DirecTV Bets on a Knockout From Boxing

NEW YORK (TheStreet) -- DirecTV (DTV) has seen its shares rise from market chatter about a potential merger with Dish Network  (DISH). While this deal would give investors a strong return, I think DirecTV should be an investment for other reasons. DirecTV is venturing into the world of boxing with a brand-new sport and continues to hold ownership stakes in key channels and content.

Apart from the merger talks, the big news for DirecTV was the state of Nevada sanctioning Big Knockout Boxing. Big Knockout Boxing is the newest combat sport, which serves as an entry into a competitive field that includes boxing, World Wrestling Entertainment (WWE) and UFC. Big Knockout Boxing is 100% owned by DirecTV and could be a nice growth strategy, if the sport gains traction.

The new combat sport will take place in an area known as "The Pit." The big differences for the sport are shorter rounds, which last two minutes, and a more intense offensive style of fighting that rewards aggressive boxers. The sport reminds me of the Arena Football League's fierce take on that sport, in contrast to the more popular National Football League's.

DirecTV has announced plans for Big Knockout Boxing events in 2014 and 2015. The company is also looking at building its own venue in Las Vegas, which would generate an even bigger revenue share of the sports success.

Currently, boxing is a revenue driver for both CBS (CBS) and Time Warner (TWX) through their respective Showtime and HBO channels. Showtime sees revenue from both its Showtime Championship Boxing series and its pay-per-view boxing events. Showtime has an exclusive six-fight deal with Floyd Mayweather Jr. that will continue on May 3 with a fight against Marcos Maidana. Back in September, a Mayweather vs. Saul Alvarez fight saw pay-per-view revenue of $150 million from more than 2 million purchases. HBO airs the Boxing After Dark series that scored higher ratings in January against its Showtime rival by a margin of 777,000 to 390,000.

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