December 10, 2022

Read in Browser [[link removed]]

POWERED BY

Hi, I’m Mike McCarthy, senior writer at Front Office Sports. After three decades of success, it seems inconceivable that TNT and the NBA could split, but a closer look at other high profile sports rights negotiations makes me wonder if it’s more of a possibility than we realize.

Let’s talk about it on Twitter: @MMcCarthyREV [[link removed]].

Will TNT Walk Away From The NBA? [[link removed]]

Inside The NBA

The setting was an industry conference.

On stage, the cost-cutting president of a legacy media company warned that he wouldn’t overpay for the NBA in upcoming rights negotiations. If the “numbers are going to choke us, we are going to walk away.”

Was the speaker David Zaslav, president and chief executive officer of Warner Bros. Discovery, at RBC’s 2022 Global TIMT Conference last month? Nope.

It was actually former NBC president Andy Lack way back in 2001 — right before [[link removed]] the network lost the NBA to ESPN.

Twenty years later, it could be deja vu all over again for the NBA.

Ever since Zaslav surprised the sports world [[link removed]] by claiming, “We don’t have to have the NBA,” at an investor conference on Nov. 15, the industry has been buzzing about the implications for upcoming rights talks.

The NBA will be seeking a combined $50 billion to $75 billion or more from incumbents Warner Bros. Discovery’s TNT and Disney’s ESPN, starting with the 2025-2026 season.

With a young, tech-savvy fan base, and global appeal in markets like China and India, don’t be surprised if the NBA gets it. That would double or triple the payout from its current 9-year deals that pay a combined $24 billion, or $2.6 billion a year, from the 2016-2017 season through 2024-2025.

If the NBA doesn’t get the offers it wants from TNT and ESPN during their exclusive negotiating period, the league could open the bidding [[link removed]] to tech giants such as Amazon, Apple or Google.

The Zaslav Doctrine

Was Zaslav saying TNT could walk away from the NBA after 33 years? Or was he talking tough to impress a Wall Street crowd that has downgraded legacy media stocks?

And how will NBA commissioner Adam Silver react to Zaslav’s vow to stay “disciplined” until he gets an NBA deal that reflects the “future,” not the past?

Commissioners aren’t sympathetic when their media partners cry poverty. They want to be courted and ultimately overpaid for the valuable live sports rights holding up the TV ecosystem.

Now the NBA has to decide if it wants to re-up with cable networks like TNT and ESPN — which are losing subscribers every year to cord-cutting — and embrace the brave new world of streaming. Or even return to broadcast TV.

One executive said Zaslav’s comments went over like a lead balloon at the league.

“Zaslav was posturing — but very poorly. He doesn’t understand how to balance Wall Street and his sports brand.”

But media consultant Patrick Crakes noted it doesn’t matter what network executives say at conferences; it’s what they do in the boardroom that counts.

“If the NBA can negotiate in public, why can’t [Warner Bros. Discovery]? I would be cautious drawing too much out of these comments,” Crakes said. “That said, the marketplace is evolving rapidly, and there is a great deal of uncertainty around nearly every renewal.”

That said, an NBA-TNT divorce still seems unlikely considering their successful history:

From the top down, TNT executives and talent love the NBA and want to renew the relationship, said sources. TNT and Bleacher Report are also deeply embedded with the league’s multimedia properties, including NBA TV, NBA.com and the NBA app. Only TNT can offer the long-running “Inside the NBA,” the gold standard for studio shows. The network recently gave Charles Barkley a 10-year contract extension [[link removed]] and Shaquille O’Neal, Kenny “The Jet” Smith and host Ernie Johnson Jr. extensions of their own.

Why would TNT extend the “Inside the NBA” cast if it was getting out of the basketball business?

As Ben Johnson of Stratechery wrote [[link removed]], “I would assume those deals include some sort of out clause in case Warner Bros. Discovery doesn’t retain the NBA, but it is a pretty explicit signal of intent as far as the next NBA contract is concerned.”

Broken TV Relationships

On the other hand, nothing lasts forever in sports TV.

Just ask ESPN, which is losing [[link removed]] Big Ten Conference football games after 40 years. Or CBS Sports, which will wave bye-bye [[link removed]] to the SEC Conference after nearly 20 years.

Warning signs have been blinking for the TNT-NBA partnership:

Zaslav wants to cut $3 billion in costs after WarnerMedia’s merger with Discovery Inc. Dumping expensive sports rights are a quick way to reduce costs — and Zaslav noted he has other sports besides the NBA, including MLB, the NHL, and the NCAA’s “March Madness” men’s basketball tournament. Sports TV is a relationship business. TNT has lost several long-term, top executives instrumental to the NBA relationship, including Lenny Daniels (27 years) and respected Turner Sports president David Levy (33 years). With the ad market hitting a wall, Warner Bros Discovery is not the only media company cutting back [[link removed]]. Disney, CNN, Gannett, Vice, and BuzzFeed have all announced layoffs or hiring freezes. Previously bulletproof tech giants are downsizing, too. Amazon is launching what could be the largest layoffs in its 28-year history — as many as 10,000 employees could lose their jobs.

The NBA and TNT declined to comment on this story — but sources still say the deep-pocketed tech behemoths like Amazon could be the solution, not the problem.

Like the NFL, the NBA could create a balanced roster of media partners that includes both linear television networks like TNT and ESPN as well as all-digital partners such as Amazon.

Under this scenario, the NBA would not have to squeeze TNT and ESPN for every last nickel. Instead, it could make its desired number by splitting off a separate, streaming-only package [[link removed]] to a tech company that can afford it.

Think Amazon’s deal for the NFL’s “Thursday Night Football,” which pays $1 billion a year through 2033. With “TNF” on Prime Video for the next decade, Amazon has signaled [[link removed]'s%20current%20U.S.%20media,exclusively%20stream%20TNF%20through%202033.] its strong interest in the NBA, said sources.

A partnership with a technology company such as Amazon or Apple could also give the NBA the freedom to possibly unwind some of the digital duties handled by TNT in the next contract.

A Dynasty in Danger?

Driven by Michael Jordan’s dynastic Chicago Bulls, Bob Costas and John Tesh’s driving “Roundball Rock” score, the 12-year run of the “ NBA on NBC [[link removed]]” that ended in 2002 is still remembered fondly by many hoops fans.

Could history repeat itself 20 years later with TNT and the NBA?

The iconic Turner Sports name has already been rebranded “Warner Bros. Discovery Sports.”

The nightmare scenario for sports TV executives is for penny-pinching corporate higher-ups to overrule them come deal time.

Former CBS Sports president Neal Pilson knows the feeling all too well.

Back in 1993, CBS had controlled the NFL’s marquee NFC package for nearly 40 years. But CBS’ bottom-line-focused chief executive officer Larry Tisch wasn’t satisfied with the deal that paid the NFL $265 million annually.

Tisch told a reluctant Pilson to offer the NFL $250 million a year — or a $15 million pay cut [[link removed]]. Bad decision. Rupert Murdoch’s upstart Fox Sports swooped in with a four-year, $1.6 billion bid that offered to pay the NFL $400 million a year. The late Tisch declined to match. The rest is history. Fox has controlled the NFC package for the past 30 years. Murdoch’s network will broadcast Super Bowl LIVII — its 10th Big Game — on Feb. 12, 2023.

Five years after losing the NFC package, and under new boss Sean McManus, CBS Sports agreed to pay $500 million a year for the weaker AFC package — $100 million more than Tisch was willing to pay to keep the NFC. But that too proved a bargain, with quarterbacks John Elway, Peyton Manning, and Tom Brady driving AFC TV ratings to new heights.

Sometimes negotiating in public can help. Other times it can lead to disaster.

Pilson interpreted Zaslav’s comments as part “invitation” to start negotiations; part “warning” there’ll be limits on how much he’s willing to bid.

“I wouldn’t even define what was said as hardball. To throw out something like that in a public forum isn’t the [equivalent] of telling a league to get lost in a private meeting behind closed doors. That’s hardball,” said Pilson, who’s now a media consultant. “This is still way in the definition of a softball statement that I doubt will make its way into the negotiating room.”

Step Up or Step Away

Ultimately, the marketplace will set the price for NBA rights.

Like CBS and the NFL in 1993 and NBC and the NBA in 2001, it will be up to the incumbents to “either step up or step away,” according to Pilson. But if they walk, they better be prepared for the fallout from viewers, affiliates, and advertisers.

“The marquee value sports are unique. They’re not creating any new ones. I always refer to them as beachfront property,” said Pilson. “What’s happening is there are now more competitors for these rights than 10-15 years ago with Apple, Google, and Amazon stepping into the arena.”

The NBA appears to be holding the cards as it heads into its next cycle of media rights talks in 2023.

As Silver said at an industry conference [[link removed]] last month: “We’re in the enviable position right now of letting the marketplace work its magic a little bit, you know, to see where the best ideas are going to come from, what’s going to drive the best value.”

More From FOS Renowned American soccer journalist Grant Wahl [[link removed]] has died while covering the World Cup in Qatar. Wahl was at the Netherlands-Argentina match at the Lusail Stadium when he reportedly collapsed in extra time. Wahl will long be credited for helping to raise the profile of soccer in the United States, and had recently spoken [[link removed]] with Front Office Sports about his expectation’s for this year’s World Cup. Since hiring Deion Sanders as head football coach, Colorado has seen their best merch sales day ever, added 175,000+ social followers, and surpassed 2,000 season ticket interest forms. No wonder fans are already chanting his name [[link removed]]. We caught up [[link removed]] with Celsius Holdings CEO John Fieldly to talk about how his company’s energy drinks got so popular, plans to take out Red Bull and Monster, why sports and fitness are so important for Celsius’ brand, and that $550 million investment from PepsiCo.

SPONSORED BY INVESCO QQQ

The Local Deal That Made a Lasting Impact

This college football season, Invesco QQQ [[link removed]] is recognizing players who are innovating on and off the field, because an investment in innovation helps push progress forward. By investing in Invesco QQQ, you can access innovative Nasdaq-100 companies in one exchange-traded fund (ETF).

Drake Heismeyer, like many college athletes, wanted to take advantage of the new legislation around NIL. However, what began as a way to earn money transformed into a way to help others.

Drake used his platform to raise more than $2,000 for cancer research, earning an award as a top fundraiser. Drake has since expanded his philanthropic efforts, creating his own apparel company – 573 Tees – where he dedicates 50% of all proceeds to the Food Bank of Central and Northeast Missouri.

Learn more [[link removed]] about how you can become an agent of innovation with Invesco QQQ, the Official ETF of the NCAA.*

Refer Friends to Score Your Favorite Team’s Jersey

SPONSORED BY

Front Office Sports is celebrating that Paramount+ is home to world-class soccer matches from around the globe by giving away five authentic official jerseys.

How can you score one? Refer your friends and colleagues to Front Office Sports. Copy and paste your unique link below and share it in an email or on your timeline.

NO PURCHASE NECESSARY. Enter between October 24, 2022 @ 12:01 a.m. ET – December 18, 2022 at 11:59 p.m. ET. Open to US residents age 18+ only. 1 entry per person. Void where prohibited. See Official Rules [[link removed]] for details.

Referral Count: 0

Copy your invite link: [link removed] [[link removed]]

Or share on social media: DISCLAIMER

*Invesco is not affiliated with Drake Heismeyer or the University of Missouri.

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

There are risks involved with investing in ETFs, including possible loss of money. ETFs are subject to risks similar to those of stocks. Investments focus in a particular sector, such as technology, are subject to greater risks and are more greatly impacted by market volatility, than more diversified investments. The Nasdaq-100 Index includes the 100 largest non-financial companies listed on the Nasdaq. An investment cannot be made directly into an index.

NCAA is a trademark of the National Collegiate Athletic Association. Invesco is not affiliated with the NCAA.

Before investing, consider the Fund’s investment objectives, risks, charges and expenses. Visit invesco.com [[link removed]] for a prospectus with this information. Read it carefully before investing.

Invesco Distributors, Inc.

Advertise [[link removed]] Awards [[link removed]] Learning [[link removed]] Live [[link removed]] Podcasts [[link removed]] Pro [[link removed]] Written by Michael McCarthy [[link removed]] Edited by Brian Krikorian [[link removed]]

If this email was forwarded to you, you can subscribe here [[link removed]].

Update your preferences [link removed] / Unsubscribe [link removed]

Copyright © 2022 Front Office Sports. All rights reserved.

80 Pine Street Suite 3202 New York, NY 10005