Fox Stands Up to the NFL, a Big Change to TV Ownership, and Ellison Commits to 30 Movies

0:04Matt Belloni:This episode of The Town is presented by HBO Max. HBO Max presents Hacks, nominated for 25 Emmy Awards, including Outstanding Comedy Series. In the aftermath of mistaken news reports that Debra passed away, she and Ava returned to Las Vegas determined to secure Debra's legacy as a comedian. Don't miss the series Variety is calling one of TV's best comedies ever. Hacks is now streaming on HBO Max. This episode is brought to you by LinkedIn ads. Ever invest in something that seemed incredible at first, but didn't live up to the hype? Marketers know that feeling. They optimize for the numbers that look great, impressions, reach, and reacts.

0:42Matt Belloni:But when they don't show revenue, well, that's a not so great conversation with the CFO. LinkedIn has a word for that, bull spend. Instead, why not invest in what looks good to your CFO? LinkedIn ads generates the highest ROAS of all major ad networks. Reach the right buyers with LinkedIn ads. You can target by company, industry, job title, and more. So cut the bull spend. Advertise on LinkedIn, the network that works for you. Spend$250 on your first campaign on LinkedIn ads and get a$250 credit for the next one. Just go to linkedin.com slash the town. That's linkedin.com slash the town. Terms and conditions apply.

1:25Matt Belloni:It is Monday, August 10th. A couple big moves last week in the TV business. Yes, the old-fashioned television business. It still generates about$300 billion a year worldwide, while people like me talk mostly about streaming. Anyway, the FCC, the government agency that regulates the broadcast networks, they voted to rescind the rule that bars local broadcast station owners from reaching more than 39 % of U.S. TV households. Remember, these are TV stations like your local Fox or NBC affiliate. They're usually owned by a big station group like Sinclair or Nextstar, but not the networks themselves.

2:02Matt Belloni:The FCC, led by Trump's guy, Brendan Carr, he will instead consider applications for TV company mergers on an individual basis to determine if they are in the public interest. The result here is that we will likely see a bunch of M &A in the space. The FCC already approved the$3.5 billion sale of Tegna to Nextstar, and Carr thinks this will give stations more leverage against national networks, which tend to be owned by the bi-coastal Hollywood studio conglomerates that may not share Trump's politics. That case is held up in the courts right now. And speaking of Trump, Fox did something pretty rare and extraordinary this past week.

2:38Matt Belloni:They stood up to the NFL. Lachlan Murdoch, on his earnings call, he said, quote, we will not be making any amendments to our existing contractual relationship, which extends to the completion of the 2029 season. That's a big deal because the NFL had wanted to reopen its deals with Fox and other partners to get more money in exchange for more guaranteed years of live games. So what's going on here? Does this mean that the NFL might not be as powerful as they think they are? Doubt that. But we're getting into that today and the SEC move and more with Lucas Shaw, our Monday guy. We'll also hit the latest in the Warner Mount merger saga, but mostly it's the big moves in TV and how dare Fox stand up to the NFL.

3:18Matt Belloni:From the Ringer and Puck, I'm Matt Bellany and this is The Town.

3:25Matt Belloni:All right, we are here with Lucas Shaw from Bloomberg, our Monday guy. Lucas, big week on the town. It's our annual trip to the Dodger game. I am finally taking you guys as penance for losing the box office draft last year to you. So we have decent seats, unlimited soju, and Japanese octopus balls for you and Craig. Unfortunately, it is the night before my annual physical. So I think it's, I'm going to have to be a little restrained. It's also Hello Kitty night, so all of us can just come home with the Hello Kitty swag that I'm sure you both want. All right, enough about that. Speaking of sports, we're going to go through a couple topics today.

4:03Matt Belloni:And the first one I want to get into is this pretty big middle finger that Lachlan Murdoch extended to the NFL this past week. He said that he's not interested in doing another deal, reopening their deal, and is going to choose to wait it out until after the 2029-2030 season. I feel like the NFL is the most powerful media owner in this country. It has the most compelling product. They usually get what they want, and they have put it out there that they want to reopen these deals. They saw that the NBA tripled its media rights revenue, got an 11-year,$77 billion deal that they struck in 2024. The NFL wants a piece of that.

4:49Matt Belloni:They want to raise their own rates. Why did Lachlan do this? Can I ask you a question first? It's something you got at. Have you ever seen the NFL get punked in public like this before, at least in the last 10, 20 years? And we're not talking self-inflicted. We're not, you know, the various scandals they've had around concussions and player behavior, but like a business negotiation. It was part of a strategy here because Rupert Murdoch pretty clearly was seeding the waters for the past six to eight months, getting these politicians to talk about how sports is too expensive. There's too many games on streaming services.

5:27Matt Belloni:And that all goes back to Fox. That was their strategy. Maybe the Ellisons and Paramount, but I don't think the Ellisons were doing that. This is Rupert saying that we need to keep our deals and you have a responsibility to put these deals on linear television where your fans can all watch them and not extract more money from streaming services that coincidentally have way more money to outbid Fox. So this is not like out of nowhere. No, but even in that situation, you know, I think there was an expectation like, oh, you have NFL owners like Robert Kraft who are friendly with Trump. And so if they, you know, if the NFL really wants to push back on this Murdoch Fox narrative, they can go that way.

6:12Or there's the counter to all that, which is, yes, there are issues with kind of how expensive and fractured the sports media environment has become. but NFL is actually sort of like the least problematic. Maybe it's the most fractured in terms of games in the most places, but most of the games are still on broadcast TV. Yeah, but they have the most demand for their games. Yes, but it's not like, like I was debating with my wife over the weekend, like, oh, do I want to keep Peacock right now? Apologies to Matt's house and Peacock folks, but like, I'm not, I don't use it all the time. And then I remember, oh, but there are a bunch of Peacock excuses.

6:45Matt Belloni:That's what you debate at the dinner table? It wasn't at the dinner table. It was not at the dinner table. But I was like, oh, but they do have a bunch of exclusive NBA games, which makes it hard for me to get rid of Peacock. The only thing that's like that in the NFL would be Thursday night Amazon. And most people don't even think of paying for Prime Video because they're paying for Prime. Yes, but there was a Peacock exclusive playoff game. Sure. And everyone lost their shit when they couldn't watch it on Linear. And there will be more of those. And that's what they're talking about when they put that out there, that it's too expensive.

7:20Matt Belloni:And people want to watch NFL so badly that it's much louder than if there's a random NBA game or five or 10 on Peacock. The NFL signed their most recent deal in 2021,$100 billion. So it makes sense that they would want to exert leverage here. They have this out with CBS Paramount because of the change of control. but that is now on hold because of the Warner Brothers litigation. So not a great week for the NFL. Their big partner Fox said, no, we're good. You haven't answered the question. Why is Lachlan doing this? Is it just that he, why is Lachlan doing it? Yeah, why is Lachlan doing this? Because in exchange for reopening the deal, he could have gotten additional years, which would give some security and stability to the company heading into the next couple of years of the streaming wars.

8:14Matt Belloni:And they chose not to do this and play their percentages in 2030. I was a bit surprised by this. I think it's relatively straightforward. If you can put off paying an extra billion dollars a year or whatever it's going to be for Fox to keep those rights and not get locked in some kind of bidding war with Netflix or YouTube or Amazon or anyone like that, you do it. and especially if you're Fox and you're in the middle of buying Roku, so you're spending a bunch of money and a bunch of energy on that, you want to buy Roku, fully digest that, and then by the time that the negotiation comes around, you're hoping or believing that you not only still have one of the broadcast networks, but you have like a real streaming alternative to offer them because right now what they have is Tubi, which is nice, but it's not the same as some of these other streaming services.

9:06Matt Belloni:You don't think this is them throwing up their hands and saying, you know what, we've acknowledged that we are likely going to get outbid in 2030. So we're just going to milk this for when we, while we can. And he even had some language in his statement saying, we're going to be disciplined. We're going to, you know, is this the equivalent of David Zaslav saying, we don't have to have the NBA because he knew he saw what was coming and where the economics were going. Is that Lachlan doing that? Or is it the opposite? He's riding high right now because they had this amazing quarter thanks to the World Cup.

9:37Matt Belloni:they've got you know by most accounts the most stable and growing business of the major partners other than the streamers and he is confident maybe i don't think that fox is in a position to walk away from the nfl and lachlan knows that because it's the it's the most you you brought it up it's the most valuable programming they have i've had people over the years tell me if you want nfl rights just buy fox because it'll you know pre roku deal at least basically cost the same amount of money and you've got a lot more than just the NFL rights. How dare you? You're really discounting Hannity and his ability to sell catheters and MyPillows and all sorts of things.

10:18Look, Fox News obviously has value. But I think that the NFL is the single most important property that they have. And they're not in a position to walk away from it, but they did feel like they had some leverage. They'd created sort of this political groundswell against the league. And to your point, one of the things that the NFL was going to use to exert leverage on the other people to come back in was by getting Paramount to pay more money through the change of control. And so they got Paramount up some certain amount of money. Then they could go to NBC and Fox and Disney and say, you're not paying us enough now.

10:52Matt Belloni:They were discussing an increase of about a billion dollars per year with Paramount. And now that's off. It's interesting that Paramount could just say, like, yeah, we're going to wait on this. We have this other big deal going on. If I was the NFL, I'd be like, guys, you know, that's great that you have this other big deal, but we would like to be paid now. Right. Well, look, though the NFL is a bully that can usually push anyone around, it is, these are partnerships, right? And so they don't want to completely screw over everyone that they're in business with. And look, the new players, there is still a little bit of uncertainty, right?

11:28Netflix is still in the we only want big events. And so they're reluctant to just take any old package. Amazon already has a big package. I think most people think they'd like to add to and maybe upgrade. But how much they do that, we don't know. And YouTube, they have the Sunday ticket deal. But other than that, YouTube still hasn't been like a big buyer of sports rights.

11:49Matt Belloni:And most people think that Sunday ticket loses money. and now that YouTube is ingesting Peacock, it's going to have Sunday Night Football for its premium customers in the U.S. Maybe that takes them out of the bidding for their own NFL games. Or reduces the need. Michael Morris, the analyst at Guggenheim, he put out a note this past weekend basically saying, you know, questioning the desire by these potential bidders to get into this race. So it might be that Netflix and Amazon are not the bidders that the NFL wants or needs. And then who is? It's not Warner Discovery if they get ingested into Paramount.

12:32Matt Belloni:And it may not be YouTube. So where are these bidding wars going to come from? I happen to disagree. I think that by the time we get to 2030, Netflix is going to realize that it needs a real package of NFL games, not these stunts that they use as acquisition moments for subscribers and that they can sell as one-offs they they will need the regular cadence of that nfl audience to maintain and grow engagement so i think they will be a bitter but you never know i tend to agree and that would be the biggest reason for fox to to do something lock it in now yeah can fox even compete with netflix but also we don't but think about what will look three four years from now where is nbc going to be, right?

13:17NBCUniversal, if Comcast goes ahead with this split, NBCUniversal will be a standalone company. It won't have the same resources. Maybe they'll need to not opt out, but partner with somebody. We don't know what will happen with Paramount and Warner Brothers between now and then. Even if David Ellison gets the deal, he's going to have a ton of debt, like what happened to that company. There's just a lot of uncertainty.

13:36Matt Belloni:Yeah. So you think that Lachlan is essentially just reading the room and saying it doesn't benefit us to lock in more years now if we're going to have to pay more we can play the percentages and see what the landscape looks like in two three years and then re-approach even if it pisses off the nfl yeah and of the biggest players they're they're in a relatively stable situation they know what numbers they're going to have to get to they know what numbers they have yeah it's interesting though because what this is setting up is that we could see a complete reset of the nfl landscape in 2030 if these deals i mean depending on what paramount does and disney has an extra deal an extra year on their deal but the nfl could just go back to the drawing board and just completely redraw the landscape say okay we're gonna create a national game at one o 'clock on sundays it's not going to be this regional stuff that we've been doing.

14:34Matt Belloni:You have to pay extra for the regional games. We're going to do, you know, I don't think they'll do that because that would enrage fans in their local markets, but it gives them an opportunity to redraw their rights for the modern streaming age. They could, but the NFL does not tend to take dramatic steps with its programming like that because it wants its customers to know where to find it, right? It took them a couple of years just to train people to go to Amazon for Thursday. If you You start scrambling everything. I don't think the average NFL fan is going to like it. And they will eventually have a football game every day in December and January.

15:11Matt Belloni:And Craig will go crazy and jump off a bridge. We are already almost there. I mean, Tuesday is the only day of the week if there's not an NFL game this year. Tuesday, also known as Craig's sleep-in day.

15:26Matt Belloni:This episode is brought to you by 20th Century Studios' The Dog Stars. Only in theaters August 28th, visionary filmmaker Ridley Scott returns to IMAX with The Dog Stars. In a world shattered by catastrophe, a lone pilot's isolated existence is transformed when a mysterious radio transmission crackles through the silence. Setting out into the unknown, Higg embarks on a dangerous journey in search of something more powerful than survival, hope. From the legendary director of Gladiator, The Martian, and Black Hawk Down comes the riveting post-apocalyptic thriller The Dog Stars. starring Jacob Elordi, Josh Brolin, Margaret Qualley, and Guy Pearce.

16:04Matt Belloni:Based on Peter Heller's acclaimed novel and adapted for the screen by Mark L. Smith, The Dog Stars delivers breathtaking visuals, an extraordinary ensemble cast, and a deeply human story about resilience, connection, and the choices that define us. The Dog Stars, only in theaters and IMAX, August 28th. This episode is brought to you by Disney+. For your Emmy consideration, Taylor Swift, The Error's Tour, The Final Show. Nominated for five Emmy Awards, including Outstanding Variety Special pre-recorded, the final night of the history-breaking tour is now streaming on Disney+. This episode is brought to you by Netflix, presenting Remarkably Bright Creatures.

16:41Matt Belloni:Nominated for three Emmy Awards, including Outstanding Movie. Screen Rant hails it, a stunning, emotionally resonant film, starring Emmy Award-nominated lead actress Sally Field. Awards Watch raves Remarkably Bright Creatures, is a beautiful tale about loss, connection, and the power of family. Sally Field remains a force of nature. Get tickets now. All right, let's move on to second topic. Our buddy Brendan Carr at the FCC, he did it. He has been telegraphing this for months. He led a vote. It was two to one. Shockingly, the Democratic appointed commissioner did not vote in favor of lifting the cap on ownership.

17:22Matt Belloni:Do you think this is a big deal? Because I've sort of downplayed this. In this modern media landscape where so much of what we consume is not governed by the FCC, I have downplayed the impact of consolidation among station owners. And I've gotten some feedback, negative feedback from listeners and readers that, you know, I'm not thinking about the grandmas in Peoria who are all going to be subjected to the same local news now. And that the consolidation of power in local news is really going to impact what we see and what people think in this country. Do you think that's alarmist? No, I think it's a big deal.

18:07I don't. I guess I'm torn on it. On the one hand, I agree with your sentiment that considering the concentration of media in the hands of a few companies, like the idea that the number of people that Facebook reaches or that Meta owns Facebook and Instagram and WhatsApp and like we're worried about, you know, Nexstar owning another 30 local TV stations in the US seems kind of silly, right? Which company has more power to influence hearts and minds? or that Google owns both Google and YouTube and obviously many other things.

18:41Matt Belloni:That's the one I have. I don't understand how the government lets that happen, but that's another show. So do I think that it's sort of this gives would give any local TV station owner the level of influence of our tech overlords? No, but local TV remains very powerful. It's why politicians spend a lot of money targeting people that way. And for a certain generation of viewer, I mean, we were just talking about it with football, right? How do most people watch football? It is technically still broadcast by local stations in all of these markets, right? At least if we're talking about the broadcast networks.

19:24Matt Belloni:And they put on their terrible local sports guy to commentate after the game. and then it feeds into the local news. And I've been watching Colleen Williams on Channel 4 in Southern California since I was like eight years old and she's still there. And I have a connection to Channel 4 because of Colleen Williams. There you go. So I think it does matter, especially if you have these local station owners with political agendas, which it seems like at least one or two of them do. And so that's where I think people get really nervous. Well, that's the thing is that, you know, Brendan Carr is pretty explicit about this.

19:59Matt Belloni:He thinks that these bi-coastal liberal elite network companies owned by the liberal elite Hollywood studios have too much power. And we saw it in the Jimmy Kimmel showdown where ultimately these station groups back down against ABC Disney. And he's essentially saying we need consolidation in this space in order to battle big media and give these station groups more power. But if there's only one or two or three of these, that's a lot of power. Yeah. Well, I mean, the funny thing about that or the silly thing about it, I guess I should say, is if you look at it, okay, of the broadcast networks, kind of Fox unavowedly conservative.

20:47CBS has an owner who's talking all the time about being down the middle. and so you're really complaining I guess about NBC and ABC you look at the broadcast networks like Fox is conservative NBC is or MS Now is progressive CNN is kind of down the middle and talking about Warner Brothers Discovery is a company that's like kind of or at least John Malone very influential over the years and John Malone is fairly conservative so I think all of that stuff from Brendan Carr is mostly BS he's just complaining about the late night hosts yeah it's Kimmel and I guess although Fallon's not really that political either okay Kimmel and Colbert and Colbert is gone um so yeah Seth Meyers Seth Meyers is coming to get the hearts and minds of Americans but yeah like it I guess going back to the Kimmel situation since that's where we where this kind of this matter the most recently and the FCC got involved you know one of the differences between the time where Kimmel briefly went off the air and the time where he didn't was the complaints from local stations.

21:47Do we think that either one of those plays out differently if there's more concentration of power in the station groups? Like the second time where everyone was just like, Brendan Carr, go home, like you've overreached here.

22:01Matt Belloni:Yeah, that was the Melania joke. But the Charlie Kirk joke where Disney thought, we now know, Bob Iger thought it was over the line and Disney took Kimmel off the air. They said, quote, indefinitely, which caused everybody to freak out. Turned out to be not indefinitely, or turned out to be just a few days. That's pretty. But I do think that plays out a little differently. If you have a station group that is overtly conservative or standing up for conservative values or whatever, and they decide they are not going to air Jimmy Kimmel live, it's a lot different if they represent 20 % of stations than if they represent 70 % of stations.

22:42Matt Belloni:It just is. You have to listen to them. Yes, but they were the ones who, in some cases, forced Kimmel off the air the last time. A little bit, yeah. They all got together. And you're right. But I just think it's easier to do that. It's more a question of would they have welcomed him back as readily. Yeah. Interesting angle on this, to bring it back to sports, too, is that if there are these consolidated station groups, they could be buyers for sports rights. maybe not NFL or the A-level stuff. Sure, the B-list sports. Or let's say there's a consortium of stations in the South that band together or are owned by one company and they go after SEC rights.

23:25Matt Belloni:Or they go after certain sports like NASCAR or whatever that are popular in the South. NASCAR feels more possible because of just how... SEC is still really expensive. That's true. That's true. Or maybe the CDE package from SEC, where you're getting the Vanderbilt games. Or you go after hockey in the Northwest or something like that. My point is, if these station groups get big enough with enough money, maybe they go after some sports rights. I actually think, doesn't the CW have NASCAR rights? Yeah, and the CW has some pretty B-level sports. they have a couple college football games and now they just did a deal to put CW on ESPN on the app right but CW is a network, it's not a station group oh it's owned by Nextstar though, you're right interesting, maybe we'll see station groups emerge as a sports buyer not sure, alright, final topic the latest in the Paramount saga gotta get into this you reported on some of the terms that Ellison is offering for the theater owners.

24:38Matt Belloni:Three years, 30 movies. Yeah, he's privately doing written contracts that reflect what he's been promising publicly, which is 30 movies a year. The news was not that they were doing it. The news was that he sort of got AMC and Regal to come out and publicly support the deal in part by saying, I will put this in writing. There will be penalties. Like, I mean it when I say it. This is not just rhetoric. A couple things here. First, you reported that he's offering three years, which to me seems like not that much. Yeah, I think he's going to have to raise that. And it's probably an opening offer.

25:15Matt Belloni:Like he expects to get to five, seven, ten, something like that. Secondly, what are the penalties? That is the big question here, because if it's, you know, five million dollars, ten million dollars, whatever, if they breach this deal, who gives a shit? if you're David Ellison, promise them the moon to get your$110 billion deal closed. And then if the business changes and you have to screw them over, you only owe a small fraction of that. So I really want to know what the penalties are. The penalties are where I struggle. I've had conversations with a few people about them. And it is something, you know, it is financial in nature, right?