← The Town with Matthew Belloni
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- [00:00]
Danny Kelly
Hey, it's Danny Kelly and it's officially fantasy football season. Which means the Ringer Fantasy Football show is back with the latest news from around the NFL and everything you need to get ready for the fantasy football season. So join us at the Ringer Fantasy Football show on Spotify or on our new YouTube channel.
- [00:18]
Matt Bellany
This episode of the Town is sponsored by Netflix. Presenting adolescence nominated for 13 Emmy Awards including outstanding Limited series Writing, Directing and Casting, Stephen Graham is recognized for outstanding Writing alongside Jack Thorne and joins fellow acting nominees Owen Cooper, Aaron Doherty, Ashley Walters and Christine Trimarco. Deadline calls it a world changing phenomenon, while Forbes hails its bold single shot storytelling as a technical masterpiece. Adolescence for your Emmy consideration, this episode is brought to you by FX's alien Earth. From creator Noah Hawley and executive producer Ridley Scott comes the first television series inspired by the legendary alien film franchise. A spaceship crash lands on Earth, bringing five unique and deadly species more terrifying than anyone could have ever imagined. And a technological advancement marks a new dawn in the race for immortality. FX's Alien Earth premieres Aug. 12 on FX and Hulu. It is Wednesday, Aug. 6. Disney released its earnings today and it's a familiar story. Gains in parks and the streaming services, declines in Lindsey or tv. But the big news for Disney has been trickling out for a couple weeks now. ESPN is about to become a full fledged streaming service. None of this ESPN Limited offering nonsense. Starting August 21st, 30 bucks a month gets you all of ESPN's premium sports on its linear channels. That includes NFL, NBA, MLB, even cornhole on the Ocho Plus. And here's the big one. They announced a complicated new deal with the NFL in which the league will now own 10% of ESPN. Lots of ramifications there. And in exchange, ESPN is taking over the NFL Network and NFL Red Zone, Craig's favorite channel. Plus they get a few more NFL games and some programming as well. The NFL still owns Red Zone, but ESPN also will be able to launch Red Zone branded formats to other sports. Makes sense for college football in my opinion. Basketball maybe. ESPN will keep the NFL Draft through 2030 and in a separate deal will take over WWE events like WrestleMania for the next five years. Peacock had those rights and ESPN is reportedly paying $1.6 billion for them. Big increase. All of this represents a pretty big statement by Disney and ESPN's leader Jimmy Pitaro. They got a new NBA deal. They're talking about renewing MLB again after passing. We know why. Sports rights may be incredibly expensive, but the breadth and diversity of ESPN's rights are a differentiator, especially against Netflix and even Amazon or Apple, at least for now, at 30 bucks a month. I'm not sure how popular ESPN the standalone app, will be, at least at first. But the app will be available to cable subscribers that already get espn. And Disney wants to either keep those people in the bundle or transition them to its own apps, either ESPN or preferably the Disney bundle under Disney. But what's in this for the NFL? And does this big bulk up mean that ESPN might get spun into a new company? Lots to discuss. We've got Joe Pompliano here. Joe's a sports business reporter. He has his own newsletter and podcasts and he gives investment advice as well. Today it's Disney's full court press into sports, the big new NFL deal, and all the ramifications from the ringer and puck. I'm Matt Bellany and this is the town. Okay. We are here with Joe Pompliano, who is the founder of the Huddle up newsletter, sports reporter, podcaster, et cetera, et cetera. Welcome.
- [03:52]
Joe Pompliano
Thanks, Matt. Glad to be here.
- [03:54]
Matt Bellany
So you've been following this ESPN NFL courtship. I guess it's a courtship that's been going on for a while. And we finally got news today. Disney confirmed it actually last night that the NFL is now an official owner of espn. So. So I want to get into the rationale on both sides of the table for doing this. Let's start with the NFL. Why is the NFL doing this?
- [04:22]
Joe Pompliano
Well, they've been trying to do this for, as you alluded to, about a decade now.
- [04:26]
Matt Bellany
Well, they've been trying to sell those assets. They've been trying to sell their media assets. I don't know that they were necessarily trying to invest in media companies, were they?
- [04:35]
Joe Pompliano
Well, I think that was the result of not being able to sell them potentially.
- [04:38]
Matt Bellany
I don't know.
- [04:39]
Joe Pompliano
Right. Like if you couldn't get what you wanted out of it, maybe this is the next best option. So they get the equity in the espn, I think, for the NFL.
- [04:45]
Craig Horbeck
Right.
- [04:45]
Joe Pompliano
Like NFL Network really feels like it just never became what they wanted it to become. Like, you know, they started 2003. It's a way to directly reach the fans. They actually started Thursday Night Football for the NFL Network.
- [04:57]
Craig Horbeck
Right.
- [04:57]
Joe Pompliano
To get more viewers on the NFL Network. But now we're in this environment, Right. Where they went from 70 million households to less than 50. It's obviously declining. It's really expensive to run. You have to run production studios. They have a 75,000 square foot studio in LA.
- [05:11]
Matt Bellany
Oh, yeah, the one attached to SoFi. I've been there.
- [05:13]
Joe Pompliano
Exactly. And now you're in this business that you don't really want to be in. So now you have to find someone to go take it over at all the companies they talk to and have been reported to talk to. ESPN probably makes the most sense, I would guess, because of how intertwined their business is with the NFL. Like every media company seems to be intertwined with the NFL in some degree. But ESPN is really betting a lot on the NFL and college football.
- [05:35]
Matt Bellany
Well, and the NBA and tennis and potentially mlb.
- [05:39]
Joe Pompliano
Really? Everything, Right? Everything.
- [05:41]
Matt Bellany
It is the highest profile and most prolific owner of sports rights in this country.
- [05:47]
Joe Pompliano
Yes. And they've been on a spending spree which we can get into later. But part of that.
- [05:50]
Craig Horbeck
Right.
- [05:51]
Joe Pompliano
Is what they're trying to do on the DTC side. And I think the NFL is a big part of that. So if you're espn, you're willing to probably take these assets, even though the math doesn't quite work out. Right. Like, my guess is if ESPN is doing the deal, some of this is, yeah, we can make it work. There's some advantages that we have on the DTC side by adding these assets in making the package more compelling. We can make a stronger bid when it comes to renegotiating affiliate fees, different things like that. But ultimately what you want to do is you want to be partnered with the NFL.
- [06:19]
Craig Horbeck
Right.
- [06:19]
Joe Pompliano
Because it gives you so many other benefits when you're banking such a large part of your future on the NFL as a sports property.
- [06:27]
Matt Bellany
Yeah, they're the unicorn in tv. They're the only thing propping everything up.
- [06:30]
Joe Pompliano
Yes, there's these high level benefits which we just talked about, which is dtc, all that other stuff. But then there's also a bunch of other benefits that are really hard to value. And some of that is, if you think about what ESPN did during their last rights negotiation, they went from 2 billion a year for Monday Night Football to 2.7. But it wasn't just a rights increase because the NFL got more popular. They also got a bunch of contractual upgrades in that deal.
- [06:54]
Matt Bellany
Well, but you're going into why ESPN is doing this. Oh, yeah, that is the. That is the ESPN you've moved on to. That one point I want to make on why NFL is doing this. I just think that it's diversification. The NFL's entire business is selling media rights and other sponsorships and things like that. But here, now they have an equity interest in part of a media company and potentially someday this could be spun out into its own separate company that the NFL would then own 10% of.
- [07:28]
Joe Pompliano
But do you think that the NFL would have rather cash or do you think they always wanted equity?
- [07:32]
Matt Bellany
Good question. I think if someone was out there that would have been willing to overpay for these assets, they probably would have taken the quick hit. But potentially long term, ESPN as a perhaps standalone company to own 10% of that, not bad. And then you could use the prowess of the NFL to grow that entity. And I think you could still do that within ESPN as well in ways we'll get into. So let's go to the espn.
- [07:56]
Joe Pompliano
But so that's why I asked about would you rather cash?
- [07:59]
Craig Horbeck
Right.
- [07:59]
Joe Pompliano
Because my guess is ESPN probably went to market, would have rather cash. Ultimately, the market determined that they had to take equity, so. So, yeah, they're diversifying.
- [08:07]
Matt Bellany
You mean the NFL went to the market?
- [08:08]
Joe Pompliano
The NFL, yeah. NFL went to market. So ultimately they're diversifying. But was that out of necessity or was that what they always wanted to do?
- [08:15]
Matt Bellany
Maybe.
- [08:15]
Joe Pompliano
I guess it's probably a necessity.
- [08:16]
Matt Bellany
Yeah, probably. But not a bad thing to have. I mean, if you are looking at owning what is essentially a piece of the Walt Disney Company, I mean, the analysts have said that ESPN is worth what, 25 billion? Like that's not a bad asset to own 10% of.
- [08:32]
Joe Pompliano
Yeah, I agree. So ESPN, I think there's a bunch of kind of high level benefits when it comes to dtc. We know they're launching the streaming service. It's going to be a huge part with the NFL. You obviously have Red Zone, which is extremely popular. You have NFL Network, which is somewhat popular. But I think also like if you're espn, you just want to be in bed with the NFL because there's so many other benefits that you can get to. So part of that is what happened on their last deal. But one of the things I wrote about the other day too is scheduling. And I think that's like a really underreported benefit. Because if you think about how these games are decided right now in college football, we can use the Big Ten as an example. Fox, NBC, cbs, whatever, they all sit in a room and they do a draft for literally the days of the game. And depending on how much you paid as part of that deal, you get more picks, the order changes, whatever. But you go down. Michigan versus Ohio State is obviously the number one pick. And then you go down determining kind of what games you get. In the NFL, it's obviously a little bit different where these Broadcasters have their window. So there's Thursday night, Sunday night, Monday night. You can submit preferred matchups, but at the end of the day, it's up to the NFL to determine what matchups go on which days. Right. And there's definitely some favors that are pulled there. I mean, this has been widely reported with Amazon. When they signed that initial deal for football, they wanted better matchups, they got better matchups, ratings improved. Same thing happened with ESPN when they increased their payment. The last two years have been the highest ratings in Monday Night Football history.
- [09:51]
Matt Bellany
So you're saying they're going to get better games because the NFL is now directly invested in the outcome of ESPN.
- [09:58]
Joe Pompliano
The NFL's not going to say that, but it doesn't take a genius to realize that.
- [10:01]
Matt Bellany
Right? Yeah. I mean, the conflicts here are potentially pretty extraordinary. I mean, it goes beyond that. Like, why wouldn't the NFL say to potential sponsors, like, hey, if you want to be the official beer of the NFL, you've got to spend X amount of money on espn? Like, what's to stop that? I mean, it goes from there. Like, they now have a thumb on one of their partners, Scales, and the other partners. If I were Comcast, Paramount, Amazon, Fox, I'd be kind of annoyed by this, for sure.
- [10:35]
Joe Pompliano
I think they're going to be watching this very closely to see kind of how that plays out.
- [10:39]
Matt Bellany
Or they say, where's our stake? Like, you come, you want to buy 10% of Paramount, please be our guest.
- [10:45]
Joe Pompliano
Yeah, well, they may have something in CBS right after the Skydance deal.
- [10:48]
Matt Bellany
Yeah, it also, I think the other incentive here is that ESPN is terrified that the NFL is going to renegotiate when they have that out after 2029 and potentially take away Monday Night Football when they, you know, those rights come up a couple years after that. And this now would suggest that that's less of a fear because the NFL is now invested in espn. They're not going to renegotiate significantly or pull Monday Night Football.
- [11:15]
Joe Pompliano
That's sort of my point.
- [11:16]
Craig Horbeck
Right.
- [11:16]
Joe Pompliano
Because you can look at this deal and I bet if you model it out, it probably doesn't make a ton of sense. There's a reason, again, why no one else did the deal. But if you're espn, you're probably comfortable with all these other benefits. Not only are you not going to lose Monday Night Football, but you might get preferential treatment or terms on the next deal versus what you would have gotten if you hadn't have done this deal. So I think there's a bunch of other benefits that ultimately could bring the price way above the call, $2.5 billion that they're giving up in equity.
- [11:41]
Matt Bellany
Right. And if someday ESPN and ABC or the linear assets, or all of it becomes a separate company and many people believe that once Bob Iger leaves Disney that the next CEO will try to spin off the sports assets or spin off linear or something like that, then the NFL is set up to potentially benefit there. And ESPN is set up because you've got this investor in the company that is by far the most popular sports league in the country.
- [12:14]
Joe Pompliano
Yeah. And that brings on a whole nother set of challenges and problems and opportunities. Right. But I think if you're the NFL, you probably rather that ESPN is its own standalone entity. But also it begs the question of how does the NFL value this deal if the equity ends up becoming liquid and turns into cash? Right. And I ask that because if you think about the NFL, they share revenues with their players. They don't share equity. So where does the equity sit? Right. And I don't know this to be certain, but I have a feeling that probably plays into this as well.
- [12:43]
Matt Bellany
Spoken like a player's rep. You should try to head the union.
- [12:47]
Joe Pompliano
No, I'm just saying if equity sits in a separate bucket.
- [12:50]
Craig Horbeck
Right.
- [12:50]
Matt Bellany
Yeah.
- [12:50]
Joe Pompliano
That seems more advantageous from an ownership perspective. Tell Goodell to go do this deal for equity rather than cash.
- [12:56]
Matt Bellany
Yeah, it's a great point. Most linear subs of ESPN people who subscribe on TV will have access to the ESPN streamer. So the goal here is to bring in people who are Cord Nevers or Cord cutters or people that are sports nuts and only want this one thing. What do you think is reasonable for the amount of subscribers that they will be able to get in the first couple years? Because they're downplaying. They're really setting the bar low. I think it only. It said only a couple million.
- [13:32]
Joe Pompliano
Yeah. Honestly, it's tough to tell because again, to your point, linear subs are going to get it for free and you're really going after the smaller percentage of market. And like ESPN is the necessity for sports fans. No one's going to argue that.
- [13:45]
Craig Horbeck
Right.
- [13:45]
Joe Pompliano
But they also don't have everything. So I think low millions is probably accurate.
- [13:49]
Matt Bellany
Yeah. Especially with the pricing. 30 is about what we thought it would cost.
- [13:53]
Joe Pompliano
It's more than our normal streaming service, but it's less than cable.
- [13:56]
Matt Bellany
Well, In Fox, their Fox One service is going to be 20 bucks and they only have the Sunday NFL games and they don't have a Lot else in terms of sports. They have World Series, they have some other stuff, soccer, but they don't have what ESPN has. Like, we've all. We've talked about this. Craig's complained for a while. Like each of these services has something, but they don't have it all. And even venue, when they were talking about combining all that stuff, it was still not everything. It was like a little more than 50% of everything. But would people have subscribed to venue sports in order to get kind of half or a little more of what you want?
- [14:34]
Joe Pompliano
Well, think about ESPN strategy. And I actually think this has been really smart. It's cost a lot of money, but they spent the last few years overspending in a lot of cases for some of these sports rights. And they've really diversified to your point where they have NFL, NBA, college football, college basketball, NHL, ufc. We'll see what happens there. But Formula one is obviously leaving PJ towards tennis, whatever.
- [14:54]
Craig Horbeck
Right.
- [14:54]
Joe Pompliano
There's. There's a million different sports and some of these are only portions of those leagues. But oftentimes they're very careful about getting the most important events. So if you want to watch that sport or that league at all, you need espn, which I think is a helpful strategy when you're trying to transition people to a streaming app where the game and the live content is ultimately most important.
- [15:13]
Matt Bellany
Yeah. And ultimately what you want if you're Disney is you want to bundle ESPN with your other services. They also announced that the Hulu app is going away as a separate service. Craig, Check me. But I believe I predicted that on this very show. And the Disney bundle is going to be the primary point of sale, or they hope it will be, where you pay 50 bucks and you get Disney plus and all the Hulu content as a tile and ESPN as a tile.
- [15:42]
Joe Pompliano
Well, that's what helped ESPN so much.
- [15:44]
Matt Bellany
Yeah, I mean, ESPN, how many subs do they have? And that was basically nothing on there.
- [15:49]
Joe Pompliano
It was like 25 million subs. And then they started to decline. But like, I would be surprised if even a fraction of those people were watching espn. It was all coming from Hulu and Disney.
- [15:57]
Matt Bellany
Yeah, that's the goal in the television streaming business, is to get people to pay for stuff they don't watch.
- [16:08]
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- [16:26]
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- [17:12]
Matt Bellany
Applecard.Com if I'm JoBlo consumer and I am looking at the sports landscape and what I want to purchase as a streaming service now, there is one that you can buy and I think it rises above the others. That I think is the explanation for the spending spree. There has to be a sense of urgency and a sense of bulk around your service in order to get people to say, okay, I'll do that. And now when you look at espn, it's got all four of the major leagues in some part and it's got enough where you can say I'm a sports fan, I subscribe to one of these services. It's espn.
- [17:53]
Joe Pompliano
Yeah. But I think also the execution of how the app actually works is super important, right? Because I think they almost have to make it where it's a must have for sports fans where your tying all of these things in together, right? Because one of the biggest frustrations as a sports fan over the last decade has been just the confusion around everything, right? How many different apps you need, you don't know where to watch games. And ESPN is not going to be able to tie all of that together because they don't own the rights to all these things. But if you're able to create a central location that's personalized to the individual and the teams and the leagues that they like, but also combines sports betting and fantasy and merchandise purchases and all of that kind of stuff, like all of a sudden it becomes a little bit more valuable on top of those live sports rights. The live sports rights still drive, but there's going to be people that are just such big sports fans where they're going to subscribe to it anyways because it's going to become a must have if you integrate all of that.
- [18:40]
Matt Bellany
Yeah. And you can use algorithms to curate what people see.
- [18:46]
Joe Pompliano
Yeah, I want. I want it to look like my Netflix home screen.
- [18:48]
Craig Horbeck
Right.
- [18:49]
Joe Pompliano
Like I want to be shown what I want to watch.
- [18:51]
Matt Bellany
And eventually, if they get local rights, maybe they can show you the new version of the RSN for your favorite team. Maybe if your favorite team is playing on ESPN Basketball night or whatever, it will alert you. Things like that. That can kind of.
- [19:05]
Joe Pompliano
Well, that's, that's why the baseball deal, getting rid of MLB was so interesting.
- [19:09]
Matt Bellany
Well, though, they didn't get. They. They said they were not going to renew MLB Sunday Night Baseball at the current price. Now they are supposedly talking again about renewing it. Are your sources saying that that will likely happen? No.
- [19:23]
Joe Pompliano
I don't know. Right. I think. I think there's a chance that it will. I think they weren't likely to do it at the price that it was, but now they're probably more interested when MLB hit the market and realized that that was the truth. But I think there's a huge benefit to MLB content, too, for all the reasons you just mentioned. It's a ton of inventory. It's regionalized in a lot of places, and it can act as like that new age RSN where you put it all on there and you're able to drive subscribers but also reduce churn because, you know, if you're an Atlanta Braves fan and you're subject to blackouts in an area or vice versa, whatever, pick a team, you're more likely to subscribe to the service and keep it because you know that you're going to be able to watch all your team's games.
- [19:57]
Matt Bellany
Right. And the algorithm could essentially become the RSN regional differentiator, where if you can bundle a lot of these RSNs together, then you just show the games to the people in the area that want to watch them.
- [20:12]
Joe Pompliano
One thing that I wasn't as bullish on in the announcement that a lot of people seem to be excited about, and Goodell even talked about it on ESPN this morning, was the idea that ESPN now owns the Red Zone brand.
- [20:23]
Matt Bellany
Yeah, why not? That could be cool. Red Zone for college football. Red Zone.
- [20:27]
Joe Pompliano
They already did that, though. They had that.
- [20:29]
Matt Bellany
They had that.
- [20:30]
Joe Pompliano
ESPN used to have the show called Goal Line, which was literally the same thing as Red Zone, and it wasn't that popular because of the rights problems. They were only able to show games that were on espn. And the way college football is spread out, there's so many different games going on at once. If Fox has the game or whatever, then you can't show that game.
- [20:49]
Matt Bellany
So it ends up being like SEC red zone.
- [20:51]
Joe Pompliano
Yeah, which, which I think maybe there's an appetite for. Like if you just admit it up front, you say, okay, this is going to be SEC specific and that's all you're going to see. Like maybe someone would watch that. But it's not nearly as enticing as the NFL product because of the rights problem.
- [21:03]
Matt Bellany
Interesting. Yeah, I guess you would have that problem. But you know what, maybe they solve that down the line. The Red Zone is a brand though. Everyone knows what that is. Couple other downsides to this. The Trump question. This NFL buying a stake in espn, that means that it is subject to regulatory review, which means that the Trump Department of Justice is going to be involved here. Given what we have just witnessed with the Paramount nonsense and the tributes that various media companies are paying to the president and his interests in order to get these deals done, are ESPN and the NFL essentially walking into a buzzsaw with the government right now? Is Trump going to be able to essentially extract what he wants in order to get this deal done?
- [21:50]
Joe Pompliano
I think potentially. I mean, you saw, did you see his true social post about the Commander Stadium the other day?
- [21:56]
Matt Bellany
Yeah, he wants to, he wants to like strong arm everybody into getting rid of the Commander's name and going back to the old name.
- [22:02]
Joe Pompliano
He likes getting involved in the sports stuff too. He attends a lot of games. So maybe he takes a personal interest in this and something has to be done to get the deal. But it's non binding and I would assume that there's some expectation that they would have clarity in this over the next nine to 12 months at least. Because that's the other thing I don't think people realize is that this deal isn't going into effect when the streaming service launches. It has to get regulatory approval over the next nine to 12 months, if it gets that approval at all. If it does, this would happen for the 2026 season, which I think going back to the point around the app is the streaming service is a huge miss.
- [22:36]
Craig Horbeck
Right.
- [22:36]
Joe Pompliano
If you're going down and some of this is timely and you can't control it. But if you're launching one of these streaming services, what is ESPN coming out with as sort of the bang?
- [22:45]
Craig Horbeck
Right.
- [22:45]
Joe Pompliano
They did the WWE deal today, but again, that's not till 2026. So sort of everything that you're going to be getting today is already available and out there there's nothing that's going to be super exclusive to the ESPN streaming service that's going to differentiate itself in some meaningful way.
- [23:01]
Matt Bellany
True. I would just argue that the fact that, that ESPN is available over the top, which has not been the case, and even people who go to ESPN thinking that they are going to get games and things that are on ESPN and are wildly disappointed, those people will now have reason to rejoice and say, wow, I can get this for 30 bucks and I don't have to deal with the cable bundle anymore.
- [23:24]
Joe Pompliano
Yeah, that's fair.
- [23:25]
Matt Bellany
That's at least the value proposition at the start of this. So we don't have any insights. We think that Trump will probably do what Trump does and try to extract whatever he can. The NFL, pretty powerful group. Trump once wanted to buy the Buffalo Bills, remember that?
- [23:41]
Joe Pompliano
But he likes doing deals too.
- [23:42]
Matt Bellany
Sure.
- [23:44]
Joe Pompliano
I'm just saying he likes doing deals. That doesn't mean that he's not gonna get something out of it. But ultimately he probably wants it to close because it's able to say, oh, I got this deal done.
- [23:53]
Matt Bellany
Yeah. And then on the sort of an addendum to the conflicts question, does anyone think that ESPN and its journalism is going to be impacted by one of the biggest leagues now owning a stake? I. I think that ship has sailed. I think when ESPN canceled Outside the Lines a couple years ago, that was their kind of last investigative show. The NFL already had so much control over the content of ESPN and they were all terrified of already of pissing off the NFL. This is just formalizing what has been in place for years, in my opinion.
- [24:30]
Joe Pompliano
Yeah, they're not doing investigative journalism work anyways. Right.
- [24:35]
Matt Bellany
They were like, oh, they won't do the CTE expose. I'm like, they were not doing that anyway.
- [24:40]
Joe Pompliano
Yeah, yeah, they'll give you an update on the settlement and that's about it.
- [24:43]
Matt Bellany
Right, Exactly. It'll be a straight face, you know, 22nd news story about some CTE settlement and that's it. They will not do anything more, anything less. And maybe the NFL will complain even about that. But you know, the days of ESPN being an aggressive journalism outlet, I think those have long since gone bye bye.
- [25:04]
Joe Pompliano
Those are long gone. And there's also the question around sports betting. Right. ESPN has an ownership stake through Penn for ESPN Bet. Now the NFL indirectly has one as well. There's obviously a conflict of interest there given that they're, you know, obviously running these competitions in the league.
- [25:19]
Matt Bellany
And there's all sorts of bad comments from Goodell from a few years ago saying, you know, we have to maintain the integrity of the game. We will not be involved in sports betting directly. And now here they are investing in a company that is directly involved in sports betting.
- [25:34]
Joe Pompliano
There was always this sort of implicit guarantee that I think the NFL and ESPN specifically over the last decade weren't going to do anything to kind of ruin each other. Because ultimately the NFL is a huge chunk of ESPN's business and you're not going to do something that's going to jeopardize that. Not that the investigative journalism work would have, but it could have. And I think this is sort of the next step in that process where you go full tilt on first take Pat McAfee, get up all those shows and it becomes strictly opinionated rather than journalism.
- [26:03]
Matt Bellany
Yeah. Who do you think wins here? NFL or Disney? Who has flexed over who?
- [26:10]
Joe Pompliano
I think the NFL flexed over Disney, but I think Disney could make it up depending on what the NFL does long term.
- [26:17]
Matt Bellany
How so?
- [26:17]
Joe Pompliano
If they give them some of those benefits that we talked about.
- [26:19]
Craig Horbeck
Right.
- [26:20]
Joe Pompliano
Whether it comes with scheduling, whether it comes with preferential terms on the next meteorites deal, whether it gives them additional games. Part of what I wrote the other day was that they were getting seven games out of this and then it comes out and they're only getting three games. Four of them are going to be moved to an independent package that the NFL is now going to go sell. But on top of that, ESPN is moving four of the games, I believe that were simulcast on EBC to NFL Network. That's obviously not ideal either. And they called it a licensing deal. So maybe they're paying something in return for that. I don't know.
- [26:48]
Craig Horbeck
Right.
- [26:48]
Joe Pompliano
But ultimately the deal is probably in the NFL's favor. I would say largely in the NFL's favor right now. I was just reading something where they said that ESPN is even going to assume the lease on their, on their production studio in. In LA right next to SoFi. So like that seems like another thing where ESPN probably didn't want to do that.
- [27:06]
Matt Bellany
Right. They have their own facilities in Burbank. Yeah.
- [27:09]
Joe Pompliano
NFL flex their muscles, got one over on them. And my guess is that Disney is doing this for benefits down the road that are hard to value at this.
- [27:17]
Matt Bellany
Point and that are currently making the other media partners crazy. Yeah, yeah.
- [27:22]
Joe Pompliano
If all the other media partners I'm slightly annoyed to definitely concerned.
- [27:27]
Matt Bellany
Well, we'll see. And maybe if it gets so outrageous they can claim a breach if they're just getting screwed on games right and left. I don't Think they'll be that obvious about it, but yeah, they could. Are you prepared to say whether this will ultimately lead to a spinoff of espn? Some of the analysts, the lightshade guys, others have said this is a no brainer. Disney is going to spin off ESPN and the linear stuff at some point because now they have the mechanism in place where they, you know, have bolstered up the service. They have an investor in the NFL and, and it makes sense to get this separate from the rest of the company and focus on strategic partners because sports is different from the rest of Disney.
- [28:10]
Joe Pompliano
I largely agree. I think it'll happen at some point. There's just too much to your point around. It's so different from everything else that they do. It helps the valuation from like independently valuing it rather than just sitting inside Disney as this completely different business. I think the NFL will probably want to do that because it'll give them a piece of actually ESPN rather than this company inside of Disney. And then it also helps Disney.
- [28:33]
Craig Horbeck
Right.
- [28:33]
Joe Pompliano
You can tell the story that you're going to be able to refocus capital and management's attention on all these different assets that are maybe growing a little bit faster and don't have these challenges that the ESPN business faces.
- [28:43]
Matt Bellany
Isn't hugely expensive. Like sports rights are usually expensive.
- [28:48]
Joe Pompliano
Sports rights are hugely expensive. So I think it'll happen. But again, to your point, people have been calling for this for a long time and maybe it takes Iger leaving the building to be able to do that.
- [28:58]
Matt Bellany
Maybe they sell the unit to Netflix. Maybe Netflix will be so big that they just want to drop 30, 40, $50 billion on.
- [29:04]
Joe Pompliano
Just take all the sports rights for their lives.
- [29:07]
Matt Bellany
Go from no sports to all the sports. All right, Joe, thank you very much. Appreciate the time.
- [29:11]
Joe Pompliano
Thanks, Matt.
- [29:13]
Matt Bellany
We are back with the call sheet. Craig, a real barn burner at the box office this weekend. An actual, like competition between Freakier Friday and Weapons.
- [29:24]
Jesse Lopez
Yes, Weapons has a lot of buzz. Zack Kreger, Barbarian. That movie did really well. People really liked it. I think Weapons has a ton of good buzz around it. People are very excited to see it.
- [29:33]
Matt Bellany
However, when we were presented with the opportunities to go to the premiere.
- [29:36]
Jesse Lopez
No way.
- [29:37]
Matt Bellany
You were trying to get me to go to the Freakier Friday premiere, which we did not end up going to.
- [29:42]
Jesse Lopez
I thought it would be amusing if you were at the Freak Year Friday premiere and I'm not a horror guy.
- [29:46]
Matt Bellany
Amusing. It's okay to say you wanted to go. It's fine.
- [29:50]
Jesse Lopez
I mean, sure, I like Freaky Friday.
- [29:51]
Matt Bellany
This is a millennial property. This is not my thing, but lots of love. Both of these movies are tracking to about 30 million. It's kind of odd. The NRG tracking has weapons at 26 and freakier Friday at 29. But then screen dollars has weapons at $35. Freakier Friday at 28. Let's set the line at 30 for both of these movies. What say you? I'll give you first crack.
- [30:17]
Jesse Lopez
I'm definitely taking the over on weapons.
- [30:20]
Matt Bellany
Over on weapons is easy. I think that one, given the reviews, it was at like 100% on rotten tomatoes and the fact that people like Barbarian a lot. Although Barbarian only did 45 million. Let's not say that it was a huge hit.
- [30:32]
Jesse Lopez
Yeah, but that movie came out of nowhere. That had a $4 million budget.
- [30:35]
Matt Bellany
I get it.
- [30:35]
Jesse Lopez
This has all the momentum. It has stars in it. Josh Brolin's in it. Julia Garner's in it.
- [30:39]
Matt Bellany
Real studio movie. Warner Brothers. Yes, I get it. It's also two and a half hours, though. But I don't think people care about that. If they like it over on Weapons, Freakier Friday is tougher one.
- [30:49]
Jesse Lopez
I would bet that it comes in just below tracking would be. If I had to pick, I would say just below.
- [30:54]
Matt Bellany
Oh, you think so? You're taking the under. Oh, my. How dare you. The. The Lindsay Lohan hatred. You do not want her to succeed.
- [31:01]
Jesse Lopez
I don't hate Lindsay Lohan.
- [31:02]
Matt Bellany
She redid her face. It looks normal. Like, come on, man. This is Oscar winner Jamie Lee Curtis starring in Freakier Friday.
- [31:10]
Jesse Lopez
I worry that the movie does not feel theatrical. And this is the definition of I'll wait till it comes out on streaming. I think the Nostalgia 90s play will work and some people will go see it. The older millennials are that. That this is like for them, but I don't know who else it's for.
- [31:24]
Matt Bellany
The pre sales have been, okay, not great, but that's usually the best indicator. I am going to stand up to you and also take the over on Freakier Friday. Take the over on both of these. We'll see. I agree that that one's a little shakier, but NRG has it stronger than Weapons, so they're. They're usually pretty good.
- [31:43]
Jesse Lopez
Never doubt Lohan. I guess all of her Netflix movies are huge Irish Wish. I forget the names of the other ones.
- [31:48]
Matt Bellany
Yeah, but Netflix, man, you know, theatricality and Netflix, not the same. No, we'll see. We'll see. All right, that's the show for today. I want to thank my guest Joe Pompliano, producer Craig Horbeck, artist Jesse Lopez and I want to thank you. We'll see you one more time this week.
- [32:05]
Apple Card
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