Has WarnerMedia Learned From Its Golf Pay TV Debacle?

Golf Extravaganza_Comp - iStock - H 2018
iStock; Getty Images

After a major tech issue mars the AT&T unit's first shot at a pay-per-view golf extravaganza, questions are raised about how the telecom handles live sports.

With all the pieces in place for a hyped pay-per-view golf showdown Nov. 23 between Tiger Woods and Phil Mickelson that included camera-drones, mic'd-up participants, side-betting and a winner-take-all $9 million purse, AT&T's WarnerMedia whiffed on the technical details.

Some viewers who paid $20 for live streaming were denied access, necessitating that the pay wall be lifted. Now the debacle has some on Wall Street rethinking assumptions about how the telecom giant handles live sports and whether its John Stankey-led WarnerMedia is up to the challenge of launching a Netflix competitor next year.

As to the latter, WarnerMedia shored up its executive ranks Nov. 26 with the appointment of Brad Bentley as GM of the yet-to-be named service. Bentley is a 15-year veteran of DirecTV (like WarnerMedia, owned by AT&T) who helped launch the DirecTV Now streamer.

Turner's B/R Live, a streaming service from Bleacher Report, which WarnerMedia's Turner acquired in 2012 for $175 million, was the main culprit for the fiasco, but AT&T also made the match available on DirecTV and outlets controlled by Comcast, Charter, Verizon and others. 

"DirecTV Now also had issues, especially early in its launch, so this is a yellow flag as AT&T’s strategy continues to evolve," says Steven Birenberg, founder of Northlake Capital Management. "The golf stream is a reminder that today the internet is not quite ready to deliver at sufficient scale and reliability. That could impact upcoming rights renewals for major sports."

With the match freely available online due to the lifting of the pay wall, most of the other outlets said they'd be refunding their customers as well, though WarnerMedia has not said who will be footing the bill.

"They'll lose a lot of money on this and it is humbling. But they'll learn from their mistakes," says eMarketer analyst Paul Verna, noting similar recent failures such as YouTube's TV service crashing during this year's World Cup, some Hulu viewers losing their connections at the end of the most recent Super Bowl and streaming problems during the UFC's Floyd Mayweather Jr.-Conor McGregor matchup.

In 2015, Turner purchased a majority stake in iStreamPlanet, which played a role in the golf snafu and will provide technology for future endeavors, just as Disney purchased BAMTech from Major League Baseball in 2017 to help with ESPN+ and its upcoming Disney+ that will compete with WarnerMedia's streamer.

Turner's B/R Live distributed the golf event, and its purpose, in part, was to showcase the capabilities of the service that launched in March. The match also came courtesy of CAA Sports, Excel Sports and Lagardere Sports.

The event in Las Vegas has its roots in an idea from CAA's Jack Whigham and his client, producer Bryan Zuriff. The PGA Tour signed off on it, and sponsors were lined up. Turner says the problem is owed to how popular the contest was, given it simply wasn't prepared to handle the large volume of sign-ups. It was eventually called Capital One's The Match: Tiger vs. Phil, while various elements were promotional opportunities, like Drone View by AT&T.  "There were no issues associated with video delivery or bandwidth," a Turner spokesperson said. 

"It’s embarrassing, but no more than that. It’s not material financially, and I’d be surprised if it had any lasting impact," says Craig Moffett, an analyst with MoffettNathanson.

Insiders say Woods and Mickelson each were to receive a cut of the PPV money on top of the $9 million purse, which Mickelson won with a birdie putt on the 22nd hole. WarnerMedia will likely ensure the golfers get their shares despite the refunds. A person close to the production says a second PPV golf event could be on the horizon, teaming Woods and Mickelson each with a younger player on the rise. Separately, on Nov. 27 Woods revealed a multiyear partnership with GolfTV for several on-demand streaming shows, some of them possibly live, beginning in 2019.

"The golf match was a silly first effort," adds Michael Pachter of Wedbush Securities. "They should do blacked-out NFL games first and see if that works. I went to a golf party to watch, and 20 of us saw the match. Imagine charging $100 for NFL games. We already pay for Sunday Ticket, and that works well."

A version of this story first appeared in the Nov. 28 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.