Mark Shapiro’s Media Rights Cage Match

0:04Congratulations! You made the varsity podcast. My name is John Aranda and I am Puck's sports correspondent and the host of this pod. And today, Mark Shapiro joins pod. Mark is currently the president of WME Group and TKO, but I've known him for so long, way back when he was just a young superstar executive at ESPN. Anyway, Mark's been in the middle of so many big deals this year, Paramount UFC, ESPN, WWE, that I really can't wait to get his perspective on where the business is now and where it's all headed. But before we get to Mark Shapiro, today is Wednesday, September 17th, and here's what I'm watching.

0:45Actually, what I'm watching are the headlines from Saturday night's boxing match between Canelo Alvarez and Terrence Crawford. It was a huge win for Terrence Crawford, a statement win for Omaha's favorite son. A couple of the judges' cards scored the fight much closer than it actually was. And the fight started way too late for some of my East Coast pals to sit up and watch it. Those were the headlines, all of them normal. You know what I didn't hear? Complaints about buffering. I didn't hear complaints about lag time. Nobody complained about the difficulties around accessing the fight. In fact, Netflix's performance wasn't in any of the headlines that I saw.

1:27And when I called around to some of my sources to see if they agreed with that view of the fight, more than one of them laughed at me. Is your next story going to be about the sun rising today? One asked me. That, to me, is really significant. Remember the Tyson Paul fight? That was just 10 months ago. And the technical problems that Netflix had around that fight were huge. So many people couldn't log on, and many of the ones that did had to put up with terrible video quality and massive lag times. Again, that was only 10 months ago. But Netflix, they really haven't had any problems since. Not with the NFL games it's carried on Christmas.

2:06Not with WWE Raw, which it carries every single week. You don't see other streamers like Amazon Prime or YouTube melting down when they carry live events either. And the numbers for Netflix, they were good, at least according to Video Amp, which is kind of like Nielsen, but not nearly as established. The fight averaged more than 20 million viewers in the U.S. and nearly 37 million globally. That's a far cry from the number of people who watched Mike Tyson and Jake Fahl fight last November. But it's still a good number, and I can tell you, Netflix executives are happy with it. We still don't know what Netflix's strategy is going to be with sports.

2:42They like events, we know that, events like a big-time boxing match and events like NFL games tied to a holiday. But as Netflix gets used to accumulating big sports audiences like this, and given that the technical hiccups around live streaming isn't an issue anymore, it's easy to see a future where Netflix doubles down on sports rights and tries to bring even more games or abouts, whatever have you, over to its streaming service. But I'm getting way ahead of myself. We're still years away from that. now let's get to mark shapiro so mark shapiro it's great being with you here at the soho farmhouse in the beautiful cotswolds you've you've made it man it's hardly it's a road show though it's a road show for john o 'rann how about it you went you traveled quite a distance yeah for this for this podcast in order to see mark shapiro absolutely let me kiss the ring hardly i'm here 24 four hours, but I'm excited to be here.

3:41This is a great summit that Jerry Cardinal and Adam Kelly and our overall company have put together. And we're coming up on, you know, we've been here several years now. And I think we're going to move this next year to New York City. So you're going to be part of the last one here at the Soul Farmhouse. Wait, you're moving it out of here? We are moving it out of here. Listen, breaking news. Why are you doing that? It isn't. My wife is going to be, she's so angry. She's not here this year. She thought she was coming next year. It's just starting tonight, so she still has time to get here. Okay, but that's the end of it because it's just too much of a jaunt, right?

4:15It's not like it's in London. It's an hour outside of London. So we're glad. It launched exactly the right way, and we've been able to really take advantage of our whereabouts to get folks from Europe involved in it, right? There is the rest of the world out there, John, as you know. But next year, we'll ask them to come to New York, and we'll get more U.S. entities involved. What's the point around this? Why do you launch it? A lot of people do conferences. Yeah, I know. Look, it is on the list of industry conferences. But IMG is the real driver here. I mean, right, IMG distributes licenses, works on behalf of various partners' content in 150 countries and territories around the world.

5:01I mean, so they're sitting right in the vortex, right? They're trading in information and intelligence and deals and strategy and negotiations, you know, and just about every continent in every sport that's important to that continent. So we felt it was important to have our own event for who we think is the leader in the media rights industry, and that's IMG. And by the way, that's not patting ourselves on the back. This was launched by Mark McCormick and furthered by Tenny Forstman before it ever got to us here at TKO. But they've been doing it a long time. They're quite the experts, very knowledgeable, great partners.

5:42and their whole job is to build value for other properties, not necessarily for themselves. And I'm proud of the reputation that's been built in IMG and the way that Adam Kelly in particular has cultivated and fostered it and expanded it. Let me ask a couple of questions about Mark Shapiro. New role that just started less than a year ago. You're now the president of WME, president of TKO. how has your working life changed? It hasn't changed in the sense that it stays very busy, right? And there's a lot of work to be done. But I pride myself on building exceptional teams. I mean that. I spend a lot of time trying to cultivate, recruit, keep, retain, and charge up the best and the brightest around me because there's nobody at any company doing anything on their own.

6:45There's no me, I, one person. It's the teams that lead the charge. We have almost 8 ,000 employees at the two companies, TKO and WME Group. And I am blessed by having extraordinary senior leadership teams at both companies who are experts in their respective fields. And I ask a lot of my people. I'll do the same for them, by the way. I cover their back just as much. But I ask a lot of them. I'm demanding. There's no question about it. But we pay for performance and we reward for performance. And we are in search of leaders, motivators, innovators, folks that are knowledgeable about their craft and their space and willing to spend significant time nurturing and mentoring younger people to create the next stars of tomorrow.

7:40So compare this to a year ago. It sounds to me, the way that you answered that question, that there really isn't much of a change. The role that you have and the job that you're doing is very similar to what it was five years ago. It's less Wall Street meetings. That's what it is. When you're running two public companies, and for a couple of years, I was doing that in Endeavor and then also with TKL, with Ari Emanuel, and of course the senior leadership teams of those two companies. That's a lot of quarterly earnings reports, right? There's a lot of investors that you're meeting with, analysts that you're meeting with.

8:19Frankly, part of the job, but it takes me away from the day-to-day that certainly I love and gravitate towards, which is content. Whatever that may be in all shapes and sizes, from culinary to fashion to music to sports to Hollywood. So there's less of that, but you're still leading organizations with disparate assets and properties and different niches and really agendas that are trying to carve out a leadership space for ourselves and our clients in the world of sports and entertainment. So I said this in the intro, I first got to know you a little bit a quarter century ago when you were at ESPN.

9:02And the thing that I noticed way back then. Oh, that's a quarter of a century. That just really. I probably shouldn't have. That just crushes me. That absolutely crushes me. But that's a fact now. That's true. The people who reported to you then, like they would go to war for you. They, you know, I remember when you left to join Dan Snyder and you, a whole bunch of people followed, they, they, they, they left ESPN, they followed you. um so you've always had this sort of knack as a manager how has that grown what what are you doing differently now in terms of being a manager as a head of wme that you uh didn't do then great question i i put a lot of emphasis time and investment into just this i really pride myself on this because because i'm just this isn't like cliche or out of a textbook or some bs that sounds good on a podcast or false humility.

9:58I truly believe, like, I know what I can do. I know my capabilities. I think I have good self-awareness and my strengths and weaknesses, but I will tell you my greatest strength is building great teams around me, not just people that work ethic and heart and passion that will run through a wall for you, but that are willing to learn and listen and be curious and discover and kind of stay out front, right? This landscape is really changing. You and I are on the forefront of just a content empire as it relates to sports, but entertainment hasn't slowed down either. And there's new platforms, new ways of sharing content, new areas of discovery, new ways in which young viewers and consumers consume content.

10:43So you have to surround yourself with folks that are in touch, that are knowledgeable, that are experts, that have good track records, that are willing to invest in the people around them. and I'm extremely loyal to those people. And when they deliver on that scope, our bond just grows tighter. And if they can't keep up or they're not willing to do that or things change in their life and it's just not meant for them, then they're out either by their own choice or by me because we have to run at a certain speed and we can only do it if we're all aligned with the same mission. It was kind of a natural thing for you guys because as a young kid at ESPN, And you had that ability to sort of see through that.

11:26I mean, is it natural? Is it learned? I think that, you know, when I got put in charge of programming and production at ESPN, remember those two divisions were not together. They were two separate divisions. So George Bodenheimer and obviously Steve Borenstein played a big role as well, you know, had heavy hands in, let's bring these two together. Let's bring content and acquisitions and the actual content itself, the production of content, the editorial, the journalism. Let's bring them together under one individual. and that individual is barely 30 years old. When you get placed in that position and all of a sudden everybody that hired you from an internship on up is now reporting to you, that can be very intimidating, right?

12:04That very challenging. And I think from an early age just knew that I know enough to know I don't know enough. I'm going to surround myself with the right people, but I'm going to listen. And I probably spent those first 90 days, 90, not 30, 90 days on just a listening tour at ESP. and just sponging and asking questions. John Walsh, the great John Walsh, Steve Anderson, who was running production at the time, John Wildhack and Mark Quinzel, who were running programming at the time, and meeting with individual talent from Chris Berman to Stuart Scott to Dan Patrick and hearing about what was right.

12:39It's always good to hear that and celebrate that so we can do more of it. But what was wrong? What could we fix? What could we improve on so that ESPN could continue to out-distance the competitors? The thing I like about my podcast is I had no idea that I was going to go down that route. We just started it, but I found it fascinating. It's a question that people have. I am the world's worst hire of talent. I can't judge it well. And I don't know if it's a learned behavior. You know what I think my problem is, is that I'm a reporter and so I try to connect with people. And during an interview process, I'm trying to connect with the interviewee instead of having it turned around almost.

13:25It's just a different muscle that you have to have. By the way, when you're putting together a team, you want those leaders to generate ideas and strategy, formulate strategy and make you better, right? Round out your edges. So if it's ESPN and our objective is to grow ratings, which was first and foremost my mission when I was put into that job at a young age because our ratings were declining because we had just lost NASCAR. It isn't just, it's not, oh, let's go get Wimbledon and that'll fix everything. Let's get the NBA. Some are obvious if you can get them, but it's people on your team saying, here's why.

14:03Here's where the young men are going, which ESPN was very focused on. Here's the casual fans we're not getting and why. So you're listening to a lot of data, right? You're doing a lot of deep dive intelligence to understand what are the obstacles for growth. And then you're relying on your team to come up with a strategy to 180 our direction, right? To take us in a better place and improve the race. And that happened. We did get the NBA, right? We did get Wimbledon. We did launch original programming. We did put much more time into news and information with SportsCenter and Outside the Lines and create new shows like Around the Horn and Pardon the Interruption and Rome is Burning and Build Out the Afternoon and launch Cold Pizza, which would become ultimately Get Up and SportsCentury, which is a winner that would become 30 for 30 and all these debate shows that would ultimately lead to Jamie Horowitz launching first take.

14:57I mean, that's what happens. And then you get on a roll and that momentum goes, and then there's just no slowing you down. People feel it, right? They eat it, they breathe it, they're thirsty for it, and the culture thrives. And then you take care of those people and they don't want to leave. And then you just keep it going for decades. And that's truly what's happened at ESPN long after I left. And that's the kind of legacy, I think as a leader that you want to instill or you want to have in place. You have to be selfless about it. It's not your name. Ego has to be out of the equation. It's about the brand and the business and how do we prolong this for years and years to come so we're not Kodak.

15:35You just rattled, you're not Kodak. You just rattled off a whole bunch of shows, you know, part of the interruption, first take, still on the air. I mentioned a quarter century you go go that's still on the air yeah in fact tony and uh mike just signed a new deal as i i read in one of your uh in one of your columns and mike wilbon called me the day after he signed like i i can't you know it by the way it was such an awesome call it was emotional it was like do you remember when we first sat down at the at the ivy in beverly hills and i and i pitched him over like a four-hour dinner on this show and then we spent the second half of the dinner how do we get Kornheiser to commit, right?

16:17Because he's such a curmudgeon and he doesn't think he can do television. I'm sure that Kornheiser was not at the eye. No, he was not. He was asleep. By the way, it was 7 p.m. He's asleep by 7 p.m. I remember doing a story on them and I went on their set and I was like, you know, a lot of people, there are a lot of fathers to this show. A lot of people take credit for it. And that offended them. They were like, who takes credit? It's Mark Shapiro. And anybody other than Mark Shapiro that takes credit for it shouldn't. You know, you got to take chances too. like that was a chance, right? Remember, the higher-ups had told me the show won't work because it will lower sports center's ratings.

16:51My argument was, no, rising tide lifts all boats. Pardon the interruption will be higher, and that means the 6 o 'clock sports center will be higher, which will be a higher rating it delivers to the game we have in prime time, which will be a higher rating that delivers to the 11 o 'clock sports center. I couldn't convince the higher-ups of that until I actually got the job. But you have to be able to roll the dice, take some shots, It's calculated risks because if they don't work, you could be out of a job. And if they work, right, you could have a long career. And there's going to be a mix because you're going to have a lot of failures at the same time.

17:24And I just at ESPN, I mean, you know, we were just in such a dominant position that maybe I was naive, really, and immature to think that I couldn't go wrong. but I just felt like young men were so glued DSPN that there wasn't, there was almost nothing I couldn't roll out that was going to stick. I remember, you know, Nick Khan, who ironically now, you know, works with me at, uh, at WWE and TKO calling me. And I mean, he was like, I didn't even know who he was. I think he was an agent at ICM, um, at the time and just had been a lawyer, had been a manager of boxers, et cetera. And he called and said, Hey, listen, I got this guy, it was Joe Tessitore, and he's in your ranks.

18:07He does boxing, does this. I'd like to get him on college football. Okay, great. We'll do it. What? We got a million college football games. I'm not going to give him Ohio State-Michigan, but I'll make sure he gets an Idaho game and he can take it from there. And you roll the dice with that. And years later, he's doing Monday Night Football. And now he and Jesse Palmer are tremendous on college football and he does WWE. And you got to take those shots, right? I mean, you look at tape. Obviously, I looked at tape after I spoke with Nick and I knew who he was and you take a shot, right? What's the worst that could happen if he's not that good?

18:42So he'll stay on beat college football games. That's all. It's not like it's the end of tomorrow. And a part of that was a trust of Nick too, I'm assuming. Well, I didn't know him that well, but it's an attitude, if you will. It's a mindset that you're going to have to take some risks. He turned me on to paying a little more attention to Joe. I watched one of his telecasts and then we took a shot and put them on the air. And then the rest is history, right? It's the same way when you're hiring or, or you're hiring interns. I can't, I'm not going to give you the job. I'm going to open the door and then you go do the interview and you win it yourself.

19:18And if you don't win it, then, then, then, then you just don't do it. It's not like I failed you. I'm not, I'm very much into meritocracy, right? Like I know a lot of people. You know a lot of people. We all have friends. We all have family. Everybody wants a favor. There's nothing better you can do for anybody than helping their children. Truly, in life, I believe that. But they have to win it themselves. You can just open the door. You can make opportunities, but they have to close them. Mark, let me take a quick break, come back. And the reason I wanted to talk to you so badly is to talk about the market.

19:49So let's talk about that.

20:00All right, I want to talk about the UFC deal and the WWE deal, and I want to get your sense of the market. But first, the Wall Street Journal, Joe Flint, wrote this such a nice piece on you, and he quoted Steve Bornstein as saying, Mark Shapiro should be the next head of Disney. He should replace Bob Iger over at Disney. What did you think when you read that quote? What was your reaction to that? I wasn't, I don't want to say this with all humility, I wasn't surprised by it in the sense that just where I've been, right? ESPN's in my blood and Six Flags is a theme park company and WME trades in Hollywood.

20:38And, you know, I work with talent from all walks of life every single day. And of course, Bornstein knows me better than anybody. So he knows what I'm capable of and he knows my shortcomings as well. So I was flattered by it. You know, I wasn't surprised. and I'm excited to see kind of where they go in this next chapter. The first one didn't work for many reasons from Bob to Bob Chapik, but they've got a lot of incredible people internally from Josh DeMauro to Dana Walden, Jimmy Pataro. I mean, a lot of folks that can do a sensational job running the company from within. And I'm sure a lot of folks outside.

21:18You know, I'm really pleased and happy and at ease with my dual role right here at WME Group and TKO and excited about the people I'm working with and excited about our growth trajectory with both companies, public and private. We're on a bit of a run right now, but that could all end tomorrow. And you can't get blinded by a few chapters of success. We're playing the long game here, and I'm excited to be here. And I really love the people that I work with. All right, you're on a bit of a run. I want to talk about this. I was a skeptic. I was a UFC skeptic, even though you have a lot of good deals out there.

21:59It just didn't seem like cord cutting is happening. The streamers aren't coming in as heavy as I thought they would be by now. And I thought that the UFC was one of those companies that it faced some peril and you doubled the revenue that's coming in. The rice fee. The rights fee, not the revenue. Thanks. The WWE, another great deal, sending it to ESPN. I mean, timing is everything. You have somebody new at Paramount, David Ellison, and he wants to make a bang. And you have ESPN. You have, of course, the direct consumer that's coming up. I want to talk about those specific deals eventually, but you were out there in the market.

22:47What's the market like right now for rights holders that are not the NFL, NBA? Yeah, that's a good question. I mean, look, premium wins out. That's the bottom line. I mean, the UFC has become mainstream. And the WWE, right, it's sports and entertainment. It's obviously scripted. But it's carved out a hell of a space for itself. It's must-see TV. It's become premium. and it's doing huge viewership numbers on netflix i mean raw's you know top 10 week week after week in almost 30 countries in wrestlemania summer slam royal rumble i mean you know these are beacons i mean these are real tiffany products for wwe so i would just tell you the the first tier the premium content is continuing to see rights fees right when the nfl opens up and you've written about it you know no shit sherlock they're gonna get a big increase because they're the NFL.

23:42And whether you're the Premier League, you know, or you're Wimbledon or the US Open, who's just done a, you know, renewal with ESPN that IMG, you know, helped put together, you're going to see increases for the big properties. At the same time, there's, you know, not enough money for everything out there. So those secondary or tertiary sports and or secondary or tertiary talent are likely going to take a hit. That doesn't mean you won't find a property to invest in those properties like ESPN has with Major League Lacrosse. But folks are going to have to be really careful about where they place their bets because the market is demanding.

24:22The market wants growth. The market does not have the patience for you to take a platform and lose money by spending gobs of money on content that doesn't have the return when it comes to subscriber acquisition or retention. And for us, UFC and WWE have proven to be real winners, winning models for subscriber acquisition and retention. And I think a lot of that, John, plays to the fact that we're global. We're year-round. We're young, very young. Engagement is very strong. And a good split on male-female. I mean, we're primarily 60-40 on male-female on both properties. And that becomes very attractive to a lot of properties.

25:05And timing's everything. But you know what? Timing's everything. always everything. We talk about why IMG is so great. They're trading in this intelligence all over the world, right? They got their fingers on the pulse. So you have to know what's moving, where, who's in need of what, when, and where's the right time to strike and the right platform to strike and where you have that leverage. And it just takes two when it comes to bidders. And I'll tell you, the last time we were doing the UFC deal, Ari and I were out there, we had Fox and ESPN and nobody else. And luckily, Bob Iger and Kevin Mayer and Jimmy I mean, Pitaro saw the long-term play.

25:39They saw the vision and we captured a great deal. This time we had a potpourri of bitters, really, who wanted to play linear, wanted to play digital streaming, wanted to play pay-per-view. Some didn't want to play pay-per-view and some wanted to play full Monty Global and some just wanted to do the US. But it put us in a really nice position in terms of being able to maximize the market for our shareholders. Was there ever a moment where, you're a relentlessly positive guy. Was there ever a moment with UFC that you were like, okay, this is going to be a struggle. This is going to be a tough one.

26:17It's great going into the inner workings of the deal. Yes. Yes, there was, frankly. I will tell you, the difference was, and I kept saying this to our board, the difference with the last UFC deal was we had two, right? We had ESPN and Fox. Luckily, we had two interested parties. The good news here was we had everybody interested, but not everybody was willing to pay the kind of dollars we were looking for, which was 2x, right? I mean, of course, you'll get as much as you possibly can, but you're also balancing. You're not just taking the biggest check. You need to find the right brand and platform to grow your brand and grow your audience.

26:56And I'm not just saying that because that sounds good. That was something very important to us. We didn't want to be split up five ways. We were willing to, to get the money. And as long as those platforms were some of the more premium platforms, but it would have been more out of desperation. You're not looking to go to five partners if you don't have to, right? If you don't have to, if you can get it all in a few different places, putting aside the NFL, they always are. They're in a different, they're not even sports. Them go getting a split up, just everything they do seems to work. Ari and I always joke with Roger, you know, that he's just, he's just got the lucky horseshoe.