Appearances be damned. Disney needs to make sure the NBA doesn’t get away.
The timing isn’t great. This is a company in the midst of massive layoffs. There very well could be a PR hit of some sort, but Disney is, at its core, a content company. The NBA is some of ESPN’s and ABC’s best sports content.
Math is rarely on the side of the bidders in these situations. John Skipper talked about this recently on a Meadowlark Media podcast. He attacked the accusations that he overpaid for NBA rights when he was running ESPN by saying that he didn’t do rights deals thinking about the current media landscape.
“Rights go up,” he said. “They look terrible in the beginning, by the end they look great. That’s why broadcasters should do long-term deals.”
Disney isn’t in a position to set the price this time around. The NBA is counting on tech giants Apple and Amazon to use their nearly unlimited resources to drive the bidding up. Both have been adamant about wanting to do business with the league and the league has been open about the fact that it expects to earn between $50 and 75 billion in these new deals.
Whatever percentage of that number Disney is going to be asked to pay to keep the NBA, it isn’t going to sit well with the people receiving pink slips from Mickey Mouse. Those people’s anger and frustration are going to be used against the company.
Ron DeSantis is trying to build a potential presidential campaign on going after Disney. Clay Travis used the “ESPN is too liberal” argument to springboard himself to a new level of relevance. There are going to be people ready to pounce on the idea that Disney cares more about the NBA than their own people if a deal gets done. That cannot sway the company. The NBA is too important to what they do. Besides, if it isn’t the NBA, those same people will say the same things about something else down the road.
Look, I’ve lost a job before due to cutbacks. It sucks. There is no way to sugarcoat it. I feel for all of the people that are going to get laid off, especially the “below the line” folks behind the scenes.
There is appearance, and then there’s reality. The NBA’s price tag will not change whether or not anyone at ESPN keeps their job. Those decisions have already been made.
Between ABC and ESPN, Disney will carry up to five games in a week during the NBA’s regular season. The playoffs are the centerpiece of both networks’ spring and summer schedules – ESPN during the week and ABC on the weekends.
On top of that, the NBA is at the center of so much that ESPN does. NBA Today is on every single weekday. Conversations about LeBron James, the Warriors, and trade demands dominate every show from SportsCenter to First Take. Some of the league’s biggest stars are at the center of movies on Disney+ and shows on ABC.
As stated earlier, Disney is a content company and the NBA gives Disney great content – a lot of it!
Doris Burke told Owen Pointdexter of Front Office Sports that she is taking nothing for granted. In the midst of layoffs, it doesn’t make sense to expect your company to invest billions or even millions in anything.
The NBA isn’t a building or a new piece of equipment. It’s inventory that creates inventory. That’s not an expense. It is an investment.
Disney’s cash flow issues have a lot to do with Covid-19. The pandemic disrupted movies, theme parks, and live sports. It’s like it was perfectly designed to hurt this particular company.
The other major contributor is the business model of Disney+. No one has really figured out how to be a profit machine in streaming video yet and Disney has set the difficulty to All-Madden with the amount of money it spends to create episodes of The Mandalorian and Loki.
Currently, Disney pays $1.4 billion per year for its NBA rights. With 99 games on its airwaves across ESPN and ABC during both the regular season and the playoffs, that works out to about $14 million per game – slightly less than it spends to make an episode of The Mandalorian and significantly less than it spends on an episode of any of its Marvel shows.
Now, admittedly that $14 million doesn’t include production costs associated with getting games on air nor does it factor in what broadcast talent is getting paid, but even with the additional amounts factored in, it is still a bargain compared to those prestige shows. Disney cannot sell commercial spots on its Disney+ properties. The NBA is an advertising machine! It is two different economic models, so they have to be evaluated in two very different ways.
There are no bad investments when it comes to media rights for the marquee brands in sports. We can debate what those brands are, but the NBA is part of a select group, along with the NFL, Big Ten and SEC, that would show up on everyone’s list. Shelling out the kind of money it takes to keep a property like that while you’re in the middle of massive layoffs may be a bad look, but that is temporary. People will forget about it quickly. Letting one of those properties get away is bad business that will have lasting effects.
Demetri Ravanos is a columnist and features writer for Barrett Media. He is also the creator of The Sports Podcast Festival, and a previous host on the Chewing Clock and Media Noise podcasts. He occasionally fills in on stations across the Carolinas in addition to hosting Panthers and College Football podcasts. His radio resume includes stops at WAVH and WZEW in Mobile, AL, WBPT in Birmingham, AL and WBBB, WPTK and WDNC in Raleigh, NC.
You can find him on Twitter @DemetriRavanos or reach him by email at DemetriTheGreek@gmail.com.
Laughable for you to say the NBA is a marquee sport when they get beat regularly in the ratings BY spongebob