content creation to keep these fans constantly engaged. This created an entire new white space opportunity for startups to automate content and distribute it for them. ScorePlay, Greenfly, WSC Sports, and the like are helping teams & leagues automate content & distribution for clips, player graphics, and stats for their social media. And by tracking real-time fan engagement on their content, startups can also curate content that fans will like the most.

New Leagues Create New Media Rights: Another way to innovate in sports streaming is the creation of new IP - which comes from emerging leagues that are gaining significant traction. Overtime is one of the best examples of this. The Series D startup closed $100M financing to put it at a $500M valuation. Backed by world class investors like Sapphire Sport, Blackstone, A16z, Drake, and more, the company has found a way to monetize IP that it creates through its league operations. Creating their popular high school basketball league, Overtime Elite (OTE), gave them exclusive rights over broadcasting and distributing their original content. OTE has amassed:

425M views and 100M+ followers across all platforms, and 83% of viewers under 35 y/o
250K fans tuned in to watch live games on Prime Video
Media rights deal including 20 lives games

OTE also provides unique storylines such as the Thompson Twins bypassing college to become the first academy grads to be first round NBA picks, team-league dynamic such as the City Reapers winning the 2023 Championship, and amassing new fans in the process. This caught the eye of digital content platforms - Amazon Prime, which then partnered with Overtime on the docuseries One Shot: Overtime Elite.

Final Thoughts:

Consolidating the most rights in the sports streaming space has become a blood bath. Smart players like Disney are making move after move to provide the #1 on-demand streaming platform for all sports, pushing competitors to join the arms race for media rights. Although this hoarding of rights by major players stimulates innovation in sports media, social media content creation and new league developments may be a silver lining that emerging startups can innovate.