What CBS’s new $7.7 billion sports partner tells us about golf

If you were wondering how CBS’s new owners felt about the sports business, you did not need to wait long to find out.

On Monday afternoon, Paramount announced it had acquired the rights to the UFC in a seven-year, $7.7 billion agreement, earning access to one of America’s fastest-growing and youngest sports demographics after a successful run on ESPN in a considerable opening salvo for the company’s new ownership.

The announcement was Paramount’s first major strategic decision since being acquired by David Ellison, the son of the second-richest man in the world, Larry Ellison, last week. Ellison has said his goal is to modernize the Paramount business across all of its platforms, including CBS, Paramount Plus, and the broader Paramount TV and movie businesses.

The UFC deal gives Paramount more than just a splashy acquisition under new ownership — it provides a new pillar for a streaming business that is expected to take on a significant focus under Ellison’s stewardship. According to the New York Times, the majority of the UFC deal will air on Paramount Plus, while CBS will cover some marquee events. As part of the agreement, the UFC will be available for free to subscribers of Paramount Plus, ending a pay-per-view setup that had become commonplace under the league’s previous media rights agreement with ESPN.

More than any one piece of information, Monday’s announcement suggests that sports will play a considerable role in Ellison’s vision. In acquiring the UFC, Ellison is making the bet that sports content can be a “moat” to subscriber growth, encouraging rabid fans to pay for one of Paramount’s two streaming tiers, an $8-per-month ad-supported version or a $13 ad-free version. The long-term hope is that sports content will encourage fans to join Paramount Plus and stay with it, either to watch more sports content or out of interest in the platform’s larger suite of shows and movies. In addition to the UFC, CBS’s outstanding agreements with the NFL, NCAA, PGA Tour, Masters and PGA of America provide access to millions of potential streaming customers — though most of those agreements do not currently provide streaming-exclusive options.

The strategy is a new twist on an old approach, replicating cable providers’ success in enticing sports fans to pay for cable “bundles” featuring access to hundreds of channels in exchange for access to sports programming they principally desired. Over the last two years, Peacock has seen considerable subscriber gains utilizing this strategy, with streaming-only coverage of the NFL and Olympics helping to drive major numbers.

For golf fans, the UFC deal should be affirming on a few fronts. It largely quiets any lingering concerns about the role CBS Sports will play in the future of the new Paramount. If Ellison’s first $7.7 billion spent as chief executive tells us anything, it’s that CBS’s established brand strength in sports — golf included — is viewed internally as a considerable bargaining chip. While streaming can — and probably should — take on a larger role in the shape of CBS Sports heading forward, that news probably doesn’t arrive as a surprise to anyone who has witnessed golf’s own success on digital-first platforms like YouTube.

The latest news comes in a summer of change for the sports streaming business. In addition to Paramount’s new investment, ESPN is less than 10 days removed from launching its biggest product advancement in years, a direct-to-consumer platform that will provide viewers with access to all of its over-the-air content for $30 per month. Meanwhile, on Tuesday morning, NBC announced its first slate of NBA games for the fall months, several of which will air exclusively on Peacock.