Entertainment Media/Telecom

Endeavor Eyes Sports Expansion

Endeavor, the talent and sports agency formerly known as WME-IMG, wants to become the ESPN of niche sports.

The company, backed by Silver Lake Partners and SoftBank, already owns bullfighting and martial arts competitions, and runs streaming services for both. But now it is considering how to expand these efforts. Endeavor has held talks with the World Surf League about buying the rights to stream its competitions when they become available, said a person familiar with the company’s thinking. Endeavor also is interested in acquiring sports leagues, said another person familiar with the firm’s thinking.

The Takeaway
• Endeavor has approached World Surf League for rights
• Endeavor is interested in buying sports leagues
• Betting could differentiate an Endeavor’s sports offering

And the company is contemplating ways of broadening the sports streaming offering, people familiar with the company’s plans told The Information.

Internal discussions about sports expansion at Endeavor would support its long-term effort to diversify from its roots as a talent agency. The business of representing talent has been squeezed in recent years because its main moneymaker—fees from TV shows going into reruns—has been devastated by the rerun market’s decline resulting from Netflix’s growth.

In recent years, Endeavor has built up an entertainment operation, including through the purchase of Donald Trump’s Miss Universe Pageant and the Professional Bull Riders. It also led an investor group to buy Ultimate Fighting Championship. Endeavor also jointly runs Euroleague with the European basketball league, as well as ELeague, an esports league, with AT&T’s Turner.

A more diversified business could help Endeavor go public one day, the people said.

“The whole idea is, how do I get out of just being an agency and maybe go public,” said one of the people, all of whom wished to remain anonymous because discussions are confidential.

Lately Endeavor has taken steps to expand in streaming, buying streaming technology provider NeuLion for $250 million earlier this year. That put it in a position to compete more effectively with Disney and Turner, both of which acquired their own streaming technology firms, BAMTech and iStream Planet, in the last several  years. NeuLion clients include the National Basketball Association, the National Football League, as well as UFC.

One person familiar with the company’s thinking said right now it is focused on growing NeuLion’s business of helping clients that offer streaming video. The person said Endeavor had no immediate plans to launch another sports offering.

It’s possible the company will continue to launch streaming offerings around different sports. It could buy more rights and add other niche sports to a service that would fall under the Endeavor brand.

That might make more sense than an overall service, given how different the sports and fan bases are, said Brandon Ross, an analyst at BTIG.

“How many people that like bullriding [also] like surfing?” he asked.

Endeavor may face challenges getting rights to more niche sports. For example, World Surf League has an exclusive deal with Facebook through 2019. World Surf League did not respond to a request for comment.

Endeavor also recently signed a five-year, $1.5 billion deal to let ESPN stream major UFC fights, limiting what it could do with UFC otherwise. Still, UFC’s Fight Pass streaming service has a number of fights that are not part of that deal.

Endeavor believes that its relationships with sports leagues and talent—IMG has a long history of representing sports stars—as well as its ownership of NeuLion, put it in a strong position to create a successful sports service.

Talent Roots

Endeavor faces plenty of competition in expanding in sports. Walt Disney just launched ESPN Plus, a video streaming service that costs $4.99 a month and offers pro golf, tennis, Major League Baseball, as well as niche sports like boxing, cricket and rugby, none of which are on ESPN’s cable service.

Similarly, AT&T’s Turner in April launched a sports streaming service, Bleacher Report Live, named after the digital sports site it owns. The service offers such sporting events as NBA League Pass games and NCAA Championships, but also smaller sports like World Armwrestling League.

And in September, U.K.-based media company Perform Group, which is owned by Soviet-born billionaire Len Blavatnik, will launch its streaming sports service DAZN in the U.S., focusing on combat sports for $9.99 per month. The company has tapped former ESPN chief John Skipper to lead the business.

But Endeavor believes that its relationships with sports leagues and talent—IMG has a long history of representing sports stars—as well as its ownership of NeuLion, put it in a strong position to create a successful sports service, the people said.

Endeavor may have some advantages in going up against rivals. For one thing, its biggest shareholder, Silver Lake, could play a role. Silver Lake earlier this year acquired a stake of more than 6% in Madison Square Garden Co., the owner of the Rangers hockey team and Knicks basketball team. At the time, the company said it was taking the stake to help MSG, which is controlled by Executive Chairman James Dolan and his family, create long-term value. Some industry insiders wonder if Silver Lake may want to buy the teams someday. Mr. Dolan has said the teams are not for sale.

Betting Option

It’s also possible Endeavor could differentiate its service by offering betting on games as they happen. Endeavor’s IMG Gaming division provides data and video feeds to casinos and sports betting companies in Europe. This spring, the U.S. Supreme Court struck down a federal ban on sports betting, leaving it to the states to pass laws to legalize it. And if Endeavor could create a streaming service that would enable sports betting, that would be a first, people said. Still, there are barriers: sports betting is legal only in a few states, such as Delaware and New Jersey.

Even if it takes a year for Endeavor to make a decision and come to market with a service, it could still be a very competitive offering, said Ed Desser, a sports media consultant.

“There is a lot of jockeying for position going on right now, with various entities of relatively deep pockets looking to have a premier leadership position in the live sports streaming space,” he said. “It’s like the early days of sports cable when USA Network had a lot of the rights before ESPN had them—this could be that replaying itself.”

Jessica Toonkel is a New York-based reporter for The Information covering media and how the industry is being disrupted by technology. Before that, she spent seven years at Reuters covering a range of topics including media, mergers and acquisitions and financial services. She can be found on Twitter @jtoonkel.