Monday musings: Of Paramount importance

Sports Media Watch presents thoughts on recent events in the industry, starting with the Paramount-Skydance merger and its implications for sports TV.

One of the biggest storylines in news, media and politics is the Paramount-Skydance merger. After an on-again, off-again saga during the early part of last year, the merger was finally agreed to exactly one year ago — just in time for the home stretch of the presidential election, and a questionable lawsuit against Paramount-owned CBS News by its eventual winner. While few observers believe CBS would have lost at trial, Paramount’s much-criticized decision to settle was widely viewed as a necessity to win regulatory approval. Putting aside the implications of such an arrangement, the expectation is now that the Skydance-Paramount merger will be eventually approved.

As far as media mergers go, Skydance-Paramount does not change much on the surface. This is not GE acquiring Universal, putting NBC and USA under the same umbrella — or Comcast acquiring NBCUniversal less than a decade later, combining NBC and USA with Golf Channel and Versus. This is not even Disney picking up most of the Fox cable networks, or WarnerMedia and Discovery combining their platforms into an ill-fated new venture. The Paramount properties will remain the same as now.

The difference is that Skydance has both the resources — and seemingly the intention — to make Paramount into a bigger player in sports television. Currently, Paramount’s $8.9 billion market cap is closer to Nexstar ($5.38B) than to fellow major media conglomerates Fox Corporation ($23.7B), Warner Bros. Discovery ($27.5B), Comcast ($132.5B) and Disney ($221.3B). (Including debt and cash, Paramount is a bit closer to Fox, $22B to $28B.) While CBS may seem every bit the equal of its “Big Four” rivals, its approach to sports rights has been considerably thriftier and more selective.

Consider the three most important CBS Sports partnerships. Yes, CBS is able to afford a full NFL rights package for more than $2 billion/year — an essential for any major media company. But the network was only able to keep the NCAA men’s basketball tournament as part of a joint deal with then-Turner Sports, and pays nothing for rights to the Masters golf tournament.

The network’s other major rights deals include the Big Ten “B” package, filling a vacancy that opened when the network failed to renew its SEC football deal. (Per reporting when the deals were struck, CBS is actually paying more for the Big Ten “B” package — $350 million/year — than ESPN paid to steal away the SEC “A” package — $300 million/year.) Plus, CBS pays some portion of the $700 million/year PGA Tour rights deal, which it splits with NBC and Golf Channel.

With all due respect to international soccer, it is ultimately a light portfolio. CBS has not held NBA rights since 1990 or baseball rights since 1993. When it was desperate in the mid-1990s, it got passed over for NHL rights in favor of FOX. It last aired the Olympics in 1998. Other than renewing its own properties, it has for years stayed mainly on the sidelines during major negotiations — even when business was comparably booming.

But Skydance clearly has designs on changing that. In a conference call following the announcement of the merger deal last year, Jeff Shell — the former NBC executive who will be the new president of Paramount — called sports “the foundation of our business,” adding that “if there’s compelling rights in the future that we think can bolster us, we are a buyer probably, rather than a seller.”

If that is to change under new management, there are a handful of opportunities to make a considerable splash in the near term. Rights to the 2030 FIFA men’s World Cup have yet to be awarded, and the current Major League Baseball and NHL rights deals expire in 2028. The joint NCAA Tournament deal with TNT Sports expires in 2032, and given the uncertain state of TNT, it would not be surprising to see an empowered CBS seek to reclaim exclusive rights to the event.

But there are only so many rights available, and Paramount will surely prioritize keeping the NFL over any new deals. The NFL is expected to exercise the various opt-outs in its rights deals starting in 2029 and has the option, however unlikely, to immediately renegotiate its CBS deal in the event the network is sold to a new owner.

Plus, “New Paramount” is still going to be a far cry from Disney or Comcast, to say nothing of streamers like Amazon, Netflix and Google. Its proposed valuation of $28 billion would be merely on par with Fox Corporation.

The presence of a newly aggressive player will surely be helpful to properties that are on the market, but there is only so much impact that a company of Paramount’s modest size and scope can possibly have.

With the exception of Comcast acquiring NBCUniversal, the major media mergers of recent years have been a net negative for sports television. AT&T’s acquisition of Time Warner in 2018 — which was similarly held up by government regulators — resulted in a short-term spending spree that included the newly-renamed WarnerMedia picking up NHL rights for the first time. But within five years, the networks were spun off into a new venture with Discovery. Next year, most will be spun off yet again, this time onto an ice floe.

Disney’s acquisition of 21st Century Fox assets brought with it the promise of ESPN-branded regional sports networks, but government regulators yet again gummed up the works and forced them to divest. Those RSNs ended up with Sinclair, went bankrupt, and barely survived — imperiling the entire RSN industry.

Even the Comcast-NBCU merger ultimately resulted in the demise of OLN-turned-Versus-turned-NBCSN, and the looming spinoff of USA, CNBC, MSNBC and Golf Channel — networks that at one time belonged to three separate media companies, but after two sets of consolidation are now the core elements of the new venture “Versant.”

To an extent, it makes sense. At one time, media mergers were growth opportunities. Disney’s 1996 acquisition of ABC and ESPN transformed both the networks and the parent company. Now, these deals are borne of a combination of desperation and opportunism. The properties on the move in the past 15 years are linear networks, most of them cable, with futures that are hazy at best. It is no surprise that in many cases, the networks acquired only last a few years before being sent on the move again.

Perhaps Paramount-Skydance has a better chance of success. But the issues that have plagued media companies throughout the decade — the decline of linear, the at-times ragged transition to streaming — are not going to magically disappear.

Indeed, for all the sound, fury and political tumult surrounding the Paramount-Skydance merger, the drama surrounding this sale may paint an exaggerated picture of what is at stake if it goes through.

Plus: Caitlin Clark, MLB on ESPN, NASCAR Chicago

Caitlin Clark has played in just half of the Indiana Fever’s 18 games this season — fewer than half if one includes the WNBA Commissioner’s Cup Final, which technically does not count — and as the All-Star break approaches, it is fair to wonder if the realities of modern day basketball could start to slow her impact on the game.

Indiana knows well what happens when players try to power through injuries. Pacers GM Kevin Pritchard said Monday that star G Tyrese Haliburton will not play at all next season after tearing his Achilles during Game 7 of the NBA Finals. In the case of Clark, who is not only the future of her franchise but of her league, a few regular season games are a small price to pay to ensure she does not suffer more serious injury.

Nonetheless, the fits-and-starts nature of her sophomore season has taken her mostly out of the news cycle. If one is looking for a positive parallel, Michael Jordan missed nearly his entire sophomore season with a broken foot — but returned just in time to score 63 points in the first round of the playoffs.

How much should one read into ESPN’s delaying the start of the MLB All-Star Selection Show due to cornhole runover? Not much, usually. But if MLB is channeling Manny Ramirez and “looking for a reason,” then perhaps it could be viewed as a sign of disrespect.

On the long list of ESPN slights, a few minutes of overrun really do not jump off the page. If the preceding event was not cornhole, it is possible few would have even noticed. In fact, one could easily argue that it would be poor form to preempt a live competition like cornhole in favor of the recitation of names.

Having said all of that, given the hard feelings at MLB regarding ESPN, it may have been wise to just get to the baseball on time.

If Sunday marked the final edition of the NASCAR Chicago Street Race, it was the end of an interesting experiment. Realistically, shutting down portions of the nation’s third-largest city was never going to be a long-term proposition. But when this writer attended the race last year, even the rain and a shortened finish could not put a damper on what was a pleasant afternoon.

While NASCAR could take its street race concept to other locales, like San Diego, Chicago was a particularly evocative host. For all the negative headlines, Chicago is on a short list of iconic cities with the right history and scenery to make such a race into a marquee event. Short of racing around Times Square or the Las Vegas Strip, it is hard to see how NASCAR can do much better.