UP533 The Bundle: Super Bowl, cultural relevance v culture war; ITV's in-game ads; FIFA and TikTok

25:42Yannick Ramcke:i'm fully with murray the consumers also getting used to everything and i think case in point has been the nfl red zone in the us where there was if you might remember at the beginning of the current NFL season there was huge and quote-unquote huge pushback because they added like minimal advertising to the red zone which always marketed itself as seven hours of commercial free football and this may took a week or two and everybody forgot about it and I can tell you next season there will be more advertising than last season and no one will care or complain I think the final

26:20Murray Barnett:point on this is is actually when you think about soccer rugby these are all sports which are steeped in a certain amount of tradition where commercialization of them has never been historically the primary objective of of playing the game whereas you know MLB NHL NBA NFL are purely commercial entities from day one the objective is always to generate the most amount of money so to look at other sports in the context of what's happening in the u.s is a dangerous analogy because it comes from a very very different place in terms of the way in which

27:00Yannick Ramcke:people think about them now you are assuming that sporting success is a north star for european sports which i guess it depends on whom you are asking but different discussion right okay let's

27:11Richard:move on then right where should we go what's the next obvious place let's talk about espn Disney and NFL closed their mega deal in the last week, giving the league its non-controlling interest, leaving Disney with 72 % and Hearst 18%, according to the company's 10Q. What is a 10Q? Quarterly earnings.

27:33Murray Barnett:It's a filing. It's a filing for me.

27:36Richard:and the NFL's 10 % non-controlling stake in ESPN was valued at approximately 3 billion which gives us a total value for ESPN in the 30 billion dollar range why is this important it feels like a rebuttal to the sort of binary of tv is over streaming is everything is that one reading of this that there's still a lot of money in good old ESPN I think now you're already

28:05Yannick Ramcke:touching on one of the detailed points regarding, okay, is it linear? Is it streaming? Is it actually converging to each other? And I think taking a step back first, bigger point is that we have seen that go-to strategy to create value for shareholders of spinning off, quote-unquote legacy slash linear media, especially in the US market, as the US market consolidated. So Warner Brothers Discovery considered this linear spinoff, but now actually seems to follow through with the sale of the entertainment streaming slash studios business to Netflix. We saw this with Comcast spinning off the linear business into Versand or something like this.

28:52Yannick Ramcke:And I think ESPN is actually like a counter example here where they have also adjusted their reporting structure just to represent future business and value. But they actually bucket ESPN under the sports category from linear to streaming and everything in between. So I think that is exactly the right question that you are asking. Is it linear? Is it streaming? Is it both? I think nowadays there is not this single go-to distribution system or technology because you want to address the diverse addressable market and consumer marketplace where some might still be in the traditional linear distribution system, while others may, especially digital natives, may have moved on or have never been in the linear distribution system.

29:41Yannick Ramcke:and the news here was actually I think the price tag. Okay, how do you value such a business that is media, linear plus streaming? And if you look at the multiples, the 30 billion, which is now given as an official price tag due to the acquisition of NFA network, I think it's a quite healthy multiple. If you consider operating income of around 2, 2.5 billion, even though declining 25 % quarter, year over year, quarterly, I think it's still a healthy multiple that at least the NFL was willing to accept as they divested from their legacy business.

30:19Murray Barnett:It's a zero risk for NFL because they have ESPN as a buyback option in 10 years time. And the NFL has an option to increase their stake in ESPN as well. So I think it's a good succulency for them. They get out of the production business with NFL networks sitting under ESPN. I think you're right that the interesting point here is the valuation because the notional value of ESPN as a standalone has been anywhere from 20 to 50 billion over the last five years, which shows sort of the volatility of the valuations of media assets. But I think this feels like it's a pretty good number. I don't think it's a question of buying linear or buying streaming or whatever.

31:06Murray Barnett:you're actually buying a brand which is so ubiquitous in the states and i think you know the the the death of espn seems to be something that that that us commentators sort of gloat on every now and again and i think this just points to the fact that they've they're still some of the smartest people in the room about how and how they're developing and changing and i mean you guys know having me having spent a long time at espn i'm a massive massive fan of theirs and still think that they're on the right trajectory to be with us for another 100 years in some form or another. And I think that this is just them being super smart and also should be seen in the context of NFL opening up their deals in a few years' time.

31:51Murray Barnett:So this puts them in pole position in terms of guaranteeing that they're going to have some NFL going forward, however those rights are structured going forward and even just on a you know immediate basis they're already taking the number of nfl games that they get from 24 to 28 by having nfl network as part of it even though they're effectively losing three games from espn because they're no longer doing the simulcasts but with the complicated math is that the short answer to the complicated math is that you're getting more NFL games through ESPN than ever before as part of this and you have two superpowers sort of aligned in a at least corporately in a strategy for what the future holds and you know if you don't have NFL you're not a big player in the states and this is one way that ESPN and Disney have guaranteed that they're going to have NFL going forward.

32:48Richard:One of the things I can't quite work out is that so nfl has tied itself to espn in a competitive market and i assume that guarantees them nfl games and you can't get a safer bet in american sport than

33:03Murray Barnett:sorry but what i should clarify is it doesn't guarantee that espn will get nfl games it guarantee the guarantee is that they will have a large amount of nfl content so we talked about this in the past that espn is two parts espn is sports fabric so that's news and information around sports gambling to a certain degree as well and then it's live events and they're definitely guaranteed to have the sports fabric part of the nfl going forward and that they'll get the live events at a minimum through the nfl uh through through having nfl network. Whether they retain a lot of that to go through ESPN, you've got to think that they will retain that because they're obviously corporately aligned.

33:48Murray Barnett:But my guess is that NFL will be going into the market saying, this is carte blanche for everybody. You know, it's all fair. It's about who pays the most amount of money.

33:59Yannick Ramcke:I mean, they pretty much have to say this. Otherwise, you would probably have some antitrust problems and challenges. My point, I think last time we spoke about it is that nfl cashes out at a still profitable rate for its linear television network with nfl network which like a decade ago served a huge strategic purpose by building up some artificial competition into the rights buying market but i think everybody would agree that a standalone linear television channel even if and when owned and operated by the nfl is not competitive nowadays anymore if it's not tagged to a bigger media company to a broadcast channel or anything so they sell off this legacy part of their business they retain actually the future forward part of the business with nfl plus and all the digital business but i think all incentives align here including the fact that espn can put a quite attractive multiple and market valuation onto a segment which may be up for grabs or may be spin off or spun off at some point in the future they now have the reporting structures in place they have with the fceo that could also i think would be good enough to run a publicly traded separate company they just made the ceo decision on the broader disney company that deprioritizes sports so i think a lot of strategic optionality across the board with the most recent developments here with ESPN.

35:33Murray Barnett:I think one interesting detail in this whole story was the piece around the Walt Disney company taking$110 million hit for the 15-day blackout that it had on YouTube. And it does point to the fact that even if everybody's going direct to consumer, that there is still a reliance on the ecosystem that sits around aggregators and other operators being hugely important to the financial well-being of all of these organizations. And, you know, I don't know how much you attribute of that 110 million to ESPN, but even if you said that that was 25 % and then extrapolated that over the course of the year, that you all of a sudden get to a pretty big number for just that one operator.

36:20Yannick Ramcke:I mean, I can tell you that the operating income decline year over year for the first quarter 2026 this is how their calendar is working has been 60 million so 23 they declined i think it's fair to say to attribute 60 out of the 110 million to the sports part of the disney the world disney company this is pretty much like a big part of their operating income that they are still making and they made 190 million this quarter they made 250 like this last for same year last quarter so the legacy business is still what runs the profit and even like 15 days on one of many distributors makes such a difference in the bottom line numbers because ultimately it's a small margin game nowadays okay right let's jump there's a there's

37:10Richard:a natural jump here and we'll just finish off this bit with talk about how much money the streamers are spending or expected to spend so this is a research piece by ampere analysis media analytics firm so streaming services are expected to spend 14.2 billion dollars on sports rights in 2026 with amazon prime video to be this year's highest spender the media analysis firm ampere predicts that streamers will spend seven percent more than the 13.2 billion they paid for sports rights last year about 44 percent of that total will be paid by global generalist streamers which do not focus on sports content okay what's happening here and is this just a marker for the growth of streamers

38:07Yannick Ramcke:us why is this significant i for me there were three things standing out number one i think what we see is that streamers quote-unquote and i think the definition of such is another point streamers are taking a bigger share of a flattish market so they overall are spending more than their legacy counterparts over time so i think there's a market share shift even though the market as a whole might not grow at the same rate. Point number two is I think it's an unfair comparison because the streamers are more inherently global or multinational while historically and also the biggest broadcasters in the sports broadcasting market have been local companies where your spend is inherently limited because your target and addressable market might be a single country territory instead of the entire world.

39:09Yannick Ramcke:And point number three is back to the aspect of what's a streamer and what's not and back to ESPN being categorized as ESPN sports, not as ESPN plus or ESPN proper flagship linear channel, but like media is convergent. And my go to example is always the zone here in Europe. once they saturated the streaming market they launched linear channels carried by satellite and cable tv operators show a most the most traditional pay tv channel that you can imagine the zone one and two in order to reach the market that is not yet in streaming so calling the zone a pure play streamer might not reflect reality anymore either and it might be a streaming first company but not a streaming only so global companies convergent media and streaming how Ampere defines it taking a bigger share of a flat market where like for me the three take a risk

40:13Murray Barnett:I wasn't surprised about the analysis I was a little bit surprised by the number which you know when you break it down actually I shouldn't be that surprised about because we know of you know the zone paying a billion dollars for allegedly for the fifa club world cup we know about the various big deals that there are in the states with the streamers i thought the interesting point in here was about the the generalist players because we all know that it's relatively easy to get subscribers initial subscribers through the door but then it's how do you keep them and how do you grow them and so sports as we know from very traditional legacy players like you know sky sports or you know disney bundles or whatever is or direct tv is that sports is something that that drives both subscriber avidity reduces churn but also incremental subscriptions and i think that's what's really attracting the generalists if you assume that somebody like an amazon or netflix is a generalist which they are that they have gone and got all the you know to use yannick's favorite phrase the the low-hanging fruit and we're now at a stage where you're looking for those pockets of additional subscribers and those are coming from people that are fans of particular sports and that's one of the things that drove something like paramount and ufc in the states but they are also a fantastic subscriber retention tool and you know we'll go on and talk about how you know lfp is doing that with world cup in in france but in a very tactical way but with generalists sports is a great subscriber retention tool

41:49Richard:okay right let's uh marie mentioned there about lfp media let's talk about that so we go to france now so lfp media strikes league un plus world cup rights deal so league un plus the in-house streaming service owned by french soccer's lfp will broadcast the upcoming 26 world cup in america Mexico and Canada and all 104 games striking a deal with the global governing body FIFA

42:20Murray Barnett:Murray what's happening well firstly I think when I when I look at Ligue 1 plus they're doing everything that I would do if I was launching a streaming service if it was purely down to me they're doing you know the pricing is right the the longer term view is right even this acquisition is a smart one in terms of the period of time that it happens. So it allows them to reduce subscriber churn. It also increases the potential reach of the service in terms of new subscribers. But I think that the maths just don't add up, right? Like the whole thing is pointing to the fact of how difficult it is to make services like this work.

43:06Murray Barnett:even a very back of an envelope analysis of the amount of money which they're allegedly paying which Le Keep is reporting as being around 20 million it makes it very difficult to see how they're even going to break even on on this particular acquisition even if it is absolutely the right thing that they should do and you know hopefully this isn't a one-off but they're thinking of this as more of a strategic longer-term play looking at other things that they might be able to have at other times and taking that long-term view of it. But, you know, I do feel for them a little bit because I think it's just super difficult to see how they can make this work for the kind of numbers that they want.

43:45Yannick Ramcke:Yeah, I think the natural transition from the previous topic into this one is that we have identified that it's difficult as a pure sports streamer to be competitive in the consumer entertainment marketplace. it's even more difficult as a single sports streamer. Now imagine you are like a single property. So you're talking about one sports and one competition and want to go direct to consumer in that one. So I think in terms of playbook and strategy, the league does a lot of good things. Obviously, the overall situation is a mess given where they are coming from with all the media rights agreements that were terminated with the zone ahead of next season also the one with the one remaining with being sports has been terminated it's a horrific situation but they have said and i will need to add a disclaimer in a second but they have said that they are actually like in line with business case and business plan the problem is like business plan for the first year it counts for 100 to 200 million like gross revenues it's not like bottom line licensing revenues that you are normally getting if you just license out your ip so it's a horrific situation for the french football clubs in particular but with the cards that they are dealt they're actually doing a tremendous tremendous job the one disclaimer that i have to make that obviously not obviously but league on plus is also listed in the one football tv channel store in france to give you some context there also again doing things right and one of the things that murray could have also mentioned is that okay their distribution strategy they don't go direct to consumer and hoping that everyone is coming to their website or mobile application they work with the biggest distributors in the marketplace that are wholesale pretty much the league on plus service be it telcos like free or orange or like video channel stores like prime video the zone one football tv we have been quite late to the party with one football starting like i think at match day five or six but actually have cast out our niche of the market by doing actually some great innovation like mobile only passes and really try to get incremental consumer take up but with all that uh being said i think the holy grail of a streaming service and again coming from a b2b mindset trying to do b2c things it's like churn and mori i think you had the numbers in the in the data that 70 percent of their current subscriptions are actually annual passes so they are not in this monthly hamster wheel of subscriber retention marketing but have some health room there but churn especially those monthly subscribers during the off season like this is crunch time for for them and i think whether it's friendlies from the teams which can be expected to be part of the service but more importantly this right acquisition i think again it's taking a lot of boxes in terms of strategic initiatives that you have to do it's an uphill battle nonetheless to make this be a bill for

47:08Richard:the french football ecosystem so is that just to finish off you've got this channel which is for the league in france i'm just trying to equate this to what so if this was the premier league channel and then they get the the rights of the world cup for the summer because it gives subscribers something to do when the premier league is not on essentially is the league plus

47:31Yannick Ramcke:it's just another broadcaster it is run by the league instead of a media company but you can imagine like just another broadcaster running a streaming service and now they have acquired third-party rights to add to their first-party rights that they already utilize to run their

47:48Murray Barnett:streaming service but it's also not random rights in the sense that you know it'll feature it'll feature a lot of games that france are taking part in it'll feature other teams other national teams that have players who play in the french league so i mean it's a natural extension from that perspective in terms of the type of viewer and level of interest that people have in it i think it's i think it's very smart because they've got the entire tournament so you have 54 games i think on on mcs uh free to air network but you're going to be able to see the entire tournament every single game on on this service so it's just it creates a bit of inertia around churn hopefully adds a few subscribers depending on some of the talent that they might have in terms of production but i think it's a pretty smart move it's just the economic as you know as we said the economic environment which they're operating in is just makes it very challenging

48:43Richard:to see how they can make this work because it's a poster child for direct to consumer league channels it's interesting i hadn't really thought about it in obviously in any depth but that summer hiatus is going to be a challenge for any league so the premflix question that is going to be a problem and then you start to say right okay i'm going to have to then put a world cup or euros on

49:06Murray Barnett:or whatever it is but it's why in the uk there's value to cricket you know not it's not the only reason but cricket outperforms its actual value by having a high strategic value and the clubs will

49:18Yannick Ramcke:be happy to throw their friendly matches their summer break friendly matches onto the streaming service but it's only so much of an incentive for like a cordial fan to stick around during the summer break still paying 20 dollars or 20 euros plus and final point i think the price tag for the pay tv world cup rights which is ultimately what we are talking about of 20 million i think it's also reflective of the not that competitive market environment in the french market where The French League is actually the biggest party to suffer from, but it's just not a hyper-competitive scenario. And 20 million is less than what be in sports, I think, paid for the previous cycle.

50:04Yannick Ramcke:And again, as we had somewhat of a consensus, they're ticking all the boxes. It's a challenging situation regardless.

50:12Richard:Right, let's just stay with FIFA. Just to round off a couple of things. So TikTok, what is a preferred platform? The talk has been named as FIFA's first ever preferred platform for the FIFA World Cup 26, a new designation which gives the short form video platform a deeper role in the tournament's digital ecosystem, which is a phrase I can never say, than any social network has previously had. Yannick, talk to me about this. When you first saw that, because obviously you're embedded into this world of the ecosystem around football, what did you think when you saw that phrase?

50:47Murray Barnett:He's also the youngest of the three of us, so probably closest to the TikTok generation.

50:53Richard:Still somewhat close.

50:54Yannick Ramcke:But what people don't know is that Yannick is much, much older than he looks. No, I keep trying. But the point that I want to make is what stood out in your prelude to all of this is you said it's a preferred platform. Because I don't know if I break news, but there will be more preferred platforms to come. This is far from an exclusive designation. And if you want to take a somewhat, not hypercritical, but fair view, I think on that one, it is pretty much not a ransom that FIFA is asking from the social platforms, but we often discussed in the past that about the value exchange between platforms and broadcasters and club public federations, platforms capturing all the value, but not really contributing or like just free riding on rights or content that others acquired, like the broadcasters.

51:53Yannick Ramcke:And I think what stood out to FIFA is that there is serious business going on. I mean, we all know what the market cap and valuation of the TikToks, YouTubes and Facebooks are, that there is a lot of value creation where they are not really participating. And this strategy is pretty much a mean to finally participate in those downstream economics. So everything that happens after the media rights acquisition from their media broadcaster to participate. and what they effectively have done as far as how it does look to me outside looking in is that the platforms can whitelist themselves by paying probably an eight figure, if not nine figure, but I think eight figure is very safe to say, eight figure sum to FIFA so that they do not become eligible to host FIFA content, but they remain eligible to host FIFA content.

52:55Yannick Ramcke:Because for them, they now are paying money for something that they were already allowed to do before, where the broadcaster can decide to put the highlights on their respective YouTube channel.

53:08Richard:So this is a sort of agreement which suggests that stuff is going to appear on TikTok anyway. People will stream World Cup stuff. TikTok, they're paying this fee because they don't want to get sued by FIFA at some point? Or is that what's happening? or the other the other question i had is whether this is tick tick tock us because that's now a different entity and it's quite a sort of it might be sound like a minor point but it you've got this situation where the u.s bit of tick tock has been bought by larry ellison and andreas and horowitz and you know a consortium of financiers which people are now saying well okay well how does that affect the algorithm and there are things that are going to happen in you know on tick tock in the US that are different.

53:51Richard:So there's a couple of questions that jump out. And the other bit to it, just before I let you back in, which is there's a good stat in there. Now, whether I believe it or not, the number is always wrong and all that. But TikTok game plan turns fandom into measurable business results for our sports partners, this is TikTok talking, with fans being 42 % more likely to tune into live matches after watching sports content on TikTok, particularly younger and female audiences which is a number which i don't believe but will you know by that's by the by

54:20Yannick Ramcke:but just give me your sense yeah so let's start with question number one this agreement doesn't ensure that there will be highlights or live matches on tiktok because for this tiktok still needs to have an agreement in place with the local broadcasters to whom fifa sold their rights they are just now eligible to have these conversations and in case of an agreement with the local broadcaster the local broadcaster can put it on their tiktok channel obviously fifa i think tried to come up with some incremental content that comes attached with that agreement but obviously the crown jewels the most variable content and ip has been sold to the broadcaster So there is not much that FIFA can actually sell to the platforms because they have sold out to the broadcasters.

55:13Yannick Ramcke:Your third point was pretty much the pitch to the broadcasters to put the highlights and maybe some live stream minutes onto respective TikTok channels. Because as I said, such an agreement still has to take place. the designation as preferred platform only make sure that if there is such a discussion and there is such an agreement that tiktok is eligible to put that content on their platform and the us versus global entity i believe this tomorrow to figure out because that's that's yeah i mean

55:46Richard:don't worry about that one it's just it was just something i was thinking about as you were talking murray sorry i rudely went back to janik with the uh you know i went back to the youth

55:54Murray Barnett:for the i mean i think i think you hit the nail on the head at the beginning is that there's been a bit of scratching scratching of heads over the last few major events spanning the last i don't know 10 years or so about uh effectively all the social media platforms getting a free lunch off of the big events so i think this is an example where you know they're trying to do two things one stay relevant to a younger generation but perhaps more importantly make sure that they're actively monetizing the platforms and but doing it in a way which doesn't take away from the existing relationships that they have with broadcasters so hence no full legs games etc but i think it's also buried in the detail of it somewhere opportunities for local broadcasters to effectively partner up with TikTok in various countries to sort of be able to monetize that content directly themselves as well.

56:51Murray Barnett:So I think this is pretty smart. And as Yannick said, this is a partner. It's not the exclusive partner, so it doesn't rule out the ability to do it with others. And then the final part is the regulatory aspects to it. Well, it's kind of vague enough, And there are various different scenarios that can play out where TikTok will be able to play just outside the US, will be able to play in the US, but not internationally, or be able to play everywhere. And so I think there's enough sort of optionality in the way that this deal is at least being portrayed that one way or another, it's going to work for everybody.

57:30Yannick Ramcke:And if someone offers even money for the bet, if YouTube also becomes a preferred platform, I would take that bet. But I think those odds won't be available anymore.

57:41Richard:Okay, right. Last one is piracy. Yannick, just talk us through this. La Liga getting tough. That's a sort of phrase that you could have used at any point in the last sort of 15 years, isn't it? But let's see, how tough are they getting now?

57:55Yannick Ramcke:Whether it's tough, desperate, or actually quite effective with anti-piracy strategies, won't judge. But I think we discussed in the past that, okay, solving piracy for sports, and we always, and at least I always say it's used as a stalking horse to argue why media rights are not growing or not growing at the clip that they have grown for some time over the past decade. but obviously there is some leakage in the market why and where some revenues are lost we always said okay look this or i said this requires to solve this as we have solved this in the music industry it requires an orchestrated effort between legal framework and enforcement and we have seen a bunch of news around like enforcing pull downs and so on recently legal enforcement and framework to the security technology becomes more even more waterproof and three and maybe most importantly and this is how the music industry has primarily solved the problem of piracy through product innovation i mean we daily talk about all the fragmentation and money used and we are not able to navigate let alone afford this fractured digital marketplace But I think La Liga has come up here with a quite effective strategy to prevent piracy for their commercial premise rights.

59:25Yannick Ramcke:And commercial premise rights for La Liga in Spain is nothing that goes for 20 million like the World Cup in France. But I think it's a 150 million per year kind of business. and they have introduced a whistleblower program where you can pretty much notify the authorities if a commercial premise is running on a either pirated account or on a normal consumer account because they are supposed to pay or buy subscriptions made for commercial premises where you pay accordingly how big your establishment is and so on.

1:00:01Richard:It's all a bit sort of starzy, isn't it? A bit secret police. are we you know so my so children sort of blowing the whistle on their parents that sort of thing

1:00:11Murray Barnett:is that what they're after i was worried about my uh my barbers where i go to watch a match at three o 'clock on a saturday am i supposed to be dobbing him in now for 50 quid yeah yeah well

1:00:24Richard:stay at your haircut i would say no don't do that right okay let's let's finish off i will say just before we finish, we've got Barney Francis coming on, which is sort of very bundle adjacent. And so if you're interested in the bundle, you'll be interested in that. That's next week. So Barney Francis is executive vice president of IMG studios, former managing director of Sky Sports. So he covers quite a lot of the ground. It's very interesting conversation and you'll enjoy that. But in the meantime, a big thank you as ever to Yannick Ramke in Berlin. Dark, cold, snowy Berlin indeed. Yeah. and to murray barnett in london ish london adjacent london adjacent good to see you both and you till next time cheers thank you

1:01:29Thank you.