Paramount $PARA secures exclusive UFC US rights in $7.7B 7-year deal from 2026, reshaping streaming model

In a seismic shift for the sports broadcasting landscape, Paramount Skydance Corporation has secured exclusive US rights to Ultimate Fighting Championship (UFC) events in a seven-year deal valued at $7.7 billion. This agreement, which sees Paramount committing $1.1 billion annually starting in 2026, positions the media giant as the sole domestic distributor for all 43 annual UFC live events, streamed on Paramount+ with select simulcasts on CBS. The move not only eliminates the pay-per-view model entrenched in the current ESPN arrangement but also underscores a aggressive push into live sports to drive subscriber growth amid intensifying competition in the streaming sector.

Strategic Rationale Behind the Deal

The acquisition arrives hot on the heels of Paramount’s $8 billion merger with Skydance Media, completed earlier this month, forming Paramount Skydance Corporation. Valued at approximately $28 billion, the new entity is betting big on premium content to revitalise its streaming arm, Paramount+, which has struggled to match the subscriber bases of rivals like Netflix and Disney+. By integrating UFC’s high-octane mixed martial arts events—known for their global fanbase and consistent viewership—the company aims to attract a younger, digitally native audience that values live, unscripted entertainment.

Analysts view this as a calculated escalation in the streaming wars, where live sports have emerged as a critical differentiator. Unlike scripted series that can be binge-watched at leisure, sports content demands real-time engagement, fostering subscriber loyalty and reducing churn. According to data from Nielsen, UFC events averaged over 500,000 viewers per pay-per-view in 2024, with peak cards drawing millions. Paramount’s decision to bundle all events into the Paramount+ subscription without additional fees could disrupt pricing norms, potentially pressuring competitors to rethink their own sports strategies.

Financial Implications for Paramount Skydance

At $1.1 billion per year, the deal represents a substantial outlay for Paramount Skydance, whose market capitalisation stands at $6.99 billion as of 11 August 2025. Shares in the company (NASDAQ: PARA) closed at $11.04 on the previous trading day, reflecting a 11.39% decline over the past 50 days from an average of $12.46. This valuation places the firm at a forward price-to-earnings ratio of 6.77, based on analyst estimates of $1.63 earnings per share for the next fiscal year, suggesting the market sees room for growth if the UFC rights translate into revenue uplift.

Critics, however, question the maths. Paramount’s streaming division reported operating losses of $490 million in the most recent quarter, and layering on $1.1 billion in annual rights fees could strain cash flows unless offset by advertising and subscriber gains. Bloomberg Intelligence forecasts that the deal could add 5–7 million net subscribers to Paramount+ over the first three years, potentially generating $300–500 million in incremental annual revenue through ads and tiered pricing. Yet, with the company’s book value at $24.75 per share—far above the current trading price of $11.04—investors appear sceptical about near-term profitability, pricing in risks from high debt levels inherited from the merger.

Boost for TKO Group Holdings

On the other side of the transaction, TKO Group Holdings (NYSE: TKO), the parent of UFC, stands to reap significant rewards. The $7.7 billion pact more than doubles the value of UFC’s previous US media rights deal with ESPN, which averaged around $300 million annually. TKO shares surged 1.59% in the last session, closing at $163.29 from a previous close of $160.74, pushing the market cap to $13.41 billion. This performance aligns with a strong buy rating from analysts, who project forward earnings per share of $3.24, yielding a P/E ratio of 50.40—indicative of high growth expectations.

The deal’s structure ensures TKO receives stable, escalating payments, providing a buffer against the volatility of pay-per-view sales. Historical comparisons are telling: UFC’s 2018 ESPN agreement was valued at $1.5 billion over five years, a figure that pales against this new benchmark. As reported by CNBC, the shift to an ad-supported streaming model on Paramount+ could expand UFC’s reach, with events accessible to a broader audience without the $70–80 pay-per-view barrier. This accessibility might inflate viewership metrics, enhancing UFC’s appeal to sponsors and international partners.

Market Sentiment and Broader Trends

Sentiment from Wall Street remains bullish on TKO, with a consensus strong buy rating as of 11 August 2025, per data from S&P Global Market Intelligence. Analysts at Guggenheim Securities have labelled the deal a “transformational win,” projecting 15–20% compound annual growth in TKO’s media rights revenue through 2030. For Paramount Skydance, the tone is more mixed: a hold rating of 3.5 reflects caution, with concerns over integration costs post-merger, but upside potential if sports content catalyses a turnaround.

This transaction fits into a wider trend of media consolidation and the premiumisation of sports rights. Warner Bros. Discovery’s recent NBA negotiations and Amazon’s foray into NFL streaming highlight how tech-infused players are outbidding traditional broadcasters. Yet, there’s a dark wit in the irony: as streaming services chase live sports to mimic cable’s golden era, they risk recreating the very bundling economics that cord-cutting sought to escape. Paramount’s UFC grab could either be a masterstroke or an overpay—time, and subscriber numbers, will tell.

Potential Risks and Outlook

Regulatory hurdles appear minimal, given the FCC’s prior approval of the Skydance-Paramount merger, but antitrust scrutiny in sports media remains a wildcard. The deal’s success hinges on execution: Paramount must leverage UFC’s stars, like Conor McGregor or emerging talents, through cross-promotions with its film and TV slate. Forward-looking models from Morgan Stanley estimate a 12% uplift in Paramount+’s average revenue per user by 2028, assuming 20% ad load during events.

For investors, the inflection point may come with earnings reports. TKO’s next call is slated for 6 August 2025, where guidance updates could validate the deal’s premium. Paramount Skydance, fresh from its name change on 10 August 2025, reports on 31 July 2025—offering early clues on merger synergies. In a market where content is king, this $7.7 billion wager on cage fights might just crown a new streaming contender, or leave Paramount bloodied in the octagon.

References

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• BBC. (2025). Paramount completes merger with Skydance. https://www.bbc.com/news/articles/c5ypylq0vnko
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• Deadline. (2025). Paramount sets rights deal with TKO Group streaming. https://deadline.com/2025/08/paramount-sets-rights-deal-tko-group-streaming-1236483386/
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• New York Times. (2025, August 11). Paramount scores UFC rights: High stakes, high hopes. https://www.nytimes.com/2025/08/11/business/paramount-ufc-fights-deal.html
• Paramount. (2025). Merger Agreement Press Release. https://ir.paramount.com/news-releases/news-release-details/skydance-media-and-paramount-global-sign-definitive-agreement
• Reuters. (2025, August 7). Paramount finalises $8B merger with Skydance. https://www.reuters.com/legal/transactional/paramount-closes-8-billion-merger-with-skydance-after-settling-60-minutes-2025-08-07/
• S&P Global Market Intelligence. (2025). Market ratings and valuation data as of 11 August 2025.
• StockTitan. (2025). Paramount and TKO announce historic UFC rights deal. https://www.stocktitan.net/news/PSKY/paramount-and-tko-announce-historic-ufc-media-rights-vpiphgkxb02b.html
• Wikipedia. (2025). Merger of Skydance Media and Paramount Global. https://en.wikipedia.org/wiki/Merger_of_Skydance_Media_and_Paramount_Global