UFC Begins Fielding Offers for New TV Deal, Initial Bid from FOX Lower Than Expected
The UFC has started to engage in negotiations on a new television broadcast deal that will start in 2019, following the conclusion of its current contract with FOX.
Earlier this year, the UFC had a three-month window to negotiate exclusively with FOX on a new broadcast deal, but sources said that the network never made an offer during that period.
FOX is currently paying the UFC around $120 million per year on average and while the network hopes to keep the mixed martial arts promotion exclusively on its network of channels, the two sides haven't come to any kind of an agreement yet on a new deal.
When the UFC sold last year for just over $4 billion to a conglomerate led by Endeavor (previously known as WME-IMG), the company said in financial documentation that it expected to recoup a huge portion of the money used for the purchase with a new television rights deal expected to draw around $450 million per year.
Sources told MMAWeekly.com that FOX planned to make a bid on the UFC broadcast rights, but expected the number to fall well short of those targeted figures. Last week, the Sports Business Journal reported that FOX finally made that offer at an estimated $200 million per year to keep the UFC.
Separate sources speaking on the condition of anonymity confirmed that number was relatively close to the offer made by FOX during its initial negotiation with the UFC.
Obviously, $200 million per year falls well short of the $450 million per year estimated by Endeavor when purchasing the UFC, but negotiations are far from finished.
As previously reported, Turner Sports was also expected to make a charge at landing the UFC television rights to spread across several networks, including TBS and TNT, as well as TruTV. The same report from Sports Business Journal added that Turner may run into some roadblocks with a potential UFC television deal due to the lingering merger between AT&T and Time Warner.
Time Warner currently owns the Turner networks and the UFC would add value if the merger with AT&T goes through because that company already owns DirecTV, a major pay-per-view distributor. The UFC is still primarily funded through the success of pay-per-view broadcasts.
NBC is also expected to be one of the top suitors during the negotiating period with other parties such as CBS and ESPN also reportedly taking meetings with the UFC, although sources have said those networks are a long shot to make a competitive bid.
The UFC is also expected to field offers from online companies such as Amazon and Oath (Verizon's online company), but it's not likely either of those would get exclusivity with a new television rights deal.
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Instead, to reach that lofty $450 million per year goal, Endeavor may try to package together a couple of different options to split programming between a broadcast network like FOX alongside a separate package for an online company like Amazon.
One other caveat that has clogged up the potential bids reaching higher figures for the UFC is another upcoming television deal. The WWE will be fielding offers with its current deal with NBC/Universal (who own the USA Network where WWE airs the majority of their programming) ending in the fall of 2019.
WWE consistently gets much stronger ratings on television than the UFC and its current deal pays approximately $180 million per year. WWE has also reportedly taken meetings with FOX as well as CBS, Disney, Amazon, and other networks in anticipation of its television rights deal coming to an end.
For now, the UFC will continue to take meetings as the negotiations for a new television rights deal will likely heat up again in early 2018 after the holidays are over. The UFC's current deal with FOX runs through the close of next year.
