Will the Comcast/NBC Deal Give the WEC a Viable Business Model?

Comcastnbc_300_mediumDecember 3rd, 2009 might go down as one of the most important days in mainstream media history as Comcast secured a deal to buy a 51% majority stake in NBC Universal, which means Comcast now has the majority decision-making duties of a media conglomerate that has revenues in the ballpark of $50 billion dollars per year. Fanhouse's Mike Chiapetta mentioned a number of positive effects from the deal as Versus would likely be turned over to NBC and run by NBC Sports' head Dick Ebersol. While Ebersol has historically disliked the idea of mixed martial arts on network television, Chiapetta points out that it is possible a cable television presence might be possible. He also mentions that the subsequent content war could bring the UFC in as a viable option for FOX or ABC.

One of the interesting topics related to the deal is Zuffa's World Extreme Cagefighting (WEC) promotion. The promotion inked a new extension with Versus one day before the majority stake in NBC was sold off to Comcast, securing it as a staple of the Versus network for quite a long time. Interestingly enough, most pundits and analysts believe that Comcast will try to vie for a stake of the mainstream sports market by pushing Versus up against sports' giant ESPN:

But Comcast’s impending acquisition of NBC Universal will certainly set off an effort to turn Versus into a viable alternative, if not a full-fledged competitor, to ESPN, The New York Times’s Richard Sandomir writes. Under Comcast’s ownership, Versus has transformed from the Outdoor Life Network to OLN, then, in 2006, into its current incarnation.

What does this mean for the WEC? Firstly, the WEC did produce some of the best ratings for Versus. Secondly, Zuffa did manage to secure a deal with Versus before the buyout, although I'm fairly positive that NBC executives were likely in on that deal. Hopefully, that means they have an invested interest in promoting the WEC within the new scheme.

The positives are that the WEC could be one of the hot commodities on a newly-launched NBC cable sports channel that will be within most families' basic cable package versus the extended sports package that it currently resides on in Comcast's line-up. While the WEC will be one of the better options in the first couple of years, there is no doubt that NBC Sports will use their $50 billion in revenue to attract bigger fish to replace Bull Riding and the Tour de France. Depending on where the WEC would be slotted, it could benefit from the constant viewership in terms of putting its advertising in front of its demographic or attract outliers from the 18-34 demographic.

Of course, there are plenty of negatives that I feel have been overlooked. Ebersol hasn't been a fan of MMA, and while NBC has slotted Strikeforce in late night slots with success and now Bellator... are they ready to take it under the wing of NBC Sports? With such a large bankroll, a new cable channel would likely vie for more NFL games and MLB coverage, two sports that would likely gain a priority over the WEC.

The WEC's current business model and demographic might fit perfectly into this scenario though. One thing many fans overlook is the WEC's model for success, which is mapped along the same course of what the UFC has done over the course of its existence. The UFC progressively won fans, media, and even politicians over a lengthy period of time, and Zuffa likely feels that it will take time to build the WEC. If we really look at it with that expectation, the WEC is fitting that exact mold. The real problem comes when we look at the present heading into the future.

The major problem on the horizon is the WEC's entry into the PPV market. We heard from multiple sources that the WEC would enter the PPV market last year, but an event never came to fruition on PPV due to what many believe was the DirecTV-Comcast debacle over Versus and the loss of ways to promote the card. Interestingly enough, MMAWeekly.com is reporting that Reed Harris has stated that a PPV is "definite" in 2010 and the DirecTV dispute could be resolved as soon as the end of the year:

Talking with MMAWeekly Radio on Monday night, Harris said all signs are pointing to satellite subscribers getting their WEC fights back sooner rather than later.

"The last thing I heard a couple weeks ago is they were both talking and they had both come back to the table to discuss it, and I had heard that maybe we would be back on by Dec. 19, so that's what I'm hoping for," Harris commented.

The promotion’s next event is WEC 45: Cerrone vs. Ratcliff on that date in Las Vegas.

The other confirmation Harris disclosed is that the WEC will absolutely be on pay-per-view by the end of 2010, but once again, sooner may be the call rather than later.

During The Ultimate Fighter Finale on Saturday night, Josh Gross tweeted an interesting question. Would you buy a PPV that featured Frankie Edgar at 145 vs. Jose Aldo for the title with possibly another division title up for grabs. Throw on either Torres or Faber for more draw, price it around $40. Would you buy that card?

Most answers were likely on the negative side of the fence due to the $40 price tag, but that type of card might be considered a success if it pulled in somewhere in the neighborhood of 150k - 200k in PPV buys. Considering Brown vs. Aldo produced 400,000 viewers and Faber vs. Pulver produced 1.5 million viewers, there is a market there to make some money on PPV.

The mistake would be to work in too many PPVs over the course of the year, and my major argument against the PPV revenue way of business was that the new Comcast/NBC could potentially be a way to ramp up revenues and viewership for the WEC. As Gross pointed out to me, rights fees would have had to increase incredibly with the new deal, and we aren't privy to the exact details of the deal. Of course, a new network with the NBC name would help with the task of selling more PPVs along with advertising spread across Comcast's entire network and NBC-owned channels.

There are obviously some incredible dangers to wading in the PPV market. Most fans and writers believe the WEC is selling themselves too high right now in believing they can pull substantial numbers. This isn't the UFC though. They work on smaller venues, less expenses, and they don't require over 400,000 buys to be considered a huge success. 100,000 might actually be a starting point for them, and I think they might be able to actually break that with enough names.

Ultimately, the Comcast/NBC deal combined with WEC's ambitious PPV plans could be the perfect business model for the promotion to move forward. Putting a majority of the WEC events on the new Versus/NBC cable channel with the prospect of a reality series to build some newer stars, more events, and advertising throughout the NBC network of channels should bring in more viewers. While they won't make incredible money with their current rights fee deal, it will feed their new PPV model. We're not talking 9 or 10 PPVs a year though. Start out small, build the fanbase. Two or three a year at the most.

Sure, it'll take some time for the WEC to truly see some great numbers in the PPV market, especially with the UFC's saturation, but it's a much better option than the current option... continually riding out year after year on the same network that has poor ratings and the PBL, the UFL, and the Tour De France to help support it. I've given up on merger thoughts right now, but I still see it as a great option the UFC is missing out on. For now, the Comcast/NBC deal should help the WEC progress into the future, and it's likely why Zuffa signed the extension. Now it's up to NBC Sports and Comcast to figure out exactly what they'll do with Versus.

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