Welcome back to The Varsity, the now thrice-weekly private email on the deals and personalities that dominate the sports business. I’m John Ourand, and I’m in San Francisco, where the locals are still in shock over the Warriors’ capitulation to the Clippers on Sunday. The loss relegated Steph, Draymond, and Jimmy to the Play-In Tournament, which tips off later tonight at Chase Center.
It’s Tuesday, so it’s Julia Alexander Day—and she has a banger of a story that analyzes the true value of F1 media rights. This must-read piece, and all of Julia’s work, is exclusively available to Inner Circle subscribers, so click here to upgrade. It’s a Marchand-free safe space!
Before ceding the floor to Julia, I want to highlight a viewership stat that crossed my desk this morning. Remember back in November and December, when everyone was blaming excessive three-pointers, and scant defense, for the NBA’s double-digit viewership decline in nationally televised games? Well, the final numbers are in, and the audience bounced back in the second half. It was still down, but only by 2 percent year over year, which is hardly sky-is-falling territory. For the record, ABC games were up 10 percent, ESPN was flat, and TNT was down double digits.
Now, let’s get to Julia…
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Stat of the Week: 29 Percent
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That’s the month-over-month increase in sports-attributable cable viewing from February, the doldrums of the annual calendar, to March, per Nielsen’s latest Gauge report. The jump, of course, was driven by March Madness. Although the men’s and women’s NCAA tournaments are slouching toward streaming, they’re still currently among the last sizable American sports properties that remain mostly available on cable. How often do you watch TruTV outside of March? Thought so…
Despite that lift, however, cable's share of overall TV viewing grew by less than 1 percentage point for the month, while total TV viewing (cable, broadcast, streaming, and “other”) actually decreased by 6 percent. Even Netflix saw its share of total viewership in the U.S. fall below 8 percent for the first time since November. On the other hand, YouTube now accounts for more than 12 percent of all time spent watching TV.
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Trend I’m Watching: Sports’ Bravo-fication Moment
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From the minute that Overtime emerged as a real contender in the sports media space, its social-first approach to driving engagement among the Gen Z and Gen Alpha demographics caught the old guard’s attention. Today, the company kicked off a new season of Draft House, which covers three top NFL prospects during their on- and off-field journey toward the draft, bringing them together occasionally to riff off one another, and building their own social presences—a format that any fan of the Real Housewives will understand intuitively. Last year’s series generated more than 3.2 million views on Overtime’s SZN channel. This year, the producers followed Shedeur Sanders (Colorado Buffaloes), Ashton Jeanty (Boise State Broncos), and Jaxson Dart (Ole Miss Rebels), all three of whom are expected to go in the first round, so the audience should grow.
In an era of TikTok content houses and athlete-driven video podcasts, Gen Alpha audiences gravitate to this sort of behind-the-scenes content between NFL seasons. It’s another reminder that, as much as ESPN and Fox try to get the youngs to sign up for their (relatively) expensive programming, new disruptors are already producing the content that the next generation of sports fans wants now.
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- The McAfee-Portnoy “apology” tour: Legacy media companies like ESPN haven’t been shy about throwing truckloads of cash at on-air talent of the brash frat-boy variety. And while they may think they know what they’re getting into, the core appeal of personalities like Pat McAfee is that they’re truly unscripted. To wit: McAfee, ESPN’s $85 million man, and fellow provocateur Dave Portnoy have spent the past week addressing a report in The Athletic about a college freshman who faced harassment—and subsequently threatened litigation—after McAfee and some of Portnoy’s Barstool Sports team helped spread a rumor about her personal life. (Well, McAfee didn’t so much apologize as promise to be better…)
We’ve been here before, of course. After all, Jets quarterback Aaron Rodgers used McAfee’s show to speak out against the Covid vaccine and tried to link Jimmy Kimmel with Jeffrey Epstein. (Kimmel, as you’ll recall, also threatened litigation.) So it’s important to remember that, amid this platform shift, the desire for eyeballs can lead to some unsavory outcomes that arrive in the form of unfiltered, unvalidated, and occasionally actionable opinions. Anyway, it’s going to be an interesting dynamic to observe. Because while mediacos covet the audience that next-gen talent attracts, they want to mitigate the legal hassles.
- Disney’s Bananas baseball deal: Ever since Disney launched an ESPN tile on Disney+ last December, I’ve struggled to understand what the use case is. MLB games are also available on Hulu and ESPN, of course, and Disney+ lacks the split-screen technology familiar to sports fans that might incentivize Dad to tune in while Junior watches Bluey. Enter the Savannah Bananas, the exhibition ball club whose Harlem Globetrotter-esque antics and appeal has sold out stadiums over the last couple of years. This summer, Disney+ will broadcast the Bananas’ games, which will also be available on ESPN and ESPN2. Now it all makes sense.
- ESPN’s multiview win: Speaking of the split screen, it’s the feature that viewers most often mention when asked what separates YouTube TV from the competition. ESPN technically has split-screen technology, but it’s limited to Apple TV devices. And since Apple TV maintains about a 10 percent market share for O.T.T. devices in the United States, only a portion of (mostly coastal) ESPN viewers have been able to enjoy the feature. Now, however, anyone with a Flagship account will be able to access multiscreen viewing on their TV, ESPN’s Jimmy Pitaro revealed on a recent Sports Business Journal podcast. It seems like ESPN, and Disney, are willing to bet on making themselves the centralized ecosystem for audiences, rather than relying on the aggregation of others. Content may still be king, but underlying tech will always lurk around the throne.
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Liberty Media’s sales pitch for Formula One’s U.S. media rights has thus far fallen flat due to the asking price, the sport’s time zone problems, and viewership numbers that lag behind social media enthusiasm and a broader cultural hype machine.
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Back in 2022, ESPN was reportedly paying Liberty Media about $90 million per year for U.S. media rights to Formula One. But these days, amid the league’s cultural resurgence and broader, always-in-overdrive hype machine, many assumed that Liberty would seek a much richer payday on its new U.S. rights deal. In fact, it’s been widely reported that the league hoped to fetch up to twice the current price, or between $150 million and $180 million per year. And in an era when NBA rights are going for $76 billion over a decade, the Savannah Bananas have a Disney deal, and a single holiday NFL game can fetch nine figures, many in the industry assumed there would be a taker.
Alas, that has not been the case. As analytics firms like Ampere Analysis have valued the league’s U.S. rights closer to $100 million, deal activity has reached a stalemate. Indeed, distributors like ESPN may sit this one out, and other big players like Netflix and Amazon are lukewarm, per The Wall Street Journal.
So, why isn’t the package more valuable? The main reason is that F1 is a global sport, and Liberty is merely selling a U.S. package. Moreover, ratings in the U.S. are down slightly—or stagnant at best—with 2024 drawing roughly 1.12 million viewers per race, down from 2023’s 1.16 million and 2022’s 1.2 million—all less than an average national MLB game. Netflix’s Drive to Survive may be credited with popularizing the sport, but it’s apocryphal to attribute F1’s skyrocketing U.S. viewership between 2019 and 2022 to just that docuseries. That success, in fact, was mainly due to the races being available on the largest cable network in the country—but that deal ends next year. For all the hubbub around the league’s social media growth—including a nearly 40 percent increase in followers on its handles between March and December of last year—it’s not translating into audience growth in the U.S.
F1 also has an interesting time zone pickle. Its most dedicated fan base is overseas, and viewers in the U.S. often have to schedule their lives around the globe-spanning races’ inconvenient hours. Meanwhile, the cost of modifying the schedule to better accommodate U.S. time zones would only make sense if viewership would reliably increase—a big if. And so the U.S. rights simply aren’t that valuable—or at least they’re not growing in value commensurate with Liberty’s reported expectations. Now, there’s no question that streamers like Netflix and Amazon would jump on an F1 deal if it included exclusive global rights, but that’s not on the table (at least, not yet). Instead, Liberty is asking for more money without the data to justify the ask.
Part of the problem is that we’re currently in a sports rights bubble, which presents the illusion that every league’s value should always increase. But that’s simply not true. These days, streaming companies want to optimize the efficiency of their content spend as they compete for incremental viewership, stronger customer retention, and sizable ad rates. Does a deal make sense for their business three years from now? Five years?
It’s often case-by-case depending on the league, and the streamer, and the size of the package. WWE on Netflix? Yes. MLS on Apple TV+? Far more difficult to judge. So who’s the right partner for F1, and what do these realities suggest about creative deal-making?
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Perhaps even more than Netflix, Apple TV+ is best positioned to make a play for F1. It’s the type of splashy, sexy, global property that fits well with the streamer’s image. (Yes, there’s also a synergy: Apple is releasing the film F1, starring Brad Pitt, in June.) The sport’s driver-facing camera angles and tech-focused productions could also become marketing vehicles for the spatial camera technology that powers Apple’s Vision Pro headsets. (Some of Apple’s competitors, like Meta, are digging into sports media rights as a way to showcase their own technologies, including A.R. glasses and A.I. capabilities.) Also, any rights fee would be pocket change for a $3 trillion company.
Liberty Media and Apple could make a deal, but would this partnership be worth potentially sacrificing audience growth for the sport? Many in the industry argue that MLS’s Apple deal has prevented the league from reaching its cultural potential. But the Harris Poll found that nearly 70 percent of MLS fans in the U.S. were also F1 viewers, so Apple has the potential to double down on its sports strategy by leaning into more event-driven leagues that could help engage a specific group of fans throughout the year.
For some, though, Apple’s investment in MLS might be the argument against it betting on F1. Both MLS and Apple insist that they’re happy with the partnership. “More people are watching our games,” MLS commissioner Don Garber has said, though no one will release viewership numbers, and some of the data tells a different story. Subscriber growth halved for the MLS Season Pass app in the period following Lionel Messi’s debut season, per Antenna. Some general managers have blamed Apple’s exclusivity for hurting the league’s growth. And there isn’t much to keep MLS fans around after the season ends—which means Apple has to spend just to reacquire the same subscriber base.
As I’ve written, a more fragmented and confusing TV landscape means more creative approaches are needed to both expand awareness and command attention. Apple’s arrangement with MLS benefits from the fact that the league also has a deal with Fox. F1 and Apple could benefit from a similar tie-up: What if Apple became the exclusive home for F1 enthusiasts, while Fox kept the league relevant for casual fans by broadcasting two of the three annual U.S. races? Currently, 57 percent of Millennials, 53 percent of Gen Zers, and 40 percent of Gen Xers pay to watch sports via a specific streamer, according to the research firm GWI. In this hypothetical, Apple wouldn’t be losing an audience to Fox—in this transforming landscape, the company would likely see a subscriber bump due to the races airing on the third-largest broadcaster in the country.
Broadcast often seems like the dullest blade in a streaming-first world, but all the data we have highlights just how important that reach is to growing sports and helping with streaming success. WNBA viewership, for example, increased 201 percent between 2023 and 2024, per Nielsen. Part of this was the Caitlin Clark and Angel Reese effect; similarly, YouTube videos about the WNBA saw a 250 percent increase in views over the same time frame. But ESPN also aired more games, and is set to broadcast a record 13 contests on ABC this upcoming season. NBCUniversal, ESPN, and Fox have also had success with women’s volleyball—one of the fastest-growing college sports—leaning on a mixed strategy of leveraging broadcast and streaming audiences.
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At some point, Liberty Media may have to recalibrate its rights strategy to incorporate distributor needs, especially as consolidation looms on the horizon for some of the major American players. Those who remain will focus on the internationalization of their streaming services. In Europe, for example, there has been a near 60 percent increase in sports fans watching games via Prime Video across 15 key markets since 2022, per GWI.
For now, however, Liberty Media’s goal, above all others, should be to show potential partners that F1 viewership in the U.S. can increase. Trying to make that a reality, even if it means bringing those rights fees down closer to the $100 million to $125 million range, is much more important than securing the bag and praying for the best.
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