How Paramount Won the UFC Rights in a $7.7 Billion Deal

Back in 2008, CBS struck a small-but-historic deal to bring a handful of MMA fights to primetime — the first time the then-upstart sport, still struggling for respect in some circles, had broken through the big-four broadcast-network barrier. Two decades later, the Eye network’s early investment is poised to pay off thanks to a just-inked, nearly $8 billion deal between TKO Sports and Paramount, the parent companies of MMA giant UFC and CBS.

The seven-year agreement announced August 11 will give the Skydance-owned Paramount exclusive access to all UFC events in the United States starting early next year, including 13 annual, numbered “marquee” events plus 30 so-called Fight Night bouts. All of the nearly four dozen bouts will stream live on Paramount+ at no additional charge. Per TKO execs, the linear Eye network was critical to making the pact work. “It was important for us to have CBS play a big component in this,” TKO president and chief operating officer Mark Shapiro told CNBC Monday. He added the broadcaster will “simulcast many of the fights and likely all of the numbered events,” and implied airing the bouts on CBS would also elevate the UFC brand. “We’re going old school here — Jimmy the Greek, Brent Musburger, CBS Sports, all that great history. We like that,” he said, perhaps temporarily forgetting why Mr. Greek (real name Jimmy Snyder) left CBS. Ari Emanuel, TKO’s CEO, also played up the Eye’s value: “We wanted the reach of CBS and the Tiffany aspect of CBS,” he told CNBC.

That’s a massive shift from the UFC’s TV model with its current partner, Disney’s ESPN, which has been in place since 2019. While a few smaller UFC-branded events air on ABC (often during the daytime hours), the vast majority of content is paywalled on bundled cable network ESPN or, in most cases, subscription streamer ESPN+. And while ESPN+ streams the Fight Night events as part of a standard subscription, UFC diehards who want to see those 13 big numbered events currently need to plunk down a whopping $80 to watch each telecast, in addition to whatever they pay for ESPN+ (or the Disney bundle). While that certainly brings in revenue for Disney and UFC, it also limits how many eyeballs will be on each event to those who have the coin to pay for it. That changes with the new deal. “If you take … Paramount+ with ads, it’s $8. It’s $8 — and you get all of the UFC included,” Shapiro said.

Now, if Shapiro’s prediction that “likely all of the numbered events” will end up on CBS, too, that could bring several million more mostly casual MMA fans into the ring for UFC. The pay-per-view scheme currently used by ESPN for UFC is “just an antiquated model,” Shapiro argued. “It’s a wall. It’s a barrier.” Being on CBS and the much more affordable (for now) Paramount+ will help “our fans to get our product,” he said. It’s the same logic cited when the NBA announced its decision to bring its biggest package of games to NBCUniversal: In addition to putting games on Peacock, the company will also bring basketball to primetime two nights a week for several months each year, expanding its reach in a way cable-based Turner Sports never could. This is a big swing from just a few years ago, when legacy companies seemed to be in a race to see who could abandon their broadcast properties as quickly as possible. Indeed, the 2018 press release for Disney’s UFC deal didn’t even mention ABC.

None of this is to underplay the value of this agreement to Paramount’s streaming business. While P+ is actually doing pretty well already with 77 million global subscribers and has a strong sports component already — from CBS’s telecasts of the NFL to the Masters to UEFA Champions League soccer — being the exclusive streaming home of UFC’s biggest events will almost surely bring in new subscribers and, more importantly, cut down on churn since UFC events take place year-round. Disney saw UFC’s impact on ESPN+ almost immediately, adding over 500,000 new subs the weekend Fight Night debuted on the platform (though, it’s worth noting, the service was barely a year old at the time and had more room to grow than P+ does in the U.S. right now). Making the numbered fights part of the core P+ package should also up the platform’s appeal and add to consumer perception of its value. By contrast, under its old ownership, Paramount and P+ de-invested in MMA, selling the company’s ownership stake in UFC rival Bellator and shutting down its Showtime Sports division two years ago.

While Shapiro talked up the great “value” for consumers in this new agreement, there’s a good chance all P+ subscribers — including the millions who don’t care about sports — will end up subsidizing the decision to put a much less expensive paywall around UFC’s most premium content. That’s what has happened over at Peacock, where parent company NBCUniversal’s decision to spend billions on the NBA is a key reason that streamer just hiked prices by $3 per month. It’s too soon to say how much P+ will increase its monthly fee once the UFC lands, but some sort of hike seems all but guaranteed. And as with the NBA on Peacock and NBC, it’s also possible Skydance-owned Paramount will be forced to cut spending in other areas in order to fund this new investment in sports. Realigning financial priorities was a key reason CBS gave for its decision to cancel The Late Show With Stephen Colbert; spending billions on UFC is one such move.

And yet, CBS also stands to benefit from the UFC deal — for many of the same reasons former CBS programming chief Kelly Kahl cited when he pioneered the Eye’s first move into MMA 17 years ago with the much-smaller ProElite. While CBS has no problem, even today, attracting big audiences — it’s been the No. 1 TV platform for close to 20 years now — reaching younger viewers, especially men, has never been more challenging for linear networks. UFC fights on CBS won’t magically bring young dudes back to broadcast TV in droves, but it will almost surely give a dramatic lift to the Eye’s Nielsen numbers in key demos and, just as importantly, expose them to promos for the Eye’s many male-skewing entertainment shows like Tracker and Fire Country. We’ll also likely see a slew of branding crossovers between CBS and UFC talent, or possibly even UFC-branded content on the network (you know Jeff Probst is already dreaming up potential collabs). CBS isn’t going to make itself over into the UFC Channel; its brand, and audience base, is much broader than that. But it’s not hard to see this agreement giving the Eye a major boost in a way Disney’s pact with UFC never did for ABC.