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What the NBA rights deal spells out about the future of streamers, platforms in live sports

July 29, 2024
in Technology
What the NBA rights deal spells out about the future of streamers, platforms in live sports
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Last week, the NBA announced it — finally — wrapped negotiations between the league and media companies over its broadcast rights.

But the fight over which media companies are able to provide NBA coverage, and rake in the advertising dollars targeted at basketball audiences, isn’t yet over.

So, what’s going on, and why does it matter for advertisers?

Previously, broadcast rights were split across two packages. Games in the regular basketball season, playoffs and conference finals were divided between Disney-owned ABC and ESPN, and Warner Bros broadcast network Turner Network Television (TNT); ABC was the sole broadcaster for the NBA Finals.

After months of jockeying between TV companies and tech firms, the pack’s been reshuffled. ABC has retained the finals, while games in the regular season, playoffs and conference finals are set to be scattered across ESPN and ABC, Amazon Prime Video, NBC and Peacock. Amazon will be showing its NBA coverage in the U.K., while NBC will be broadcasting some of its games in Europe via Sky Sports.

Collectively, the three companies will be paying the NBA just over $76 billion over the next 11 years.

There’s a few key takeaways to look at here. Firstly, Peacock and Amazon’s involvement is a milestone for sports media and streaming, after a series of tentatively successful — but isolated — tests such as the NFL Wildcard games, which have been shown on Peacock since January.

Michael Cavanagh, president of NBCU-owner Comcast, expects the addition of the NBA to greatly aid Peacock’s subscriber acquisition efforts, as well as NBCU’s ad sales. “We look forward to putting the weight of our entire company behind our partnership with the NBA for decades to come,” he said during the company’s Q2 earnings call, held just before the NBA’s deal announcement.

“Sports has been a great source of acquisition for us in Peacock and a great source of value to the consumer … we view the NBA as a excellent piece in that puzzle and it will allow us to rebalance programming from other areas,” Cavanagh said.

Despite streaming services such as Netflix encroaching on the prestige TV era, sports coverage has been a preserve of the established broadcasters. That began to change in 2022 when Apple snagged the rights to show MLB baseball games; it began showing MLS soccer matches a year later.

According to David Cohen, the CEO of the Interactive Advertising Bureau, the deals are a “true watershed moment for media and sports.”

“All eyes are going to turn to how Amazon performs,” he added in an email. “As we have seen over the past few years, sports league deals are becoming increasingly streaming centric. The center of gravity in this industry has been changing for a while now, and this landmark deal solidifies the shift in television toward a true streaming-first future.”

Why now?

Tech firms want more growth from their streaming services, and they believe that premium sports coverage is the way to attract more subscribers and eke out more advertising revenue from their ad-supported tiers.

“It’s a diversification strategy to reach more people,” said Matt Wurst, CMO at vertical video platform Genuin, when asked why platforms and streamers are after sports rights deals now.

They’ve got the deep pockets — Amazon, for example, reportedly bid $1.9 billion a year for the NBA rights — to make that happen.

Warner Bros. Discovery does not. The company carries over $39 billion in long-term debt and has been cutting jobs to massage its cash flow. Its effort to hold on to NBA rights that TNT had kept since the 1980s was outgunned, first by sworn rival NBCU and then by Amazon.

But there are legal challenges ahead

Claiming that its offer matched Amazon’s, Warner Bros.’ executives “do not believe the NBA can reject it” — and, according to CNBC, are suing to that effect.

A statement issued by TNT last week said: “They [the NBA] are rejecting the many fans who continue to show their unwavering support for our best-in-class coverage, delivered through the full combined reach of WBD’s video-first distribution platforms — including TNT, home to our four-decade partnership with the league, and Max, our leading streaming service.”

“We think they have grossly misinterpreted our contractual rights with respect to the 2025-26 season and beyond, and we will take appropriate action. We look forward, however, to another great season of the NBA on TNT and Max including our iconic Inside the NBA.”

An ongoing shakeup in sports rights

However WBD’s legal efforts shake out, advertising experts are intrigued by the introduction of streaming platforms into the world of the NBA and beyond – even if they harbor concerns that more diverse mix of providers means viewer confusion might initially depress audiences.

Wurst told Digiday: “I think there’s going to be a messy middle because it’s really hard to communicate where a specific game is on any given day.”

“There’s going to be a challenge in terms of messaging and communication as well as subscription-based barriers to entry that we’re all going to have to muddle through,” he added.

Laura Grover, svp and head of client solutions at EDO, told Digiday: “This deal signals a new streaming era for the NBA and its fans. NBA games are some of the most effective live sports programming for advertisers all year — second only to the NFL.”

Principally, that’s because the cost of advertising on streaming platforms is usually lower than doing so on linear TV. Speaking in May, co-CEO of Horizon Sports & Experiences and former president of Turner Networks David Levy, told Digiday he expected the entry of streaming platforms to lower barriers of entry into the NBA.

“This may allow new advertisers to come in that have been unsuccessful in the past, or [that] have been blocked out through exclusivity,” he said.

— Kristina Monllos contributed reporting to this piece.

https://digiday.com/?p=551100

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