Over the next 11 years, NBC will fork over $27 billion to the NBA for its new package of exclusive regular season and playoff games. The deal, finalized last year, is a big bet for the network.
Extraordinarily, NBC will be paying more per year for its NBA package than it will under its current NFL agreement, which gives the network one of the top games of the week in Sunday Night Football, and puts them in the Super Bowl rotation.
If that sounds a bit out of whack considering the massive gulf in viewership between NBA and NFL contests, it appears that some NBC executives agree. In a new report by Joe Flint of the Wall Street Journal, some NBC executives are sounding the alarm. “Some senior NBCU entertainment executives and Wall Street analysts have questioned the price and all that has to go right for the deal to be a success,” Flint reports.
Now, it’d be natural for an entertainment executive at the network to be upset about the new NBA deal. The $2.5 billion per year that NBC is shelling out for hoops cuts directly into the budget that would have been used for more traditional entertainment programming in the past. NBC also recently made cuts to its news division, in part to focus more resources on sports.
Still, NBC execs in entertainment and news aren’t the only skeptics. Robert Fishman, an analyst at media research firm MoffettNathanson, suggested the math simply doesn’t add up. “It is hard to make the math work on generating any substantial returns,” he told the WSJ.
On the record, NBC executives are open to admitting the NBA deal is” going to be a money loser in the near term.” The hope is that the agreement will pay dividends over time.
“All of these deals lose money discretely,” NBCU executive Dave Pietrycha, who worked on the NBA deal, said according to the WSJ.
“It’s important for us to take big swings when we believe they will benefit the company over the long term,” Comcast co-CEO Mike Cavanagh wrote in a memo last year after the deal was announced.
Per Flint, NBC is projecting losses of between $500 million and $1.4 billion in the early years of the deal. The goal — between growing revenue from Peacock subscriptions, increases in affiliate and distribution fees, and more lucrative advertising inventory (NBC is charging approximately $130,000 per 30-second spot, while its predecessor TNT charged about $50,000) — is that the network can begin turning a profit further down the line.
That will be an uphill battle. Critics of NBC’s deal are skeptical that Peacock will see significant growth. Most sports fans, one analyst claims, already have Peacock to access its wide-ranging inventory of live sports including the Olympics, NFL, Premier League, and college sports.
NBC has seemingly acknowledged this, and plans to launch a new cable network to air live sporting events that were initially exclusive to Peacock. In turn, the network can further capitalize on its extensive live sports portfolio via distribution fees rather than relying solely on Peacock subscriptions.
In this industry, there’s a fine line between a successful deal and one that’s seen as an albatross. NBC is banking on this deal becoming a success over time, while hopefully minimizing losses in the interim.
‘ The preceding article may include information circulated by third parties ’
‘ Some details of this article were extracted from the following source awfulannouncing.com ’
