The Mayweather-McGregor Fight Could Ring Up Major Profits for CBS

When undefeated longtime pound-for-pound champion Floyd Mayweather comes out of retirement to face mixed martial arts champion Conor McGregor in August, those wishing to view the bout on TV will have to fork over the same amount as promoters charged two years ago for Mayweather’s fight against Filipino boxer Manny Pacquiao.

Viewing the fight produced by CBS Corp.’s  (CBS) Showtime will cost $89.95 for standard definition reception, though pay-TV operators are expected to add another $10 for high-definition. That’s the same price pay-TV operators charged in May 2015 when Mayweather faced Pacquiao in a fight that had been planned and heavily hyped for more than five years.

Its also twice as much as Viacom Inc.’s (VIAB) Spike TV charged recently for its Bellator NYC event held at New York’s Madison Square Garden. Viacom owns Bellator, an MMA business that competes with McGregor’s Ultimate Fighting Championship. Its June 24 pay-per-view event, featuring a fight between Chael Sonnen and Wanderlei Silva, cost $49.95. UFC typically charges $59.99 for its monthly pay-per-view events.

For CBS, the pricing for Mayweather-McGregor could result in a handsome profit.

A few months after Mayweather defeated Pacquiao, CBS CEO Leslie Moonves acknowledged that Showtime had to share most of the pay-per-view proceeds of that fight with a slew of pay-TV operators — in addition to the two fighters. In a subsequent investor conference call, CBS COO Joseph R. Ianniello described the economics of that deal as “a lot of revenue but low margin.”

The Pacquiao fight, part of Showtime’s six-fight contract with Mayweather, grossed more than $600 million, the most ever for a pay-per-view event.

The Mayweather-McGregor fight offers the possibility of a better cut for CBS given Showtime’s direct-to-consumer subscription service that doesn’t require a cable TV contract. CBS launched Showtime as a standalone service in July 2015, months after the Mayweather-Pacquiao fight. Showtime’s digital platform has attracted more than 1 million subscribers paying $11 per month for its ad-free offering.

Having secured the fight for Showtime, CBS will negotiate terms of the deal with its pay-TV distributors, i.e., Comcast Corp. (CMCSA) , Charter Communications Inc.’s (CHTR) Spectrum, Verizon Communications Inc. (VZ) , AT&T Inc. (T) and so on.

Nonetheless, CBS is unlikely to circumvent its pay-TV partners, though it could use Showtime’s standalone service as a bargaining chip. Unlike with Mayweather-Pacquiao, CBS has an alternative mode of distribution yet at the same premium price.