Why TNT kept losing the NBA to Amazon
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Last week, the NBA unveiled its new TV rights deal: an 11-year, $77 billion deal that runs through the 2025-26 season. ESPN/ABC will remain the league’s top broadcast partner, paying $2.6 billion annually for a package that includes the NBA Finals. NBC, which aired much of Michael Jordan’s brutal sacking of the Utah Jazz before losing the rights to the game in 2002, is back in the fold, paying $2.45 billion for a bunch of less profitable shows.
In the end, Amazon Prime Video will pay $1.8 billion for the right to broadcast everything that’s left: some regular-season games, a few playoff series, the conference finals every other year, and the annual In-Season Championship. The new three-partner structure essentially triples the value of the nine-year, $24 billion deal the NBA signed with ESPN/ABC and Turner Sports back in 2014—which, in essence, tripled the value of the deal before that.
This classic game of musical chairs leaves Turner, who has televised NBA games on his TNT network since 1989, without a seat at the table. “Roundball Rock,” a popular Sunday afternoon theme The NBA on NBC television, will soon return to a screen near you; Inside the NBATNT’s award-winning studio show, will begin its final season in the fall.
This, at least, is how the NBA and Amazon would like things to go. But days before the news broke, Turner, who is owned by Warner Bros. Discovery, announced that it has requested its contractual right to match Amazon’s offer and retain its rights for another decade. But after reviewing the details of Turner’s proposal, the NBA said it wasn’t enough to match Amazon’s offer, and that it would continue with the streaming giant as planned.
Turner, as you might expect, asserted that the league “grossly misinterpreted” the language of the contract and promised to take “appropriate action.” Indeed, last Friday, Turner sued the NBA in New York state court, demanding that the league honor its obligations or pay for its failure to do so. (That noise you hear is a small army of BigLaw associates clearing their schedules for the next few months.)
The smart money is on Amazon and the NBA is finally getting its way, for two reasons. First, courts generally do not like to make parties do business with people they do not want to do business with. Second, it is a good rule that the largest and richest company in court will win. Amazon, with a market cap of nearly $2 billion, would be eligible to do so in almost any situation. Given that Warner Bros. While Discovery is still trying to figure out what to do with its $43 billion debt, the numbers here aren’t very close.
However, the upcoming legal battle will be an interesting perspective on the future of media rights to live sports, as the traditional networks clinging to these important assets are trying to block serious broadcasters who understand that without them, the networks will exist. in a bigger problem than the one they are already in. By one estimate, losing the NBA would cost TNT about $600 million a year in advertising revenue and cable and satellite deals, and in his complaint, Turner touts his rights to “one-of-a-kind” NBA games as essential to the network’s programming. whole business model. “This is not just a case of the loss of one important sports property,” the complaint states, “but rather a case where the various impacts of the loss of NBA distribution rights are multiplied and not only difficult, but impossible to fully quantify.”
In a brief statement, the NBA said Turner’s claims are “without merit,” meaning they will settle them in court. But according to The Athletic, the gist of the NBA’s legal dispute is that even if Turner matched the dollar value of Amazon’s gift, it didn’t—more importantly, I won’t-match Amazon’s offer in terms of access. Turner mainly broadcasts games on basic cable, while Amazon is a “premium” distributor that bypasses traditional distribution channels (such as cable and satellite providers) and streams directly to consumers. From the NBA’s point of view, Amazon’s infrastructure makes it easier for more people to find and consume its product, and thus renders Turner’s bid legally inadequate.
Turner, as you might expect, disagrees on several grounds. First, it contends that the same provisions of the existing agreement are responsible for the streaming rights, and that Turner’s ability to broadcast NBA games on the Max—Warner Bros. streaming service. Discovery—allowing it to match Amazon’s bid to stream NBA games on Prime Video. Second, Turner argues that there is no longer a meaningful difference between watching television and streaming: After all, consumers can watch Amazon Prime on their TVs as easily as they can stream TNT and Max on their laptops. Fans care about the game on the screen, not the technology they had to use to get to it.
The real reason the NBA isn’t getting this influence, of course, is that the NBA has seen the same staggering cord-cutting data as everyone else. Last year, live cable coverage of the eclipse was the nation’s preferred viewing method. Only 58 million households subscribe to traditional pay TV, a number that may drop to 41 million by 2028, and the modest increase in subscriptions to digital pay TV providers (such as YouTubeTV) is not enough to make a difference. Meanwhile, Amazon says that 200 million people watch Prime Video every month. Even when you include Max’s 100 million subscribers worldwide, again, the numbers aren’t close yet, and likely won’t be close anytime soon.
The NBA has been publicly fuming about the perceived limitations of its deal with Turner and ESPN/ABC for some time. In an interview last year, for example, NBA commissioner Adam Silver noted that the cable audience is “older and less diverse,” which he compared to the NBA’s audience which is “predominantly young and diverse.” Cord cutters are often new. When news of the deal broke, Silver’s statement highlighted the potential of Amazon’s “huge subscriber base” to “dramatically grow” the league’s footprint. The NBA knows that there are more eyes on streamers than on traditional networks, and sees no reason to wait any longer to try to reach them.
Perhaps the most interesting part of Turner’s complaint accuses the NBA of negotiating in bad faith, of trying to structure the Amazon deal so that it would be impossible for Turner to match. Some of the details are reproduced in the complaint, but to give a general idea of the kind of thing going on here, The Wall Street Journal previously reported that Amazon was willing to pay the three-year fee in cash; TNT, given the financial problems of Warner Bros. Discovery, had to get funding first. The dynamic will be familiar to anyone who has tried to buy a house while competing with all-cash offers: Even if the numbers are the same, there’s more at stake, sellers are eager to deal with liquid buyers who can’t cut a check.
As is often the case, an out-of-court settlement is likely to benefit everyone. The NBA is determined to continue its broadcast season, while Amazon has 14 months and is counting on building an extensive infrastructure from scratch. Since Warner Bros. Discovery may want to keep the NBA on TNT, for a company that’s eleven figures in debt, a possible hefty payout won’t be a bad consolation prize. It is also possible that the NBA could solve this by bringing in Turner as a player the fourth partner of the game token package, a move you can also save Inside the NBA in the air—basically fan action.
But even decisions like these can be ominous signs for the future of traditional TV networks. Although they have left broadcasters in recent years for live events—the NFL now shows weekly games on Prime Video and YouTube, will show two Christmas Day games on Netflix this year, and airs the honest-to-God NFL Finals. especially for the dreaded Peacock—the networks’ long-standing relationships with major sports teams remain a big reason fans keep their cable subscriptions alive.
The NBA’s push to partner with Amazon—and its notable efforts to sideline its oldest and perhaps most prominent partner in the process—suggests the industry is at its peak. With more broadcasters offering more money to provide more content to their growing subscriber bases, the leagues won’t want to deal with anyone. but they don’t broadcast. In his complaint, Turner is asking the court to consider the “hundreds of millions of dollars” he invested in the network’s “carefully developed 40-year-old program.” Unfortunately for Turner, in the eyes of the NBA, this legacy is all Turner has left to offer.
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