Now that the NBA has navigated its latest existential crisis and the conference semifinals are officially underway, the league’s media partners can start earning back a good chunk of the advertising revenue that was lost during the COVID-19 shutdown.
According to Standard Media Index data, the second round of playoff action is when the ad dollars really start rolling in, especially for Turner Sports. During last season’s opening round of postseason action, the average unit cost in TNT’s 23 televised NBA games was $102,820 per 30 seconds of airtime. The going rate for a spot in the conference semis jumped 41% to $145,400 a pop, per SMI, a research firm that harvests ad sales data from the invoices of the largest media-buying agencies.
The spoils of postseason play only improve from there, as TNT nearly doubled its ad rates during last year’s Eastern Conference Finals. According to SMI’s database, the price of a half-minute in that six-game Raptors-Bucks series was a princely $278,584 per unit.
To say that the Turner Sports sales team is happy to rake in this summer’s basketball bounty is to traffic in an almost absurd strain of understatement. Perhaps no media conglomerate has been more upended by the coronavirus than the WarnerMedia unit, which earlier this year was rocked by the loss of the NCAA Men’s Div. I Basketball Tournament—before the pandemic struck, TNT sibling TBS was slated to air the Final Four and the national championship game—and then faced postponement of the NBA and MLB seasons.
The cost of sports’ vanishing act is etched in parent company AT&T’s earnings results. According to the phone company’s most recent quarterly filings with the Security and Exchange Commission, Turner’s ad revenue in the second fiscal period plummeted 37% to $796 million, down from $1.27 billion in the year-ago period. That loss came on the heels of a first quarter drop of 24% that was, in large part, caused by the cancellation of March Madness. Through the first six months of 2020, the Turner unit’s ad sales revenues are down 31% to $1.75 billion, a net loss of nearly three-quarters of a billion dollars ($774 million).
From a pure P&L standpoint, the sports-related ad revenue hit wasn’t entirely lethal. As AT&T notes in its second quarter 10-Q, the Turner unit in the first six months of 2020 saw sports costs plummet by some $1.13 billion, as a result of “the postponement of the NBA season, the cancellation of the NCAA tournament and other smaller items.” Among the expenses deferred were sports production costs and all requisite rights fees. (NCAA financial records put this year’s March Madness bill at $879 million. Per terms of their joint 2016 extension, CBS and Turner will continue to share the rights to the college hoops tournament through 2032.)
Of course, if the bubble ratings declines continue throughout the next two playoff rounds, make-goods will eat up a significant chunk of the available ad units, thereby eroding the overall sales revenue. Through the first full round of play, TNT’s live NBA coverage is averaging 1.92 million viewers and a 1.3 household rating, down 870,000 viewers versus its year-ago average (2.79 million) and off 28% compared to its analogous 1.8 rating.
That said, TNT’s playoff ratings have largely held up during its priciest windows. Per Nielsen, TNT is currently averaging 2.56 million viewers for its games airing in East Coast primetime, down just 11% from the year-ago 2.88 million. And that’s not just geographical bias talking: 48% of all TV homes are in the Eastern time zone (versus 16% out west, 29% in the Central zone and 7% in the rugged Mountain region). East Coast prime is where it’s at.
While the NBA media partners over the course of the playoffs may have to shell out more than a few audience deficiency units, TNT arguably has the best shot at putting together a pre-Finals hot streak. The Turner net is scheduled to carry the entirety of the Western Conference Finals, and if Vegas bookmakers are anything to go by, the top-rated rivals from Los Angeles are overwhelming favorites to meet up in the next round. Oddsmakers have the Clippers listed at +110 to win the West, edging the Lakers chances (+130). The Rockets are much further behind in the bookies’ estimation (+700), while the Nuggets (+1400) are gaining ground and the Thunder (+3330) are mere afterthoughts.
If LeBron James and Kawhi Leonard do meet up in the Western Conference Finals, TNT’s asking price will likely top $300,000 per :30. Should that series go the full seven, the network will have gone a long way toward salvaging an absolutely murderous fiscal year. Per SMI, TNT over the course of its 44 postseason telecasts in 2019 booked $268.8 million in ad sales—this despite being saddled with a less-than-favorable Eastern Conference Finals matchup that featured a team from a market with just 0.8% of all TV homes (Milwaukee) and another franchise that doesn’t even have a domestic footprint (Toronto).
Which isn’t to say that Disney’s TV group won’t make some noise of its own under the bubble. After all, ABC enjoys the rights to air the NBA Finals, and if the gods of heated roundball rivalries are in any mood to favor us with a seven-game Celtics-Lakers championship series, the Mouse House will be basking in auto, insurance and sneaker dollars. The last time these two antagonists met in the Finals (2010), the series went the distance, averaging 18.1 million viewers and a 10.6 rating on ABC. Game 7 scared up 28.2 million viewers and a 15.6 rating.
Hampered by the presence of the non-affiliated Raptors, ABC’s coverage of the six games of the 2019 NBA Finals averaged 14.9 million viewers and an 8.8 rating, down 15% and 12%, respectively, versus the year-ago Warriors-Cavs sweep (17.5 million/10.0). ABC charged advertisers an average rate of $671,697 per unit in last season’s title tilt.
While Disney didn’t break out its quarterly ad sales results, saying only that “total ESPN advertising revenue was down significantly in the third quarter due to the impact of COVID-19 and the absence of the NBA and other significant live sports programming,” the media unit’s overall revenue slipped 10% to $4.03 billion. As was the case with Turner Sports, Disney’s sales declines were offset by curtailed production expenses and delayed rights fees.
The delay of the NBA Finals caused sales at Disney’s media unit to fall 36% in June, per SMI estimates.
(This story has updated Western conference champion odds following Denver’s Game 7 win over Utah.)