The tie-up between WWE and UFC immediately puts Ari Emanuel and Endeavor toward the top of the sports and live event space. But it comes with a cost, Tim writes.

Why it matters: The deal is a huge PR win for Emanuel, who risked his company two years ago by taking it public. It's also going to challenge Endeavor's debt-burdened balance sheet.

• Endeavor's stock price dipped more than 2% in morning trading after the deal was announced.

The big picture: The new UFC-WWE company (trading under a very fitting "TKO" ticker) should have no shortage of investor interest. But buying into Endeavor now becomes less enticing without the popular combat sports league.

• Last year, UFC was the main reason that Endeavor's sports business — which also features the Professional Bull Riders league and EuroLeague basketball — grew revenue by 20% to $1.3 billion, accounting for nearly a quarter of its total revenue.
• Though Endeavor paid down $500 million of its debt last year, it still carries more than $5 billion in long-term debt.

Catch up quick: Endeavor this morning announced it was buying WWE and merging it with UFC into a separate company.

• The all-stock deal values UFC at $12.1 billion and publicly traded WWE at $9.3 billion, the companies said in a regulatory filing.
• When the deal closes later this year, Endeavor will hold a 51% controlling interest in the newly combined company, and WWE shareholders will hold the remaining 49%.
• The two companies will be run separately under the yet-to-be-named company.

What's next: The WWE and UFC will negotiate their linear TV rights separately from one another, but could partner on a combined streaming deal, WWE president Nick Khan tells Sara Fischer in an interview this morning.

• WWE's linear TV rights deals with NBCUniversal and Fox expire next year. Its streaming deal with NBCUniversal's Peacock expires in 2026. UFC's media deal with ESPN, which includes giving ESPN+ the exclusive rights to all UFC pay-per-view matches, expires in 2025.
• "The most important thing is that NBC and Fox, from a WWE point of view, feel respected in the process," Khan said. "So we're going to enter those conversations with them." The right of first refusal "just starts now."
• Khan continued: "If we're not able to do that, we'll see what the marketplace has to say and ultimately, you know, choose the right partner for the WWE audience in our shareholders."

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