Lockout to Hurt the NBA’s Television Rights Deals

by November 16, 2011

The League makes enormous sums of money from its TV rights deals with various media giants, but the continued lockout threatens to take a chunk out of that revenue. From the NY Times: “Big media companies are likely to feel the chill, with months of empty television time that would typically be filled with N.B.A. games. ESPN and ABC, owned by the Walt Disney Company, and Time Warner’s Turner Sports pay a combined $1 billion a season for the rights to games. The N.B.A. drives ratings in the coveted 18- to 34-year-old male demographic that advertisers pay a premium to reach. And it gives cable networks leverage in negotiating carriage fees, or the price cable companies pay in order to offer subscribers a network. The N.B.A. said on Tuesday that at the end of the current season it would discuss repayment to networks for fees associated with canceled games. If the entire season is wiped out, the league could add an additional year to Turner and Disney’s contract, which runs through the 2016 season. Last season, from October 2010 to June 2011, marketers spent $806 million to advertise during games, with 53 percent of those dollars spent during the playoffs, according to Kantar Media, a division of WPP. John K. Martin, Time Warner’s chief financial officer, said in an earnings call this month that a drop in ad revenue would be ‘relatively immaterial’ because it would be offset by a reduction in rights costs … Networks braced for further N.B.A. delays after players said Monday they had rejected the league’s latest offer. Had they reached agreement, a 72-game season would have started on Dec. 15. A 204-day lockout in the 1998-99 season led to a truncated 50-game season and the cancellation of the All-Star Game. Television networks largely made up for the missed games by charging advertisers a premium for end-of-season and playoff games … Some were still holding out hope that the season, and valuable television programming, would not be totally lost. ‘We believe in the strength of the N.B.A. brand and hope for an outcome that preserves as much of the 2011-2012 season as possible,’ David Levy, president of sales, distribution and sports for the Turner Broadcasting System, said.”