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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.<\/p>\n
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\u00a0Sunday Night Football<\/em>, and puts them in the Super Bowl rotation.<\/p>\n 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\u00a0Wall Street Journal<\/em><\/a>, some NBC executives are sounding the alarm. \u201cSome 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,\u201d Flint reports.<\/p>\n Now, it\u2019d 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<\/a>.<\/p>\n Still, NBC execs in entertainment and news aren\u2019t the only skeptics. Robert Fishman, an analyst at media research firm MoffettNathanson, suggested the math simply doesn\u2019t add up. \u201cIt is hard to make the math work on generating any substantial returns,\u201d he told the WSJ<\/em>.<\/p>\n On the record, NBC executives are open to admitting the NBA deal is\u201d going to be a money loser in the near term.\u201d The hope is that the agreement will pay dividends over time.<\/p>\n \u201cAll of these deals lose money discretely,\u201d NBCU executive Dave Pietrycha, who worked on the NBA deal, said according to the\u00a0WSJ<\/em>.<\/p>\n \u201cIt\u2019s important for us to take big swings when we believe they will benefit the company over the long term,\u201d Comcast co-CEO Mike Cavanagh wrote in a memo last year after the deal was announced.<\/p>\n Per Flint, NBC is projecting losses of between $500 million and $1.4 billion in the early years of the deal. The goal \u2014 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) \u2014 is that the network can begin turning a profit further down the line.<\/p>\n That will be an uphill battle. Critics of NBC\u2019s 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.<\/p>\n NBC has seemingly acknowledged this, and plans to launch a new cable network<\/a> 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.<\/p>\n