The NBA TV Deal Throws More Chaos into the Merger Mix
Joe Flint, Amol Sharma, & Isabella Simonetti
These NBA rights negotiations are like a game of Jenga that never ends. The news today is that the final deal "nears" but still isn't done because, of course, Warner Bros Discovery can topple the whole thing over by matching the NBC bid or by trying to sue to say they don't have to fully match it. Or they just may take their money saved and go home. Or go buy CBS from Paramount. If that deal happens. Which has also been on the verge of happening for months. But may not happen.
Welcome to the state of entertainment in 2024.
Anyway, here's the latest reported "near" deal from Joe Flint, Amol Sharma, & Isabella Simonetti:
Now, with negotiations progressing as the Boston Celtics and Dallas Mavericks prepare to face off in the NBA Finals, the league is on track to score big: It is closing in on deals with NBC, ESPN and Amazon that would bring in about $76 billion in media revenue over 11 years, people familiar with the discussions said.
That is, without question, a lot of money. How much money? Almost NFL money, which is wild given the discrepancy in ratings. But what it lacks in pure viewers, the NBA makes up for in demographics and international potential:
The NBA is on track to increase its annual fees by more than 2.5 times under the new deal, to an average of nearly $7 billion. The NFL roughly doubled its fees under its last deal to around $10 billion a year. The NBA has much lower average ratings than the NFL, but it has more games and a young audience that is important to advertisers. It is very popular abroad, which is a big motivator for Amazon’s Prime Video.
It's also a very long time. Which the NBA must be thrilled about. Because the next time such a deal is negotiated, things are going to look very different. And they almost for sure will not look better, from a monetary perspective than they do right now. Of course, I thought that before and I was wrong. But I simply didn't anticipate the full court press of the tech giants into sports and the pure conglomerate chaos amidst the collapse of cable.
What about the deals for the individual companies here:
NBC is near an accord with the league to pay an average of $2.5 billion a year, people familiar with the deal talks said. It would show around 100 games per season, with about half airing exclusively on the Peacock streaming service, reflecting a major bet on the future of streaming. Games would air on NBC on Tuesdays and Sundays when there isn’t a conflict with NBC’s “Sunday Night Football.”
Amazon’s $1.8 billion-a-year package would include regular-season and playoff games, the new NBA in-season tournament, and the “play-in” games in which teams compete for the final playoff spots. It also would have a share of the conference finals, which the media partners will split in a rotation, the people familiar with the terms said.
Disney would retain an NBA package and would continue to air the NBA Finals, with payments averaging about $2.6 billion a year, people familiar with the terms say, up from $1.5 billion under the current deal. Disney would get fewer games than under its current deal. ESPN’s deal will allow the company to air games on its direct-to-consumer streaming service, which is set to launch in 2025.
From the reporting, WBD could have had the NBC package for $2.2B, but walked away because they were mad about the price increase and how many games Amazon was getting. That is not a great look for David Zaslav given where this ended. But it will look even worse if he matches now. So his best option may be to get a court to say that some lower offer is equivalent to NBC's, somehow. Naturally, there's turmoil inside NBC over the deal too, with many thinking they're overpaying, but Comcast being okay with it to further bolster Peacock.
You know, the other service rumored to merge with Paramount at one point. And the game of Jenga continues...
Warner is already plotting how to use the potential savings from not being an NBA partner to buy other sports content. It recently cut a deal with Disney’s ESPN to sublicense some college football playoff games. Warner executives note that TNT also has rights to NASCAR, the National Hockey League, Major League Baseball and the March Madness college basketball tournament.
Warner would relish the opportunity to acquire CBS from Paramount Global as that company explores a sale that could eventually result in asset sales, say people familiar with the situation. That would help Warner consolidate ownership of March Madness, which it now splits with CBS, and it would make Warner a partner of the NFL.
Disney already threw WBD a bone in the form of some college football playoff games, presumably to help their partner on the confusing new piecemeal sports streaming service, Venu, look less foolish if and when they lost the NBA rights. If WBD was somehow able to buy CBS that would be just about the only way to save face given those NFL rights, which would also make Venu make a lot more sense (though they'd still be lacking the NFL games which Amazon and now Netflix control).
This is all gravy for the NBA though. Adam Silver deserves a raise. Charles Barkley will certainly get one now whether its from TNT or elsewhere.1 Zaslav? Jenga!
1 How about "Inside the NBA on Prime Video" as they aim to build out their sportsnight...