The UFC Alone Isn’t Enough Streaming Punch for David Ellison’s Paramount
The media company’s $7.7 billion rights deal was a bold statement, but not enough to put Paramount in the streaming big leagues.
It didn’t take long for David Ellison, the fresh-faced millennial owner and CEO of Paramount Skydance, to make a statement. Just five days after the merger between Paramount and Skydance closed, the scion of Oracle’s Larry Ellison reached into his deep pockets to acquire seven years of broadcast rights to UFC mixed-martial arts matches for $7.7 billion.
With a single pen stroke, the sports rights deal accomplished two significant feats for Ellison and the new Paramount. First, it demonstrated his willingness to spend lavishly after years of tightfistedness at Paramount. And second, it signaled that the media company is determined to become a major player in streaming and to use live sports rights to do so. It was a striking turnabout in sports after Paramount sat out negotiations for NBA rights and generally fell behind the rest of its competitors.
Still, it’s not a knockout punch for Paramount. The Paramount Ellison has acquired has a litany of issues to address: Its Paramount+ streaming service isn’t cash flow positive, and with 77 million subscribers, it has nowhere near the scale of Netflix (301 million) or Disney (156 million). No single sports deal could catapult Paramount+ into that tier of reach.
Which is why savvy media watchers believe Ellison may need to play another card if he wants to really get into the big leagues of streaming. Could Paramount+ form a distribution bundle with Comcast’s Peacock (41 million subscribers)? Bundling is a tool Disney and Warner Bros. Discovery have used effectively to boost the growth of their streaming apps.
Or perhaps Ellison could go in a different direction and make a play for TikTok, the short-video app that is under pressure to sell to U.S. investors, one former executive at Paramount, who spoke to me on the condition of anonymity, speculated. (Ellison had better hurry: A group of investors appears to have a deal in place to buy TikTok, though it still needs approval from China, where TikTok’s parent company, ByteDance, is based, we reported earlier this week. Oracle is among those potential investors.)
“If you think about it, he doesn’t need another dollar, right?” the former executive said. “This is not necessarily about payouts or income, it’s about success—however he defines it.”
This person also told me they think Ellison overpaid for the UFC rights. “For UFC, it’s big money, big reach, and no more pay-per-view—it’s an A-plus deal. For Paramount? Grade TBD.”
Live sports accounted for 87 of the top 100 broadcasts last year—down from 96 in 2023, a nonelection year. Apple, Amazon and Netflix are each taking on live sports rights of their own, a sign that even deep-pocketed tech behemoths can’t resist the consistent, highly engaged audiences that flock to big games. Traditional media organizations like Paramount have to keep up or get left behind.
And until this week, Paramount was about to get lapped. Among the major media conglomerates, Paramount has one of the slimmer portfolios of marquee live sports rights: the Sunday afternoon NFL slate, Champions League soccer and Big Ten football are its primary seasonal events. While those are popular assets, the lineup can’t compete with the breadth of Disney’s ESPN (NFL, NBA, MLB, NHL) or Comcast’s NBC Sports (NFL, NBA, the Premier League, and the Olympic Games, as well as annual Olympic sport events).
What’s more, Paramount’s sports crown jewel—its NFL rights—isn’t even a lock. The league has two potential opt-outs in its contract: one for the change in ownership at Paramount, and another with its entire slate of media partners after the 2029–30 season. Ratings agency S&P Global expects the league to use leverage on the latter front to renegotiate terms with those partners, taking into account trends across streaming, cable and linear viewership.
When asked about the league’s opt-out clause with Paramount in July, NFL Commissioner Roger Goodell was noncommittal. “I think we’ll wait and we’ll see when the transaction is done, and we will get together with them and see how they’re approaching the NFL and how they are approaching their business,” he told CNBC’s Julia Boorstin at the time.
As such, Ellison had little choice but to signal loudly and clearly from the jump that Paramount Skydance would be aggressive on sports rights. UFC’s existing contract with ESPN expires this year, and it was in concurrent talks with potential new partners at the same time Skydance was closing its acquisition of Paramount. Dana White, UFC’s colorful CEO, told The Wall Street Journal this week that the MMA league initially planned to divvy up rights among several media partners à la the NFL and NBA, but “last minute, [Paramount] came in and said, ‘You know what? We don’t want to share. We want it all.’”
The result has benefits for both: The UFC rights give Paramount a year-round sport to fill in an otherwise patchwork athletic calendar. (The NFL season lasts from September to February, while other CBS assets like March Madness and the Masters golf tournament are major ratings magnets but limited engagements.) And UFC fans need only subscribe to Paramount+ and a free-to-air antenna (for the matches on CBS) to watch all the action. That would be a dream for fans of the NFL, MLB and NBA, who today might be coughing up hundreds of dollars a year for three or more services.
For Paramount, the $7.7 billion all-in contract with UFC might make more strategic than financial sense: It casts Ellison in the light of a swashbuckling dealmaker. And it puts him in the good graces of some politically advantageous contacts: for example, UFC impresario White, a close associate of Donald Trump. Viewed through one lens, maybe Ellison paid $350 million per year too much for UFC. Viewed through another, he’s potentially easing regulatory approval for a theoretical TikTok acquisition or whatever other M&A he chooses to do.
For Ellison, surrounding himself with savvy (and sport-connected) dealmakers is already an element of the Paramount Skydance secret sauce. Ellison’s partner and major shareholder is private equity group RedBird Capital Partners, whose existing sports holdings include AC Milan as well as stakes in the Boston Red Sox and Liverpool FC. Gerry Cardinale, RedBird’s founder, cut his teeth at Goldman Sachs establishing the New York Yankees’ regional sports network, YES. And RedBird is an existing deal partner of Hollywood power agent Ari Emanuel, CEO of UFC’s parent company, TKO.
What a change in tone at Paramount. Under previous ownership, then-CEO Bob Bakish told investors in late 2023 that Paramount wouldn’t bid for rights to NBA games, which eventually fetched a record 11-year $76 billion trio of contracts that begin this fall. With Ellison at the helm now, I don’t see Paramount Skydance sitting on the sidelines of sport—or dealmaking—any longer.