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It’s time for another addition of “What I Got Right, What I Got Wrong”!
I usually try to balance these articles with a mix of two or three big topics that I got right and two or three that I got wrong. But today, yeah, there’s a lot of “I called it” in this issue. What can I say? That’s what happened. Hopefully, I’m not as overconfident in my wrong opinions as everyone else, but then again, I probably am!
Today, I’m looking at big news on the NBA’s projected earnings next year, WGA earnings in 2024, Omaha Productions’ big $750 million valuation, tariffs, Spanish language content, Formula 1, Caitlin Clark, the manosphere’s popularity among young people, and a whole bunch more.
Let’s dive right in!
RIGHT – The NBA’s Salary Cap Might Not Go Up, and Ratings Are Going Down
So, last summer, in two very, very long deep dives into the NBA, I poured a lot of cold water on the NBA’s new media rights deal. One year later, I’ve been vindicated on my two main arguments:
- The NBA’s TV ratings continue to go down.
- The NBA is projecting that next year’s (2026-2027) salary cap will only increase by 7%.
That last tidbit is fairly shocking news. It’s safe to say that very few NBA pundits saw this coming. Because of the “big new media rights deal”, everyone assumed that the NBA’s salary cap would go up by 10% each year (the largest increase allowed by the players’ collective bargaining agreement) for at least a few years going forward.
In other words, while most NBA reporters and pundits believed the big new media rights deal would drastically increase the NBA’s total revenue in the coming decade—NBA players receive 55% of that revenue—it didn’t.
Why? The NBA’s new media rights deal doesn’t offset losses in other areas, namely, local media rights…and this salary cap projection confirms it. I saw one report that local media rights revenue might be cut in half. Half!
(In fairness to the NBA media, in the last month or so, I’ve finally heard the otherwise skeptical bullish NBA podcasters mention local media rights declining, meaning they finally understand this reality.)
That said, two of the NBA’s premiere franchises, the Celtics and Lakers, sold at reported valuations of $6 billion and $10 billion…and that seemingly refutes the above argument! Well, maybe. Yes, the buyers expect league revenues or franchise valuations to keep going up. (Or to find new buyers at higher prices later, which isn’t quite the same thing.) Conversely, the current owners might think they’re selling at the peak…
Frankly, there’s way too much to cover in this article, so consider this just a teaser before I take a deeper look at the NBA later this summer.
Related: The Sports Media Rights Well Has Dried Up
According to an article in Puck by John Ourand…
“the era of the 10-figure rights deals is a thing of the past for everyone besides the NFL and NBA,” and it’s “a stagnant market, at best, for less sexy leagues—F1, the Mountain West, the Pac-12, and even a post-ESPN-divorce MLB—and fewer (and more cash-conscious) bidders.”
To which I would say, well done, Adam Silver. No, seriously, Silver got an amazing deal for the NBA, a league which has ratings more like MLB’s than the NFL’s, so that media rights deal only looks better for the NBA a year later. But it doesn’t look great for the media companies buying the rights; if Disney, NBCUniversal and Amazon were negotiating this summer, the NBA’s payday wouldn’t be coming.
WRONG – Two A24-Related Budget Notes
After last week’s article on production companies—which seemed to really resonate!—I got some tips on the acquisition cost of Friendship: mid-seven figures, with one source claiming $4.5 million. But that source also said that Sorry Baby cost $8 million (which seems way too high to me), so take what you will.
I still have some lingering doubts about Friendship. I wonder if this sale actually covered the cost of production, which depends on how many distributors were bidding on this. In other words, did A24 get a good price because other bidders shied away? Still, if that figure is right, it looks profitable.
Next, I also wonder if any of the talent had backend compensation, because Paul Rudd, Tim Robinson, Kate Mara and Jack Dylan Grazer don’t work for free. Now, there’s a long tradition of big-name actors working for very little to get passion projects/independent films made, but let’s be clear: Paul Rudd wasn’t working at his normal rate. Perhaps the actors got backend compensation, but that’s going to cut into A24’s $3.5 million theatrical take-home.
Finally, yeah, it’s sad that no one is developing rated-R comedies in-house. I know there have been some new comedies getting greenlit; let’s hope this continues.
RIGHT – WGA Earnings and the Hollywood Bubble.
A few months before the 2023 WGA writers strike, I warned everyone (or tried to) that streaming was in a bubble. Then the strike hit, and the bubble popped.
First, the number of shows has gone down and not come back up, and second, the number of writers employed and total revenue have gone down too, dropping 9.4% from 2023, the strike-shortened year.
WRONG – Omaha Productions has a $750 Million Valuation
I struggle with headlines about valuations. On the one hand, yes, if someone bought into a company at a given price, then that’s what the company is “valued” at. But—and it’s a huge “but”—it’s more accurate for privately held companies to say, “One investor valued the company at that.” Heck, I just did this myself with the sub-header. Accuracy is hard! But a “valuation” isn’t liquid cash, and I doubt Omaha Productions could sell itself for $750 million, which is about one-tenth the value of Paramount Global’s market capitalization.
All that said, good for Peyton Manning! He built a production company that is actually making shows (over thirty, according to CNBC) that people watch.) I’ve long been skeptical of celebrity production companies, but I wasn’t skeptical of Omaha Productions two years ago, writing:
“So if you’re keeping score, sure, Tom Brady has all those Super Bowl rings, but Peyton Manning is winning the production company game. (All that said, I tried and tried to run the numbers to see how all these deals could justify a $400 million valuation…and I just can’t.)”
Since then, not much has changed. Omaha Productions is one of the rare successful celebrity production companies (Like Brad Pitt’s Plan B), but their valuation still seems insane to me. Since 2023, Starting 5 flopped big time. Receiver flopped. And we’re waiting on Chad Powers on Hulu.
I’m not sure how they’ve added $350 million in value in two years.
RELATED/RIGHT – The Sports Docu-series Pull Back Has Begun
By the way, if every time I’ve written that sports documentaries underperform, you thought, “Then why do streamers buy so many?”, then just know…the streamers aren’t anymore. The Ankler had a report about the decline in purchases by streamers. In the old saw, “follow the money”, it isn’t going to sports docs as much as at the height of the streaming bubble.
WRONG, Then RIGHT, Then WRONG Again on Tariffs
“The long-talked-about-on-the-Campaign-trail tariffs have finally been announced by the Trump administration. Unless they change their mind or extract concessions, they will begin hitting companies across numerous industries. (President Trump could also exempt certain products.)”
…Trump paused the tariff. So I was wrong! Then he announced a different set of tariffs in April, and the markets flipped out. So I was right! Then he paused those tariffs for ninety days. Wrong again? And now, many tariff deals are being finalized. Was I right or wrong on this? Who knows?
Remember, the keyword: uncertainty.
Related: Trump Will Attack Foreign Tax Credits
Speaking of tariffs, does anyone else remember mid-May when absolutely everyone was talking about Trump’s “tariffs” on foreign films? It feels like ages ago!
On the one hand, as I wrote at the time, yeah, I absolutely predicted that. On the other, remember my rule for the Trump admin:
“My political commentary—and yes, how government regulates entertainment, tech and business definitely impacts entertainment strategy—will be guided by this principle: I will focus on what the Trump administration does, not announces or threatens. This is the “show me, don’t tell me” theory of analysis, and I think it will avoid running down rabbit holes or doing too much speculation.”
Since then, there’ve been precious few updates on any of this. But I will note two things:
- Jon Voight wrote a plan for President Trump to save Hollywood, and he mentioned FinSyn rules, something I’ve been banging the drum on for years now.
- Most of the media is way too complacent about how easy it would be to stop foreign tax incentives; you’d just set up a proportional tax in the US. Say an MCU or Star Wars film got a $30 million rebate for filming in the UK. The US could just tax Disney an additional $30 million+ for taking US jobs out of the US.
RIGHT: China and the EU are Already Attacking Digital Goods
Within a week of writing about the tariffs and how other countries could attack our “services” industry, China announced that they’re restricting US films in China, which would be a more effective strategy if they hadn’t already stopped watching them as a country and hadn’t already limited supply. And the EU also said they might look at tariffing digital goods.
Just to repeat my thesis: these trade wars could spiral in ways other people don’t expect.
RIGHT/WRONG – F1 Scores a Big Debut
Before its premiere, I planted a rhetorical flag in the sand on Twitter/Substack Notes that, frankly, I could spin F1’s big box office numbers either way: If it did well, send your films to theaters. If it did poorly, Formula 1 isn’t very popular in the US! I’d be right either way!
Since F1 did well, what does it mean? Well, I’d quote Sonny Bunch:
“Fortunately, car racing is second only to boxing as a cinematic sport; there’s something inherently gripping about cars zooming around a track at 200 miles per hour, the squeal of tires and crunch of fenders punctuating the back and forth on the leaderboard.”
I agree. Creed doing well doesn’t mean that boxing is popular.
Also, caveats abound. The film still probably lost money, costing between $200-$300, plus Warner Bros. distributed it, so they get a big cut. Also, Apple offered discounts to its Apple Wallet users. (This MacWorld article on the antitrust implications is great.) For a more detailed take, listen to me on The Bulwark Goes to Hollywood podcast!
Speaking of Formula 1…
RIGHT: Formula 1 Is Up, But Caitlin Clark is Still Bigger Than Formula 1
As long as we’re talking about Formula 1, let’s update the Formula 1 to Caitlin Clark/WNBA comp.
So far this year, Formula 1 ratings are off to a good start. I think. Formula 1 races are averaging 1.3 million viewers, which is higher than 2024’s average, but I’ll have to check in at the end of the year to confirm this. (I have a feeling that the NFL knocks the races’ ratings down in the last third of the season, something many pundits mention in the fall, but I wasn’t able to confirm.) Also, the main source for this article didn’t seem especially trustworthy (I’ve never heard of Sportsnaut), and I couldn’t find comparable reporting on this from other outlets.
The Monaco Grand Prix grabbed 2.3 million viewers, the third highest viewership for Formula 1 in the US all time, but the Miami Grand Prix fell from 3.1 million (the highest all time) to 2.1 million.
But…how does Formula 1’s ratings compare to other motor sports? Still down.
- IndyCar started the year up +45% at 1.4 million per race. And the Indy 500 had 7 million viewers, the highest since 2008. One website claims that they’ve already surpassed last year’s total viewers through just eleven races.
- NASCAR’s Daytona 500 averaged 6.7 million, down from two years ago.
- In general, NASCAR’s Prime Video exclusive ratings are down 10-20% from broadcast the year before, but still higher than Formula 1, averaging 2.3 million viewers. (Side note: NASCAR on Prime Video over-indexes with young viewers, but doesn’t make up for the decline in older viewers.)
Meanwhile, the WNBA’s momentum has NOT stalled out. Caitlin Clark and Angel Reese’s season opener averaged 2.7 million viewers, the largest regular season game since 2000 and the second largest since 2000…out of all games, including playoffs. Clark had a preseason game average of 1.3 million viewers…or what Formula 1 averages.
But it’s not even just Clark. A Chicago Sky versus Indiana Fever game grabbed 1.8 million viewers, the eighth largest game since 2001, and Caitlin Clark wasn’t even playing.
I’ll check in again more fully next year.
Quick Hits and Corrections:
- Right: Spotify got out of podcasts…and now they’re profitable. I’ve long been very, very skeptical of Spotify’s massive payouts to podcasters (and the media hyping this trend up). Since Spotify stopped handing out massive paydays to podcast producers, boom, they’ve become profitable.
- Right: Social media use is flat or going down. I’m far more skeptical of social media hype than many pundits. Sure enough, according to the University of Southern California Marshall School’s Neely Center Ethics and Technology Indices, over the last two years, social media use for every site except Reddit is either flat or down.
- Right: The manosphere isn’t popular. Check out this stat from the Harvard Youth Poll:
“Joe Rogan has a net unfavorable rating among men under the age of 30. Just 27 percent have a favorable rating of him, 35 percent see him unfavorably, while a plurality of 36 percent either don’t have enough information about him to rate him (21 percent) or have never heard of him (15 percent).”
- Wrong: Rivals did well in the UK. After I speculated that Hulu/Disney’s Rivals may have done well in the UK, I got feedback from a reader that, yes, it did very well, topping the BARB, the UK rating system. The same thing happened with Peacock/Sky’s The Day of the Jackal reboot.
- Right/Wrong: Live theater is back on streaming. According to Axios, a number of streamers are heading back down the filmed stage performance route, which I pooh-poohed a few years ago for the Ankler. The data so far is mixed: while Good Night, And Good Luck grabbed 2 million viewers, which is good, if not elite, Disney’s Frozen: The Hit Broadway Musical definitely underperformed.
- Wrong: France already has levies on streamers. Manori Ravindran wrote a great piece for the Ankler on how Europe could respond to the trade war, mentioning a critical fact: France already has levies on foreign streamers and mandates for local productions. I mentioned the former but was unsure of the latter.
- Wrong: Shemar Moore and SWAT are going to be in a spinoff, SWAT: Exiles. In my last “Renewals and Cancellations” update, I mentioned SWAT getting cancelled, but it’s not! It’s coming back as SWAT: Exiles, but I’m still unclear about what channel/streamer it’s headed to. (It’s a Sony show.)
- Right: Daily reality shows work on streaming! As I just wrote in the streaming ratings report, Love Island USA is a hit on Peacock.
- Right: Netflix is investing in Spanish-language television! After I wrote about foreign content for the Ankler (also the subject of an update in my last “What I Got Right/Wrong” column), at least one pundit tried to argue that I wasn’t right; Netflix uses a “Moneyball” approach when it comes to content, they argued, and also, Spanish language content isn’t a great bet, since the cultures are very different between Spanish-speaking countries. Well, guess who’s investing big in Spanish language content, in both Spain and Mexico? Netflix, the “Moneyball” streamer. So yeah, I think I called it pretty well on this one.
