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BFD Expert Voices - Media Deals

BFD Expert Voices

🏀 Situational awareness: Coby Cotton of Dude Perfect and the sports and comedy group's new CEO, Andrew Yaffe, are speaking at Axios BFD on Oct. 22. Get your ticket.

Diamond Sports Group is on a path to either exit bankruptcy by the end of this year or exit the regional sports business entirely.

Why it matters: Much of how the future of regional sports networks will play out is tied to Diamond's fate.

Driving the news: Diamond included a plan to shutter the company should it fail to get its new restructuring agreement approved. The agreement was filed minutes before a status hearing yesterday.

"We have included in the plan a toggle to a wind down, should we need it," said Brian Hermann, one of Diamond's lawyers. "We don't think we're going to need it. We think this company is reorganizing, and it's going to emerge, hopefully, by the end of the year."

Diamond included the wind-down plan to give the NBA and NHL a guarantee that it would be able to broadcast their teams throughout the upcoming seasons.

"We wanted to give everybody the certainty of knowing one way or the other. Again, we think it's a reorganization, but if we're wrong, everybody will know with certainty by the end of the year," Hermann said.

A confirmation hearing, where Diamond will finally find out if it can exit bankruptcy, is set for Nov. 14 and 15.

The intrigue: Diamond is willing to go forward with just one MLB team, the Atlanta Braves.

As part of its new restructuring plan, Diamond is dropping contracts for seven MLB teams. Additionally, its broadcast deals with four other teams expired at the end of this season. 

That means 11 MLB teams will need new TV deals for next season as a result of Diamond's bankruptcy.

"Rejecting these other agreements is not our preferred path," said Andrew Goldman, another of Diamond's counsel.

Between the lines: Major League Baseball commissioner Rob Manfred has been very open about his desire to reclaim their teams' local TV and streaming rights.

Even though Diamond is seemingly giving the league what it wants, the hearing got a bit testy when MLB's counsel James Bromley said they were "sandbagged" by Diamond's new plan.

"This is just another example of being given no information by the debtors and then being greeted with hurrahs that everything has changed once again, and we have no information about what is being done," Bromley said.

Diamond deadline

Podimo, a Copenhagen-based podcast and audiobook subscription platform, has been acquiring companies that support podcast ad sales. 

Why it's the BFD: Offering both subscription and ad dollars to podcast publishers aligns with creators' desires for revenue diversification and more reach while further boosting the startup's revenue. 

What they're saying: "Despite our greatest ambitions, we don't necessarily expect everybody in the future will be paying for podcasts," Podimo chief content officer Sachin Doshi tells Axios.

Driving the news: Podimo announced today that it has acquired Podads, a Copenhagen-based podcast monetization company that also offers production services. 

All seven employees are joining Podimo's team of 300. Podads will operate independently under CEO Anne-Kathrine Pommergaard. 

Podimo also announced that Whitney Rosenthal, former head of creators at Instagram, recently joined as global director of creator platforms. Ida Adler-Olsen was named head of content research after previously serving on the product team.

Catch up quick: Founded in 2019, Podimo is a subscription-based audio platform that's available in seven countries. The service offers more than 1,600 exclusive and original podcasts and more than 70,000 audiobooks. It specializes in localized content. 

Podimo has raised €235 million in total. 

Podads is its third acquisition expanding into ad sales, first with Dag en Nacht Media and then Tonny Media — two Dutch production houses. 

Between the lines: Publishers have leaned on subscriptions to garner reliable revenue and build loyal audiences. For podcasting, advertising growth has fluctuated in recent years amid challenges in the ad market. 

But the podcast ad industry is maturing with programmatic buying and improved measurement tools, supporting Podimo's move.  

Podimo's new strategy involves keeping its service as paid and ad-free but also helping creators across platforms to build audiences and monetize their content.

What's next: Podimo is aiming to reach profitability in its third market this year, Doshi says, after achieving that in Denmark and the Netherlands. 

The company also is looking at more acquisitions and expanding to more countries.

Podimo adds Podads

Illustration of a microphone on top of a stack of dollars.

The acquisition of Dish Networks by DirecTV is a deal 22 years in the making — and there are numerous ways it can fall apart.

Why it matters: Even by the standards of media dealmaking, this is an astonishingly convoluted deal, featuring highly sophisticated players — TPG and Charlie Ergen — who, despite being on opposite sides of the table, are teaming up to get concessions from an equally sophisticated group of bondholders.

The big picture: The deal, announced Monday, only gets done if a large majority of Dish bondholders agree to it — something that seems unlikely to happen with the deal in its current form.

Bondholders aren't usually consulted in a merger. But this is a distressed deal in which the equity appears worthless — so the lenders scrambling to get paid back are actually the ones in control.

The details: Dish is being sold for a negative amount of money. DirecTV is paying a nominal $1 for the equity, and is asking Dish's bondholders to swap $9.75 billion of existing debt into about $8 billion of new bonds — that means a nearly 20% loss of principal, which many bondholders aren't happy about.

DirecTV is being bought by TPG as part of a concurrent deal. 

TPG, in turn, is spending $2.5 billion to pay off the November bond maturities, and throwing in another $500 million to cover operating expenses for good measure.

It's able to find that kind of cash thanks to its acquisition late last year of Angelo Gordon, a deep-pocketed lender. The idea is that if and when the deal goes through, the combination of DirecTV and Dish should easily be able to repay the new $2.5 billion loan. 

The catch: None of this can happen without bondholder approval, and right now the bondholders don't seem to be particularly inclined to go along with the deal. 

How DirecTV wants to snag Dish

Illustration of a television with $100 bill on the TV screen

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

• Reducto, an SF-based startup that helps LLMs read documents, raised $8.4m in seed funding led by First Round Capital. Go deeper

• Rivrs, a French developer of UGC video games, raised €4m led by Pléiade Venture. Go deeper

• RedBird IMI invested in A-Frame Productions, a sports production company founded by "Full Swing" showrunner Pat Dimon. Go deeper

• 🏈 Stephen Ross is in advanced talks to sell minority stakes in the NFL's Miami Dolphins to Ares Management (10%) and Joe Tsai (3%), at an $8.1b valuation, per Bloomberg. The deal also would include positions in Hard Rock Stadium and F1's Miami Grand Prix. Go deeper

• Warner Bros. Discovery signed a $150m multiyear rights deal with WWE competitor All Elite Wrestling. Go deeper

Deal flow

• Andrew Yaffe was named CEO for Dude Perfect, a sports and comedy YouTube channel. Go deeper

• Marcus Sanford, former CFO of Blizzard Entertainment, was named CFO of PrizePicks. Former CFO Ari Koteles was named CBO. Go deeper

• Jill Dehnert was promoted to group publisher of Eater, PS, Punch and Thrillist at Vox Media. Go deeper

Movin' on up (or out)

💸 Why OpenAI burns through billions (Axios)

"Software businesses have always benefited from economies of scale — once you build the product, adding incremental customers brings in revenue without piling up new costs. But for OpenAI, new customers are adding to the red ink," Scott Rosenberg writes.

📺 Amazon to increase number of advertisements on Prime Video (FT)

"The company said it had not seen a sharp drop in subscribers since it introduced advertising to its Prime Video platform eight months ago, allaying fears among top executives of a customer backlash, as it attempts to win over more brands to its streaming service," Daniel Thomas writes.

🤨 OpenAI asks investors not to back rival start-ups such as Elon Musk's xAI (FT)

"Seeking exclusive relationships with investors restricts rivals' access to capital and strategic partnerships. The move by the maker of ChatGPT risks inflaming existing tensions with competitors, especially Musk, who is suing OpenAI," George Hammond and Stephen Morris write.

Channel surfing

Illustration of a remote control in the shape of a surfboard leaning against a VW bus.

@tim_bays: "The Franchise" on Max. Not only have we reached a saturation point on superhero content, but we're reaching the saturation point on satirizing superhero content. 

@kerrymflynn: "Hello Seattle" by Owl City. Headed to Seattle for the first time (wild?!) this weekend to celebrate a college friend's wedding. Send tips for the best 90-minute running route in downtown.

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

Thank you for reading Axios Pro Media Deals! Please ask your friends, colleagues and Dish bondholders to sign up.

October 03, 2024

1 big thing: Diamond deadline