SBD/March 22, 2012/Events and Attractions

Fertitta, Shanks Offer Insights On UFC's Blockbuster TV Deal With Fox

Fertitta said Fox’ willingness to let UFC continue to produce its own fights was key
UFC signed its seven-year deal with Fox because the network offered so many platforms on which to promote the mixed-martial arts organization, said Lorenzo Fertitta, Chair & CEO of UFC parent company Zuffa during a panel discussion at the IMG World Congress of Sports hosted by SBJ/SBD in Dana Point, Calif. Fertitta said the appeal of being able to spread 400 hours of UFC programming across Fox, FoxSports.com, Fox-owned RSNs, Fuel TV, FX, Fox Deportes and News Corp.’s international sports channels far outweighed the benefit of buying and rebranding the cable channel G4 or going with other suitors, such as HBO. Having UFC featured across all of those channels would help drive viewers to UFC’s PPV fights, which remain its biggest revenue stream. “At the end of the day, we are a sports and entertainment media company,” Fertitta said. “Being out there as a single channel, trying to get distributed, we felt we had the brand to get us there but thought it would be an uphill battle. What I was concerned about was that we needed to have that broad platform to promote our athletes and drive people to pay-per-view.” Another key piece of the puzzle was Fox’ willingness to let UFC continue to produce its own fights. HBO wanted to take over production, Fertitta said. “We felt like we developed this core brand that catered to young men,” Fertitta said. “We were afraid to hand off our brand to someone else.”

CONTROL PANEL: Fox was okay with letting UFC control production, said Fox co-President & COO Eric Shanks. “You wouldn’t have given up control if you don’t trust the guys,” Shanks said. “You want the authenticity that made the sport what it is. Part of what made it authentic was the production.” The result is broadcasts that are different from a traditional sports production. Fertitta: “When we come on air and the announcers are doing introductions, music is blasting in the background. Joe Rogan is yelling at the top of his lungs and the veins in his neck are popping out.” There were some things Fox asked UFC to do before the first fight, such as shortening the fighter walk-ins and changing the mat so that it is clean when the Fox broadcast begins. “I don’t want it to look like someone just sacrificed a goat before Fox comes on the air,” Shanks said he told Fertitta. “(UFC) spent a month trying to figure out how to clean the mat or change the mat.” But Shanks said that ceding production control hasn’t been an issue. “It is a back and forth,” Shanks said. “Those guys have the reins during the event and after the event we sit and talk through what needs to change, if anything.”

Shanks said Fox had been courting UFC for
almost a decade before offering a deal

FOX FIGHT CLUB: Shanks said that Fox had been courting UFC for almost a decade before offering it a seven-year, $100M-a-year broadcast deal. The deal was driven largely by the opportunity Fox saw in using UFC to grow distribution of its channel Fuel TV. “We ran the numbers and the numbers looked right,” Shanks said. “Everything they wanted to accomplish matched up with what we wanted to accomplish. We wanted a new driver for Fuel TV. We wanted great content for Fox Deportes. Bringing real fights back to Saturday nights was a big goal of ours.” Fox is “edgier” than other broadcasters, Shanks said, and that made the decision easier. Plus, he saw an opportunity to use UFC fights on News Corp.’s global channels. “We believe there’s no more universal language than two guys getting in an octagon,” Shanks said. “From a sports perspective, it’s a great chance for Fox to plant its flag and UFC to be global.” The success of the UFC will be measured in both its ratings on Fox and the distribution growth of Fuel TV, which currently is available in 36 million homes, Shanks said.

GONE IN 64 SECONDS: The first UFC fight that Fox broadcast last November was over in 64 seconds. Shanks said that the outcome wasn’t ideal but it was as good as they could hope. “We thought it was exciting,” Shanks said. “It was a knockout. It was a style of a knockout people were used to seeing. It could have gone a lot of other different directions.” But the takeaway from that fight will influence Fox’ future programming plans with UFC. It now plans to show four fights over two hours in its next broadcast, scheduled for May 5. "We learned people want more fighting," Shanks said. “We’re jamming more action in. There’s a little less warm and fuzzy stuff. Less talking. That’s the format we like in a two-hour block.”

FINDING ADVERTISERS: The UFC and Fox are concentrating on expanding the number of advertisers supporting the sport. They have had success in the auto category and soft drink category, where Dr. Pepper signed on, but they still are looking for support in the financial services, insurance and other areas. “It’s still early,” Shanks said. “I think you’ll see additional blue chip advertising acceptance. There’s no more efficient place to buy men 18-49 and definitely 18-34 than a live UFC fight on Fox. Obviously there still needs to be some acceptance of top sponsors.” Fertitta believes that more advertisers will sign on for commercials as they understand the UFC audience better. “We have a very, very affluent fanbase,” Fertitta said. “We have the highest average ticket price in sports at $275. We actually sell our tickets. The core demographic, the average income is around $80,000. I think there are maybe a lot of misnomers as far as who really is the fan.”

AGE OF EMPIRE? MMA still is not sanctioned in the state of New York, and Fertitta said that it has nothing to do with the state legislature. Fertitta: “We know we have the votes. The speaker has not allowed the votes to get to the floor.” Fertitta said the speaker is preventing that from happening because of opposition from New York’s culinary workers' union, which represents restaurant and hotel employees. He and his brother, Frank, own Station Casinos, the largest non-union gaming company in the U.S., and he believes the Nevada culinary workers union is getting its partner in New York to oppose the UFC’s effort to get licensed there because the Fertittas' company is not unionized. He believes the UFC eventually will overcome it and the upside will be huge. “It’s not going to make or break us,” Fertitta said. “But when an event does come to New York it’s going to elevate the brand.” Shanks agreed, saying, “It will be good when it happens but I don’t think there’s a negative to it if it’s not there.”

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