Yesterday the Wall St Journal and New York Times both ran items about the UFC's involvement in talks to purchase a controlling interest in Comcast/NBC's G4 cable channel. Along with the news came reports that negotiations between Spike TV and the UFC to renew their current deal -- which expires at year end -- are not going well.
The New York Times has the most explosive details from the UFC-Spike negotiations:
Spike's $170 million-a-year deal* with UFC for the show, "The Ultimate Fighter," and for live fights expires in six months. Negotiations between Spike and UFC for a new deal started almost one year ago, one of the people said, but broke down after UFC proposed a $325 million-a-year fee, a price that was far steeper than Spike was willing to pay.
Spike executives, meanwhile, are said to be eyeing an alternative for fights: MTV2, another unit of Viacom, recently started showing fights produced by Bellator, a smaller mixed martial arts league, and those fights could be moved over to Spike.
Mike Chiappetta has more:
Several Spike employees are openly referring to the upcoming season of The Ultimate Fighter as "the last season," and as MMA Fighting reported recently, Spike executives have been on site at recent Bellator events, familiarizing themselves with the promotion. According to a source, it's likely that Bellator will return to weekday events, possibly on Thursdays, so as not to directly compete with UFC. Bellator's current broadcast deal is with MTV2, which like Spike, is owned by the media conglomerate Viacom.
Dave Meltzer has this nugget about Bellator and Spike TV in the latest Wrestling Observer (subscription required):
In what has to be considered an interesting political move by Spike TV, they taped their "Guys Choice" awards show on 6/4 in Culver City (it airs on 6/10), which is the one where Dwayne Johnson and Jon Jones are among the list of literally tons of celebrities appearing as presenters. But also, on Spike, the UFC network, appearing as a star at the event was Bellator's top star, Eddie Alvarez. Now Spike and MTV 2 are both part of the same family, but even saying that, presenting Bellator's top star on a Spike special would be like a big awards show on USA where they invited both Kurt Angle and John Cena.
With the UFC and Spike apparently on the verge of parting ways, just how savvy is the UFC's rumored plan to run their own network? Jonathan Snowden opines that there are pros including the UFC controlling its own destiny:
The UFC has more fighters than it knows what to do with. Fighters are limited to two or three bouts a year, often not by choice. There just isn't room on 20 shows to give hundreds of fighters multiple opportunities. Owning a television network opens up opportunities to run more shows, smaller shows, even the possibility of sending UFC fighters to smaller regional events; events that the UFC would in turn broadcast on their network.
The addition of a weekly fight show would help legitimize MMA as a sport, one that has regular news and results to report, and make it feel less like a monthly PPV spectacle. It could potentially go a long way in building a base of sports fans.
Snowden also sees some cons including:
The network wouldn't run itself - and White doesn't have a history of delegating responsibility easily. If you've seen him at a UFC event, he micromanages everything, right down to fighter's entrance music and other tiny details. There is a risk that White, already perpetually exhausted, would spend more time than healthy with his new television toy and less time than needed fixing a mixed martial arts business that seems at the tipping point of either being a staple of sports programming or a dying fad.
I have to say that the UFC is playing some long-ball if they're looking at running their own network. G4 is already in 53 million homes, a big head start from most fledgling cable networks. If Comcast/NBC retains a 40% share they will have an incentive to put their considerable muscle behind the channel as well.
But I have to think that the dedicated UFC channel is just one part of a gambit that could potentially include a deeper relationship with Comcast/NBC and its Versus channel which is expected to become NBC's answer to ESPN. If the UFC has a G4 homebase where it can run weekly fight nights, the reality show, a UFC news show and some MMA history shows (there is a lot of gold in their archives that they are not using very well at all) and combines that with a bigger partner where it can run international events, the bigger fight nights and countdown specials for its PPVs then it will be in a very strong position.
It's also interesting that they have left the Spike TV door so wide open for Bellator. With the purchase of Strikeforce many fans were quick to declare a UFC monopoly on the sport. If Bellator gets on Spike TV -- which is positively addicted to MMA programming -- there will be no UFC monopoly. Instead the UFC will be locked into a brutal fight with a very serious competitor.
UPDATE: Zach Arnold comments:
Bellator upgrading from MTV2 to Spike would allow them to build up more stars and eventually make the move to PPV. That would be the ultimate goal, which is to make good money on Spike and make occasionally solid money on PPV. Being a respectable, profitable #2 right now in the MMA space would be great. Most importantly, it would give fighters, agents, fans, and insiders who dread the idea of a one-bodied entity some hope. Some hope of fresh faces, of different production, of fighters getting a chance for exposure when they might be buried underneath Zuffa cards despite winning fights. If MMA is all about star power, Bellator on Spike TV would give fighters a real opportunity for exposure.
I'm not here to suggest that Bellator would draw the same ratings as UFC on Spike - far from it. But what if Bellator drew a 0.7, maybe even a 1.0 rating? That's a hell of a lot better than what they're doing on MTV2 right now. And as we've learned with UFC before on different platforms, having the right television network with the right demographic makes all the difference in the world. Which is why I think UFC going all-in with NBC/Comcast is a gamble. UFC has ran a few shows on Versus and the Versus demos are not as forgiving as the Spike TV demos. Jon Jones drew a 0.87 rating against Vladimir Matyushenko on the network. Yes, Versus is a sports channel, but it may never have the same kind of demographic that Spike does that appeals to MMA fans.
*Note: The $170 million a year number reported by the NYT seemed very high.
Sources close to the deal didn't confirm exact numbers but suggested that the numbers in the NY Times would be those for the life of the deal.
UPDATE: The NYT pulled any mention of the numbers from the print version of the story:
Spike's deal with U.F.C. for the show, "The Ultimate Fighter," expires in six months. Negotiations between Spike and Ultimate Fighting Championship for a new deal started almost a year ago, one of the people said, but broke down after Ultimate Fighting Championship proposed a dramatic increase in Spike's annual payment.