UFC and WWE mega-merger will create a streaming and advertising powerhouse

The news: WWE and Ultimate Fighting Championship owner Endeavor Group will merge to form a public company that “will be well positioned to maximize the value of our combined media rights,” said World Wrestling Entertainment chairman Vince McMahon.

• The deal values the combined company at $21 billion and is a major step toward greater consolidation in the entertainment industry.

WWE and UFC viewership: Combat sports and professional wrestling are often siloed into their own, separate category when talking about sports viewership, but they’re powerful forces with huge, growing audiences.

• WWE is viewed by 11 million fans, according to its website, and its “diverse audience spans generations of fans.” It claims that its broadcasts are viewed worldwide by over 1 billion households each week.
• The UFC’s viewership is harder to pin down due to its pay-per-view model, but since Endeavor purchased it in 2016, viewers and revenues have reportedly grown to record levels.
• While there’s sure to be some crossover between the two sports under shared ownership—mixed-martial arts personalities have previously appeared in WWE events—the WWE is aimed at a broad, family demographic, while the UFC is focused on adults.

Cashing in on rights: The merger of the two highly viewed sporting events comes as streaming services are cooling on a frenzy of purchasing sports streaming rights, spending billions to exclusively stream major sports leagues.

• Currently, the WWE is engaged in a $1 billion exclusive deal with NBCUniversal streaming service Peacock to broadcast Wrestlemania and also has a deal to broadcast Friday “Smackdown” events on Fox. But under new ownership, it seems the WWE and UFC will pursue an NFL-like rights structure.
• As cord-cutting reaches record highs, sports leagues are realizing there’s a highly lucrative opportunity in auctioning off a new set of broadcast rights to streaming services eager to gain new viewers in a tight market. Amazon Prime Video bought rights to Thursday Night Football for $11 billion, and YouTube recently purchased the NFL Sunday Ticket for a reported $2 billion yearly.
• Elsewhere, Apple TV is making a bet on the long-term future of Major League Soccer in the US, having paid $2.5 billion in a decade-long attempt to propel the sport to the mainstream.

Our take: With its considerable size, wide demographic, and growing place in pop culture, the new WWE-UFC corporation will be sure to throw its weight around in the advertising and streaming worlds.

• But is it arriving too late? The size of the new company will surely earn a high price, but rising interest rates have led to a significant slowdown in sports rights acquisitions and streaming spending overall, which could dampen values.