The latest turn in the relationship between Warner Bros. Discovery and the NBA is the prospect of the league carving out a fourth rights package that would allow WBD to maintain at least some ties.
Once regarded as a faint enough possibility to merit little mention, the ‘fourth package’ option has been mentioned — to varying degrees of depth — in The Wall Street Journal, Puck and Sports Business Journal in just the past week, and that is surely no coincidence. WBD executives “have signaled an openness” to a fourth package, per John Ourand of Puck, and one can assume the sources floating the possibility are coming exclusively from that direction, given the NBA’s apparent opposition to an additional deal.
For WBD, a fourth package is at this point the only way to keep some rights that are neither prohibitively expensive nor requiring legal remedies.
What would such a package entail? The NBA is not willing to pull game inventory from its top three packages, and understandably so. Absent that, the league will have to create new inventory out of nothing.
Per Ourand, one option may be to build a new package out of “a handful of teams’ local game rights.” This past season, NBA teams under contract with Diamond Sports Group were able to sell ten Bally Sports-produced games to local over-the-air affiliates in their respective markets. (That was part of a one-time agreement between the NBA and Diamond Sports that was supposed to result in all of Diamond’s RSN rights reverting to the NBA after the season, but was ultimately abandoned.) It is unclear whether the NBA or its teams could wrest back similar rights from Diamond, much less other RSNs, in the future — but that would be one way to fill a potential fourth package.
Assume that a fourth package consists of games pulled from Diamond Sports. Only half the league is under contract with Diamond, and that list does not include several of the highest-profile teams. If other, non-Diamond teams are included in the games, such as the Lakers (Spectrum SportsNet), Knicks (MSG) or Warriors (Comcast), the TNT broadcasts would surely be blacked out in those markets. There are only so many games that can air exclusively on or co-exist with national television, and there is little doubt that the top three packages will account for all of those. In essence, TNT would have an NBA package that is not much better than its Tuesday night MLB package, which largely consists of games subject to local blackout. (It is also worth wondering whether the Diamond-sourced feeds would be exclusive to TNT — which would be a boon for a fourth-tier “D” package — or merely co-exists.)
The regular season is one concern. It is almost impossible to imagine that the NBA has not already allocated its postseason inventory to its top three packages. Even the games currently carried by NBA TV have surely been doled out to one of ESPN, Comcast or Amazon. With all four rounds of playoffs at best-of-seven, the NBA is in no position to create more inventory. While there is good in having even just regular season NBA games, the postseason is where the league’s value is highest.
Thus what TNT would be bidding for in this scenario is a weekly night of regular season games — either featuring a limited number of teams or a slew of local blackouts — and zero in the postseason. Perhaps WBD could find a way to secure NBA All-Star Weekend in such a deal, as Puck reported last month that the league was still seeking “clarity” regarding rights to its midseason event, making it perhaps the only marquee event not firmly spoken for. In any case, WBD would continue its relationship with the NBA, but with sharply reduced inventory and — presumably — sharply reduced viewership. Perhaps that would be enough for TNT to maintain its current rates with distributors, though that seems hard to believe.
Beyond the above, it is unclear what other options are available to WBD. One Hail Mary — even by the standards of the fourth package, which is itself a Hail Mary — is some sort of joint agreement with one of the other partners. Amazon has been mentioned as a potential landing spot for TNT talent if WBD loses rights, and there has even been some speculation that Amazon could rely on TNT to produce its NBA telecasts, the same way that it has used NBC’s Sunday Night Football production team for its Thursday Night Football games. Perhaps in exchange for the use of TNT’s production team — including the Inside the NBA studio personnel — Amazon allows TNT to simulcast some of its regular season inventory and a handful of playoff games.
That is, to be clear, highly unlikely. Then again, there really is no ‘likely’ scenario in which WBD holds onto the rights at this point, beyond paying nearly $3 billion a year price for the “B” package it currently owns. The other suggestions — suing the league, matching Amazon’s “C” package or carving out a fourth — smack of desperation.
Though the fourth package discussion seems to be originating from the WBD side, the idea seems more beneficial for the NBA than for WBD. While the NBA is said to be concerned about watering down its other three broadcast deals, it does not seem likely that ESPN, Amazon or Comcast could be legitimately threatened by TNT airing one night a week of nonexclusive games. The concern about having too many outlets airing games is real, but runs a bit hollow in an era where even the NFL is spreading its content across as many outlets as possible. For a few extra hundred million a year — maybe even a billion if WBD is particularly desperate — these seem like risks worth taking. The NBA could in essence keep WBD (and its wildcard leader David Zaslav) at arm’s length while still counting it as a partner. Given the uncertain future of the media industry, there is surely some value to not leaving any money on the table.
If impractical to the point of borderline impossibility, it is easy to see why the ‘fourth package’ idea continues to surface. Ultimately, the motivations are compelling. For WBD and Zaslav, it appears that being able to say to distributors ‘we have X and Y’ is more important than the quality of the package. Consider the way it has touted deals for NASCAR races and College Football Playoff games that include minimal inventory. A proverbial “D” package would allow WBD to continue listing the NBA among its many other properties, even if the actual content of the package is lacking.
For the NBA, it is simply even more money to add to a massive rights deal, and one less headache to deal with — assuming, of course, that WBD’s next deal does not include any ‘matching rights’ this time.
