Netflix's Commitment To Live Sports Spells Doom For ESPN

Netflix has announced a deal with TKO Group, the holding company for the UFC and WWE, that will bring WWE’s flagship program “Raw” to the streaming service next year, marking Netflix’s first real foray into live sports entertainment.

The deal is $5 billion over ten years, according to a TKO Group SEC filing. Netflix will also become the home for all WWE shows and specials outside the U.S., including SmackDown, NXT, WrestleMania, SummerSlam, and Royal Rumble. WWE will still be in charge of event production, providing Netflix about 150 hours of content annually.

This announcement, combined with the appointment of Dwayne “The Rock” Johnson to the company’s board of directors, sent TKO shares soaring. The holding company opened up more than 20 percent on Tuesday, adding ~$1 billion to its market cap.

This is a huge deal because no one saw it coming. Sure, Netflix has built its name in sports through original documentaries like F1 Drive to Survive, the Untold series, The Last Dance, Beckham, Full Swing, Break Point, and more. But the world’s biggest streaming service has always said live sports rights were too expensive for its taste.

However, we’ve now reached a point where it makes sense for both parties.

Netflix has 80.1 million subscribers in the United States and Canada. That gives WWE more distribution than it had on cable television (77.87 million) while also providing it access to 180 million additional international subscribers on Netflix.

The $500 million annual deal represents a roughly 30% increase in payment, depending on how you calculate international rights, and Netflix gave itself the option to either cancel the deal after five years or extend it another ten after completion.