The National Basketball Association has renewed its national TV deals with Turner Broadcasting and Disney. The basic terms released on Monday can be summarized in one word: more. The two networks signed on for nine more years at nearly triple their current annual cost, and both will air more games. The league will reap an average of almost $2.7 billion per year over the life of the deal, up from the current $930 million.
There will be more of the same talking heads. More Charles Barkley on Turner’s TNT and more Bill Simmons on Disney’s ESPN and ABC (when he gets back from his suspension). And there will be more money in NBA team coffers, half of which is owed to the players under the league’s collective bargaining agreement. Exactly how and when that gigantic influx of funds will make its way into player paychecks is a complicated matter that could well lead to another lockout in 2017. More money, more problems.
The new piles of cash, however they get divided, ultimately come from the pockets of cable-TV subscribers, who can expect to pay more for their service over the next decade. The league and its partners basically held a recommitment ceremony for a codependent relationship: The NBA needs its TV partners to drive revenue growth; its partners need basketball games to keep their viewers tuned to live broadcasts and paying ever more for cable bundles. In the age of the digital video recorder, sports are the only thing keeping the cable business model together. “It’s the only thing that you have to watch live,” as ESPN’s John Skipper put it at yesterday’s press conference.
The $101 billion question for sports leagues, programmers, and cable carriers is, how long can they hold this very profitable arrangement together? Where is the breaking point in the U.S. household budget and sports appetite? When will new pay and delivery models break through? The NBA’s answer is not until at least 2025, when this deal expires. All the other major U.S. sports leagues have national TV deals with traditional networks through at least 2021. A radical digital future for television is, it would seem from these deals, at least a decade away.
NBA Commissioner Adam Silver said the league “had a sense of where the emerging potential content acquirers are, the Googles, the Apples, and companies like that,” as it negotiated this latest contract. The key word there is “emerging.” According to SportsBusiness Journal, live-streaming rights were a sticking point during the talks with the incumbents, with the NBA hoping to sell them separately, the way the NFL does with Verizon (for mobile phones only). In the end, the NBA stalled. Streaming service for cable subscribers already paying for ESPN or TNT will essentially stay the same, as will the Turner-managed League Pass package for out-of-market games.
ESPN and the NBA, according to the league’s press release, “established a framework” to launch an “over-the-top” streaming service that does not require a cable subscription, with the league holding an equity interest in the venture. Beyond that, “details for the new offering will be announced at a future date.” The arc of the TV industry is long, but it bends toward a la carte.
