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BFD Expert Voices - Media Deals

BFD Expert Voices

The forthcoming sports streaming joint venture from Disney, Fox and Warner Bros. Discovery has prompted a range of criticism that will loom around the government's reported review of the deal on antitrust grounds.

Why it matters: What type of action, if any, the Department of Justice takes threatens to delay the launch or even kill the service before it starts — not to mention cast a lengthy shadow over any future similar endeavors, Tim writes.

Catch up quick: FuboTV filed a lawsuit yesterday in an attempt to block the planned service.

Fubo says the sports streaming JV would give those three networks less incentive to make their channels available on Fubo and other distributors, as well as charge Fubo above-market rates.

What they're saying: "I think this is a case that has real legs to it. A court should block this deal to protect consumers," said former FTC official David Balto, speaking to CNBC this morning.

Once you take ESPN's market power and bundle it with other products, it increases the cost of those products, he noted in the interview.

"It's like telling the 800-pound gorilla, 'Here, eat more ice cream.'"

On the other side, Matt Bilinsky of Weinberg Gonser tells Tim, "the actual business analysis does not run in Fubo's favor."

Bilinsky continued: "These companies can simply make the argument that 'we have the financial wherewithal to purchase these TV rights, we're not obligated to share them with any distributor, everybody has to conduct an arm's length transaction.'"

Fubo has a better chance if it can prove that the three companies have been artificially inflating the price that Fubo has to pay to carry their networks compared to others, Bilinsky said.

"The strongest card that Fubo has to play are these Most Favored Nations clauses that they're claiming are phantom MFN clauses that are then being circumvented by the studios entering into streaming deals with Hulu and Google, and then compensating Hulu and Google through other means."

Zoom out: Pay-TV distributors are furious about the planned streaming service, which would create a skinny bundle consisting only of those three's TV networks that air sports, such as ESPN, TNT and Fox.

For years, distributors have sought to offer the same type of sports-centric TV package but met resistance from those same media companies who did not want their sports networks relegated to a pricier subscription tier.

League partners, including the NFL and NBA, are also reportedly angry with the networks over being left out of the planning process.

The bottom line: Even if Fubo's lawsuit doesn't go anywhere, it keeps the temperature up on the DOJ to strenuously probe the venture.

What Fubo and others really want is to be able to offer the same kind of skinny bundle as this forthcoming service. In its lawsuit, Fubo accused the three of preventing them from doing this.

Allowing other distributors to give its customers such a similar offering, however, could make it less enticing for consumers to sign up for Disney, Fox and Warner Bros.' streaming service.

Fox, Disney, Warner Bros sports streaming venture facing scrutiny

1 big thing: Fubo calls foul

Illustration of a gavel with the center being a staticky TV

Universal Music Group is buying a minority stake in Chord Music Partners, owner of about 60,000 songs including the catalogs of The Weeknd and John Legend, in a deal valuing the music rights holder at $1.85 billion.

Why it's the BFD: The music rights market is booming. This deal grants a major record label a stake in some big music catalogs and an opportunity to acquire more, Kerry writes.

Catch up quick: KKR and Dundee Partners formed Chord in 2021.  

Details: KKR has agreed to sell its majority stake. UMG will acquire a 25.8% stake in Chord for $240 million, the company announced yesterday. The Dundee consortium will hold the remaining 74.2% stake. 

UMG executive Boyd Muir said in a statement that the deal offers the company an "efficient vehicle" for future catalog acquisitions "without significant capital allocation."

Of note: Goldman Sachs, Kirkland & Ellis and Freshfields advised UMG. DLA Piper and Axinn, Veltrop & Harkrider LLP served as legal advisers to Dundee. 

Fifth Third Bank and National Association served as financial advisers and provided committed financing to Dundee and UMG. 

The Raine Group served as financial adviser and Manatt, Phelps and Phillips, LLP served as legal adviser to Chord. Latham & Watkins LLP served as legal counsel to KKR.

Universal Music buys stake in Chord for $240M

2. The BFD: UMG enters catalog sale frenzy

Illustration of a pencil writing sheet music with dollar and cents symbols

Former Spotify executive Courtney Holt has joined Moonbug Entertainment as global head of music and strategic audio initiatives.

Why it matters: The new role helps Moonbug, owned by Blackstone-backed Candle Media, further invest in revenue sources outside of YouTube and other video streaming platforms while complementing that core business, Kerry writes.

Details: Holt started on Feb. 12, reporting to Moonbug's managing director of operations and music Jon Benoy.

The big picture: Moonbug, behind CoComelon and other popular children's series, is not new to audio production and distribution deals. Holt, in fact, helped ink a podcast deal between CoComelon and Spotify in 2022. Moonbug Radio launched on SiriusXM in June.

But Holt's hiring is a clear sign of Moonbug strengthening and expanding its audio business. It comes as Moonbug was on track for a 30% miss from its profit estimates in 2023, Bloomberg reported.

Holt tells Axios that his role involves all aspects of music — from its traditional role as a "soundtrack" to Moonbug's shows to more audio-centric storytelling. He noted further investments in "co-listening," as in podcasts that parents and children can enjoy together.

Catch up quick: Holt worked with Moonbug CEO René Rechtman at Maker Studios, the digital media brand specializing in online video creators that Disney acquired in 2014. That sale connected Holt to former Disney executives Kevin Mayer and Tom Staggs, now the co-CEOs of Candle Media.

For five years at Spotify, Holt helped lead its podcast push, including licensing deals with Joe Rogan and the Obamas. He previously worked in the music business at MySpace, MTV Networks, Interscope, A&M Records and Atlantic Records.

3. CoComelon's new musical muse

a photo illustration of Courtney Holt surrounded by squares and a cutout of the moonbug logo

Photo illustration: Tiffany Herring/Axios; Photo: Courtesy of Courtney Holt

Go deeper in our full database in the Axios Pro Deals Tracker.

• Qloo, a New York-based culture trends analytics startup, raised $25m in Series C funding led by AI Ventures, with AXA Venture Partners, Eldridge and Moderne Ventures also participating. https://axios.link/3I3KGxU

• Astera Labs, a Santa Clara, Calif.-based cloud and AI infrastructure company, filed for an IPO. It plans to list on the Nasdaq but has not selected a ticker symbol. Morgan Stanley, J.P. Morgan, Barclays, Deutsche Bank, Evercore ISI and Jefferies are the joint bookrunners on the deal. https://axios.link/3T3gtVQ

• Apica acquired Circonus, a Malvern, Pa.-based telemetry data company, alongside an undisclosed amount of funding led by Riverside Acceleration Capital, with Industrifonden, SEB Foundation, Oxx and Leo Capital also participating. https://axios.link/48mxOgV

• Athletes Unlimited, a network of professional women's sports leagues, signed a multiyear renewal deal with ESPN. https://axios.link/3Peu9eD

4. Deal flow

• Jay Levine was named CEO of Hartbeat, Kevin Hart's entertainment company. https://axios.link/3USATCx

• Brice Daumin was named CEO of DAZN Group's French and Swiss operations. https://axios.link/49nj0jB

• David O'Donoghue was named COO of management and production company 42. https://axios.link/48kXGtv

• Kathryn Vaughan was named SVP, head of production at Investigation Discovery. https://axios.link/3PdXSEv

• John Avlon, formerly a CNN anchor and EIC of The Daily Beast, announced a run for Congress in New York's first district. https://axios.link/4bHQESH

• Owain Walbyoff is stepping down as chief commercial officer for Banijay. https://axios.link/49nZ8wB

5. Movin' on up (or out)

🤔 Reddit plans to sell stock to loyal users in unusual IPO wager (WSJ)

"The company plans to reserve an as-yet-undetermined number of shares for 75,000 of its most prolific so-called redditors when it goes public next month, according to people familiar with the matter," Corrie Driebusch writes.

📻 Radio giant Audacy gets court approval to emerge from bankruptcy (Bloomberg)

"Radio and podcast company Audacy Inc. received court approval on Tuesday to emerge from bankruptcy and hand ownership to creditors including Soros Fund Management. ... [It] will slash nearly $1.7 billion of debt from its balance sheet through its restructuring plan, according to court papers," Amelia Pollard writes.

📀 Disney outsourcing Blu-Ray, DVD business to Sony (THR)

"Disney joins Warner Bros. Discovery and Universal in deciding that sharing resources is a better path forward for a physical media business in decline," Alex Weprin writes.

Disclosure Statement

6. Channel surfing

an illustration of a television that says "channel surfing" on the screen being held up by hands on a dark smoky background

😡 Situational awareness: For many die-hard fans of Taylor Swift, "getting official swag has proven difficult — and disappointing," Axios' Ivana Saric writes.

@tim_bays: "Tokyo Vice" on Max. Managed to catch up (finally) as Season 2 starts.

@kerrymflynn: "Madame Web" at AMC Theatres. Not the best superhero movie, but I'm still laughing over the baby shower scene. 

✏️ Thanks to Michael Flaherty for editing and Katie Lewis for copy editing this newsletter.

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February 21, 2024

1 big thing: Fubo calls foul