Negotiations for media rights to the NBA are reportedly ongoing but are gaining some level of clarity following reports of frameworks of a deal with The Walt Disney Company (ESPN/ABC) and Amazon. The league is ostensibly offering three rights packages, leaving one final spot that Comcast’s NBCUniversal is reportedly bidding $2.5 billion to attain. If the league decides to accept such a bid and establish this media triumvirate, it will leave Warner Bros. Discovery on the outside looking in for the first time since then-Turner would not broadcast league games since 1988.
As existing rightsholders, The Walt Disney Company and Warner Bros. Discovery were both granted a 90-day exclusive negotiating window with the NBA that expired towards the end of April. While The Walt Disney Company reportedly exited the period with the framework of a deal, there have been no reports of Warner Bros. Discovery doing the same. Barkley, who has been a studio analyst with the company since 2000, expressed recent feelings of uneasiness and revealed that he has an opt-out in his contract should the company lose league broadcasting rights.
“To me, the most puzzling thing here is why Warner Bros. Discovery has gotten themselves in the position of potentially losing the NBA,” John Skipper, co-founder and chief executive officer of Meadowlark Media, said on a recent episode of The Sporting Class. “I think it’s pretty close to must have for them. They did have an exclusive negotiating window. Maybe it wasn’t possible, but I don’t understand why they let it come out of that exclusive negotiating window.”
David Samson, current host of Nothing Personal and former president of the Miami Marlins, expressed that it was almost like no one was paying attention when the company indicated it would not overpay for sports. In fact, Warner Bros. Discovery chief executive officer David Zaslav had stated in 2022 that the company did not need the NBA and would take a disciplined approach to the negotiations.
“Warner Bros. Discovery answers to more than just Adam Silver and the NBA,” Samson said. “They are a large public company, [and] they have a lot of different sides to them. They’re not going to overpay, and [NBA Commissioner] Adam Silver wants an overpay right now.”
Skipper conveyed a sense of confusion pertaining to the meaning of the word ‘overpay,’ something Samson attributes to the fact that Skipper did not look at rights deals in that manner when he was the president of ESPN. Samson explained that when Skipper wanted something, he would pay whatever was required to land it “plus one.”
“Yes, and I do believe this is fairly existential for Warner Bros. Discovery,” Skipper replied. “I think to lose probably the crown jewel…. I do not believe their share price will be rewarded if it’s revealed – I would assume this is still in play – but if it’s revealed they have lost the NBA.”
Warner Bros. Discovery remains $44.2 billion in gross debt after it had repaid $1.2 billion of debt during the fiscal fourth quarter of 2023, according to its latest earnings results. The company concluded the fiscal year with $4.3 billion cash on hand and reduced its quarterly net loss to $400 million. After Samson reminisced on the Los Angeles Dodgers’ 25-year regional sports network contract that pays the organization a total of $8.35 billion for local broadcasting rights, he articulated that Warner Bros. Discovery currently finds itself in a position to determine if it can make money on an NBA deal.
“Though I do not believe that what NBC might pay for the NBA makes that of the same magnitude as that deal for the Dodgers. That’s maybe the craziest deal I’ve ever seen in sports is the amount of money that was paid for the local rights for the Dodgers,” Skipper said. “I don’t think that at $2.5 billion, would [NBC] make money Year 1? No, they would not. It’s a 10-year horizon. These deals always look very, very expensive in the beginning and very, very profitable at the end.”
If he were a member of the board, Samson would not accept such a deal that does not look good in the near-term because he is a “prisoner of now.” Skipper had preceded that point by depicting that the lack of immediate profitability and efficacy in this sense is part of what is wrong with aspects of American capitalism.
“Investors and sponsors love themselves some All-Star Weekend, and if they lose that, I don’t think it’s good for their business,” Skipper said. “You could be right – I’m sure if they do a strict P&L and don’t count the promotional value of it; don’t count the brand halo; just count, ‘We’re going to pay $2.5 [billion],’ and, ‘How much money are we going to get back?,’ it probably loses money.”
