It didn’t take long for the first eyebrow to be raised inside the PGA Tour headquarters. On the other end of the line, Discovery’s new tour buddies were ready to rock.
It was December 2019, less than a year into the 12-year, $2 billion broadcast rights agreement between Tour and Discovery, but the streaming giant has seen enough. Discovery executives called a meeting with the tour to tell them the news: GOLFTV’s The days are numbered.
Inside the room, the tour staff were stunned. The golf-only streaming service launched into a sensation just 11 months ago. An expensive marketing campaign placed the tour’s main asset, Tiger Woods, as the service’s figurehead. How soon can Discovery pull the plug, with more than 11 years to go and $1.8 billion still owed?
Plans have changed, Discovery told the tour, and so-called “vertical subscription services” are no longer part of the company’s long-term vision. After an extensive internal review, Discovery found that it was cheaper and more consistent to follow a “horizontal” model, with subscribers paying a larger monthly fee for a group of shows rather than a lower fee for just one. GOLFTV and its $9.99 per month fee was one option that was primarily affected by the change.
“We were scratching our heads a bit,” one tour official told GOLF.com on condition of anonymity. We said, ‘Well, this is very different from what we originally planned to do together. “
But then the good news came. Discovery had no plans to change its agreement with the PGA Tour, which gave them international broadcast rights to the tour, and they had no intention of changing the financials of the deal. For the tour, the only difference was where the broadcasts would be live.
This past Friday, Discovery officially notified subscribers that it will be shutting down GOLFTV, effective December 12th. The PGA Tour’s international broadcast rights will now be primarily bundled with Discovery+ and Eurosport, although the full range of Discovery availability depends on existing PGA Tour broadcast deals in the territory.
The decision didn’t come as a surprise to much of the sports media, particularly those who watched the big implosion of CNN+ just days after its owners, Warner Media, completed a $43 billion merger with Discovery. Just like GOLFTV, CNN+ was first conceived as a vertical subscription service, selling its suite of news programming directly to consumers. The two streaming services share similar dreams of expansion, and envision a hugely lucrative new world built for purists. Months before the announcement of GOLFTV’s closure, Discovery Broadcasting President JB Perrette went so far as to tie the two together, suggesting that past failures of vertical services, especially GOLFTV, were responsible for the fate of CNN+.
“We have failed at nearly every turn in launching these products,” Perrett said in an executive meeting, according to The New York Times.
Even given the overlap between the two services, tour sources indicated that Warner Bros. Discovery officially shutting down GOLFTV came under much different circumstances than its highly publicized cousin.
Such as The New York Times And the Wall Street Journal In April, CNN+’s multibillion-dollar overhead costs proved to be a much bigger factor in discovery than its subscription model, even if both pieces were a factor in the service’s eventual demise. with the discovery incurred $50 billion debt burden In the Warner Bros. merger. , the company didn’t have the resources to dump billions into a fledgling streaming service, particularly one that didn’t align with its long-term vision.
On the other hand, GOLFTV was more of a strategic disadvantage than a financial one. The decision to cease operations was driven more by Discovery’s desire to align than part of Zaslav’s crusade for $3.5 billion in cost savings. As further evidence of the point, the latest round of broadcast agreements for the tour mandate that it foot the bill for production costs, reducing overhead on its partners, including Discovery.
The same tour official said: “CNN+, although outwardly it looked like something similar, was actually very different.” It was after the merger, it happened right after the merger, and it was a huge cost-cutting process. Strategic reasons [for closing GOLFTV] It was similar, but the truth is, our deal with Discovery predated the merger.”
The timing of GOLFTV’s decision proved fortuitous in more ways than one. Prior to 2019, the tour still followed its own local vertical subscription model, PGA Tour Live, which it offered directly to consumers along with NBC. After launching at a loss, the service quickly turned into a winner, and Tour executives had big plans to expand the platform even further.
But then came 2019, and her pending tour deal with NBC expired. The sports broadcasting market was very hot, and just a year after the PGA Tour sold the international broadcast rights to Discovery for $2 billion, it was about to make about half of that for a reduced copy of the domestic broadcast rights. Among the buyers most interested in the tour were the big broadcasters – companies that stood to execute the rights to the tour in a horizontal package instead of the current vertical package.
Unbeknownst to the tour leadership, the tour faced the same decision as their Discovery friends: buy into the “big tent” and reach as many viewers as possible, or cater exclusively to the fanatics.
Had Discovery’s decision come a year earlier, the Tour might not have been so open to change. But with ink freshly dried on a file $680 million nine-year agreement With ESPN+, the round hardly needed an explanation.
“We were in agreement that this was the right move,” the official said. “We feel like we’re going to reach more people, and that’s ultimately what we want.”
And to reach the people, the tour may. Under its new deal with ESPN+, the tour says it has seen an “explosion” in audience reach. There is early optimism that it will be able to do the same under Discovery+ and Eurosport, especially as Warner Bros. Discovery is directing more resources to the streaming service.
“If you look at the core golf audience on ESPN+, it doesn’t come close to the numbers we’re pulling on this deck,” the official said. “Obviously we’re bringing in sports fans on a larger scale.”
Audience is an important metric for any sports league, but perhaps none more so than the PGA Tour, which has found itself the primary target for disrupting LIV Golf for the past nine months. The irony is that there may be no league better positioned to fend off turmoil in the media rights landscape than the tour. In many ways, GOLFTV has been a victim in the name of stability.
“She brings everyone into the boat, so to speak,” said the official. “If you look at it from our perspective, when we finished those negotiations, we had very important distribution deals with NBC/Comcast, CBS/Paramount, ESPN/Disney and Discovery Warner Bros. You’re talking about the four biggest media companies in the country.”
Sometimes it’s best not to rock the boat.