When the boxing champion Floyd Mayweather faces the free-style fighter Conor McGregor in August, CBS (CBS) may be in line for a bigger cut of the proceeds.
A few months after Mayweather defeated the great Filipino boxer Manny Pacquiao in May 2015, CBS CEO Leslie Moonves acknowledged on an investor conference that his company had “made a sizable amount of money” on the fight which ran as a pay-per-view event on its premium-channel, Showtime.
The Pacquiao fight, part of Showtime’s six-fight contract with Mayweather, grossed more than $600 million, the most ever for a pay-per-view event.
Nonetheless, Moonves also added that Showtime had to share most of the pay-per-view proceeds of that fight with a slew of pay-TV operators, in addition, of course to the two fighters. In a subsequent investor conference call, Joseph R. Ianniello, CBS’s chief operating officer, would describe the economics of that deal as “a lot of revenue but low margin.”
In the ever-changing business of content distribution, May 2015 seems like a different era. Showtime was still almost entirely distributed through pay-TV providers, cable and satellite.
Pointing ahead to a time when CBS might have its own means of broadcasting events directly to consumers, Moonves said Showtime would then be in a position to make a whole lot more money on a similar high-profile boxing match.
“You could look even further out at putting it directly to the consumer, and we keep 100 cents of the dollar,” he said. “That is something that obviously is coming.”
That time, of course, is now. CBS launched Showtime as a standalone direct-to-consumer service in July 2015. (It started a sister digital service, CBS All-Access, in the fall of 2014.) Showtime’s digital platform has attracted more than one million subscribers paying $11 per month for its ad-free offering.
Floyd Mayweather.
On June 14, the network joined with Mayweather Promotions and McGregor’s mixed-martial arts organization, Ultimate Fighting Championship, to announce that the fight will be held in August in Las Vegas. The UFC is owned by William Morris Endeavor – International Management Group, the sprawling Hollywood talent agency, which paid $4 billion for the league a year ago.
Having secured the fight for Showtime, CBS will now negotiate terms of the deal with its pay-TV distributors, i.e. Comcast (CMCSA) , Charter Communications’ (CHTR) Spectrum, Verizon (VZ) , AT&T (T) , etc.
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Any while CBS is unlikely to circumvent its longtime partners, it’s also possible that the network will be able to use it standalone Showtime service as a bargaining chip. Unlike with Mayweather-Pacquiao, CBS has an alternative mode of distribution.
So, will the distribution model be different for Mayweather-McGregor? Will Showtime be allowed to carry the event on its standalone direct-to-digital app rather than having to exclusively distribute the fight through pay-TV operators?
It remains to be seen whether this fight will draw anywhere the number of viewers who paid $100 to see Mayweather take on Pacquiao, a fighter with an enormous international following. A Mayweather-McGregor match appears to be as much as spectacle as a genuine sporting event.
After all, the two men have trained for years to fight in very different ways, though under Las Vegas law, this content will be strictly a boxing match. And then there’s the question of age. Mayweather is 40 and the Dublin-born McGregor is 28.
But those are details for bookies, fans and hyper-ventilating sports pundits to contemplate. For Moonves, it’s all about distribution, and what cut of the pie will go to CBS. A Showtime representative declined to comment.
