How the NBA's next TV deal could disrupt the media landscape

It’s a good time to be in the sports business, and no one knows that better than the NBA.

In the coming weeks, the league is expected to announce a new game-changing multiyear media rights pact that reportedly will more than double its annual fees from TV and streaming outlets to $6 billion annually after the 2024-25 National Basketball Assn. season.

The deal has the potential to shake up the future of the current media landscape, as two streaming platforms are said to be in the running for exclusive games. The ongoing talks also could result in the loss of an NBA TV package for Warner Bros. Discovery’s TNT, which has made the league a cornerstone of its programming for more than three decades.

Amazon Prime Video is expected to get an exclusive package of games. It would be the second major sports property for the tech giant, which has the rights to NFL “Thursday Night Football” and will stream its first exclusive playoff game next season.

While streaming services have drawn users with the lure of high-quality original programs and movies, live sports is the most efficient way to attract massive audiences and build scale. Amazon’s bid coincides with its aggressive push into the TV advertising marketplace.

The deep-pocketed Amazon, buoyed by its online retail business, has been able to spend aggressively for sports (it’s paying $1 billion a year to the NFL for Thursday games). Meanwhile, legacy media companies are under pressure to deal with rising costs while managing the declining revenues and profits for their traditional TV businesses.

While Amazon is expected to come away with a significant package, Walt Disney Co. likely will retain the rights to the NBA Finals. One of the crown jewels of TV sports, it would continue to air on broadcast network ABC.

Disney’s ESPN also would continue to carry regular-season and playoff games. Disney reportedly would pay $2.6 billion a year, up from $1.5 billion in the current deal that runs through the 2024-25 season.

Retaining the NBA would further solidify ESPN’s future as it prepares to offer its channels through a new streaming service aimed at consumers without a pay TV subscription. The plan is to make the direct-to-consumer version of ESPN available in 2025.

The wild card in the NBA talks is the entry of Philadelphia-based cable giant Comcast Corp., which reportedly has made a $2.5-billion bid for a package of games for streaming service Peacock and broadcast network NBC.

If Comcast succeeds at the expense of Turner, it would be a significant blow to the latter’s parent company, Warner Bros. Discovery, especially from a public image standpoint. Warner Bros. Discovery’s stock has declined by 40% during the last year.

The popular “Inside the NBA,” with co-hosts Charles Barkley, Shaquille O’Neal, Ernie Johnson and Kenny Smith, has helped define TNT’s identity over the years. (Barkley has already said he has the option to leave TNT if the network loses the NBA.)

Representatives for the NBA and the media companies all declined to comment.

Comcast’s offer appears to be aimed at boosting Peacock, which has struggled to reach profitability despite steady subscriber growth. The streaming platform, which currently has 34 million subscribers, has proven its ability to handle large live audiences. Its presentation of an NFL playoff game in January peaked at 16.3 million concurrent viewers.

A Comcast deal also would return the NBA to NBC, which held the league rights from 1990 to 2002 and brought the championships of Michael Jordan’s Chicago Bulls to living rooms across the country. The network also carried the league’s games from 1954 to 1962.

NBC reportedly is offering to carry two prime-time NBA games a week, according to the Wall Street Journal, which first reported the bid. Such a commitment demonstrates just how much traditional TV networks desire live sports, which has been a bulwark in the battle to retain viewers and advertising dollars.

Network audiences for scripted comedies and dramas have greatly diminished, as viewers now prefer to watch them on demand through streaming platforms. Viewers still have to make an appointment to view live sports, enhancing their value in the streaming age.

If Comcast lands the NBA, NBC could have live sports in prime time several nights a week, as it already carries “NFL Sunday Night Football” and Big Ten college football on Saturdays.

“It’s indicative of the fact that sports draws a major audience unlike any other programming,” said Lee Berke, president of LHB Sports, Media & Entertainment.

NBC is hardly alone. Companies with broadcast networks and TV stations are all looking at adding live sports to their lineups, as the habit of watching shows in real time becomes a relic of the past.

If Turner loses the NBA, questions likely would be raised over Warner Bros. Discovery’s role in a planned joint venture with Disney and Fox Corp. The three companies announced in January that they are launching a streaming platform, carrying linear channels such as ESPN, TNT and Fox Sports.

Turner has the NHL, Major League Baseball and the NCAA men’s basketball tournament. But the NBA was a significant piece of its offering. Without it, Warner Bros. Discovery could end up with a smaller stake in the venture, according to people familiar with the discussions.

There also could be long-term ramifications for Warner Bros. Discovery’s carriage arrangements with cable and satellite operators, who pay fees to carry its channels. The company would have to negotiate its next round of deals without offering the NBA at a time when such talks are increasingly contentious. Pay TV operators are battling to keep costs down as their customer base continues to shrink every year.

“WBD’s management has disclosed that a decent number of network carriage agreements are up for renewal next year making this a key focus for investors in the days ahead,” wrote analysts from the New York firm MoffettNathanson in a research report for clients.

The report noted that TNT commands around $2.6 billion in subscriber fees, accounting for 30% of Warner Bros. Discovery’s revenue from pay TV providers in the U.S.

People familiar with the NBA discussions say there is a chance that the league could put together a fourth package of games to accommodate both Comcast and Turner. But that would complicate life for the consumer looking for the next tip-off in an already fragmented media environment.

“When you offer up your games on four or five national outlets, it makes it more difficult for the fans to find out where the games are on,” Berke said.

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