TKO Group COO Mark Shapiro On UFC Media Rights, Vince McMahon And Gambling

Knocking out competition 16s

• TKO Group is roughly a year into its formation, following the combination of WWE and UFC, and has financially outperformed its original forecast due to strategic execution and integration 28s.
• The company has initiated a robust capital return program, including a quarterly dividend, and acquired three strategic sports assets: a hospitality business, PBR (a sports league), and a media rights consultancy business in IMG 58s.
• The acquisition of these assets is part of TKO's plan to build a "moat" and fuel growth by piling up assets that will drive revenue 2m11s.
• TKO is looking to acquire sports leagues, with PBR providing a proven commodity that fits into the company's sports ecosystem, including live events, media rights, consumer products, and site fees 2m32s.
• IMG is a legendary asset that will be used globally to help TKO secure increases in sports rights for UFC, WWE, and PBR 2m57s.
• On Location is the market leader in sports experiences and hospitality, supporting WWE and UFC, and its acquisition will accelerate, fuel, and strengthen TKO's growth 3m17s.
• TKO has raised guidance on both top-line revenue and adjusted EBITDA for the second time in a year, with the third quarter performance guiding towards the upper end of the forecast 1m11s.
• The company's growth is driven by the hot demand for sports events, experiences, and premium content, with TKO sitting "dead center" in this market 1m28s.

League ownership 3m46s

• The possibility of buying into the PGA or tennis leagues has been considered, but it is not a viable option at this time, with LIV already facing challenges in trying to buy into the PGA tour 3m55s.
• There are not many sports leagues available for acquisition, and none are expected to become available in the near future, making it unlikely that any will be acquired 4m10s.
• The Professional Bull Riders (PBR) was a potential target, but it is not part of the current plans, and its absence is related to a story involving Vince McMahon 4m18s.
• Any future ownership or new league ventures will likely be organic, rather than through acquisition 4m27s.
• Boxing is a potential area of interest, with Dana White consistently bringing it up, but there are no plans to acquire boxing agencies or federations 4m33s.
• Instead, there is a possibility of organically starting a boxing venture or partnering with someone who can financially support it, allowing for a risk-free investment 4m44s.

The Vince factor 4m58s

• Vince McMahon initially did not want to start TKO with more than two sports, considering the UFC and WWE as juggernauts, and was hesitant to include PBR, but was on board with it long-term 4m59s.
• The decision to include PBR was a compromise, with Vince McMahon wanting to focus on two sports and the other parties involved wanting to include PBR 5m14s.
• Vince McMahon is no longer part of the company, having sold out, and is not involved in decision-making, but still holds some shares 5m26s.
• Despite being out of the business, Vince McMahon is supportive of the direction WWE is going in and has been cooperative, as seen in his participation in a Netflix series 5m37s.
• Mark Shapiro had breakfast with Vince McMahon a few weeks prior, where McMahon was cooperative and professional, but Shapiro did not seek his opinion on the company's direction 5m32s.
• Vince McMahon is currently focused on litigation and values his privacy and time to work through it, allowing the company to continue building and expanding without his direct involvement 5m56s.

Big tech and sports 6m27s

• A Netflix media rights deal for WWE content is set to start at the beginning of 2025, which may be the start of something transformative in the industry, with big tech companies potentially becoming dominant players in owning sports rights 6m34s.
• The six biggest spenders globally are expected to spend $126 billion on content in 2024, up 300 basis points from last year, with a further 9% growth expected next year 7m3s.
• Content spend from companies like Netflix, Amazon, Disney, Warner Brothers, and Google is significant, with sports rights driving a lot of this growth 7m20s.
• Sports rights are now leading the way in content spend, surpassing other types of content such as scripted series, documentaries, and films 7m29s.
• The growth in sports rights is evident in deals such as the NFL, the College Football Playoff (CFP), and the WWE deal on Netflix 7m52s.
• It is expected that more players will look to expand their content portfolio when it comes to sports, with new players potentially entering the market 8m1s.

Future of sports media 8m11s

• The idea of a sports bubble has been discussed for 30 years, but sports appear to be more popular now than ever, with high interest in sports-associated media rights 8m13s.
• A possible reason for the current high demand for sports is the presence of new streaming players seeking subscribers and an old legacy media industry holding on to sports for survival, creating a dynamic that may not exist in the future 8m45s.
• Sports rights are always in demand, but the temperature of the market can fluctuate, with periods of high demand and record-breaking increases, and periods of lower demand with smaller increases 9m33s.
• Sports unify people, creating a sense of community and shared interest, with factors like history, equity, tradition, folklore, stars, personalities, rivalries, and rooting interests contributing to their enduring popularity 10m1s.
• The popularity of sports is evident in various leagues and events, such as soccer, the NFL, college football, the UFC, WWE, and the World Series, which continue to attract large audiences and high ratings 10m52s.
• ESPN is launching a direct-to-consumer product in August 2025, which is seen as the right strategy, with features like sports betting, e-commerce, and personalization, but the product will be a mirror of the linear ESPN, limiting its potential for innovation 11m41s.
• The direct-to-consumer product will need to offer unique features and a personalized experience to attract subscribers, despite mirroring the linear ESPN, and this approach is seen as attractive to content providers like the UFC 12m47s.

Gambling on WWE? 13m13s

• WWE is not considering sports betting for its matches, as they are scripted, and maintaining secrecy would be challenging, especially with the creative team led by Triple H, Paul Levesque, having to keep scripts under wraps 13m26s.
• The difficulty in keeping information secret is compared to the challenges faced while keeping the winners of the American Music Awards and the Golden Globes under wraps during the time at Dick Clark Productions 13m28s.
• In contrast, sports betting is being done with the UFC, and it is growing, as the nature of UFC events lends itself well to sports betting, with multiple fights, rounds, and props to bet on 13m51s.
• The UFC's appeal to young men, in particular, contributes to the success of sports betting in this context 14m11s.

UFC media rights 14m19s

• The UFC media rights deal is set to expire next year, and negotiations for a new deal will likely be a major focus in the first quarter, with various options being explored, including linear, digital, and pay-per-view 14m20s.
• The company has an exclusive window with Disney and ESPN for the UFC, and with Comcast for WWE, which they intend to honor 15m3s.
• The company values its partnerships with Disney and ESPN, considering them fantastic partners who are passionate about growing the sports and entertainment leagues 15m13s.
• The concept of a sports bubble is continuous, and the company keeps an eye on what's hot, what's next, and what's trending in the sports business 15m28s.
• Innovation is extremely important to the company, and they are committed to their current portfolio, with a focus on integrating recent acquisitions and finding ways to save money and generate new revenue 16m6s.
• The company is laser-focused on delivering returns and increasing margins from its recent acquisitions, including IMG, PBR, and On Location 16m55s.
• Geopolitics plays a significant role in the company's international strategy, with a strong presence in 35 countries through IMG, which manages or sells rights to almost 160 different sports properties 17m19s.
• The company's personal relationships in various regions and its ability to see around the corner in terms of trends and changes in the sports business are crucial in negotiating sports rights and dealing with different players 17m42s.
• Global events, such as the Russia-Ukraine conflict, can have a significant impact on the company's operations, including sports betting partners, media feeds, and athlete travel 18m21s.

Comcast's future 18m43s

• Comcast is considering spinning off its cable networks, which are still cash flow generators, similar to TKL, and this decision is likely due to the company's desire to shed non-core assets and focus on its core business 18m50s.
• The decision to potentially spin off cable networks is a sign of the changing media landscape, where companies are reassessing their assets and looking for ways to adapt to the shifting market 18m57s.
• Disney previously went down a similar path, deciding to pull back on some of its assets, but it's unclear how this will play out in the long term 19m24s.
• Comcast's introduction of a potential spin-off is a strategic move, allowing the company to sit back and assess its options without being forced to make a sale 19m38s.
• In five years, the major media players, including Disney, Amazon, Netflix, Google, Warner Brothers, Comcast, Paramount, and CBS, are likely to still be around, but they may look for ways to shed archaic assets 20m16s.
• Netflix is a major player in the media landscape, with a strong brand and a wide range of content offerings, and it's likely to continue to be a major player in the future 21m15s.
• Netflix's plan for sports content involves partnering with companies like TKO Group to offer episodic, quasi-sports content, and using its marketing powerhouse to promote these events 22m17s.
• The success of Netflix's sports content will be measured by its ability to attract and retain subscribers, with events like the Tyson Paul fight and the NFL Christmas games serving as key indicators 22m40s.
• Netflix's advertising strategy for live events will involve manual ad placement in the first year, with plans to introduce dynamic advertising in the future 23m4s.
• It's possible that Netflix could become a UFC partner, given its interest in partnering with leagues and brands that can provide global, power sports content 23m22s.