Today’s column is from Sportico media reporter Anthony Crupi.
When thinking about escalating rights fees and the near-mythical sums the networks are forking over for sports properties that draw fewer viewers than even the dopiest network sitcom, there are two things worth keeping in the back of your mind:
1) It’s not your money.
2) No matter how bad the deal may seem on paper, there’s almost no way it will turn out to be the worst sports-rights investment of all time, as that dubious distinction in all likelihood will never be wrested away from CBS’ 1990-1993 pact with Major League Baseball.
If Thing 1 is rather self-explanatory, Thing 2 could do with a little contextual fiddling. Without getting too far into the murk of ancient history, the Tiffany Network lost about a half-billion dollars in what one rival TV exec—ah, hell, it was Dick Ebersol—characterized as “the biggest write-down in network sports history.” As it happens, CBS’ final go-around with MLB coincided with its return to the top of the primetime ratings heap after a few seasons of basement-dwelling, although baseball’s contribution to the regime change was negligible.
Also not doing much in the way of heavy lifting was the animated comedy Fish Police, which bowed during Year 3 of the CBS-MLB tie-up. The thing about Fish Police is, the pilot featured a bivalve named “Clams Casino” who owned a gambling emporium, and while this has very little to do with the point we’re trying to make here, it’s still worth thinking about. Maybe.
If the deal did very little to grow the sport—CBS’ Saturday afternoon MLB schedule was so erratic that fans never quite knew if they were about to while away the lazy summer hours in the company of Inspector Gadget or Chuck Knoblauch—the $1.06 billion deal made perfect sense to commissioner Peter Ueberroth and the league’s owners. That CBS acted as decisively as it did can in some ways be chalked up to the burgeoning sense of panic that was beginning to settle in at the Big Three networks. In almost no time at all, cable had knocked broadcast’s share of the primetime audience from 90% to 68%, and for the first time ever, the rabbit-ears crowd was staring down an existential crisis. Something had to be done, and in time-honored fashion, the quickest way to accomplish that something was to splash ungodly sums of money around.
Plus ça change. Back then, shows like SportsCenter and Rugrats were stealing impressions from the traditional TV marketplace; today it’s the latest gloss on the Star Wars canon and whatever the hell The Umbrella Academy is supposed to be. Differences in degree lead to differences in kind. Water gets colder and colder, and suddenly it’s ice. Clams Casino gets older and older, and suddenly he’s dead. TV keeps losing impression after impression to the streaming services, and suddenly you’re paying something like $90 million per year to re-up with a très continental auto racing package that currently costs $5 million.
Of course, the streamers who are doing their damnedest to kill off TV are also driving the rights fees up into the nosebleed latitudes. While the strategy doesn’t always pay off on the deal-making front—Amazon is said to have bid as much as $25 million more than ESPN for the Formula One package, and its proposal caught the John Heisman stiff-arm—it’s been wildly successful as far as the whole make-the-other-guy-hemorrhage-money scheme is concerned. Apple’s 10-year, $2.5 billion MLS deal is at once wholly disruptive and almost weirdly noncommittal, inasmuch as the sum agreed upon represents about 0.1% of the tech giant’s $2.2 trillion market cap. The same applies to the annual $1 billion fee Amazon will pay for the rights to the NFL’s Thursday Night Football, although in that case, the networks were perfectly happy to watch the primetime package topple into Jeff Bezos’ digital shopping cart.
What this all means in the near term is that Adam Silver will continue to wear that canary-swallowing grin through the end of the NBA’s current $24 billion contract with Disney and Turner Sports in June 2025. While the odds of either incumbent being shouldered aside are currently listed as slim:none—by 2025, Turner will have been in business with the NBA for 41 years, while ESPN/ABC will have reached the 23-year mark—it’s hard to imagine a scenario in which an Amazon or an Apple doesn’t put in a bid, if only to drive the price up even higher. (No less an authority than David Levy has said he expects the NBA to nail down a fee that’s two-and-a-half times what the incumbents pay now.) It’s basically an arms race, only rather than stockpiling more weapons than your ideological foes, the idea is to force them to spend so much on artillery that there’s nothing left in the budget to feed the troops.
The thing is, the linear-TV networks can’t afford to let the streaming set make off with all their sports properties, because those are the only programming options that still draw an audience. That audience is also far more likely to watch the commercials; because nearly 98% of all sports deliveries happen in real time, the games are practically DVR-proof. Meanwhile, entertainment programming is collapsing in on itself like a dying star, as the average primetime broadcast series is now eking out around 652,000 adults 18-49, or one-half of a ratings point, while the cable numbers are so bleak that Warner Bros. Discovery has slammed the door on further scripted development. (Cable’s getting it from all sides. Fewer than 68 million homes now subscribe to the bundle, which marks a decline of 26% versus the analogous period in 2018. At its peak, the bundle reached north of 100 million U.S. households. At present, only 56% of TV homes subscribe to a bundled pay-TV package. Four years ago, penetration was a relatively hale and hearty 78%.)
As much as just about anything can happen between now and when the NBA negotiations begin in earnest, the current state of affairs makes for a compelling argument against reducing the league’s national TV exposure. Even as pay-TV subscriptions continue to spiral, the tube remains the platform of choice for the top-tier U.S. sports leagues. Sustained relevance buys a whole lot of loyalty, and when a program is shunted from the living room to behind a firewall, the audience starts disappearing like Barret Robbins in the hours leading up to Super Bowl XXXVII. Howard Stern made himself $500 million richer when he jumped from terrestrial radio to Sirius XM, but in doing so, the self-described “King of All Media” effectively checked himself into a cultural Witness Protection Program. Mention Baba Booey to a Gen Zer and he’ll think you’re quoting the radio edit of a Cardi B song.
Which isn’t to say that Amazon and Apple aren’t going to try and carve out a space for themselves with the NBA, or that Silver and the owners may not have a change of heart two or three years from now. If nothing else, there’s an awful lot of money floating around out there. Together, the two digital players amassed some $834.8 billion in revenue last year, and even a media adept like Silver may find it difficult to say “no thanks” to the people with the money cannons.
Of course, all an Amazon or an Apple need do to eliminate any misgivings about a streaming-only distribution scheme is buy a TV network outright. The parent companies of ESPN and TNT may be too big for a takeover bid, but grabbling, say, Fox or CBS would put about as much strain on the Amazon and Apple war chests as the purchase of a yard-sale toaster oven might have on your own wallet.