The cost of acquiring sports media rights is steadily rising, but analysts from JP Morgan believe that at some point the media rights market bubble is going to burst.
According to reporting from Forbes, despite strong ratings and live viewership driving inflation of media rights fees, whether or not streaming and digital platforms can replace linear TV is still unknown.
“We believe the ratings and viewership of sports today, essentially must-haves in an otherwise challenged linear ecosystem, will continue to justify sports rights inflation, but that inflation exacerbates what are already existential challenges for the video distribution business as a whole,” the report reads. “Today, it is unclear how DTC/digital platforms will be able to replicate the legacy model’s level of profitability, as today’s model of low prices and easy on/off on a monthly basis with high churn looks unsustainable in general but especially for sports.”
Forbes estimates around $26 billion in rights fees will be paid this year looking at payments and revenue from network TV, regional sports networks, and streaming services. They also factored in NFL Sunday Ticket on YouTube, Amazon’s NFL deal for Thursday Night Football, and Apple’s contracts with MLS and MLB.
The next major negotiations expected to begin will be for the NBA’s media rights. The league is seeking somewhere in the neighborhood of $75 billion in total and will do deals with multiple partners. NASCAR’s rights are also on the table.
