NBA ready to discuss rights dealPublished May 13, 2013
The NBA plans to start informal negotiations on its next media rights deal this summer, two years before its current ESPN and Turner Sports deals wrap up, according to several sources.
The current contracts run through the 2015-16 season. On average, the networks are paying the league a combined $930 million annually as part of the deals, which started with the 2008-09 season.
|Incumbent rights holder ESPN has said it’s interested in renewing, as has Turner.
The league plans to wait for its playoffs to end in June before turning its focus to the media package, sources said. While those informal talks are likely to take place, a formal deal is not expected until next year, when current NBA Deputy Commissioner Adam Silver replaces David Stern as commissioner.
The NBA would not comment on its coming discussions, but the league’s TV business was an agenda topic at the NBA’s April 19 board of governors meeting.
“There was a very lengthy report on TV matters,” Stern said in a briefing after the board meeting.
The league is looking to take advantage of a sports rights marketplace that has resulted in record rights fees over the past three years, with an increasing number of sports networks chasing a dwindling amount of live sports rights.
Typically, big sports properties start TV talks roughly a year before contracts come to an end. The NBA is deciding to test the waters now, with the cost of sports rights at an all-time high, timing Fox Sports co-President Randy Freer alluded to at last month’s World Congress of Sports conference.
“If I’m the NBA, I’m probably feeling pretty good,” Freer said. “But I’m probably also looking at maybe doing my deal now because I don’t know what’s going to happen in 2015 or 2016.”
Timing is key. There’s a sense in some circles that this record run of sports rights has created a bubble that could burst. But there are no signs any kind of downturn is imminent.
Last year, Major League Baseball signed $12.4 billion worth of media rights deals with ESPN, Fox and Turner for an eight-year span, more than doubling the average annual media rights revenue from its previous deal. A few months earlier, the NFL renewed its broadcast network rights deals at a 60 percent increase. These deals were struck amid a run of deals in the college market that brought record windfalls to the ACC, Pac-12 and BCS.
The NBA can similarly expect to get an increase in its deal. While viewership of the NBA dipped this season compared with the last on each of the league’s partners (Turner, ESPN and ABC), those viewership numbers still marked the second-best audience on record for a full regular season (no lockout). Additionally, NBA games deliver a desired young demographic, and the games take place from November through June, when TV viewership is high.
ESPN and Turner both have said they are interested in renewing. Turner, in particular, is tied into the league, having carried games since 1988. Turner also runs the NBA’s digital business.
But the incumbents will have competition. Fox Sports is launching its Fox Sports 1 channel this summer and is looking for live sports content. NBC also is interested in bringing live sports content to its NBC Sports Network.
The NBA is keenly aware of the current marketplace. Three of the league’s top executives — Stern, Silver and Bill Koenig, executive vice president of business affairs — attended a New York event in March announcing the launch of Fox Sports 1. As they were leaving the event, a reporter asked what they thought of the presentation. Stern offered a wry smile, and said, “It’s always nice to have competition.”