Life’s a Beach, and Then You Lose the NBA. (Maybe.)
If the rest of us have one thing in common with the people who run gigantic media conglomerates and top-tier sports leagues, it is this: They don’t want to work over a long holiday weekend either. As much as all the breathless coverage of the NBA rights saga suggests an announcement is imminent, the reality is that everyone who matters is at the beach—which means nothing’s shaking on the dealmaking front.
Eventually, however, the season’s first brush with sand fleas and sunburn will come to an end, whereupon the offers tendered by Disney’s ESPN/ABC, Amazon’s Prime Video and Comcast’s NBC Sports will be committed to paper.
Once the contracts are in hand at the league office, the NBA’s Board of Governors will give the emperor’s thumbs-up (or -down, although, come on already), whereupon Warner Bros. Discovery will have five days to launch a counteroffer.
In other words, we’re still a ways away from the endgame, even if at least one high-profile WBD employee already seems to fear the worst. Sacks of cash will have a major role in the negotiations—if the NBA okays the three leaked offers, it stands to rake in something like $7.2 billion per year, or roughly three times what it generates under the legacy rights deals. But platforms are nearly as central to whatever comes next. Where the games will end up being shown three, five, eight, 11 years from now is as integral a consideration as the particulars of the various fee structures, and the fluid nature of the media business has contributed to making an already thorny process knottier still.
While WBD executives have mostly avoided going into specifics about their NBA retention strategy, the company’s recent earnings call offered a hint of the state of play at TNT Sports. CEO David Zaslav on May 9 told investors that his team enjoys the luxury of “matching rights,” a block of text in the contract that allows WBD “to match third-party offers before the NBA enters into an agreement with them.”
Zaslav lowballed NBA commissioner Adam Silver when WBD and Disney’s exclusive 45-day negotiating window flew open back in March, which provided Comcast an opportunity to swoop in on the league’s “B” package. Shortly after the window slammed shut on April 22, Comcast sailed in with a bid that is expected to average out to $2.5 billion per year, more than double what WBD pays under its current pact.
Incidentally, should the Dallas Mavericks and Minnesota Timberwolves force a seventh frame of the Western Conference Finals, June 3 will mark TNT Sports’ final NBA telecast of the season. As such: hard to imagine a deal being announced before then.
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Again, no offer has been papered, so nothing official has been plunked down in front of the Board of Governors, but unless Zaslav decides to outspend NBC’s deep-pocketed parent company (and for a decidedly reduced suite of games), fans are probably going to be hearing a lot more “Roundball Rock” in the years to come.
If, however, Zaslav and his lieutenants believe those shadowy matching rights cover every takeover bid, then it’s conceivable that WBD might try to elbow Amazon and its $1.8 billion-plus offer away from the table.
During an appearance at the 52nd Annual J.P. Morgan Global Technology, Media and Communications Conference in Boston, WBD chief financial officer Gunnar Widenfels confirmed that the company has the right to match a takeover bid for its NBA package. “We do have a contractual matching right, and that’s an important part of our ongoing contractual relationship,” Widenfels told JPM’s David Karnovsky, before proceeding to the usual boilerplate about fiscal probity.
“We’re always going to be disciplined,” Widenfels said. “It’s very easy with sports rights to burn a lot of money.”
WBD would have little trouble justifying an end-around investment in a long-term NBA streaming package, but the “matching” part of the “matching rights” clause remains a mystery—and it may be the kind of thing that can lead to legal action. If the language of the contract is interpreted to mean that WBD merely agree to handing the NBA a fatter envelope than the one that’s being waved around by Amazon, then fans will no longer have to worry about the fate of TNT’s Inside the NBA. However, should the NBA argue that WBD must also match Jeff Bezos’ juggernaut on reach, then 2024-25 will mark the final season for Charles Barkley and the rest of the crew.
In its first-quarter earnings report, WBD said its streaming base had grown to an enviable 99.6 million worldwide subscribers. Trouble is, Amazon Prime boasts an estimated 180 million customers in the U.S. alone. Advantage, Bezos.
If nothing else, it’s not hard to imagine that the language underpinning NBA’s next round of megabucks rights deals will be far less open to the whims of interpretation. In the here and now, however, it looks as if WBD is running out of options.
Normal business resumes Tuesday. Don’t forget the sunblock.
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