Asset Class: Why Paramount Overpaid
frontofficesports.com -- Friday, August 15, 2025, 9:28:35 AM Eastern Daylight Time
Categories: Presidential Campaigns, Classified Documents & National Security, Social Media & Public Statements
Paramount's seven-year, $7.7 billion deal for the U.S. media rights to UFC represents a purposeful overpay with the aim of finding a foothold in the world of live sports.
The landmark agreement runs through 2032 and represents a huge jump from UFC's previous media-rights deal with ESPN, reached in 2018 and worth $1.5 billion over five years. The deal does not include international media rights, a market Paramount may still pursue, with chairman and CEO David Ellison noting in the press release, "We look forward to delivering this premium content to millions of fans in the U.S., and potentially beyond."
Until very recently, leadership at TKO, parent company of UFC, thought it was closing in on a deal to sell just the Fight Night events to Paramount, while the marquee numbered events would be sold to another media partner like Netflix or Amazon.
After the Skydance-Paramount merger closed Aug. 7, however, discussions ramped up and the deal announced Monday was negotiated in just 48 hours, Mark Shapiro, president and COO of TKO, told CNBC.
Thus far, the market's reaction to the deal has been mostly positive. Paramount Skydance stock is up about 20% over the last five days -- hitting a high of just under $17.50 per share. As of Thursday morning shares were trading at a little over $14.
Some analysts say there's no question this represents an overpay, but one done on purpose as part of a long-term strategy to increase subscribers for its streaming service, Paramount+.
Under the new deal, Paramount will pay an average of $1.1 billion annually -- although the deal is structured so that annual payments will get bigger on the back end. That's double the $550 million ESPN had been paying annually.
"We think Paramount overpaid for these rights," Morningstar analysts wrote in a research note, but added that the deal can "only be judged as part of a bigger vision."
According to Bobby Hacker, longtime VP of business and legal affairs for Fox Sports, that bigger vision appears to be staking a claim in the sports world.
"In the bigger picture, paying double what was being paid might seem absurd, but it could be the hook for subscribers," Hacker tells Front Office Sports.
Morningstar analyst Matthew Dolgin shared a similar sentiment, telling FOS that while the deal doesn't appear "financially beneficial" for Paramount, "that doesn't mean putting this imprint as a first move in a larger strategy -- even if you take a little loss on the outset -- won't help build something bigger."
"It remains to be seen, though," he says. "I'm skeptical that this in and of itself will be a huge catalyst."
Morgan Stanley analysts called the deal "a major financial commitment" for Paramount, albeit one that "fits within the new management team's priorities -- streaming, sports, and studios."
J.P. Morgan analysts described the deal as "a surprise," saying investors likely thought there might be a "partial role" for Paramount with UFC's rights distribution, as opposed to a "full buyout."
The NFL and NBA, for example, split up their media rights across multiple partners. The NFL is expected to opt out of its current 11-year, $111 billion media-rights arrangement with partners Amazon Prime Video, CBS, ESPN, Fox, and NBC after the 2029 season (the deals are supposed to run through the 2033 season), while the NBA's new $77 billion media-rights deal, which kicks in next season, is with Disney, NBC, and Amazon.
UFC just sold all of its U.S. media rights to one entity, Paramount.
Similar to Morgan Stanley, J.P. Morgan noted the agreement is "consistent" with plans laid out by then-new Paramount chair and CEO David Ellison last July, that the company would be "opportunistic on sports rights coming to market."
The bigger plan for Paramount may already be taking shape. FOS reported Tuesday that the company is in advanced talks to buy another TKO property, Zuffa Boxing -- an upstart boxing promotion spearheaded by Saudi official Turki Alalshikh, UFC president Dana White, and WWE president Nick Khan.
MLB is also marketing a short-term package of rights that is being abandoned by ESPN, and CBS Sports president and CEO David Berson said during a Tuesday event to preview the network's 2025 NFL coverage that "there are a lot of baseball fans around here, including some of our new management."
According to Morningstar's Dolgin, while it's true that sports rights "are going up and up," MLB can't simply point to the UFC deal and tell Paramount, or other potential suitors, to pay up.
"Sports cannot be classified so broadly," he says. "Every league is unique to itself. UFC is different from MLB, both in terms of trajectory and popularity. To me, MLB's negotiating stance is not different because of the UFC deal."
Analysts agree the deal is a boon for UFC. Morgan Stanley said in a note that "big picture, this is a highly successful rights renewal for the UFC in our view." They also noted that "long-term, this agreement should meaningfully broaden the reach of the UFC," in part because the organization's premium fight cards will move from the "double paywall" of needing an ESPN+ subscription and buying the pay-per-view to "the national reach" of CBS (Paramount owns CBS).
Further, Morgan Stanley noted UFC's value has "quadrupled" to between $15 billion and $16 billion since the $4 billion sale of a majority stake in the business in 2016.
J.P. Morgan similarly said the deal is "largely positive" for TKO, and that the agreement -- widely viewed as a death knell for pay-per-view -- "should widen the reach for numbered events substantially." The analysts at J.P. Morgan said the average annual value of the contract of $1.1 billion is "favorable to our $925 million forecast," and that UFC has the potential to make even more money because it will receive two minutes of advertising inventory per hour of streaming or broadcast content.
There's a ton of connective tissue between the Trump Administration, UFC, and Paramount. The CBS Sports parent recently reached a $16 million legal settlement with President Donald Trump, a move seen as an attempt to placate the president, so the $8 billion merger with Skydance could close ahead of football season without intervention from the federal government.
"I don't think it's a coincidence this happened on the heels of that deal closing," says Dolgin.
Meanwhile, UFC president Dana White, who is close with Trump and the administration, is in talks to host a mixed-martial-arts competition on White House grounds. If it happens, that event could be streamed on Paramount+.
This has all led to speculation that Trump may have had influence on Paramount ponying up so much dough to land UFC's U.S. media rights, even if only indirectly as Paramount tries to ensure no further fights with the administration.
Former Marlins executive-turned-podcast-host David Samson said outright on The Ariel Helwani Show that "to me it's very clear" Trump knew about the deal ahead of time. "It would be almost a fiduciary irresponsible act for Dana to go forward, or [TKO CEO] Ari Emanuel, for anyone, to go forward and not involve the president," he said.
Connective tissue doesn't necessarily mean conspiracy, however.
Hacker, who now runs his own legal and sports media consulting business, tells FOS the idea that Paramount made this UFC push in part to try to continue staying on Trump's good side "might be a bit too conspiratorial."
Sign Our PetitionThe recent announcement of Paramount's $7.7 billion deal for UFC's media rights, a staggering leap from its previous contract with ESPN, exemplifies the aggressive maneuvers that corporations are willing to undertake in the ever-evolving landscape of media and entertainment. Paramount's strategy is not merely a financial gamble; it reflects a broader trend of corporations seeking to dominate live sports as a means of strengthening their streaming services amidst fierce competition. In the context of ongoing corporate consolidation, this deal serves as a case study in the lengths to which media companies will go to secure market share, often at the expense of responsible financial planning and equitable labor practices.
Historically, the media landscape has been marked by a few conglomerates wielding disproportionate influence over cultural narratives and public discourse. The rise of streaming services has intensified this trend, prompting companies to acquire exclusive rights to lucrative content, particularly live sports, which remains one of the few genres that consistently draws large audiences. This shift is emblematic of the broader neoliberal economic environment, characterized by privatization, deregulation, and the prioritization of shareholder value above the interests of workers and consumers. Paramount's decision to overpay for UFC rights, as analysts suggest, is a calculated risk rooted in the pressures of a market that rewards immediate growth over sustainable practices.
Moreover, the implications of such deals extend beyond the corporate boardrooms and into the realm of social justice. The UFC, while popular, has faced criticism regarding its treatment of fighters, many of whom struggle with health care access, safety protocols, and fair compensation. This overarching narrative highlights a systemic issue within the sports industry, where the prioritization of profits often comes at the expense of athlete welfare. As Paramount invests heavily in UFC, it raises questions about the potential for this financial commitment to translate into greater support for fighters and improvements in their conditions, or whether the focus will remain squarely on maximizing revenue and viewership.
Furthermore, this deal positions Paramount within a broader context of labor struggles in the media industry. As streaming platforms and content creators vie for audience attention, the pressure to produce profitable content often leads to exploitative labor practices. The gig economy, prevalent in media production and sports, continues to erode workers' rights, with many facing job insecurity and inadequate benefits. Paramount's push to capture the sports market could serve as a rallying point for discussions on labor rights, pushing advocates to demand better conditions not just for athletes but for all workers in the media landscape, including producers, technicians, and those involved in the promotional aspects of sports entertainment.
Finally, Paramount's strategy can be viewed as a reflection of the capitalist imperative to commodify culture and the arts. As media companies prioritize lucrative contracts over creative or social responsibility, there is a significant risk of homogenizing content and stifling diverse voices. The overvaluation of UFC's rights underscores the need for a critical examination of how such corporate strategies shape our cultural landscape, and the potential consequences for social equity and representation. As consumers and advocates, it is imperative to engage in conversations that challenge the narratives presented by these corporations, advocating for not only fair treatment of athletes but also a reimagining of how media can serve the public good rather than merely corporate interests.
In conclusion, Paramount's significant financial commitment to UFC's media rights is a microcosm of larger trends in corporate strategy, labor relations, and cultural production. It challenges us to consider the implications of such deals on sports culture, athlete welfare, and the broader media landscape. Engaging with these issues from a critical perspective allows us to advocate for a more equitable and just society, where the rights and welfare of all workers, including those in the sports industry, are prioritized over mere profit margins. This situation presents ample opportunity for dialogue about the intersections of corporate power, labor rights, and social justice, giving rise to a movement that demands accountability and equity in all sectors of our economy.
The recent announcement of Paramount's $7.7 billion deal for the U.S. media rights to the UFC signifies a significant shift in the landscape of sports broadcasting. This overpayment, which doubles the previous media rights deal with ESPN, is emblematic of a broader trend in media where companies are making bold financial commitments in pursuit of securing a foothold in the lucrative world of live sports. While some analysts argue that this move is part of a grand strategy to bolster Paramount's streaming service, Paramount+—and potentially an international media rights push—it raises critical questions about the sustainability of such spending in an industry that is increasingly dominated by streaming platforms.
Historically, the sports broadcasting market has been a battleground for major media players, each vying for audience engagement in an era where traditional viewership is declining. The rise of streaming services has fundamentally changed how audiences consume content, leading to an escalating arms race for exclusive rights to high-profile sports events. Paramount’s decision to overpay for UFC rights appears to be a strategic maneuver to attract subscribers to its platform, hoping that the allure of live sports can drive viewership and ultimately justify the investment. However, this aggressive approach also underscores a significant risk: the potential for financial instability if subscriber growth does not meet expectations.
This situation presents a unique opportunity for consumers and citizens alike to engage in conversations about the implications of such mega-deals. As Americans, we have a stake in how these media rights negotiations unfold, particularly as they can influence the accessibility and affordability of sports content. We can advocate for transparency in media negotiations, urging regulators to examine the financial practices of corporations that may prioritize profits over community access to sports. There is also a need to emphasize the importance of equitable media practices that ensure diverse sports—beyond the flashiness of UFC—receive adequate coverage and resources.
Moreover, as the media landscape continues to evolve, we should consider the broader impact of corporate consolidation in the industry. The merger of Paramount and Skydance reflects a trend towards fewer but more powerful entities controlling vast swathes of media content, which can stifle competition and innovation. By discussing the dangers of monopolistic practices with our peers, we can encourage a more competitive environment where diverse voices and narratives are celebrated. This conversation can extend beyond sports, examining how corporate interests shape the media we consume daily, from news to entertainment.
In educating ourselves and others about these dynamics, we can foster a more informed public that is critical of corporate strategies that may prioritize profit over people. By organizing community discussions, writing opinion pieces, or advocating for policy changes that promote fair media practices, we can build momentum for a media environment that values accessibility, diversity, and sustainability. The conversation around Paramount’s bold UFC deal is just one entry point into a larger dialogue about our values as a society and how we wish to see our media landscape evolve. It’s essential to hold corporations accountable while nurturing a sports culture that is inclusive and reflective of the communities it serves.
Analyzing the recent deal between Paramount and the UFC highlights several critical issues related to media rights, corporate strategy, and their implications for consumers and creators alike. From a perspective that prioritizes community engagement and social responsibility, here are some actionable ideas and steps individuals can take to address the implications of such corporate moves:
### 1. **Support Transparency in Media Deals** - **Action**: Advocate for transparency in media rights contracts and their impacts on viewers and content creators. - **Petition**: Create or sign petitions that call for regulatory bodies like the Federal Communications Commission (FCC) to enforce more transparent reporting on media deals. - **Where to Sign**: Platforms like Change.org or local advocacy groups focused on media transparency. - **What to Say**: "We demand transparency in media rights deals to ensure that consumers and content creators are not adversely affected by corporate decisions."
### 2. **Engage with Local Legislators** - **Action**: Write to local and state representatives about the impacts of corporate media monopolies on diversity and fair access to sports content. - **Who to Write**: - **Example**: Your local state senator or representative. Find their contact information on your state’s government website. - **Email Template**: - Subject: "Concern Over Corporate Control in Media Rights" - Body: "Dear [Representative's Name], I am writing to express my concern about the recent media rights deal between Paramount and the UFC. This deal exemplifies the growing trend of corporate monopolies in the media landscape, which can limit access to diverse content and harm consumers. I urge you to support policies that promote media diversity and transparency. Thank you for your attention to this important issue."
### 3. **Promote Alternative Streaming Platforms** - **Action**: Support and promote smaller, independent streaming platforms that prioritize diverse content and equitable creator compensation. - **Example**: Encourage subscriptions and usage of platforms like FITE TV or independent sports networks that focus on niche sports and events. - **What to Say**: Share on social media or community forums: "While major networks focus on lucrative deals, let’s uplift independent platforms that promote a wider array of sports and voices."
### 4. **Consumer Advocacy** - **Action**: Engage in consumer advocacy by spreading awareness about how large media deals affect subscription prices and content availability. - **Where to Share**: Utilize social media platforms, blogs, or community groups to educate others about the implications of such deals. - **What to Say**: "With Paramount's recent overpayment for UFC rights, we might see increased subscription fees. Let's discuss how we can collectively negotiate for fair pricing and access to the sports we love."
### 5. **Feedback to Paramount** - **Action**: Provide direct feedback to Paramount about their content strategy and its implications for consumers. - **Who to Write**: Paramount Global's corporate communications. - **Email**: [paramountglobal.com/contact](https://www.paramountglobal.com/contact) - **Mailing Address**: Paramount Global, 1515 Broadway, New York, NY 10036 - **What to Say**: "As a consumer, I am concerned about the implications of your recent deal with the UFC. I urge you to consider the impact of increased media rights costs on subscribers and to ensure that all fans have access to diverse sports content at fair prices."
### 6. **Host Community Discussions** - **Action**: Organize local or virtual discussions to raise awareness about the implications of corporate control over sports media, and foster community solidarity. - **Example**: Use platforms like Zoom or community centers to host discussions about media monopolies and advocate for local sports initiatives. - **What to Say**: "Join us for a community discussion on the impact of corporate media deals on our access to sports. Let’s brainstorm ways to ensure that our voices are heard in the media landscape."
### 7. **Engage with Advocacy Organizations** - **Action**: Partner with organizations that focus on media fairness, such as the Media Freedom Foundation. - **Example**: Participate in their campaigns or volunteer to help promote their initiatives. - **What to Say**: "I want to get involved in efforts to promote media fairness and transparency. How can I help?"
By taking these actions, individuals can contribute to a broader movement advocating for fairness, accessibility, and diversity in the media landscape, particularly as large corporations continue to shape our entertainment environment.