The Hollywood Reporter did a feature on Ari Emanuel and Patrick Whitesell, the co-founders of the William-Morris Endeavor (WME). In the feature Emanuel and Whitesell discuss the IMG acquisition, the possibility of going public, battling against others in the industry who believe they are over-extended, the WME-IMG content and global strategy in the future. I’ve pulled out an excerpt that is enlightening on what WME-IMG might have planned for the UFC and some of the incentives behind the acquisition.
Emanuel describes China as a “pretty big puzzle to solve”:
WHITESELL: We feel like their footprint in Asia — I can’t go into a lot, but essentially what they want to do with content in that part of the world given their massive mobile footprint there — is really strategic.
…China is a very important puzzle to solve, and if we solve that, then we’ve solved a pretty big puzzle for where the movie business for our clients is going and the television business is going. And sports.
Going to the original [Endeavor] premise in ’95, content is king. We have movies and television, and we have sports. So we have a solve for a bunch of those [Chinese] companies that is unique. You’ll see our foray into China that solves a bunch of their issues. They’ve made huge investments in distribution, and they’re going to need stuff to fill the pipes.
WME’s strategy can be described succinctly that “content is king.” The company has been buying entities, representing athletes and content creators, and events in order to create more content for companies to distribute.
The UFC produces 40 live events a year and has a library with tens of thousands of hours worth of content. There is also already an international market for the UFC with even more room for growth, especially in Asia, which is a key geographic region for WME. Thailand held the first MMA fight in the country less only in the last couple months.
It is important to remember that the UFC is an event-based sports business first and foremost. All the content is created around events, with twelve events a year making up the majority of the UFC’s revenue. WME-IMG knows how to create sponsorship agreements, how to monetize content, how to coordinate with content distributors, and how to cross-promote different parts of the WME company. An example given is Brad Paisley performing a free concert on Friday night before a bull-riding weekend, which enhances the event, creates a better experience for attendants, and makes sponsors happy.
One of the larger overarching themes of the article is how distribution has disrupted the business in Hollywood. Netflix, Amazon, over-the-top channels, YouTube, and more companies are distributing content to subscribers across the world. With so many different paths of distribution, content needs to be created on a level that can keep pace with demand. All the distribution companies are looking to add more original content and acquire content that will differentiate them from competitors. The value of content creators will only increase as more content is demanded by distributors and consumers.