Why the Netflix & WWE deal is bad news for ESPN
A top sports business commentator gave his thoughts on the groundbreaking news
The Netflix and WWE deal doesn't bode well for ESPN, at least according to popular sports business commentator Joe Pompliano.
Pompliano spoke on his podcast, "The Joe Pomp Show," on Thursday morning and recapped the $5 billion deal between Netflix and TKO Holdings Corp. that will air WWE's flagship "Raw" program exclusively on Netflix.
He said that this deal — being Netlflix's first dip into live sports entertainment — will have a massive effect on the entire industry, but singled out ESPN as the one who might feel the worst of it.
"The rise of alternative content platforms has made it increasingly apparent that ESPN future revolves around live sports rights," Pompliano said. "But the addition of Netflix has a bidder to the live sports rights ecosystem makes that business model more challenging."
Netflix, whose stock is up around 15% since its Q4 earnings call on Tuesday, now joins Amazon, Apple, and Google as some of the companies who are bidding for live sports rights. And those companies all have deep pockets.
"These companies have cash flowing products that aren't relied on, or in the case of Netflix, actually benefit from decaying cable bundles," Pompliano said. "They will continue to bid higher and higher for these sports rights using the cash on their balance sheets as a wedge to transfer people from money losing products to their higher margin core competencies like Amazon Prime and Apple services."
Pompliano added that ESPN likely even knows this, and it's why the company has openly announced that it is looking for a strategic partner.
"[Disney and ESPN] see the writing on the wall," Pompliano said. "They know things can get ugly, and if they aren't already scared of these tech conglomerates, they should be. These companies have significantly more financial firepower, and they will only get more aggressive."
Pompliano — who has amassed over 500,000 followers on X, formerly Twitter, and nearly 100,000 subscribers on YouTube — also said that he's not the only sports business mind who is thinking this way.
"I along with many others have been talking about it for years," Pompliano said.
To his point, another sports business writer, Darren Rovell, tweeted after the deal was announced and said that ESPN's parent company Disney should be "scared as hell."
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