Disney and Charter aren’t the only ones suffering from their now weeklong holdout.
The changing tide in the sports broadcasting industry signified by Charter Communications (CHTR) -) standing its ground against Disney and ESPN has media analyst Ben Thompson concerned about what it could mean for the NBA.
Thompson spoke on “The Bill Simmons Podcast” and explained that the NBA will likely not get the raise it’s targeting for its next media rights deal. The league’s current deal — which is with ESPN and Warner Bros. Discovery — expires after the 2024-25 season, and reports are the league is expecting to triple its yearly fee.
Related: Disney goes on the offensive as Charter blackout feud escalates
“The NBA is in a bad spot that it did not get this deal done before this happened,” Thompson told Bill Simmons.
Thompson explained that Charter’s hardball negotiation with ESPN signifies a changing tide in the media industry. Cable operators used to value sports, and particularly The Walt Disney Co.’s (DIS) -) ESPN because of the value of sports to the cable bundle. But with the shift to streaming, and how many cable providers are now shifting their revenue focus to internet service, they are now able to squeeze ESPN instead of the other way around.
Because of ESPN’s ability to utilize its service on companies like Charter, sports leagues like the NBA were able to strongarm ESPN into paying more for rights deals. But that may no longer be the case.
[The NBA’s] whole bit about being able to triple the rights deal and extract all this money from ESPN, it's dependent on ESPN being able to extract money from the cable carriers. And if the cable carriers say no, where's the money gonna come from?” Thompson said.
Thompson said he still expects to see the NBA’s next media rights deal to be higher than the $2.7 billion annually it was receiving from ESPN and Turner, but he just doesn’t project it to be as much as the $7 or $8 billion that past reports have suggested.
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He also explained that while ESPN is expected to bring live sports onto a direct-to-consumer service like ESPN+ in the coming years, this will not come with the same customer base and therefore ESPN may not be able to shell out as much as expected for NBA rights.
“It just takes time to build that revenue to make up for revenue that they're losing. And the last thing you can afford at that time is having to pay out billions and billions of dollars on a rights deal,” Thompson said.
There is an expectation that tech companies like Amazon and Apple will also be bidding for the NBA rights, which could push the number closer to the figure that the league desires. However, that could come with sacrifices in viewership in accessibility that the league may not be willing to bite.
ESPN, which is looking for a strategic partner, is also reportedly exploring the help of the massive tech companies to boost content and distribution. But Thompson doesn’t see how this is a positive for Disney or the NBA.
“Ask every other industry in the world how well that went,” Thompson said.
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