Sports has to feed into a streamer's 'ecosystem': Kevin Mayer

As streaming platforms lean heavier into ad-supported subscription tiers and live sports broadcasts, what does this mean for linear TV which has been on the decline for years?

Candle Media Co-Founder and Co-CEO Kevin Mayer joins Yahoo Finance Executive Editor Brian Sozzi at the 2024 Cannes Lions International Festival of Creativity to discuss where sports streaming fits into the broader game plan for major streaming service providers.

Mayer calls sports and news "the last bastion of pay TV" with the future of linear television mainly coming down to sports.

"The outlook for pay television isn't great, and when sports viewers find other opportunities to watch sports, I think you'll see a continuation of that decline and a collapse, frankly, of that environment," Mayer says. "But broadcast is a bit different. That doesn't depend on pay TV to get delivered to households there in every single household. And I do think you'll just see a different type of programming coming on there."

Mayer's resume also includes his tenure as the CEO of TikTok, COO of the popular app's parent company ByteDance, and the chairman of Disney's (DIS) Direct-to-Consumer & International segment.

Watch Brian Sozzi's full interview with Kevin Mayer, and keep up to date with Yahoo Finance's coverage of this year's Cannes Lions International Festival of Creativity.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Luke Carberry Mogan.

Video Transcript

What is the outlook for linear TV?

If we're having this conversation 10 years from now, what does the local TV station look like?

Linear TV is in is in secular decline.

I think there's no question that at least the pay TV elements of linear television are being supplanted by streaming.

And I think that, you know, the last bastion of TV has always been sports and news news.

You can get in a lot of different streaming, uh, and and you can get them just on the Web and you can get news in a lot of different places.

So I'm not sure that's going to continue to be a major driver of pay TV.

So it's really down to sports.

And I think you know, ESPN has announced that they're going over the top of their sports streaming.

There's they're in a joint venture with Warner Brothers and Fox to do the same thing.

I think that you'll see sports migrating from pay TV in a very, very substantial way also to streaming.

So I think the the outlook for pay television isn't great.

Um, and when when sports viewers find other opportunities to watch sports, I think you'll see a continuation of that of that decline and a collapse, frankly, of that environment.

But, uh, broadcast is a bit different that doesn't depend on pay TV to get delivered to house in every single household.

And I do think you'll just see a different type of programming coming in there.

You'll still see sports on broadcast.

You'll see a see a news, of course, and you'll see a much more reality programming, less expensive programming.

I think this the day is a very expensive high production value, scripted programming and then your television are coming to an end.

I hear what Disney and Warner Brothers teaming up to launch that streaming sports, um, that out that package or, uh, platform.

But do we need another streaming service in our life?

And is that is what they're doing, something that a Netflix and Amazon should just got into and just totally own the own the ecosystem.

I don't think that, um, Amazon and Netflix should have gotten into that.

I think sports are very, very interesting and differentiated type of programming.

They're very expensive.

They appeal to a subset of the population, but not everyone.

I think you know, big time sports fans are probably less than 50% of households would be my guess.

And for years I mean one of the reasons pay TV is in such, you know, secular and substantial decline is the cost of those sports rights, and everyone had to bear the cost of those sports rights.

So you had every consumer.

Almost every household had pay TV 10 years ago, and everyone was paying not only for the entertainment that they loved but also for sports.

And not everyone watched the sports, and I think that helped drive the decline down.

People were paying for something in a very expensive thing that they didn't really want to watch.

So I think Netflix will put their toe in the water.

But they've been they've become a very successful entertainment company without sports, the sports related programming, but not the actual sports rights.

I don't think they're going to get into it in a big way with the major sports rights.

I might be wrong.

Can linear hold these sports rights?

They continue to go up.

I mean linear the the cost is going up the balance sheets for the likes of the sports broadcasters are getting.

They're not where they need to be.

And the biggest companies with the biggest cash coffers are in fact, Amazon and Netflix.

They are Netflix, Amazon, Google and Google.

You know, the the big the big tech companies and Amazon has proven, has proven once in the end, that they are interested in sports rights.

They're bidding on them, you know.

Rumour has it.

They're in the NBA this time around.

I don't know if that's true or not.

Um, they obviously have, um, football.

They have a lot of sports and they have sports internationally, too.

I don't know how much more they're going to do in sports.

It has to feed their ecosystem in some way the direct revenue of sports through their advertising business.

And it's a big advertising business.

I doubt it covers the big major sports, but I do think that there is ancillary benefits to companies like Amazon and Google.

It brings people to the ecosystem, has a lot of engagement.

It causes it's a brand deposit in a very big way, so I think they'll still be in it.

I just don't know if it would be a wholesale shift away from traditional media to digital or not.

It's yet to be seen