WBD Preps NBA Counteroffer as Sir Charles’ Waiting Game Continues
Charles Barkley got a little out over his skis this morning when he said he thought a decision on Warner Bros. Discovery’s stewardship of the NBA’s big cable TV package would be made by the end of the day. While a plume of white smoke is expected to emerge from the metaphorical chimney at 645 Fifth Ave. within the next few weeks, there is no hard and fast deadline for an announcement on how the league’s next media rights package will shake out.
Speaking Friday morning on The Dan Patrick Show, the Inside the NBA mainstay suggested that a proclamation was imminent. “I think they are going to make a decision by the end of the day,” Barkley said. “I don’t think any of us know what that decision is going to be. It’s very stressful at work right now.”
Unfortunately for Barkley and his stressed-out colleagues at TNT Sports, the pins-and-needles anticipation won’t be letting up as quickly as they would seem to prefer. More to the point, the prospect of Warner Bros. Discovery sustaining its 40-year collaboration with the NBA is likely not anywhere near as dire as many would seem to believe—this despite Comcast’s staggering $2.5 billion offer.
We set down the argument for a WBD victory here; long story short-ish, TNT Sports needs the NBA a hell of a lot more than NBC does, and while necessity doesn’t always win the day, it’s now almost impossible to imagine a scenario in which WBD CEO David Zaslav makes with the alligator arms when the time comes to break out the checkbook. (Yeah, we know what he said in back in November of 2022. That’s called negotiating in public.)
Even sports-world heavies like The Ringer’s Bill Simmons, who seems convinced that NBC is about to successfully emerge as the spoiler, have acknowledged that Comcast has a history of puckishly inserting itself in negotiations—a practice that sometimes results in a rival paying through the nose for an asset that wasn’t necessarily a must-have for NBC. When Comcast in 2018 made a competing bid of $65 billion for the 21st Century Fox entertainment assets coveted by Disney, the Mouse House found itself upping its offer to $71.3 billion.
Whether Comcast actually wanted those assets is now immaterial; in the end, that deal is one of the reasons why Nelson Peltz remains a stone in Bob Iger’s shoe. (Shortly before Peltz lost his proxy fight at Disney a month ago, the billionaire singled out the Fox deal as “strategically flawed.”)
For his part, Simmons sees NBC walking away with the pot, although he isn’t averse to assigning a bit of mischief to the network’s parent company. “Comcast is the guy in your fantasy football draft who keeps bidding up the guys you like,” Simmons joked this week during a hit on Matthew Belloni’s podcast. “He already has Mahomes, but he’s like, ‘No, no, I’m also in on Justin Herbert: $16!’ And all of the sudden you’re paying $29 for Justin Herbert and you’re like … ‘why did you do that to me?!?’”
WBD execs are currently putting together a counteroffer.
As Wall Street awaits a resolution on the final piece of the NBA’s national rights package, the league stands to make good on its internal goal to treble its annual media payments. Disney’s offer to retain the “A” package (which includes the NBA Finals) shakes out to some $2.6 billion per year, and WBD will need to match Comcast’s offer. With Amazon set to pour as much as $2 billion a year for the all-new streaming package, the average annual haul could end up in the neighborhood of $7 billion. The legacy Disney/WBD contract is worth $2.6 billion per year.
Duration, pricing and other terms have been sketched out as part of the Disney and Amazon bids, but no official deals are in place. That said, the new NBA package is expected to extend through at least through the end of the 2035-36 season.
Based on the estimates that are in play, the final NBA rights deal should pay off with a compound annual growth rate, or CAGR, of between 7% to 9%. As the anonymous finance pro Entertainment Strategy Guy pointed out yesterday via a thread posted to his X account, the league’s legacy package boasts a 12% CAGR.
Still, it’s hard to look at the numbers the NBA’s wrangling and not interpret this as a massive win for Adam Silver, who is on the cusp of pulling off what’s very likely the last blockbuster sports-rights deal of the cable-TV era.
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