The Dan Le Batard Show with Stugotz - Sporting Class: College Football Controls the Future of College Sports; 3-headed Sports Streamer Mess Gets Messier

Episode Date: March 1, 2024

Meadowlark Media CEO John Skipper and Nothing Personal's David Samson are back with another episode with host of Pablo Torre Finds Out ... Pablo Torre! Welcome to the Sporting Class!? Today is all about sports confusion. What is happening with the College Football Playoff? ESPN reportedly agreed to a $7.8 billion deal for the new 12-team College Football Playoff, but nothing has been signed yet. It appears that the conference just can’t agree on anything. Should the Big Ten and SEC care about the other conferences? What is the future of college football? Private investment? Then, can anyone explain what the Disney, Warner Bros. Discovery, Fox venture is doing? Is it happening? FuboTV is not happy about this at all and filed a lawsuit. Plus, Warner Bros. Discovery no longer is pursuing a merger or purchase of Paramount Global. What is the future of Paramount?  Learn more about your ad choices. Visit megaphone.fm/adchoices

You're listening to Giraffe Kings Network. My dad's been talking about Rebelsys. Rebelsys? Really? Yeah, he says it's a pill that's... That's right! Did you know it's also covered by most private insurance plans? Well, I'll definitely be asking my doctor if Rebelsys is right for me. Rebelsys, ask your doctor or visit Rebelsys.ca. Order up for Rebelsys! This is the Dan Levittor Show with the Stugatz Podcast. David Samson has stripped the label from his bottle of water.

Which is how you know we're back. About to record this board in class with John Skipper and David Samson. Hello John. Hello Pablo. Hello David. I don't like giving free advertising away. We don't have a water sponsor yet, so. If you would like to sponsor the liquid

that powers David Samson as we get into the most pressing topics about rich guy stuff and sports business, that is an open space for you to bid on. Speaking of bidding, I wanna start with the college football playoff, John. And I wanna start with this idea that, okay, the CFP is expanding, a TV deal is expanding,

lots of things are changing in sports business, but this one, I come to you first because, as I always say, you were the guy as the head of ESPN who dealt with all of these conferences, who dealt with the future of college football, you redrew the map of the sport. And so here is ESPN in the present agreeing to pay $7.8 billion to broadcast the College

Football Playoff over six years, dot, dot, dot, unless some stuff happens that is not to their liking. Can you explain what's happening here with the condition around the $7.8 billion and what ESPN is looking for here? I can tell you what I think is going on, but I'm not sure that the public information provides everything you need to know. It feels like ESPN has a deal with the college football playoff organization, which is headed by I think still by Bill Hancock.

So it sounds like they have a deal with them. At some point, about a week or ten days ago, the SEC and the Big Ten announced that they had an advisory board. So it feels like the SEC and the Big Ten may not yet have agreed with the college football playoff governing body that they are okay with this bid for ESPN because they're still sort of arguing over the format. Yes, the field. And so, okay, a 12-team college football playoff field is projected. It's the five highest ranked conference champions who will receive auto bids.

The seven highest ranked teams remaining will round out the 12 teams I think what they're actually fighting about is governance Remember we we've talked about and I think all the time about Tony Petiti the former He started MLB network and ran it first and then left and is now the commissioner and they had the big 10 of the big 10 they had this meeting where they were getting together and saying, here's how we're going to operate. It was just the two conferences. And then all of a sudden there's an announcement of a deal that of course would involve them. And then there's an announcement that the deal isn't really a deal yet.

And what I was thinking behind the scenes is Tony Petiti standing up and saying, hey, you didn't come to me. I want to be in charge of how this deal is structured. I want to understand what this means for distribution of this money. Who's getting what, when, where, and how? Who's getting the bids? So that's what I think the delay is.

Were I to fashion a guess? Cause sitting in his shoes, I would do the same thing. It's one thing to make a power play in a meeting with a fellow commissioner, but it's a whole nother thing to hold up an entire TV deal for an entire sport and that's what I think is happening. Well, I'm assuming they're concerned about governance over two things. Who gets in and how does the money get distributed?

And if that is your concern, I'm puzzled by this 5.7 plus 7 format. They seem to be, as people always do, solving the last problem they had, right? The five highest-ranked conference champions are going to get in. They solve the Florida State problem. But all they do is create other problems. What is the governance for how the other seven teams are going to get in? I don't know why they're not just agreeing that there are four major power conferences. I realize they have legal issues with what the contracts they've signed with the PAC

12, which now has two members. They've got to figure out how to get rid of that stub and then they've got to figure out. I don't know why it's not the top three teams from the SEC, the top three teams from the ACC, the top three teams from the Big Ten, the top three teams from the Big 12. Well, what about everybody else? That's why it's not. Well, if they're arguing about governance, if I was arguing about governance, I would say, well, you know, we're the big conferences, our teams are going to get in and people want to see Alabama and Georgia

and Ole Miss and Texas and Michigan and Ohio State and Penn State and they don't really want to see and I just, I'm just not going to name, you know who I'm talking about. They do not want to see the teams from the other conferences. It would be better for television, would be better for ratings, and I don't know why I don't know why they need a middle person to run the tournament. Can I take you inside a room, both of you? Sure. It's a room I was in once.

We are in a room. By the way, just to be clear, we are in a room, David. I was appreciating. Are you going to take us into a virtual room? I would like you to go into a magical room where there was a time when the New York Yankees and the Boston Red Sox had a conversation about forming their own league, where the conversation is they don't wanna give

revenue sharing dollars to teams like the Guardians or then the Indians or the Marlins or the Royals. And the response- Are the Guardians and the Indians the same team? Then the Indians. This conversation happened when they were called the Indians. same thing to the Indians this conversation happened when they were called the Indians okay and the conversation went like this go ahead except you're just gonna have to play each other every day

so if the two of you want to be your own baseball league then it's Red Sox Yankees for 161 games or you can do it for 80 games or 40 games and not be a world series You can do your own cup the Yankees cup and if you want to do that, that's fine but you need the little teams because That is what fans want. They want a build-up a crescendo to a season and what you're talking about Reminds me of that because you'd prefer it just to be the top teams. No, no, I'm not suggesting what I would prefer. I'm suggesting that if I were the commissioner of one of the big leagues, I would be concerned

about how do I get the most teams I can get into this playoff system and how do I get the most money out of it? That's what I would care about. But it's at the expense, yes. But if you give all the bids to three conferences or four conferences, there's a whole lot of teams out there who will just say, okay, then I guess we're no part of you and then we're not gonna ever play you during the regular season,

we're not gonna play you ever again. No bowl games, no nothing. And what, well there will be no bowl games for the teams in the big conferences, I don't think. I think eventually that will go away. And by the way, that's the problem, it's not two teams, teams in the big conferences, I don't think. I think eventually that will go away. And by the way, it's a problem. It's not two teams.

It's somewhere between 60 and 70 teams. That is plenty of teams. And by the way, it would be great for television and media rights if they only played each other because the least valuable games are when Alabama plays Troy and Penn State plays Young Town State and you get rid of all those games that nobody cares about. It's a super league. Yes. Super league.

It's back to what they tried to do in Europe with football. They don't work. Why not? Because you're forgetting the fact that fans, if you buy, let's go to Michigan. Should we in the big house? Is that Michigan or Notre Dame? That is Michigan. If you only played Harvard Yale, what if Harvard only played Yale all year?

Every game. If they don't, they can play Texas, Oklahoma, UCLA. But they're just playing each other. So what? There's a 60-some team. That's really not interesting to an alumni group. So if you're getting seasoned tickets as an alum of Michigan, you would not want to see them play.

Every game is a good competitive game with a major team. By the way, you know the teams, the games that nobody goes to. I used to get, there was a guy who was the athletic director of Florida, used to complain to me that ESPN put too many games on television. Consequently, nobody went to his home Florida games. I looked consequently nobody went to his home Florida games. I looked at the attendance of the home Florida games. Every time they played a team from a major conference, sold out. Every game in which 20,000 people didn't show up was the game that they had scheduled just

so they could win. And now, if you have a system where the automatic bids are the one, two, three, four best teams from a conference, you no longer have to worry about how many losses you have. As long as you finish fourth or better, if you have two, three, four losses, doesn't matter. So maybe we'll have a Division I and Division Ia, because this concept already exists. It's called Division II and Division III. That exists in the college world.

Right, the FCS, the FBS. Yeah. It's just, it depends where you go to school. If you go to Lehigh, you know, you're not, although Lehigh is Division I. Take a different, whatever, whatever school is Division II. That, of course, is the problem. Lehigh, a fantastic school, I do think they call themselves now

the Golden Eagles or something. They were engineers for years. You've never heard of that problem. But they didn't. But nevertheless, that's the problem. Lehigh is in the same conference. Nobody wants to see Lehigh in the college football playoff. They don't.

And by the way, why you say fans won't? People always say fans love a Cinderella. They love a Cinderella. What are the worst rated games in the history of the tournament? It's when Florida Atlantic and ends up in the final four, less people watch it. They're so excited, why don't they watch?

Let's have a world that's so exclusive. I can't believe we switched chairs now, but let's have a world that's so exclusive that is always only teams playing each other and there can never be an upset. There can never be a surprise team in the CFP. There can never be anything in. How about now we have to take it to March Madness.

Cinderella's and March Madness drive the needle. People love that. Cinderella's will be the teams that are in the second half of major conferences and upset a team. Georgia Tech beat North Carolina this year. That's a that's a Cinderella. Wait for us just beat Duke. But we should talk about what the incentives really are. If you are the head of a, if you're the head of a conference, if you're a conference commissioner in college football,

the highest levels, which means you're the guy running the SEC or you're the guy running the Big Ten, right? What do you actually want? Because when you bring up March Madness in the NCAA tournament, a parallel question can be asked of the commissioner of the ACC, right? And so, John is circling this idea that actually, if these guys really wanted to maximize the hand that they have to play at this card game, they would say, we want our own card game. Yeah. And you'd have to split at this card game, they would say we want our own card game. Yeah. And you'd have to split it by sports.

Yes. Because there's certain schools that are better in basketball than in football, and others that are better in football than in basketball. So if you're gonna do that, then actually what you're saying is that you'd want Duke to be in two separate conferences because they're not invited to any super league

in football as a team, but they certainly are in basketball. No, I think they would qualify for being one of the top 64 college football programs. So the super league is not going to be conference delineated. It's going to be the top 64 programs based on what? Recruiting? Did it change? No, this is why it's completely unrealistic.

You can't do it because you need to start with a white sheet of paper and or blank sheet of paper. So, it can't happen what I'm talking about. Because too many contracts are pre-existing. Yes. I'm just suggesting that if you are the conference commissioner, what you care about is automatic bids for the teams that are the best in your conference and being guaranteed to receive the most money you can receive from the playoff.

But if they're the best, they're going to get the bids. If FSU, if there were five teams in the CFP, you don't think FSU would have been the 15th? You're always going to be arguing over that undefeated San Diego State team that by some definition belongs in the championship. But that is if I'm the commissioner of the big town going, they're not as good as Penn State or Wisconsin or even Iowa. They're not – no, that's not the Florida State problem because it's not the top of the team.

It's the second, third, fourth, fifth, sixth. What he's trying to argue is that he wants a world where you're- Forget, I'm not arguing what I want. I'm arguing what they should want as Tony Petiti. Let's keep talking about Tony in behind his back and in front of his back. To be clear, I have not talked about this with Tony Petiti.

I don't think that you have either. No, but John is cosplaying the role of Tony Petiti head of the Big Ten or or Greg Sanky, head of the SEC. What would they do? And what he's saying, I believe, and I'd like you to confirm this, that the fifth best team in that conference deserves the postseason appearance more so than the number one team in a lesser conference. If I'm the commissioner of a conference,

I'm not paid for some sense of justice. Of meritocracy. Of America and meritocracy. I'm paid to do the best job I can do for the teams who belong in my conference association. The argument from a union standpoint and a quality of play standpoint is this. I don't agree with Samson Union guy I am making what is our argument which we've switched like we were 13 going on 30 today is that if

Everyone gets in then it's a race to mediocrity. Why do you have to pay to get the best recruiting class? Why do you have to do anything to be a good team? You want to win? But you're gonna you're gonna have a chance in the playoffs. You're in the playoffs automatically. That is one of the reasons why the baseball union, as an example, is concerned with certain of the salary quashing rules that happen because they believe that owners are incentivized to just get into the playoffs. That's why they didn't want expanded playoffs.

Because if you get into the playoffs, you get hot, you win the World Series. And that's what owners really want. And if you can win the World Series with a low payroll, why wouldn't you do it? If you get automatic bids low in the conference, explain to me. Four is not low in the SEC or the Big Ten. Those are big time programs that want to win and will do anything to win and you have alums who are not going to go, oh, we're going to get in. Let's don't pay for the coach. Right.

So four could be Alabama, Georgia, Texas, Oklahoma. I don't know. We can't quite do it here. But if I said there's a, by the way, there should be a 16 team playoff. There should not be a 12 team playoff. I understand what the value of that is. But if you had a 16 team playoff and you said that Lissy Michigan, Ohio State, Alabama, Georgia, Florida State, you all got in, would you be unhappy?

I'm not asking whether I'm happy or unhappy. I'm asking whether or not it is sustainable as a model to have this super-lead concept. Sure, sure, it's sustainable. But it's never happened, it's never worked. It happens in European football every year. In England, there are 120 teams at play and they play in six different levels and, by the way, gives me an idea.

They see they're introducing relegation into college and the team that finishes last. I do like that. In the ACC at some point goes down to another conference. Do they lose the distributions from the TV package? They do for the year after they're out. That's right. Relegation doesn't work. It does work. Relegation works beautifully in European football.

You may not believe it works in- It doesn't work in American sports because you can't buy a team and value what your revenue is, what your stream of revenue is from a broadcast and all of a sudden it disappears. We're talking about an amateur sport. I know we are. No, you're not.

We are, but there's no value to the University of Alabama team. I mean, they're not a standalone business. They're out there selling the rights. They're actually monetizing their team. They're going out and doing Alabama every day is monetizing its team. Of course they are. So there's a value.

And what we're gonna see in the next 10 years is we're gonna see private investment in these teams. We could see some of these teams go public as entities. It's interesting. This is not a subject we thought about doing. But what is the rationale for investing money in a college and a university sports program? How does that actually work? You want your kid to get in?

No. work. You want your kid to get in? No, they give so, so in private equity firm A gives Miami a billion dollars for 25% of their rights in the future. What do we think is going to happen? To who? To the Florida State? They will spend all that money and then at the end of, they will take the money they get from the private equity firm, they will spend it immediately and in the future they will be paying 25% out of every dollar of their media to the private equity firm and they'll be worse off than they were before they did this. But now you're making an argument for companies that shouldn't take investments from private

equity and things are happening just this. But football teams aren't companies. But so my argument is that they are. But they're not. And that they are now and they're actually going to officially be so because we're seeing it a little bit in college sports already in my opinion. So the logical conclusion of that is I'm the richest alumnus of the University of Georgia, of the University of Georgia. of the University of Georgia. I'm gonna buy the football team.

I, I, Betty Smith am going to buy the football team and I get to make the decisions about who starts. Really? It's not gonna happen. It's like you live in a fantasy land. That is exactly what happens now with boosters. Go to, and I hate to keep bringing up Harvard YELL, it's such a ridiculous flex,

but have you ever looked at who's sitting with the president of the team of Harvard and YELL during the Harvard YELL game? When they play Princeton, it's the smaller donors. For Harvard YELL, it's the biggest donors are around the presidents of Harvard and YELL. It's the same concept with any of the schools. You are paying for access. You are paying to go to practices. But with John, I want to translate your argument though that the reason a college you are paying for access, you are paying to go to practices. But what John, I want to translate your argument though, that the reason a college football team is not a company is because the money does not go into some mechanism

in the company to make the company what, different. You're talking about, it's just replenishing the coffers that they'd spend on the stuff they were gonna spend on anyway. Right. And so David is saying, what? You're saying that it is a company because... I'm saying because there's a P&L, so let's start just at a macro level. These individual sports have their own P&Ls.

Are you willing to acknowledge that? Of course. I have my own P&L. I make a certain amount of money. I spend a certain amount of money. I'm not a company. I could argue that point, but I won't on behalf of Carmen. So there is a football team that is a subsidiary of a university.

There's the big time university where there's a full budget for the university. Then they do budgets by department, academic department, sports department, and any department that can go out and fund itself, that makes that department that much better. It's why in science they try to get endowed chairs where it's money. So your argument is the science department a company? Yes, and there's someone who runs the science department and they're out there running their own little fiefdom, trying to get donors to give to their department for their research and their capital needs. I'm going to agree with your essential point and suggest that we're mostly in a semantic

discussion about the word company. They're not officially companies. They don't file as the football company doesn't file taxes. You're right. They don't file as the football company doesn't file taxes. You're right. They don't give them too much. But here's the question that's beyond semantic, right? So leave the vocabulary aside. The question is, is it a good economic idea

for this non-company company to take outside investment? And John is saying no, because what you're gonna do is spend it all and then we'll be back in the same place, except now you're gonna owe somebody more money. And I'm saying yes, because that's're gonna do is spend it all and then we back in the same place except now you're gonna owe somebody more money And I'm saying yes because that's what that's what borrowing money is All of us go out and borrow money to buy a house or to buy a car or you borrow money to start a business But private equity does is they fund people who have ideas The private equity people are just doing spreadsheets

They're figuring out what they want to invest in what the return will. And so when you're investing in FSU in your case for future media rights, this just all just happened in Germany with the Bundesliga. We were going to talk about this on nothing personal before the fans stepped in and said, no, we won't allow it. But what they were ostensibly doing was selling their future media rights and monetizing it. Well, that has happened. The Serie A in Italy did sell. But all they're doing is leveraging their future for the current. Welcome to the world.

That's what all of us do. But there is no mechanism by which that borrowing that the university is going to do is going to turn into profits, which they can use to pay the loan off. They're going to end up in a deficit situation again and they're going to be complaining that now they no longer have enough money because of the Big Ten teams. Florida State has $150 million that's their budget in their athletic department. They're saying not enough. We're going to go to the private equity market and get 50 more so we can compete with a big

10. They will spend, they operate, they're probably there, I don't know this so I'm speculating. Their athletic department at best probably operates even so they don't make any money. They likely lose money. Most of them lose. Another semantic discussion. So how are they going to pay that loan back other than- You should be rolling it over.

That's what all companies do. Disney has debt. When it comes due, what you do is you roll it over. They're going to pay for that with the profits that that barred money provides them. If I can guarantee you a flourish that gets 50 million more dollars, they're not going to generate 50 million more dollars that allow them to pay that debt back. Yeah, they think're not going to generate 50 million more dollars that allow them to pay that debt back. Yeah, they think they're going to generate more.

The purpose of what they're doing is to make their program, get better players, maybe do upgrades to a stadium, get the ability to charge more for your tickets, get more boosters, et cetera. I know of one school which definitively has shown a profit on football. But by the way, I could be ignorant about others but the University of Texas does make money. Their football program does make money and they have always been very proud that they give a check back to the school.

That's funny. It is all semantics because- I'll point out Alabama reported 199.9 million in total operating revenues, uh, 212 million in total operating expenses. That's the 2023 fiscal year. But that's the athletic department of the football team. That's the athletic department. Yes. But there's no information there. So what's the allocation? The people who are doing security around the football stadium. Is that allocated to the operation of the University of Alabama, or do they charge into the football program

the hourly rate of the security guards? I don't know the answer. The answer is we don't know. So that's why these sort of articles, and it gets everyone in an uproar, and they're so misleading. Right, okay, so the question of accounting aside, right? The question has been raised,

what do you do if you are a, if you're a very powerful football program that wants to make more money? And John's proposal is if you are a Big Ten or an SEC school, you should tell the guy even, it's beyond the NCAA, John. What you're really saying is go to Bill Hancock, the guy running the college football playoff and say, thank you, but no thank you. We can do this without you. And I just want to hear your rationale for why you don't need that guy. Again, I'm not suggesting I think it's necessarily good or bad. I'm thinking that I was a power for conference commissioner.

I would not quite understand why I need a third party to provide governance. You said, David, the problem is they don't want—the issue is when you say they can't agree on governance, they don't want governance. They want to run it themselves. Everybody says they don't want governance until they all of a sudden need to govern. So you can't have three conferences. It's like— Very George Washington-

It certainly is. How about if you started a business with someone, 50-50, and you had no rules of governance? Like you just, are things magically going to happen? Like you're just going to agree on stuff? And what happens when you don't? Then it's a pain in the ass for everybody. I don't understand why the governance among the power conferences would be that hard. Each of the conferences would have a vote.

They can't even agree on the size of the table they want to negotiate at. So they all want the power. Well, I haven't really read that story. Haven't heard that they're having a problem deciding on the table. I think that was a Vietnam. I think that was a Kissinger.

I was trying to make a reference that only you would get. Thank you for getting it. My point was the same, but I will stand down from any further Vietnam references. Oh, I cannot believe we've gotten to Henry Kissinger. But of course we have. Of course we have. So look, the point here is there's a super league logic to how college football at the very top end could reform itself, right? If they said, no, I don't want to deal with all of this stuff, all this diplomacy, no thanks.

We don't need you guys. We can just ensure that we have profits in a bigger way year over year by just making sure that we mostly play each other to our liking. And we're always in the playoffs. And we're always in the playoffs. And we can always win a national championship. But is it the same national championship without the CFP?

Would it still be the national championship? If only the certain teams have the right to the possibility to be there? If the conferences had been running this tournament this year without the CFP and Michigan one, would anybody be suggesting Michigan was not the national champion? Because, because, because...

Because UCF was undefeated? Because the University of Central Florida said... I mean, by the way, at the end of the year, did you have anybody suggesting Florida State should have been the national champion? Even Florida State, I think. They did not. Attempted. No, they did not.

No, no. Because there's an actual national champion because there's a CFP. In your world, FSU could play their own game against our company team and be the national champion. So how many years has CFP been operating? What, about 20, 25 years? When did you first start it? Oh, oh. I didn't start it. It was started at ESPN sometime early in this century, I think.

Oh, it could be 1999. Somebody's looking it up, I'm hoping. We're fact-checking on that. So it's been operating 20 plus years. Has anybody ever won who wasn't from the current Big Ten, SEC, ACC, or Big 12? That's – you're asking a question that's easily answered. I just don't know the answer, but is your point that it's already happening? Yeah, it's already happening.

While there is the occasional Cincinnati that slips in, this is already a college football playoff between the best teams from the major conferences. Don't you? No one is even threatened. I'm not sure. Has anybody even made the championship game? It's really a chicken and egg

because the teams that you're talking about, the most powerful, bigger teams, they just have better opportunities to be better. And the irony is the NILs have trying to level that playing field. And maybe that's why Nick Saban disappeared and other Jim Harbaugh and other coaches, because they're concerned that all of a sudden their false perch is going to be broken. Well, I would quarrel with that. The NIL is not going to level the playing field.

It's going to make it less level, because who is spending the most money on NIL is not going to level the playing field. It's going to make it less level because who is spending the most money on NILs? I think it's Southern Cal and Oklahoma and Texas and Alabama. But there's no barrier entry. There's no barrier to entry except you're Lehigh and maybe you find somebody who's willing to spend $100 million to make you a great team. Maybe. So this is the Southern Methodist question as we've talked about before on this show. Like where are the boosters who might wanna pay?

I wanna point out, it was the BCS 98 to 2013, the CFP started in 2014. So a decade officially. How is that BCS and CFP were the same? They're pretty close to the same. I viewed them as the same. They're pretty close to the same. Again, there's a semantic distinction here,

which we won't necessarily was computers, now it's a committee. That's the big difference You think and what I think about in professional sports and maybe the equivalent is in college sports when you buy a team That's not the Yankees or the Red Sox You're aware that that team is being sold for only a billion and not eight billion because you're aware the reason for that Vigorish is that the Yankees have more revenue? So there's a different multiplier, but also that the Yankees have greater opportunity to win more often than you will.

That your windows will be open for a shorter period of time and you may never win a World Series where the Yankees window to be good is open all the time. It's the same thing in college. There are certain programs whose window is always and And there are certain programs that, hey, every once in a while. And for a lot of people that, hey, every once in a while, it's good enough. And what you're suggesting is that that disappears

and that there's no more, hey, every once in a while. Yeah, it's the equivalent of the English Premier League where only teams in the English Premier League go to the Champions League. You might argue that it's unfair to Wimbledon, who's in the third or fourth division, that they don't have an opportunity to play the best other teams in the world, but it doesn't really seem to be a problem for the fans and the players and those teams. Now, we did forget one thing, by the way, which is, and we forgot

it because of the discussion about company and we're trying to look at the football program in isolation. There would be smart people who would say to us, to me maybe, gee, you're forgetting about the overhang positive benefit of if my team wins the national championship, I raise my ticket prices, my boosters give more money and I doubt anybody is doing a P&L that says, here is the hangover effect of we won. We're Florida Atlantic and we made it to the final four and G.R. donors raised what they give us by 40, 50 million.

So I will see the point that if you actually looked at it that way, there might be profits involved. It sounds like a company. Stu Gatz here. Did you know that according to FBI property crime data, most home break-ins happen in broad daylight? As the days get longer this spring, protect your home with Simply Safe.

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because I can use it as a learning experience for them and try to help them out and try to point out what they did wrong. But in this case, the employee was enough levels below where I was that I did not do the firing, but I had it done within moments of discovery. I'm just like firing people. It's just absurd. It's absurd. Stugats.

I'm talking about people who I fire who deserve it, who have done something that actively requires me to fire them. It is my unadulterated pleasure to do so. This is the Don Lebatar Show with the Stugas. I feel like we should move on to the topic of actual companies now that are not in dispute as such, because we've talked about Super League, we've talked about the definition of a corporation, somehow none of us quoted Mitt Romney

in terms of our people corporations. I move on to this notion that Disney, Fox and Warner Brothers are now facing because of the three headed streaming service we've discussed on this program before. They are facing an antitrust lawsuit from Fubo TV. Okay. And so this is the latest update here. So on the notion of the joint venture between those three media companies, there's some other stuff we can discuss about how Adam Silver says NBA commissioner, he didn't know about this until after it was announced,

but here is Fubo TV, the CEO, David Gantler saying, quote, to me, this is almost borderline racketeering. And he files a lawsuit that accuses these companies of quote, leveraging their iron grip on sports content to extract billions of dollars in super competitive profits and The implication there of course is that consumers pay more for all of this very popular sports content and so John You have of course a unique perspective In the world of people who talk about this stuff.

And so when you see this lawsuit and this news, your reaction is what? My reaction is that it is a bit of a Hail Mary pass for a company in some distress. And I don't think they will win this suit, nor do I think there's any particular merit. I'm interested in the quote you just had which accused these media giants of leveraging their iron grip on sports content to extract billions of dollars in dot-dot-dot profits. I think that's called capitalism. So I'm going to channel my David Sampson to suggest that that's legal. And keep in mind that sports rights are the

most expensive content in the world. So is he actually suggesting, well you can buy the most expensive content in the world and you can buy a whole lot of it and the reason you buy that and you buy it exclusively is because it provides you enormous opportunities to make money is he he suggesting that somehow that is racketeering? I don't sort of see the through line there. He's suggesting that this stuff is anti-competitive, that here is a grouping of companies are working in concert to even further leverage that.

So if I buy the Michigan Ohio State game exclusively and I am the only one who has it. Hell yeah, I'm being anti-competitive. That's why I paid the money for it, is to get it exclusively. You option to book to make a movie, you get it exclusively. It's not competitive. You buy it exclusively. You don't get the story exclusively. You get the book exclusively. So based on, you can't write a book about the Civil War and then save it.

So they want to do recreations by quick drawings of live games, they can do that. A daguerreotype of the CFP, yeah. I am concerned several parts of this lawsuit bother me. Number one, throwing out the word racketeering, it gets everyone in a fluff because they view it as Al Capone type stuff. But number number two he's suing about a concept that yet is not understood by anybody including the people who started the streaming service so remind people what this supposed what this supposedly

is so what we said it is and we didn't even have agreement in this room when we did the show It is and we didn't even have agreement in this room When we did the show press releases when this first came out the view of John is that these are three companies? That got together and they're gonna put their channels ESPN TNT TV S true TV They're gonna put them on this new platform like YouTube TV and they're gonna call it blank and they're gonna charge you 59 or $99 I suggest Kibris, which is a three-headed dog that guards the gates of hell. I think they won't choose that. We're going to put that in the maybe pilot.

I was going to put it in the no chance toilet pants combo, whatever column you want. So they get together and they get these networks and people then have a choice where they can buy just these networks and within these networks is Live sports, but what we said is they're gonna show NCIS at 2 p.m. And then an NBA game at 8 p.m. Right any channel that has sports would be folded into the bundle and it's so it's a bundle It's a mini bundle spot a We don't really know anything about what this is going to look like because

my view of it is that it was just going to be sports and that they were going to have to figure out how they were going to decide what content gets put on this new streaming network because there's already a conversation that a Super Bowl on ESPN would not be inside this streaming service that they would want it to be on ESPN Plus solo, not ESPN would not be inside this streaming service that they would want it to be on ESPN Plus, solo, not ESPN Plus as part of this new three-headed company. We don't know. Well, if ESPN, so ABC will get Super Bowls in the new deal and those Super Bowls will be in this service if it is launched as suggested.

But we don't know. Yes. We don't know that. But we just don't know. So there's a lawsuit that's filed and to me it makes Fubo look desperate. You called the Hail Mary and I completely agree. They're worried that they are being marginalized because they can't afford to get a product that they're not willing to pay market rate for.

Yes. And this speaks, John, to something that Fubo has been complaining about for a while, even before this joint venture was announced, as they outline in this lawsuit, which is to say, that these companies, you rights holders, are forcing potential channels, distributors, I should say, like Fubo, to carry hundreds of unwanted channels in order to get the things that they actually want. They wanted to show people sports and they can't because you people are making them take all this other stuff and therefore charge more money.

He's been doing that since day one as an executive, making people take crap they don't want in order to get the good stuff. Well, we didn't have any crap. Oh, excuse me. Everything smelled like roses. ESPN the 12th was Pure Rose Network. Go back.

Fubo, the people who started Fubo, and I think this is accurate, were – Were us by – No, no, no. But I'm going back to the original conception was they had the smart idea that, oh, there are a lot of people for whom sports is the most important content. How about we create a company and we go out and just buy channels that have sports and they went out to try to buy those channels. I was there when they tried to buy the Walt Disney channels that had sports on them.

Which is most of the year's license. I'm really correct. And we said, fine. We're in business. We absolutely sell to distributors. You want to buy our channels? Here's what they cost. And they said, well, no, in business. We absolutely sell to distributors. You want to buy our channels, here's what they cost. And they said, well, no, no, that's not our contemplation. Our contemplation is to put together a tight package of only sports and take that to the

market. And we said, well, that's great, but that's not the business we're in. That's your business. We will operate as we always do. We're happy to sell you our network, our family of channels. That includes a lot of sports, more sports than anybody else. So that stymied them. And actually the reason that their price point is now $70 plus I believe is that when they

did finally relent and bought all the Disney channels at market rate and that meant they had to raise their price from sort of $50 to $75. I apologize if I got that a little wrong. And that of course is why- $59.99 for the first month, $79.99 per month after that. So they're mad because they're going shit. These guys are now offering kind of what we wanted to offer many years ago and they wouldn't sell it to us that way.

They're now doing this and this and by the way they have a right in their own rooms to be angry. They're angry. They're reading the room not inaccurately. They're reading the room not inaccurately. It doesn't give you legal standing. It doesn't. And that's the question.

What do you do about this if this is the power that all of these media companies now have? Two things. You stand on the highest hill you can find and you yell racketeering. And two, you try to use all of your power to get the government to look into the deal and try to quash it from an anti-competitive standpoint. Those are the only two things you can do,

because otherwise, Fubo is done. I think you're right about the motivations. And again, I'm somewhat sympathetic though I do not believe they have any legal standing here but to be fair they probably don't understand either and they may be also doing discovery in a way in this way bad pun yeah for this but it won't even get to discovery this lawsuit yeah We might not get to discovery the topic Because discovery is no longer pursuing merger talks with Paramount Global. Do we want to talk about that?

It's a great one. I, the reason I've been thinking about this a lot now, I should, I have to say this, so make sure we don't edit this out. I do work for CBS Sports. Okay. Thank you. CBS Sports is part of Paramount. Thank you.

There has been a lot of issues at Paramount, as with all these other companies, there have been these huge mergers, Warner of issues at Paramount, as with all these other companies, there have been these huge mergers, Warner Brothers Discovery, Paramount, with the Redstone family in Viacom. Guess what, lots of debt. With lots of debt, the hope is that you have economies of scale where you combine departments and you fire a lot of people.

They call it, whenever there's a merger, there is a concomitant firing, always, mass layoffs because otherwise, why do it when you can have one CFO instead of two? So that's the merger. The reason why two companies that both have large debt would enter into merger talks is they wanna further consolidate and do further layoffs and have further

sort of one point. But the problem with these big merger talks is who's in charge. So we're right back to governance. And the biggest reason these merger talks fall apart is who's gonna be the person who's in charge. Well, as you pointed out, you don't need but one CO and it means one CO is out of a job.

Right, so there was when I was at Morgan Stanley when Morgan Stanley and Dean Whitter merged I don't know if you remember back then Pablo that could have been way early in your career But Morgan Stanley Dean Whitter became a combined more interested in Dean Warmer 0.0 Huge fight over who is what the company is going to be called. Mm-hmm And then who's gonna run the whole thing. And it almost fell apart because of it and there was a huge cultural divide between Dean Witter people and Morgan Stanley people.

And when you think about Warner Brothers Discovery and Paramount, how many more consolidations can you have before it becomes truly a monopoly market? Yeah. I do think it's clear. I doubt in this case, not only you're suggesting that, that it was over who's going to be the CEO. It would be David Zasloff or over what the company is going to be called. It's going to be called Max probably.

At this rate, yes. I think this is more of a fact that they looked at it. They looked at what consolidation they could do. They looked at the assets and how, what they could do and they couldn't do enough, right? There's not a path forward to buying these assets from CBS Paramount, Showtime, whatever it is and putting them together with Warner Discovery. So I think Warner Brothers was still scarred from its last merger. Warner Brothers.

This is a huge thing. 2019, right? Yeah, where they have not been able to actually make it work the way they thought. Right. CBS, Viacom coming together to become Viacom CBS and then now rebranded Paramount. And so that's two separate deals that have happened. And neither of them in theory have worked the way they were supposed to work, but it's only been several years.

And it seems like there's people getting nervous. And what Paramount is doing now, the global company, there's talks that they may try to merge with the NBC universal streaming service Peacock. So now instead of a full merger, now they're looking at, let's see if we can just do something with Peacock and with Paramount. But then if I could just add, finally, we had a profitable streaming service. Max announced that they were profitable, the only one other than Netflix. And their parent company stock went down 10% the next day because they weren't hitting their earnings. So the entire

industry that we talk about on this show is a hot mess. It is. And of course, there still has to be consolidation. So there are not going to be enough, it's a game of musical chairs and there are not going to be enough chairs for all the companies exist right now to make significant profits. But I actually would regard it more likely that NBC, Comcast takes some of the assets from CBS Showtime, but they are going to have to. I mean they are in sort of pecking order. They're pretty far down in the pecking order and they're further down than you'd want to be.

You don't want to be the ninth, I don't know if they're ninth. I don't know if they're sixth or fifth or fourth or ninth, but they are not first, second, third, fourth or fifth in terms of the size of company, the asset, the value of the assets behind, you know, Amazon, Apple. And the hope of a merger is that you can take number five and number eight, merge them and become number two. You don't do, you don't merge a five and an eight to become number seven or number six. But my guess is that's what some smart people from Warner Brothers Discovery figured out is, oh my gosh, we're going to merge here and we're not going to be

whatever we are. We're going to be the same and maybe one better, but we're not going to be number two. We're still going to be, we're merging five and eight and we're going to be five. And have more debt. Yeah. And then they walked away. Yeah. So to go back to the Disney Fox Warner Brothers strategy here in terms of that three headed dog guarding the gates of hell, that feels to the Fubo CEO like a super league forming. But in reality, again, let's go back to Adam Silver

who's saying, I didn't know about this. What does this really feel like to you now? We've had a couple of weeks to process it. What is this thing? Uh, look, I don't personally believe this is of dramatic concern to Adam Silver or Roger Goodell. Uh, they might have preferred to get a call earlier than they did, but so what? I don't think either one of them is losing much sleep because this doesn't, I don't see anything problematic in this for them. All it is is the games, they have licensed to ABC, ESPN and Fox are going to be on this service but it's no different than being on Fubu TV or being on Comcast or being on anything

else. It's just that they have the right to distribute those channels to anybody they want to. It's just another service. It doesn't, I don't think they're concerned. I think that's a made up media thing. I'm really excited about my lip here. Should I? Do you want me to just, I'm happy to do it.

No, no, no. Just cut my lip. Just cut my lip. Because I don't. No, no, don't bite your lip. Well, I'm not going to get blood. You'd be end up with a damage. No, I will not going to get blood. You'd be in up with a damage. No, I will.

I'll be fine. You'd be in. No. John. I would think of maybe. Why do you think Adam Silver and Roger Goodell were unhappy? They weren't called. They were unhappy because.

Who knows that they were unhappy? Well, can you tell us from your last meeting with Adam whether he was unhappy? I've not talked to Adam lately, but I'm going to talk to Pablo now because you're not going to listen. I haven't seen anything reported that says they're unhappy. I've seen speculation about and they've asked them, did you know about this before? And the answer was not, hell yeah, didn't the hell know? And I'm mad.

The answer was, nope, I didn't know about it before. So the commissioners would not ever come out with their name and do anything to impugn the actions of the hands that feed them. However, they would do it through leaks and they'd do it through underlings to make it out there that, hey, we wish we had known about this because we have some concerns. One of the concerns we have is that all of you are going to get together and collude against us, and we don't want that to happen. Adam Silver is the number one candidate for that level of concern because he's looking for new media rights deals. It's not MLB, it's not

NFL, they are locked up for the next five, seven, eight years. So Adam Silver is not. So what is he concerned? I promise you and I wish I wish he'd come and do an episode with us so we could ask him in all seriousness do you have any concerns with your total media rights package with consolidation? Does consolidation worry you? Well, you're talking specifically about the consolidation of these three companies creating a service?

That and in general. I don't think right now there is a reason from this new entity, this three company beast. I don't think there's any reason for them to be concerned. There's nothing bad in this. So more enemies are working together for the first time. I think they're more likely to end up in their own conflict than end up in a conflict with the two leagues because the NFL writes and the NBA writes

are too important to those companies to risk not getting them by doing something stupid. So the heads of those three companies could call each other up and have a private room for dinner if they wanted to collude. There is a really significant impediment to doing that or even to sending lieutenants to do that. Darrell Bock Freedom.

Yeah. Not going to jail. It is against the law. And my guess is that Adam and Roger both know it's against the law and so do Bob and David and forgetting the third and Murdoch. They all know this. You conveniently always forget the Murdoch guy. There's no reason.

If you really want to break the law, you can find a private room somewhere in which to do that. In my career, I never compared what my bid was going to be with anybody else. I don't believe anybody at the Walt Disney Company ever even looked at somebody and said, wink if your bid's over a billion dollars. They have doth protest too much. I had – once I met David, he'll ask me after we'd submitted our bids for the Olympics what our bid was.

And he and I made a bet as to whose bid was lowest, and I won. Our bid was lowest. But that was after the fact. It just – I don't think there's anybody in the companies that have enough resources to buy that. You can let him get away with this when his main line to you is always, do you know what something is worth? One dollar more than the other guy is willing to pay.

I never had anyone study at ESPN what the worth of anything was. I would always pay one dollar more than when anyone else would pay. That's not a contradiction because you're negotiating with the league. They give you guidance as to what you need to bid and you bid it. You don't go. Give you guidance. But wait, do you think I did that by going and finding out by illegally finding what somebody else bid

and bidding one dollar more? John, John has grabbed David's elbow. David is tapping John's. Because he has a problem now. Me here, I will quote Dean Wurmer, fat, drunken, stupid, has no way to go through life, son. For anybody contemplating illegal activities. David and I may have many problems,

but fat, drunk, and stupid is not usually one of them. I've behaved stupidly and I have been drunk. Every. Same. Oh, of course. Right now. I think it's time for all of us to add this for all of our self-interest.

There it is Thank you guys. Can we stipulate not drunk? Just stupid maybe a little stupid Thank you, Pablo. Thank you