Oct 6, 2014 9:56 AM
NBA extends television deals with ESPN and TNT
The Associated Press
NEW YORK (AP) The NBA and its television partners couldn't wait to extend their contracts.
The league renewed its deals with ESPN and TNT even though two seasons remain on the old ones. With potential competition from Fox looming, both networks were willing to pay generously to secure the rights long term.
The NBA's annual revenue from the agreements will increase from $930 million to more than $2.6 billion, according to a person familiar with the terms. The person spoke on condition of anonymity to The Associated Press because the league did not announce financial figures.
"We ultimately made a decision that this was the right time to go," Commissioner Adam Silver said at a news conference Monday. "These are extraordinarily healthy deals financially."
The contracts will run an additional nine years through the 2024-25 season. The previous eight-year agreements end after 2015-16.
"We believe at the end of the deal it will feel inexpensive," ESPN President John Skipper said. "It's hard to imagine."
What was painful to imagine for both companies was life without the NBA.
"Each year the playoffs help TNT win nights of television during all-important May sweeps," said David Levy, president of Turner Broadcasting System.
The basics won't change: The NBA Finals remain on ABC, ESPN's broadcast partner. ESPN/ABC and TNT will continue to split the conference finals.
Broadcasting rights fees have been skyrocketing across all sports as live events become increasingly valuable to advertisers. Few viewers will DVR an NBA game, which means they can't fast-forward through the commercials.
"There's never been a better time to be an owner of an NBA franchise or, frankly, any professional sports team," said Washington Wizards owner Ted Leonsis, chairman of the league's media committee.
Players may remember that comment when they negotiate the next collective bargaining agreement with owners, which could happen in 2017. Owners insisted they needed a new financial structure during the 2011 talks and emerged with a deal that slashed the players' guarantee of basketball revenues.
"The whole thing that went on with the last negotiation process was the owners were telling us they were losing money. There's no way they can sit in front of us and tell us that right now," Cleveland's LeBron James said. "After we continue to see teams selling for billions of dollars, being purchased for $200 million, signing for $550, $750 and $2 billion and now (Mikhail) Prokhorov is possibly selling his majority stake in the Nets for over $1 billion. That will not fly with us this time."
The league has relationships with both Fox and Comcast, NBC's parent company, which locally televise teams' games on their regional sports networks. If the national contract had gone to the open market, NBC also could have pursued a return to NBA coverage to boost its 24-hour sports cable channel, NBCSN.
Silver said the league took into consideration the potential interest of tech companies such as Google and Apple that could eventually bid on sports rights and change the model for how fans watch games.
But for the next decade and beyond, the NBA is sticking with what works.
"I don't think we left any money on the table," Silver said. "We're confident that we maximized what our opportunity was in the marketplace."
For ESPN, the value of the deal goes beyond games, though there are more of those, too: ESPN and ABC are adding 10 regular-season matchups, bringing their total to 100.
The network also gets expanded rights to air highlights and will significantly expand its NBA studio shows. The goal is to make basketball a year-round topic of conversation as the NFL has become on ESPN.
To that end, the agreement adds the NBA's Summer League and its developmental league. The network also extends its WNBA contract through 2025 and increases its offerings for ESPN International.
And then there are the plans for a new service for mobile devices that ESPN will run, with the NBA receiving equity interest. Details on that have yet to be determined.
ESPN now owns rights to the NBA, NFL, Major League Baseball, college football playoffs and four of the five power conferences through at least 2021. Only the Big Ten contract ends soon among the network's biggest sports properties.
It will be at least another decade before Fox can try to put a substantial dent in ESPN's head start.
TNT, meanwhile, can't offer its own 24-hour sports channel to the NBA. But it has deep business ties to the league through managing its digital properties, which includes NBA TV and NBA.com.
The new deal includes expanded digital rights for Bleacher Report, the sports website acquired by Turner, TNT's parent company. TNT will televise an additional 12 games with playoff implications over the second half of the season on nights other than its traditional Thursday, bringing its total to 64.
TNT will also air a new postseason awards show.
When the NBA negotiated its last CBA, the union secured the ability for either side to opt out in 2017 so players could gauge the effects of the next television deals on revenue. One reason James signed for only two years with the Cavaliers was an expectation that the salary cap would rise significantly with more TV money pouring in, increasing maximum salaries.
Silver said he would start discussions with National Basketball Players Association executive director Michele Roberts about the transition to a much larger cap.
In a statement, Roberts called the new contracts "good news for all of the stakeholders in the business of the NBA."
"Our job will be to ensure that the players receive their fair share of the results of their efforts," she added, "and that we do everything possible to maintain the growth and popularity of the game."
AP Sports Writer Tom Withers in Independence, Ohio contributed to this report.