By Joe Flint
Boxers Floyd Mayweather and Manny Pacquiao don't square off
until May 2, but the media companies behind the highly anticipated
welterweight title bout are already coming to blows over how to
split up the money.
At issue are the terms that Time Warner Inc.'s HBO and CBS
Corp.'s Showtime want from pay-television distributors to offer the
fight on pay-per-view. A price to watch hasn't been set, but it is
expected to be about $90, which would be a new high.
Typically, the split for a pay-per-view fight between
distributors and programmers is around 50-50. In this case, HBO,
which has rights to Mr. Pacquiao, and Showtime, which has rights to
Mr. Mayweather, are seeking much more favorable terms for their
fighters.
The initial offer from HBO and Showtime was a 70-30 split,
people close to the fight said. Pay-TV providers immediately
rejected that and there has been little movement from either side
since.
"Everybody at some point will hopefully be rational and we'll be
able to put our heads together and come up with a good solution.
We're not there yet," said Michael Berman, executive vice president
and general counsel of iN Demand, which negotiates on behalf of big
cable operators including Comcast Corp. and Time Warner Cable
Inc.
Boxing enthusiasts have clamored for this match for years, and
it is expected to easily set a pay-per-view revenue record. The
current high is $152 million for the 2013 fight between Mr.
Mayweather and Saul "Canelo" Alvarez. The pay-per-view price for
that fight was $65 for standard definition and $75 for high
definition. Over two million viewers purchased it.
Because of the demand, HBO and Showtime think a 50-50 split is a
nonstarter. The camps of the boxers, who get the lion's share of
the revenue, ultimately must sign off on any deal.
"I wouldn't agree to it," said Bob Arum, chief executive of Top
Rank Inc., which handles promotion for Mr. Pacquiao, of a 50-50
split. "I really believe everybody agrees that there has to be a
more generous split and they are in the process of working out what
it will be."
HBO Sports Senior Vice President Mark Taffet declined to comment
on the state of negotiations beyond saying discussions are "far
down the road."
A spokeswoman for Mr. Mayweather didn't respond to a request for
comment. Showtime declined to comment.
Some distributors are willing to be flexible, but don't want to
just roll over on the terms.
"To the extent the fight performs beyond what we've seen in
pay-per-view before, we're happy to consider untraditional
economics. Until that point however, it is speculative and
therefore the economics should be more traditionally set," said Rob
Jacobson, chief content officer of Vubiquity, which negotiates on
behalf of AT&T Inc. and other distributors.
That HBO and Showtime have to jointly negotiate with
distributors is also a drag on the pace of the talks, people
involved in the negotiations said.
Satellite provider DirecTV, which generally has the highest buy
rates for fights, isn't as optimistic.
"Even in what should be its best of times like now, boxing
always seems to manage to give itself a black eye," said Dan York,
chief content officer at DirecTV.
Beyond the proceeds from U.S. pay-per-view buys, the fight is
expected to bring in $75 million in event ticket sales, $10 million
in international revenue and an additional $10 million in
sponsorship.
As for the money that flows to the boxers, 60% will go to Mr.
Mayweather while 40% will go to Mr. Pacquiao, according to a split
the camps have negotiated.
Write to Joe Flint at joe.flint@wsj.com
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