A College Football Power Grab & CBS Sports on Edge

0:04Sara Fischer:Congratulations! You made the Varsity, the podcast. My name is Jon Oran, and I am Puck's sports correspondent and the host of this pod. Axios's Sara Fischer is one of my favorite guests, and she joins the pod today after spending a bunch of time in the south of France at the Cannes Lions event. And Sarah's going to talk about how sports fit into this year's festivities over in France. But we're also going to hit on the big topics of the day, including what happens to CBS Sports if the Skydance Paramount merger gets approved, as we think it will. Plus, we're going to hit on rights deals and the NFL's position in our hometown of D.C.

0:44Sara Fischer:But before I get to Sarah, today is Wednesday, July 2nd, and here's what I'm focused on. it's college football which is rapidly coming up you see the big tens commissioner tony petiti sat down with fox sports's joel klatt earlier this week to defend his idea to give the big 10 and the sec four count them four automatic bids each to the college football playoff now i paid a special attention to this because petiti is press shy he doesn't like to put himself out there too much. And he believes that his idea for automatic qualifiers is going to make college football's regular season even more interesting, something that's in question given the expansion of the college football playoff itself.

1:32Sara Fischer:Anyway, Petiti told Klatt that the automatic qualifiers would lead the Big Ten and the SEC to schedule more challenging non-conference games. The goal is to play more non-conference games, Petiti said. Losing those non-conference games would affect seeding in the CFP. But, Petiti said, it's not going to impact your access to the CFP. So my takeaway from all this is that the CFP certainly is going to expand to 16 games. The CFP has to tell ESPN by December 1st whether it's going to expand in 2026 or stay at 12 teams. But more importantly, and the reason why this story is so important to me, Petiti's remarks show that the Big Ten and the SEC are ready to flex their muscles.

2:20Sara Fischer:The Big Ten and the SEC are college's top two conferences, and they have total control over the future of the CFP and how it's going to look. So if Tony Petiti is going to muse over possibilities around automatic qualifiers, you can safely bet that it's likely to happen. Now, let's get to Sarah Fisher. Sarah Fisher, it's always great having you back on the pod. This is July 4th week. It's a pretty dead week in our business, but it seems like there's a bunch of breaking news coming out, especially around the Trump lawsuit against CBS and 60 Minutes. Tell me what you know. Yeah, John, it's going to be a crazy week, actually.

3:07So the both parties, Donald Trump's lawyers and lawyers on behalf of Paramount Global, which is CBS's parent, indicated to the court where this lawsuit is taking place that they should. And that's happening in Texas, by the way, that they should sort of stay all proceedings until July 3rd because they are, in quote, engaged in good faith, advanced settlement negotiations. I would be remiss not to note that CBS has a board meeting on Wednesday, and I know that they're eager to get this done before that. So we should expect, I believe, a settlement to happen imminently between Trump and CBS. And what that would mean, John, is it paves the path forward for Paramount's merger with Skydance Media to move ahead.

3:55And that's a big deal for your sports audience because, of course, CBS Sports is implicated in that. But also because that Paramount merger with Skydance is backed by an investment firm called Redbird. And Redbird, through a joint venture with an international company, has made a lot of investments in sports production companies led by Jeff Zucker. And the whole idea is that those production companies that are producing series would have potentially some distribution through CBS if this merger were to go through. So there's a lot on the line here. But after many, many, many months, I actually think we're going to get a deal probably within the next few weeks and a settlement probably in the next few days.

4:42Sara Fischer:That really is incredible because this is something that seems it seems like it was going to go on forever. And how soon after CBS and the Trump administration come to an agreement do you see deal with Skydance coming through? A matter of weeks. Definitely not going to push any later past the summer. Both parties, you know, the Redbird and Skydance Media folks and the Paramount folks are extremely eager to get this deal done. Sherry Redstone, very eager to get this off her hands. So I think they will move very quickly as soon as this settlement moves forward. And by the way, I should just note the reason why they have to settle, and this is unusual, is because there's essentially a threat of regulatory blockage into this deal if they don't.

5:33And there have been a lot of folks that have said, you know, this is a huge detrimental loss to press freedom if they were to settle. The challenge that Paramount faces is that in this market, and you're seeing what's happening with Warner Brothers Discovery splitting itself up, same thing with Comcast, NBCU, Sherry Redstone would have struggled to have put together another deal if this fell apart. And even if she did, they would have faced the same regulatory hurdles. So either she settled now, we believe the price will be around$20 million, which is about$5 million more than what ABC settled for with Donald Trump.

6:10Or she basically lost control of being able to sell the company. You know, for her, you can see why she's eager to settle. But it's been a very daunting process. You've seen 60 Minutes correspondence protesting. You saw the longtime executive producer, 60 Minutes, resign. the CEO of CBS News was sort of pushed out slash resigned over this. It's been so messy. It's going to be nice to have it be done with, but there will be a lot of books written about what the implications are of this lawsuit on press freedom. Yeah.

6:49Sara Fischer:And we certainly won't know that now. And there are a lot of very smart people that will talk about the dings to press freedom. However, I will tell you, like some of these networks are between a rock and a hard place, because if you're a shareholder of Disney, it costs so much less, just settle, you know? And if you're a shareholder of Paramount, they just want this to be settled and let's move forward and let's get this deal done. And so there are business implications that are totally separate from, you know, the press freedom complaints that you are seeing from 60 Minutes and everybody else.

7:28Sara Fischer:And it's, you know, depending on who you talk to, it's like, if you talk to dealmakers and lawyers, yes, of course you have to settle. And if you talk to anybody involved with the press, you know, this is an area to make a stand of sorts. Yeah. And I'll give you a different perspective on that. I actually do think you can put a financial value on the merits of your news division. You think about for CBS, you have tons of O &O stations that are local, that are reliant on distributing sports to those local markets, but also news. If the value of your news coverage were to be hindered by this settlement, what's the impact on your ability to monetize that on your local stations and your national stations?

8:11You do kind of have to think about it. But I think that the overwhelming answer is it's just not enough to offset what we would be losing as a part of a major merger like this. And I also think another challenge is, you know, there was an era where news broadcasts were so lucrative and news networks were so lucrative. They still are, by the way, like CNN and Fox, there's still some of MS, like the most marginally profitable companies I cover. But that is changing a lot with on-demand streaming services and just with trust and news going down. So if this had happened many years ago, it would have been so different, John.

8:50But in this climate, it's less of a business implication. I hate to say it, but it's true than it used to have would have been.

8:57Sara Fischer:Let's get back to Jeff Zucker, who, if this does go through, as you said, has been investing a lot more in sports. They have an investment, of course, in front office sports. And Dylan Byers just broke the story. They're setting up a production arm. What should we be expecting from Zucker and his sports investments if this goes through? I think that what he's focused on is creating premium content. So yes, he has front office sports. He also has Everwonder, which is a production company that does podcasts and studio content a lot around sports. And the idea is he has a place now to distribute them a little bit more broadly.

9:39You have a streaming service in Paramount Plus. you do have CBS and other linear networks. And so while they are separate, Redbird is the investor in the Paramount Skydance deal. Redbird IMI is the joint venture that Jeff Zucker is leading. They're still connected. And so I think that's what you should expect. There has long been rumors that, oh, would Jeff Zucker, you know, leave Redbird IMI and join CBS and lead that news and sports. I don't think that's going to be the case. I think he's raised a lot of money, a billion dollars for that joint venture, and he's made some very smart moves. I can't see him wanting to leave that right now.

10:19And I also think going backwards into the broadcast linear environment, even if it's your passion, it's not a great time to be in that game. I think what he's doing, assembling a portfolio of production assets seems much more akin to the future with streaming podcasts as well than going back in time to the broadcast days.

10:44Sara Fischer:You also mentioned that for CBS Sports, there's not a lot up right now. However, Jeff Schell is going to come over. He's going to oversee CBS once this all goes through. and he has a history of investing in sports and at different networks. And so the happiest people to see this go through have to be, let's start with Major League Baseball and let's go back through all of the leagues. Because if you look at Jeff's history, he was at Fox Sports when they, and basically launched the whole regional sports network system over at Fox Sports. He went over to NBC, ended up creating Versus, which then became the NBC Sports Channel, dearly departed.

11:30Sara Fischer:But he saw the benefits of having sports on air. He also is a big sports fan. You can see him in the background. I think he has seats right behind the dugout season tickets for the Dodgers in L.A. The idea that you're going to get Ellison's deep pockets and then you're going to get an executive like Jeff Schell, who has seen the value in sports, is great news for all these leagues that are looking at cord cutting and looking at traditional media networks that are sort of retrenching right now and trying to save some money. They have to be overjoyed. I think so. It's another outlet. it's hard to negotiate with a network or a streamer that's in this awkward phase.

12:19But the challenge is, John, there's just like not so much up for grabs right now. Like we just had so many big rights that have landed. So the NFL, I think that was 11 year deal in 2021. NBA last year, and I think that's another like 10 or 11 year deal. There's just not a lot. Hockey was a few years ago during the pandemic with ESPN. So like the only stuff I'm tracking, I'm curious what you're following that's up for grabs. F1, that does not seem to me likely to go to a Paramount. I feel like that's more of like a Netflix type of game. Then you have MLB, which you've written and covered extensively.

12:59That could go a number of places. And, you know, you have the UFC, which I don't think that CBS feels like the right home for that. So even with Jeff coming in, it's hard to get your hands on a lot of really sexy stuff. Now that doesn't mean there isn't low hanging fruit. Like we just saw ESPN renewed its deal with the premier lacrosse league. Scripps ion is taking on a new women's sports event from the folks at sports illustrated, but it'll be hard for him to get.

13:33Sara Fischer:Yeah, I, I, I agree with that. I do think that every single streamer and media network has 2028 circled because that's when baseball is going to come with their entire package. Hockey is going to come with their entire package. And of course, 2029 is the year that the NFL is going to opt out, almost certainly opt out of its deal. So right now, there's not a lot, but you can see on the horizon. And who knows what the, I mean, we're talking about 2029 and 2030, four or five years away. Who knows what the media business is going to look like then? Totally agree. Yeah. Well, Sarah, let me take a quick break.

14:16Sara Fischer:And are you still bleary eyed from France? Oh my gosh. No, I'm feeling good, John. Feeling good. All right. Great. I want to ask you all about the cans lines.

14:36Sara Fischer:you spent a lot of time in france uh over the past week uh at the cams lions event which is basically for advertisers for creators uh over in the south of france um uh sports really kind of i'm not sure if it took center stage over there but there seemed to be a lot more sports uh news and just conversations coming out of the South of France this year than I've seen in the past. Totally. So you have more and more sports-focused executions at Cannes, which we've never had in the past. Sagwell, which is a big ad conglomerate based in our hometown, Washington, D.C., they run this big thing called Sport Beach, and they get all the big athletes to come in every year.

15:20Travis and Jason Kelsey make appearances. They had Chad Okto-Cinco Johnson. I don't know what his last name is anymore. They had Carmela Anthony, Dwayne Wade. And then you have the Women's Sports Yacht Club, which is led by this woman named Laura Carrente and her agency, Deep Blue Sport and Entertainment. And that's where all the big female athletes tend to take stages. So the Sue Birds and the Megan Rapinos of the world and many others. And then what was surprising to me is like every single, you know, tech company, ad tech firm, publisher had some sort of sports focused programming throughout the week.

15:57We did at Axios. I interviewed Mike Tirico about all the big rights that NBC is going to be taking on early next year. I went and did something with Scripps and Sloane Stevens, the tennis player, about their investments in women's sports to be held an event on their investment in sports. And I just felt like you couldn't escape the conversation. I think one of the reasons, John, that it's become so hot is because coming out of the pandemic, the advertising community was really bogged down by like doing what was best for society and world good, brand safety. You know, that's all we were talking about.

16:35And I think that the market, once it started to rev back up in 2024, people were realizing that the dollars were there to be spent and they need to go somewhere and we're not going to put them all towards like, you know, social responsibility campaigns. Like we need to put them someplace that's culturally relevant. And so the place that's increasingly become that has been live sports. The other thing that happened, John, was the writers and actors strikes that plagued Hollywood meant that a lot of the sort of primetime entertainment content was no longer available to advertisers. So they started to invest much more in sports, not just live sports, but also sort of like sports documentaries, things that didn't require sports.

17:18Remember, sports athletes are not actors. They're not part of those guilds. So that's also what caused this huge surge. And it was inescapable at Cannes, which is the big advertising festival for those folks who don't know. And I think that's going to continue to be the case for a very long time.

17:33Sara Fischer:As you listen to these people talk about sports, because they've talked about this forever. I mean, sports, there was the great migration of entertainment viewers to streamers. And so sports was the last place where you could safely advertise and have viewers sit through your ads, sports and really live event programming. As you listened to these people talk about the power of sports and the need to advertise about sports, did they make a distinction at all between traditional linear television and streaming, or is it all just sports? It's all just sports. The opportunity with streaming is that you have a lot of athletes who are turning into entrepreneurs.

18:17That was the big, big theme. You know, athletes starting skincare brands or starting their own venture funds if you're Serena Williams. And for those athletes, they are running little startups and they don't have money, marketing money for big TV, linear TV budgets. So for them, the opportunity is streaming because you can target ads to a small niche amount of consumers and it's more affordable and it's more efficient. So I think they like streaming as a marketing play, actually. In terms of distribution, I don't think that they are that concerned necessarily where games are or where games aren't.

18:50But one thing I will note that was a big conversation in Cannes, especially in some of my interviews, there is a little bit of a concern around the consumer burden from the athlete perspective. They recognize that there's a shift that's happening where if you are having programming sit across many different streaming services, many different linear networks, it becomes confusing a little bit for the consumer to recognize where and when to get your content. they are the athletes are 100 aware of that now they don't seem upset necessarily by it but they know that the times are different and i think that's why a lot of them feel the need to lean into social media because with it becoming more difficult to get a mass audience to follow a sport in one place them following you on social is like the new hot currency and that's why they're going to these marketing conferences like they want to themselves become bigger brands in in lieu of that

19:38Sara Fischer:Yeah, we had, speaking of 60 Minutes and what you're literally just talking about, we had John Wertheim was on the pod just on Sunday. And he made a point that I just thought was really good. And it's that games seem to matter so much less. And sort of the stories around those games seem to matter more, a lot more. And it seems to be kind of what you're saying right there. Because I use Bryson DeChambeau as an example, where he's developed a social media platform to where he goes to various public courses and on the first try tries to break the course record. And then that's a series on reels or on TikTok, you know, that takes, you know, 10 minutes or so that, you know, my son has never once watched a live golf match start to finish or probably even seen a swing in a live golf match.

20:35Sara Fischer:he knows that uh that that that content same thing he used he had a a great uh viral campaign where he was trying to hit a home run excuse me hit a home run what a terrible analogy he was trying to hit a hole in one uh over his house uh and that took about a month or so of uh every day he would go out and and and take various shots to try to uh to make a hole in one again my you know my kids know all about that, that social media content, even if they barely even know who Bryson is or where he plays. Yes, that is a hundred percent what's happening. And that's why we just saw Omaha productions get a, you know, 800 million something dollar valuation in its last funding round, because they're so good at the storytelling around the athlete.

21:24One of the can panels I did was with women who run sports media or media franchises that cater to casual fans. So there was one woman who runs this social media first brand called Betches. And it's very much like a sort of millennial Gen Z audience of girls who care about fashion and pop culture. They just launched Betches Sports. And the whole point is to talk about the wags, the wives and girlfriends, and also the husbands and boyfriends, the habs of athletes and their fashion and their social lives. Like there is a huge, huge, huge audience for that. And that is definitely new. There've always been, there's always been interests in athletes as people, but in the past it wasn't as pervasive.

22:12I think with TikTok, especially it's now expected that athletes open up about their personal lives in a way they never really had to before.

22:20Sara Fischer:Yeah. And you have to be good on the field in order to get the initial audience. But then at what point, like, do you lose the audience if you retire or do you lose the audience if you get older and you're not playing as much? I don't think that doesn't look to be the case. No, especially if you can figure out your next media play, like launching a podcast. That's a big thing that folks are doing. Everybody has a podcast. Everybody has a podcast or getting into some sort of product line, whatever it is, that the only way that you can sustain that is by having a group of fans that believes in your story and your journey.

22:55And so that's why all these athletes are going to can is like they want to develop their storylines better, but they also want the brands to get it. And I've just never seen this, this sort of culmination of these two worlds as close as it is today.

23:10Sara Fischer:One more quick break. And I want to come back. I need to talk to you about our hometown, Washington, D.C., you had Mark Ein, one of the owners of the Washington Commanders, on stage and talk to him about the new stadium. And I can't wait to hear what he had to say.

23:34Sara Fischer:So you hosted a panel recently with Mark Ein, who owns the Washington team tennis franchise and is a part owner in the commanders and is a big supporter of the sports business here in the nation's capital. And you asked him about the stadium that's going into RFK and still has to be voted on by the city council. I'm curious to know whether he was optimistic, pessimistic. How would you characterize his viewpoint of a stadium actually getting built at the RFK site? I think he's definitely optimistic that it's going to happen. Although I did ask sort of what's your game plan if the city council does not pass this resolution on July 15th, which is when it's supposed to pass.

24:28And he was sort of mum about it. He, being heavily involved, does not want to publicly make a comment about that. But he feels very strongly that this is in everyone's best interest and that it's going to pass. There's a couple of reasons for it. One, the land over there by RFK is so abandoned, John, as you know, I actually don't live so far from it, that it's not like you have to displace so many businesses and people. There will probably be some changes, but it's not going to be so dramatic because that building has set dormant and non-utilized for so many years. to you can point to other examples in the history of D.C.

25:06where building out stadiums has benefited those neighborhoods. He talked about what bringing the Capitals and the Wizards into the Capital One Stadium in downtown D.C. has done for that neighborhood, Chinatown Gallery Place. He talked about what bringing Audi Field into the Southwest waterfront has done for soccer, but just also that neighborhood. I also interviewed the president of D.C. United, and she echoed those sentiments, Like when you bring a stadium into a neglected part of the city, you revitalize the city. So I think he feels very confident that the commanders are going to come to D.C.