Welcome to The Varsity. I’m John Ourand, back in Washington, D.C., after a refreshing long weekend of hiking mountain trails in West Virginia and sending Marchand directly to voice mail. Over the past couple of months, I wrote a lot about Fox Sports’s marketing efforts around the Indy 500. This was the first year Fox carried the race, and the network put a lot of resources behind it (including hiring broadcaster Will Buxton, a star of F1 and Drive to Survive). The fact that C.E.O. and executive producer Eric Shanks grew up going to the race only added to the pressure. Well, the TV results are in, and they look really good for Fox. Even with a rain delay, the race’s 7 million viewers marks the largest audience in 17 years. The race drew more viewers than this year’s Daytona 500, which had its own weather problems. That almost never happens. In tonight’s Inner Circle edition of The Varsity, Julia Alexander digs into the growing competition between YouTube and Disney—a battle that was accentuated, last week, by a lawsuit that attempted to prevent YouTube from poaching one of Disney’s most well-respected executives. Reminder: You can only read Julia’s stories if you are an Inner Circle member. So make sure you click here to upgrade. You won’t regret it.

Stat of the Week: 410 Percent

Fubo’s hours-per-viewer metric has increased a staggering 410 percent in Canada since 2021, according to The Toronto Star. That number is a stunner, but the trajectory shouldn’t catch anyone off guard. Since Fubo TV debuted in Canada that year, the streamer has become the market’s go-to destination for NBA TV, the Premier League, MLB, and MMA. In many ways, Canada is a fascinating streaming market. Unlike the U.S., with its dozens of streamers, linear options, and cable networks, Canada is a consolidated market that’s become an experimental safe space for growth and engagement tactics. There’s little question that Fubo’s success in the region will inform Disney and ESPN’s dealings in the market—assuming that deal gets consummated. (More on that below, by the way…)

Trending Three

30 for 30 derangement syndrome?: Sports media is obviously a copycat industry, but the supersizing of the sports doc industry has become both vexing and counterintuitive. Sure, on some level you can date the rise of this micro-economy to Connor Schell and Bill Simmons’ 30 for 30 franchise, which took root at ESPN more than 15 years ago. But this genre really went into overdrive during the pandemic: The Last Dance, another Schell joint, rose to cultural hegemony as a rare and excellently crafted project during the dawn of the shelter-in-place era.Anyway, the rise of the form wasn’t rocket science. Sports docs trade off the currency of established players and leagues, are relatively inexpensive to produce, and tend to enjoy long shelf lives. On the other side of the pandemic, production companies like Omaha Productions and Schell’s own Words + Pictures were ascendant—with lofty valuations to boot. And while there have been plenty of subsequent cultural sensations, like Quarterback and Beckham, the market is now in the throes of oversaturation. The supply of sports docs ordered by companies like Netflix and Amazon has more than quadrupled in less than six years, per Bloomberg, even though demand for these titles isn’t growing. Few of Netflix’s big sports documentary series have ever made it into Nielsen’s top 10, or performed well in Netflix’s big data dump. Quarterback and F1: Drive to Survive remain two of Netflix’s most successful titles, but for every Patrick Mahomes or Lewis Hamilton series, there’s an Under Pressure (the U.S. women’s 2023 FIFA World Cup team) and a Court of Gold (the U.S. men’s basketball team at the 2024 Paris Olympics). Sports docs won’t ever really be capital-efficient alternatives to hosting live games, as some Netflix executives might have once intimated, and now the data continues to reiterate that most audiences aren’t even seeking them out.
YouTube’s off-court advantage: Over the weekend, YouTube’s Creators team posted a blog ahead of the Monaco Grand Prix that focused on the platform’s thriving F1 community. The timing seemed notable: U.S. rights to F1 are up for grabs, and YouTube’s official F1 channel has secured more than 7.9 billion views since it launched in 2012. Could a media rights deal be in the offing? Alas, YouTube doesn’t seem particularly interested in those rights. F1’s U.S. ratings have stalled—the audience skews international, and the time zone issue makes live viewing a domestic complexifier—but mostly it’s because the league had been seeking double its current $90 million-per-year deal with ESPN. And while YouTube is serious about becoming a player in live sports, it has all the leverage to be selective in the rights it pursues—after all, it doesn’t actually need to carry any official sports content. League executives should be penciling in meetings if they want to figure out a creative rights solution to meet audiences where fans are already hanging out.
Nike double-clicks on Amazon: Back in 2019, at the beginning of the D.T.C. revolution, Nike’s decision to stop selling directly through Amazon’s Prime retail portal ostensibly made sense. The only thing that mattered to significant brands was owning the relationship with customers—intermediaries and aggregators, like Amazon, were out. Things went well during the pandemic, but Nike stock has plunged by close to 40 percent from a year ago for, among other reasons, failing to meet its vast consumer base on their preferred channels. When Nike brought in C.E.O. Elliott Hill last year, one of the first priorities was meeting customers where they shopped—hence, Amazon.Now, Nike also happens to be a core sponsor for leagues like the NFL and the NBA, two sports that Prime Video will be broadcasting. All of this is happening as Amazon is touting its A.I. agentic shopping experience to make it easier for people to see something, click on it, and buy it. In other words, expect to see far more Nike merchandising integration during this fall’s NFL and NBA games. This is, after all, the Amazon difference that Andy Jassy and team have promised but failed to deliver on, at least outside of the NFL’s weird Black Friday game.

And now, on to the main event…

YouTube’s Disney War

The video platform’s surprise acquisition of a high-level Disney executive is the latest, and most poignant, strategic advance in its high-stakes, ongoing battle to become the go-to hub for the burgeoning sports media multiverse.

Julia Alexander

These days, YouTube haunts the hallways of Disney, from Burbank to Hudson Square, and for very good reason. The video platform has doubled its share of total TV minutes watched in the U.S., to more than 12 percent, while Disney+ and Hulu combined have hovered between 5 and 6 percent. So it was hardly a surprise, last week, when Disney unleashed the legal hounds after Justin Connolly, its former head of distribution partnerships, announced that he was decamping to YouTube to lead the company’s sports media business. Live sports is the final frontier of legacy media—and it’s also the turf that YouTube most wants to seize. The company recently hired the NBA’s Jen Chun to run its YouTube TV business; announced a deal to broadcast the NFL’s São Paulo game globally on its main video platform; and, of course, agreed to pay $2 billion annually for Sunday Ticket exclusivity some two years ago. At the moment, YouTube is talking with MLB teams over prospective game packages. It was even a lowkey front-runner in the recent NBA negotiations. Connolly’s recruitment was simply the most explicit signal of YouTube’s ambitions. And what stings most here isn’t that he was beloved. (Connolly was once a contender to run ESPN, before the job went to current chairman Jimmy Pitaro.) It’s the fact that YouTube is pursuing a larger, more well-capitalized version of ESPN’s own playbook—it wants to be the nexus in a heavily fragmented space. A remarkable 53 percent of sports fans in the U.S. say that streaming has made it too complicated to watch their favorite teams, according to a 2024 YouGov poll, and far too expensive to watch live sports. In order for YouTube to become the preeminent hub for sports, the company needed a connected executive to bring in more exclusive rights and partner with individual and niche streaming services across YouTube TV and YouTube Primetime Channels. And now they’ve got their guy.

More Aggregation Theory

The smuggler’s route between Burbank and Bristol flows both ways, of course. Last year, Disney C.E.O. Bob Iger poached longtime YouTube executive Adam Smith to become the company’s C.T.O. Since then, Smith has built out his own team, including product genius Dimitri Kontopidis, who will lead technology strategy across Disney D.T.C. products, like ESPN’s upcoming app; and longtime YouTube and Meta product engineer Andre Rohe, who will head up the company’s D.T.C. engineering business. (Disclosure: I used to work at Disney.) On some level, none of this is surprising. A decade into the streaming wars, everyone is looking at the same data and making reasonably similar conclusions. Even if the costs of league rights are rising, sports are the only category that consumers are willing to pay an add-on for, and that advertisers will flock to, in both traditional and non-traditional formats. That’s why companies like Comcast are adding R.S.N. packages on top of Peacock, and YouTube is investing in add-on services for sports, like cycling, as part of its YouTube Premium plans. A few months ago, YouTube C.E.O. Neal Mohan spoke explicitly about the investment the business is making into its Primetime platform, which will offer audiences access to their favorite entertainment outside of YouTube through one unified app, on top of YouTube and YouTube TV. The company is also about to roll out a forthcoming suite of Google editing tools that promise to create dazzling videos to better compete with traditional entertainment. YouTube’s advantage isn’t just cash, which obviously matters, but also its product-first culture. Disney, in comparison, has too many products, resulting in a bottomless source of customer frustration. And the tech stacks that power all of these different operations make seamless integration across services profoundly difficult. Former Disney C.T.O. Aaron LaBerge has talked about how seemingly minor details—like poster art for a title—posed significant challenges when integrating Hulu titles into Disney+ last year. Disney executives know this, and want to correct any misperceptions that they aren’t a tech-first company—one focused on full interoperability across all available content, from live sports through ESPN to live television through Hulu+Live TV, without forcing users to jump between different platforms. Iger has mentioned tech improvements on nearly every earnings call since his return, boasting to analysts that there will be “significant technology improvements” to the platform. Pitaro has referred to the lead-up to ESPN’s new standalone service as an “all hands on deck” moment from a product perspective. And while the company has a history of innovation and has far outpaced its legacy mediaco peers, it’s hard to move fast and break things at a $200 billion market cap operation that’s going through a succession challenge and has such deeply rooted relationships in legacy media. One former senior D.T.C. employee, who recently left Disney to work on a competitor’s platform, told me that the lack of tech innovation was a cause for their departure. Disney’s biggest advantage, which anyone inside the company will tell you, is its content. This is never more true than with sports. The problem is that Disney needs those expensive, rented games to entice subscribers in the United States to spend $30 a month on yet another service. YouTube doesn’t need to offer more incentives for consumers to engage with its platform—leadership merely sees an advertising and subscription opportunity as more longform content is created and sought out by audiences globally. When Smith joined Disney, he specifically called out the company’s “unique positioning to thrive in this next evolution of entertainment and sports.” Connolly, meanwhile, is betting that YouTube can beat Disney to the punch of becoming the go-to hub for all sports needs: live games, yes, but also podcasts, niche subscriptions, and athletes’ continued pivot to content creation. And he may be looking out with a longer telescope. After all, no less than Stephen A. Smith negotiated to keep pursuing side opportunities—like his YouTube channel with more than 1 million subscribers—as part of his $100 million renewal with ESPN.

Thanks for this great piece, Julia. I’ll see you all on Thursday. John

Puck sports correspondent John Ourand and a rotating cast of industry insiders take you inside the executive suites and owners boxes where the decisions that shape the entire sports business are made. You’ll hear interviews with players, network execs, and everyone in between. The Varsity is an extension of John’s private email for Puck by the same name. New episodes publish every Wednesday and Sunday.

Ace media reporter Dylan Byers brings readers into the C-suite as he chronicles the biggest stories in the industry: the future of cable news in the streaming era, the transformation of legacy publishers, the tech giants remaking the market, and all the egos involved.

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