Netflix WWE deal doesn’t mean more sports investment

Dwayne ”The Rock” Johnson and John Cena in action during WrestleMania XXVIII at Sun Life Stadium on April 1, 2012 in Miami Gardens, Florida.

Ron Elkman | sports Imagery | Getty Images Sport | Getty Images

Netflix co-Chief Executive Officer Ted Sarandos wants to make one thing clear about the company’s deal to license WWE’s Raw for the next ten years: Professional wrestling isn’t sports.

“WWE is sports entertainment,” Sarandos clarified during Netflix’s fourth-quarter earnings conference call. “It’s really as close to our core as you can get in terms of sports storytelling. In terms of the deal itself, it has options and the protections we seek in our general licensing deals, and with economics that we’re super happy with globally. So, I would not look at this as a signal of any change to our sports strategy.”

After Netflix and WWE parent company TKO Group announced the deal Tuesday morning, it sparked questions about whether Netflix would try to buy streaming rights for one of the major sports leagues. But Sarandos repeatedly tried to put those discussions to rest.

Netflix has held some preliminary discussions with the National Basketball Association for possible streaming packages that may arise as the NBA renews its media rights later this year, CNBC reported in October. Still, given the league’s desire to limit itself to three media partners, Netflix likely wouldn’t play a major role in negotiations, CNBC reported at the time.

Sarandos’s comments suggest Netflix won’t be a near-term player in those talks or any others regarding traditional live sports rights. Netflix has dived in to “sports adjacent” programming, building documentary series around Formula 1 and professional tennis, golf, cycling and football.

Netflix paid more than $5 billion for 10 years of WWE’s Raw and other international programming. The deal has an out clause for Netflix after five years, and includes an option for Netflix to extend for an additional 10 years.

Sarandos called the WWE Raw deal “the inverse of Formula 1,” as WWE is popular in the U.S. and has a relatively small international audience.

“We can build [WWE] like we have with Formula 1 through our shoulder programming,” Sarandos said. “Now, the events themselves are the storytelling with WWE. So, this is a proven formula for us.”

Still, Netflix executives have developed a reputation for changing their mind on key business issues. For years, Netflix stayed away from advertising and cracking down on password sharing. They’ve reversed course on both subjects in recent years.

The move to pay a giant rights deal is a clear shift for Netflix. Pushing into traditional sports could eventually be a logical step for the company — no matter what Sarandos said Tuesday.

WATCH: MNTN’s Mark Douglas weighs in on Netflix-WWE deal

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