Here’s a slogan that any large-scale legacy media company could use for a negotiable fee: rein and retain. The words themselves are rather appropriate any time a broadcasting rights pact is nearing the end, most especially those for sports. The incumbent rights holder has paid millions or perhaps billions of dollars for the ability to show games and partner with sports leagues for other content, yet it may walk a bit of a tightrope during the final years of their deal.
Which is why comments on the NBA from David Zaslav back in November drew more than their fair share of criticism from some circles and praise in others. With the NBA’s broadcasting deals set to expire in 2024-25, the president of Warner Bros Discovery said that his group, which includes incumbent cable partner Turner Sports, may not need the league. Earlier in 2022, it was reported that the NBA was seeking $75 billion in total for its next set of media rights packages, so many sports media observers viewed Zaslav’s comments as negotiating through the media. However, there could be some merit in those words as WBD has spent much of early formation so far in cost-cutting mode.
(Be mindful, however, that in 2014 the legacy Time Warner networks were taking part in a massive staff reduction while simultaneously negotiating the extension on its current deal with the NBA.)
Observers have wondered aloud if the partnership between Turner and the NBA is in serious jeopardy, and for good reason. If there’s something akin to a peanut butter and jelly sandwich in sports media, it’s the symbiotic relationship between the two companies. Turner has won dozens of Emmys with its NBA coverage and the two have also won massive, combined brand affinity with the public over three decades.
The common question being asked by analysts and reporters is “would the NBA really leave Turner?” However, WBD through Turner has its own examination to take on as it relates to a new rights deal. There are three fundamental questions that Zaslav and the leadership of WBD must ask themselves if they haven’t done so already.
Question 1: Are the new bosses willing to spend the money to justify their carriage fees?
Whether it’s a legacy network that’s trying to stay ahead of the pack, a mid-tier cabler hoping to top its competitive set or an upstart trying to ‘disrupt’ the system, the most important short-term goal for any programmer is to make sure the world knows that your channel had the most-watched program last night. Ideally, it not only wins the night, but it wins just about every night imaginable. Yet, doing so means your channel either lucks into a hit scripted show or has live sports of some kind.
Neither comes cheaply for a network, but the return on investment can make the costs worthwhile. A scripted hit suddenly has better marketing and more viewers in its next season, leading to higher CPMs for advertising and bigger salaries for the people who create and star in it. With a usually larger audience, a popular sports league provides even more of the same with one extra bonus – the demand for live sports can significantly raise the carriage fees that video providers pay TV network groups.
Even if TNT features a matchup of teams that have underwhelmed, the network still fares better compared to its competitors. Variety’s breakdown of primetime viewership for all ad-supported broadcast and cable networks in 2022 shows that TNT has dipped below one million nightly viewers for the first time in ages. TNT, ranked 13th, is one of only four networks in the top 20 that shows live sports, and one can easily assume that the rank would be even lower without sports. (Their research team would tell you that if you remove the broadcast channels, TNT looks a whole lot better at seventh in all of cable). Yet only a handful of channels have a good story to tell these days. Only five of the top 50 channels listed grew their audiences in 2022 versus 2021: #6 ESPN, #30 Paramount, #34 Grit, #41 ESPN2 and #42 Oxygen. Just two more, #27 TV Land and #50 Bounce, were unchanged from year to year.
Despite the continued erosion of linear TV usage, those in the upper tier of the industry consistently win their fair share of nights on primetime.
Those rankings may not mean much to viewers, but they matter to cable carriers, satellite companies and MVPDs (multichannel video programming distributors) such as Fubo, DirecTV Now and YouTube TV. Those distributors pay carriage fees to the network owners, and they are compelled to pay top dollar to the most watched and requested channels. ESPN has the highest carriage fees by far, but TNT ranked second as of 2021 at $2.78 a month per subscriber, according to SNL Kagan (noted in this paywalled article from Axios).
Whichever media company gains the rights to NBA games will also have a major bargaining chip against those providers. And save for having the NFL on its programming slate, that company can win a few more winter and spring Thursday nights than its competitors.
Question 2: Does WBD value the NBA’s uniquely diverse audience?
A major — albeit, largely assumed but unspoken — reason why the NBA seems to be in a proverbial culture war in the United States is because of its demographic makeup. This isn’t just about makeup of the league itself, where nearly 3/4 of the players and, for the first time ever, half of its coaches are African American. (And overall, the NBA routinely gets high marks for its diversity in hiring.) The Association’s television audience more ethnically diverse and younger than that for its peer leagues, and its household income is higher than that for the average sports fan.
That’s not conjecture, but straight from a 2021 report on the league by Sports Business Journal and insights firm Kantar:
Demographically, the NBA fanbase remains younger and more diverse than other pro leagues. The average NBA fan is 36 years old (42 is the average for other leagues), with 62% of fans identifying as either Millennial (38%) or Gen Z (24%). The league’s fans are 65% male and the average annual household income is $91,000, compared to $89,500 for the average sports fan. The ethnic breakdown is White (52%), Black (20%), Hispanic (19%) and Asian (2%).
Confirming the gender split is 2021-22 regular season viewership data analyzed by Front Office Sports, which shows that women now make up one-third of the total audience.
There’s not another TV content provider that comes close to capturing multiple demographics at once except the NFL, which has more fans of every demographic by aggregate numbers.
Yes, having a younger fan base makes the NBA more susceptible to cord cutting as Sportico reported last November. However, even the almighty NFL struggled to retain younger viewers for years until Amazon took over Thursday Night Football last fall. The NBA has had a leg up over all but Major League Baseball when it comes to mobile streaming, and with more resonance on social media than any other league, it overhauled its official app in hopes of connecting with Gen Z fans with more TikTok-like features.
As WBD continues to evaluate and remodel its linear and digital platforms, having a partner in the NBA lets the company retain some relevance with younger and more diverse viewers that won’t be replicated on a wide scale with most other programming.
Question 3: Is there a viable NBA replacement?
When Time Warner announced its renewal of rights with the Association in October 2014, it was just getting out of the crosshairs of Rupert Murdoch, who put out an $80 billion takeover bid months before. (Full disclosure: TW was one of several stops in my media research career as I worked as an analyst with its entertainment ad sales unit that year.) Perhaps in anticipation of an eventual sale, you could assume that the leadership wanted to retain those rights alongside Major League Baseball, which reupped with the company in 2013, to be more attractive to a prospective owner.
After a nearly two-year fight with the Department of Justice, that new owner eventually became AT&T in 2018. In addition to renewing rights with MLB, the renamed WarnerMedia scooped up the NHL with a seven-year package starting with the 2021-22 season. While MLB has shot itself in the foot one too many times and the NHL has rarely captured the full American zeitgeist for seasons on end, both provide TNT and TBS with stable, lucrative audiences throughout the year. Yet to borrow from sabermetrics, neither are exactly replacement-level compared to the NBA. Viewership for MLB and NHL telecasts range anywhere between just a third and a half of what TNT gets in its NBA windows.
Having the NHL, MLB and to some extent, All Elite Wrestling, provides a fallback of sorts, but letting the NBA walk would dramatically sink TNT’s overall viewership to the point that there would be some serious discussions about those carriage fees that operators are paying. Plus, Warner Bros Discovery doesn’t plan on creating original programming for the Turner networks for the foreseeable future, a strategy that helped TNT and TBS challenge and beat the broadcast networks in the 2000s through the mid-2010s.
Of course, major media companies must have contingency plans when they decide to not renew sports broadcasting rights of this magnitude, though it can take years, a financial correction, and some luck to fill the audience void. However, should the NBA move on from, there won’t be another league of similar size and scope on the market for three more years when WBD’s contracts with MLB and the NHL end in 2028. And by then, there could be significant pressure on the company to renew those rights if the NBA had left.
The 90-Day Fiancé franchise is strong, but will it be “LeBron vs. Bronny on NBA Opening Night” strong in October 2025? With this looming decision, Warner Bros Discovery will have a definitive answer one way or the other.
