What TNT’s posturing means for NBA’s future on TV


Share post:

Warner Bros. Discovery CEO David Zaslav made some noise last week by intimating that Turner Sports might not do a new agreement when its deal with the NBA ends in three years.

This caused my phone to buzz as sports media folks wondered whether, after four decades, Turner and the NBA could be headed toward a breakup.

What Zaslav said:

From The Wall Street Journal’s Joe Flint:

Sports is hard.” — Warner Bros. Discovery CEO David Zaslav on rising costs and ratings challenges. Sports once “lifted all the boats.” Says we have favorable deal(s) on March Madness, NHL and baseball playoffs. On NBA he says, “We don’t have to have NBA.”

It has to be a deal for the future, it can’t be a deal for the past.” — Warner Bros. Discovery CEO David Zaslav on next NBA rights deal.

Warner Bros. Discovery CEO David Zaslav
Getty Images

What he previously said: During a WBD earnings call on Nov. 3, Zaslav spoke about the NBA, and this was a part of it:

“We love the NBA. But we’re going to be disciplined. In the end, if there’s an NBA deal, it’s going to be a deal that’s very attractive for us and very attractive for Adam [Silver, NBA commissioner]. But we have a lot of tools in that we have a lot of sports assets that no one else has. We got a global sports business that nobody else has. And we have a platform, a high-quality platform like HBO Max that could generate 30 million people watching within a short period of time for a great piece of content. Imagine what that could do with sport. And we’ve had very good luck with sport in Europe. So I think it’s an opportunity. We like the NBA, but we’re going to be disciplined. I’m hopeful that we can do something very creative.”

What he’s done: TNT signed Charles Barkley to a 10-year deal that immediately raised his salary significantly from $10 million per year. TNT also signed the rest of the iconic “Inside The NBA” crew to extensions. This was an indication of TNT’s plans and how much the network wanted to keep the NBA. The language in the Barkley deal, I’ve been told, calls for his contract to be revisited if TNT loses NBA rights, though it is not immediately clear what that would entail.

What Zaslav’s comments mean: They mean something, not everything. I would hone in on these two quotes for real guidance.

“It has to be a deal for the future, it can’t be a deal for the past,” Zaslav said.

Charles Barkley (r.) and Kenny Smith (l.) on TNT during NBA All-Star Saturday Night on Feb. 19, 2022.
Charles Barkley and Co. recently signed contract extensions with Turner Sports.
NBAE via Getty Images

This suggests Zaslav would like the NBA to help drive HBO Max subscriptions while likely trying to keep Turner’s revenue stream. This is what ESPN is doing in every new deal, securing rights for all of its platforms.

The future for global companies such as WBD is to try to sell subscriptions globally, which might be what Zaslav is partly thinking when he talks about Turner’s future relationship with the NBA.

ESPN/Disney, Amazon, Apple and other companies likely will be interested in the same concept. It will cost a lot, and, ultimately, I think the NBA will have more than just two distribution partners. The current partners could slim down their number of cable games. For TNT, think maybe just Thursdays, but not Tuesdays.

There is also the matter of the new in-season tournament that the NBA hopes becomes a thing.

Stephen Curry #30 of the Golden State Warriors shoots a three-point shot over Jericho Sims #45 of the New York Knicks during the fourth quarter of an NBA basketball game at Chase Center on November 18, 2022 in San Francisco.
Global superstars such as Stephen Curry put the NBA in a good position to negotiate its next set of rights deals, which begin with the 2025-26 season.
Getty Images

Turner will be very active in retaining NBA rights, but there are no guarantees, especially as Zaslav emphasizes profit as opposed to just growth.

Cut & spend: One final point. WBD is in the midst of layoffs, which started with 70 behind-the-scenes employees who worked on sports. There is a feeling the company may be cutting before doing some more big spending.

Quick Clicks

The World Cup started poorly for Fox Sports, which isn’t entirely the network’s fault because it didn’t have anything to do with the bribery that led Qatar, a country that demeans the rights of women and gay people, to be the host. Still, though, it wasn’t great. With the World Cup moved from the summer to the winter and the NFL king in the U.S., the opening game aired on FS1, not Fox, which diminished its importance. FS1 is a network that routinely doesn’t send announcers to other games, which tells you how much it values production and says a lot about how much we should value the network. John Strong, Stuart Holden and Jenny Taft were on hand for Ecuador’s 2-0 victory over Qatar, but there was no post-game show. When the Qatar supporters section was shown, there were no women in sight. Fox Sports chose to ignore this while the network runs ads about how Qatar is so great. Again, some of this is due to circumstances that Fox did not create, but it just feels smaller than it should. And, even for those who love soccer and are used to it being run poorly, it is ugly that a country that disdains equal rights is the host. Fox probably needs to address it a little, if not a lot.

Qatar fans enjoy the pre match atmosphere prior to the FIFA World Cup Qatar 2022 Group A match between Qatar and Ecuador at Al Bayt Stadium on November 20, 2022 in Al Khor, Qatar.
Notice something missing from this photo?
Getty Images

LeBron James’ alternate broadcast of Amazon’s “Thursday Night Football” was pretty good. As with most of these secondary listens, it is not perfect if you are really into the game. James was mostly joined by non-football players — Dez Bryant and Jalen Ramsey were the exceptions. The key to this version of “The Shop” was Jamie Foxx. This is kind of self-explanatory — he’s Jamie Foxx. He’s very funny, so that added a lot. Ramsey gave the show a viral moment by saying James will be accused on Twitter of lying. It was good because, with everyone in person, it gave the feel of hanging out with LeBron and friends for a game. It didn’t give you the same level of expertise as the Manningcast, but it did enough that it may be worth checking out again when TNF has a bad game in Raiders-Rams on Dec. 8. … Among the layoffs from WBD was Turner Sports PR man Jay Moskowitz. Moskowitz is a thorough, hard worker.

Will Apple and MLS grow the game?

The pricing for streaming all MLS games on Apple TV+ next season was released last week, and it immediately raised eyebrows around the entire sports media stratosphere.

The numbers: Let’s go through it, citing the company’s “Apple Newsroom” press release:

Starting February 1, fans can subscribe to MLS Season Pass on the Apple TV app for $14.99 per month during the season or $99 per season, and Apple TV+ subscribers can sign up at a special price of $12.99 per month and $79 per season.

Los Angeles FC forward Gareth Bale (11) celebrates after scoring a goal against the Philadelphia Union during extra time in the 2022 MLS Cup championship game.
Gareth Bale (center) celebrates with Los Angeles FC teammates during their win in the 2022 MLS Cup.

Golazo!: I think most people have a fundamental misunderstanding of subscriptions, and I think Apple does not.

Apple says these games will be available on billions of devices around the world. So when I predictably conducted a very unscientific poll, the idea that people won’t subscribe “won.” Among the first 5,000 who responded, only 4.6 percent said they would subscribe.

But this is what is misunderstood about subscription businesses: You don’t need everyone. You really don’t need most. And what you want to do is get as much money as possible from your diehard fans who are willing to pay the most. So let’s do some simple math. Let’s use the results of our unscientific poll (which admittedly has a bias toward engaged American sports fans), round up to 5 percent and say Apple has a billion devices out there. That would be 50 million subscribers. (Easy math, because I was a journalism major.)

There is no way they are getting 50 million subs! You are correct. No chance.

However, I’m using that outlandish number to show how Apple could recoup the $250 million per year the company is paying MLS for the rights (MLS is covering the production costs, so the league probably nets more like $200M, give or take).

Commissioner of Major League Soccer Don Garber looks on from the sidelines prior to the match between Philadelphia Union and Los Angeles FC.
MLS commissioner Don Garber

If we use the easy math (again) of $100 per subscriber, Apple/MLS only needs 2.5 million subscribers to get to $250 million per season. I’m not saying they will hit that benchmark, but we are talking about the ability to reach the entire world with no blackouts. We shall see if they can.

In understanding subscription economics, and factoring in that soccer is the world game and Apple says there are more than a billion people who actively use an iPhone, it is conceivable that Apple can reach .25 percent of those users to subscribe to MLS.

So as a business proposition for Apple, it may make some sense. Heck, I get a monthly bill from Apple for $1 for storage for my kids’ phones that I’m not positive they use. You almost think they may be able to reach .25 percent of Apple devices by mistake.

You could base these calculations on a ratio of Apple TV+ subscribers instead. Apple doesn’t officially give out how many subscribers it has, but the internet has the figure at around 30 million (I don’t really trust the internet, but let’s stay that is right). If Apple got two percent of 30 million existing users to sign up, it would be just 600,000 for MLS.

MLS thinks the product will have reach because the league features players born in 82 different countries, 37 of whom are on World Cup rosters.

Argentina's forward Lionel Messi controls a ball during a training camp in Abu Dhabi ahead of the Qatar 2022 FIFA football World Cup.
There’s buzz around Lionel Messi potentially playing in MLS at the end of his career.
AFP via Getty Images

And, here’s something we wrote previously: How about if MLS adds Lionel Messi? Could Messi pay for himself with digital subscription economics?

Yellow card: What I don’t understand is why MLS and Apple are giving away subscriptions to teams’ season ticket-holders. This is supposedly 300,000-400,000 freebies. These are MLS’ most loyal customers with money in their pockets.

If Apple and MLS release numbers one day, these people will be included as subscribers, but they aren’t paying. MLS and Apple are hoping to have these people evangelize the product. I’d let them do that — and take their money.

Yellow card II: Two of the most popular sports in the world are soccer and basketball. The NBA is by far the best pro basketball league in the world. MLS is not even close to the best soccer league. Many people around the world, including in the United States, have access to watch the Premier League, Champions League and every other soccer match they want. If the NBA were to try the MLS-Apple game plan, it might really work, though as stated above, I doubt it does a one-party, exclusive deal and probably would advise against that, at this point.

MLS has yet to announce deals with ESPN and Fox to continue to have games simulcast on broadcast and cable TV, though it still appears to be in the cards. I know the folks at the networks like MLS commissioner Don Garber, but I’m not sure why they would want to prop up MLS’ 10-year agreement with Apple.

An agreement, which, by the way, could wipe the networks’ businesses off the map if it really works. When it is all said and done, there will be plenty of free MLS games in front of the Apple paywall and some select games on ESPN, ESPN2, FS1, ABC and Fox.

Philadelphia Union midfielder Alejandro Bedoya (11) kicks the ball past New York City defender Alexander Callens (6) during the first half for the conference finals for the Audi 2022 MLS Cup Playoffs.
NYCFC’s Alexander Callens defends Philadelphia Union midfielder Alejandro Bedoya during the MLS conference finals.

Yellow card III: I tend to doubt MLS will grow as a global league, though a move for a legend such as Messi prior to the 2026 World Cup in North America could add some juice. MLS, to the frustration of American soccer fans, has shown no real appetite yet to fight for talent with the big boys of soccer.

So this might work in terms of being a good money deal — no one was close to Apple’s $250M — but, at the same time, the growth that big American soccer fans want to see in the level of MLS doesn’t feel fully as if it’s on the horizon. Without that leap and with convenient access to better leagues already in place, does MLS grow?

Red card: MLS is making me, a huge soccer fan, decide: Do I need it or not? If it were part of a bigger service, incorporated into the price, such as in ESPN+’s deal with the NHL (out-of-market MLS games previously were included with ESPN+, but there were blackouts), the value proposition is with the overall content, not just a thumbs up or thumbs down on MLS.

The huge MLS fan is going to put his or her thumbs up. That’s why sports are so vital in the media landscape. We will pay for the games we love.

But if you are in charge of a growing league, do you want someone like me — who is already watching Premier League, Champions League and the World Cup — to decide whether I want to put my thumbs up for $14.99 per month? Not so sure about that.

Extra time: Though we did break the fact that Apple and MLS were getting together in this here newsletter in January, we also discussed MLB’s deal with the company. Here’s what is not totally clear: What is Apple’s strategy? My belief is they want the MLS format to become ubiquitous. The rights don’t come up for so many leagues for so long that it is kind of irrelevant to even consider. (This is also why the NBA is in prime position with its rights deals expiring soon.)

NBA Commissioner Adam Silver speaks during a presser ahead of the NBA pre-season basketball match between the Milwaukee Bucks and the Atlanta Hawks at the Etihad Arena on Yas Island in Abu Dhabi, on October 6, 2022.
NBA commissioner Adam Silver
AFP via Getty Images

Could Apple replicate the MLS model with another sports property? Maybe, but my gut tells me the NBA — though I’m a bigger believer in subscription — doesn’t ultimately do a deal like this if Apple wants the rights to everything. (It actually is basically impossible in the relatively near term unless something changed with all the teams’ RSN deals.)

The one-stop shopping is smooth and easy, which is what Apple and Amazon do so well, making them transformative companies. However, the NBA is not going to give them everything. NBA commissioner Adam Silver may be watching, but he is going to want games to be on broadcast and probably cable TV to go along with the addition of streaming.

This MLS-Apple deal might be a transformative deal or it could really stall growth for the league. Apple basically owns the league for the next decade. Players even will wear Apple patches on sleeves. It was the only deal MLS really had — the money was not comparable in any other offer.

How this works might be more interesting (from a sports media perspective) than watching the Houston Dynamo vs. Real Salt Lake.

Programming note: There will be a podcast next week, but no newsletter the following Monday. Back on Dec. 5.

Source link

Related articles

Pete Alonso breaks Mets’ Citi Field home run mark, umps’ call helps

Pete Alonso hit his 21st homer of the season on Sunday and may have gotten some help...

Cardinals lose 10th straight Jordan Montgomery start: ‘Not a loser’

Jordan Montgomery can’t catch a break. The southpaw, in his first full season with the Cardinals, after the...

Dana White wants Jon Jones vs. Tyson Fury fight in UFC

No one teases like combat sports promoters and fighters — especially boxing and mixed martial arts —...

Women’s doubles team disqualified after French Open ball girl hit

Miyu Kato and Aldila Sutjiadi were disqualified from the French Open after a ball hit in between...