Friday Dump 🥟 - WBD slipping, Peacock's podium moment, EA's CFB success

Author

Michael Sheinfeld
July 26, 2024

Don’t worry, the Friday Dump 🥟 isn’t too old to drop out 

Each Friday, we’ll breakdown 3 sports business stories that have caught our eye throughout the week. They will be assembled in the following format:

🔴 - Stories that make us stop, think, and question.

🟡 - Stories with a hint of risk and unpredictability.

🟢 - Stories that make us feel good to go and empowered.

Maybe because we’re young, wild, & free 😉 

🔴 WBD in the midst of a tailspin. The news just keeps getting juicier and juicier. Just days after writing that Warner Bros. Discovery (and TNT Sports) planned to match Amazon’s $1.8B/year bid for 11 years of streaming rights, the NBA quickly put their foot down on the neck of WBD (graphic, we know) and rejected Zaslav & Co’s attempt to make a rival bid from Bezos’ baby. Unfortunately for both parties, this rejection will more than likely lead to a lawsuit coming from WBD as they argue the NBA negotiated in bad faith and they do not have the right to reject their offer (newsflash WBD, the NBA can definitely do this). And who knows if they were really meaning to match the offer, or if they’re looking for a settlement for a little extra cash. Because my goodness, do they need it.

  • After the NBA’s rejection, WBD company shares dropped 9% Thursday morning and wiping out ~$1B in market value when the stock market closed (shows you what investors really think).

    • WBD has now lost 36% of their value over the past year.

    • WBD closed out Q1 with ~$43B in gross debt and is in the midst of laying off ~1,000 people (this after letting go 2,000 employees last year).

    • Shares of WBD have fallen 65% since the merger of Discovery and WarnerMedia closed in April 2022

  • Not to mention, the NBA accounts for more than 80% of TNT’s annual advertising revenue — which means we’re about to see linear ad revenue drop BIG TIME in 2025 as well as the sports section of Max taking a massive hit (if you even knew there was a sports section on their streaming service lol).

In a dumpshell…can someone please record the Q3 shareholder meeting where Zaslav has to explain himself to all of his shareholders? Or at least can we see how he tries to spin this into a positive? Seriously, we need a good laugh these days!

To be honest, it already seems like WBD has been planning for this day to come. It’s why they agreed to license College Football Playoff games from ESPN, agreed to a 10-year, $650M deal for exclusive U.S. rights to the French Open, and joined in on the NASCAR party. Because like we mentioned, it’s not like they can afford all these upcoming sports deals…or much of anything else?

Photo: Michael Reeves/Getty Images

🟡 Peacock going for gold. Do we think NBC will introduce a recap of the last Summer Olympics? Honestly, every 4 years we’re left wondering what the hell happened last time around? Did you hear that 30 Rock, we’re looking for a GoT style 3 minute recap trailer of how everything panned out! Nevertheless, they’re going to provide us with more abilities to watch through their streaming service, Peacock, instead. And to say they’re pushing a good handful of their chips into the streaming bucket might be an understatement…

  • Peacock is set to include a multi-view option where you can watch up to 4 events at once.

  • An updated studio show called Gold Zone, hosted by NFL RedZone host, Scott Hanson.

  • Kevin Hart and Kenan Thompson will host an Olympics highlight show for the platform, while Call Her Daddy podcaster, Alex Cooper, hosts interactive watch parties.

  • And don’t look now, but they’re planning to use generative AI to have legendary broadcaster Al Michaels deliver customized Olympic recaps for users.

In a dumpshell…we’ve seen the success Peacock has had when it comes to exclusive live sports. But NBCU’s bet on Peacock is much more than that. It’s a play to integrate sports with media & entertainment. And what better way to do that than with the Olympics? A program that nearly everyone in the world watches. Not because you know all the intricacies when it comes to Under Water Basketweaving but because it’s fun to watch all these amazing athletes compete on the highest stage in front of the world!

Peacock only has 33M subscribers and they’ve already increased their prices for all the newcomers looking to tune into the Olympics. But they’re the majority of you will stick around even after the Olympics. It’s a play they’ve done before. A play that resulted in 71% of new Peacock users that tuned into the Kansas City Chiefs vs. Miami Dolphins NFL playoff game ended up sticking towards the end of February (~7 weeks later!).

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🟢 EA is back and thriving. After a long and painful decade, EA Sports did the only thing they could to make us whole again…bring back EA Sports College Football. Since the 2014 version hit the shelves, the game sold ~1.5M copies. But since its hiatus, expectations are even greater for EA Sports College Football 25. As of 2024, 61% of Americans play video games at least 1 hour per week, and nearly 191M hit the sticks to some degree. Not to mention since 2023, college football has skyrocketed across all networks by 12% and a whopping 28% over the past 5 years. Even though we won’t know specific sales numbers for a bit, let’s review what we do know in terms of the growth of this game.

  • Before its debut, 2.2M consumers paid ~$100 for the deluxe edition of the game (the standard edition retails for ~$70).

    • Another 600K people played the game via EA’s free trial system which bumps up the ceiling of potential consumers to 2.8M.

    • That could end up being a total of $280M in sales!

      • And that’s not even including the potential to purchase an MVP bundle, which combines the deluxe editions of Madden NFL 25 and College Football 25 for ~$150.

In a dumpshell…unfortunately it’s too early to tell what the final numbers will look like for EA or if this is merely a spike in demand due to 10 years of no college football game to play.

What we do know is video game popularity has never been higher. And with a video game that now has the added drama of college football recruiting with NIL and the new playoff format, it’s no doubt EA made the right move to bring back this game and settle their differences. Maybe we should all be thanking the Supreme Court after all…or at a minimum EA Sports 😉.

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