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MBPT Spotlight: Media Buyers To Prospective NBA TV Rights Holders: Our Clients Won’t Help Foot The Bill

Media buyers aren’t particularly interested in which networks get the next NBA TV rights deals, but they do want one thing known: Their clients aren’t going to help foot the bill with any kind of exorbitant ad rate hikes.

There has been lots of speculation that the NBA will follow in the footsteps of MLB and the NFL and seek a doubling of the rights fees under the current deals which expire following the 2015-16 season—$7.5 billion for eight years being shared by ESPN/ABC ($3.9 billion) and Turner ($3.6 billion).

The networks are free to ante up whatever they choose to win the rights, but buyers say if the networks take a hard line in negotiating ad partnership fees and commercial time prices following the next rights deals, there are plenty of other sports telecasts to move their clients’ dollars into.

“We’re not going to back up the Brink’s truck and help pay for the exorbitant amounts the networks are going to pay for the next NBA TV contracts,” said one buyer, who did not want to be identified. “We aren’t going to pay 20% ad rate increases beginning with the 2016-17 season just because the networks shelled out a massive amount of money and maybe overpaid for the NBA rights. The networks have to understand that while the rights fees are soaring, the ratings for the games are not increasing in the same proportion. Live sports is compelling content, but at the right price.”

Another media buyer who did not want to be identified, adds, “We just can’t walk away from the NBA telecasts for all of our clients. Some will have a strong desire to be in, no matter what. But for most of our clients who want to reach a sports audience, there are a lot of other sports telecasts on during the months that the NBA is playing and the networks have to remember that. We could move more money into the NFL, college football and basketball, the NHL and NASCAR.”

Media buyers also say that it’s not going to matter much to their clients whether the incumbent networks renew their deals with the NBA or if Fox (with Fox Sports 1) and NBC (with NBCSN) become NBA TV rights holders.

“All of the networks have pretty much the same production quality,” one buyer said, “although the on-air talent, particularly in the pregame and halftime shows can be important to some advertisers. Turner may have an advantage there.”

As far as viewers go, the cable telecasts on ESPN and TNT are relatively close. Last season, ESPN’s regular season games averaged 1.7 million viewers, while games on TNT—which airs exclusive Thursday night NBA doubleheaders—averaged 1.9 million. Both were down slightly from the 2012-13 season when ESPN averaged 1.8 million viewers and TNT averaged 2 million.

Last season’s viewership on ABC, not including the NBA Finals, was down considerably. ABC averaged 3.6 million viewers for the regular season, compared to 4.7 million for the 2012-13 season, a decline of about 26%, and the lowest average audience since the 2007-08 season. However, the NBA Finals on ABC averaged 15.5 million viewers per telecast, up from 15.1 million in the 2012-13 season.

The current NBA TV rights holders do have exclusive negotiating windows with the NBA that will remain in effect through the upcoming season. While the NBA would not comment on the negotiations, sources familiar with the situation say the league has been holding preliminary conversations with ESPN/ABC and Turner, and that the NBA’s first choice would be to renew its TV rights deals with the incumbents.

The Digital Factor

“The league has a 30-year relationship with Turner and 12 years with ESPN and lengthy relationships like that you don’t give up so easily,” said one source familiar with the talks. “Turner also currently manages all of the NBA’s digital assets and digital is going to be a very important part of the new rights deals.”

Beyond TV rights, the new NBA deal is also going to include NBA rights for the networks on many other platforms including mobile, video-on-demand, social media, TV Everywhere and even local market game telecasts. “The decision will more than likely come down to more than just money,” one source said.

The NBA is said by sources to be pleased with how Turner has managed those digital assets and is also pleased with Turner’s talent on both TNT and on NBA TV. “On-air talent matters and Turner is the gold standard for on-air NBA talent,” said a source familiar with the NBA thought process. “Meanwhile, ESPN has been going through some ongoing experimentation to try to find the right on-air mix of talent.”

ESPN, however, has something to offer that TNT doesn’t—SportsCenter, which gives the NBA tons of exposure beyond lives games during its lengthy season. Fox Sports 1 and NBC Sports Network could offer NBA exposure on their nightly results shows, should they win the NBA rights, but neither right now has the viewership of SportsCenter.

Plus, sources familiar with the mindset at ESPN say the network is dead set on not losing another major TV rights deal to Fox, which outbid incumbent ESPN for the World Cup beginning with the Women’s World Cup in 2015 and the Men’s World Cup in 2018. That was a closed bidding process, not a negotiation, and Fox surprised ESPN with the amount it bid; ESPN was not allowed to match it under FIFA rules.

“Fox just blew ESPN out of the water,” said one source. “ESPN underestimated what they would bid. But for the NBA, which involves open bidding, ESPN is of the mindset that no other network is going to outbid it. And it plans to use the power of all of its media platforms beyond TV to help its case.”

For now, while the exclusive window is still in effect, Fox and NBC cannot talk with the NBA about the rights, and neither network is commenting.

An NBC spokesperson would only refer to a comment made by Mark Lazarus, NBC Sports Group chairman, in April when he spoke on a panel, where he said, “We love sports. We are already partners with the NBA through our regional sports networks. We have great relationships with those teams and with the league. They are in relationships right now with other partners, but if the opportunity were to arise, certainly we would talk with them as we are all old friends.”

Why Fox Has Game

A deal with the NBA would certainly help put Fox Sports 1 on the map since it would give the sports cable network primetime programming for seven months out of the year. “Fox winning the World Cup gave Fox and Fox Sports 1 programming for one month every four years,” one industry observer said. “Not only would the NBA give Fox Sports 1 regular primetime programming, but Fox could also do Saturday night or Sunday games after football season.”

Sources say while the NBA would like to renew its deals with its current partners, the league has not yet decided if it might want to add another TV package, much like the NFL did recently.

But one media buyer said, “I don’t want to see a third network NBA package. That would be oversaturation and further dilute viewership.”

So how might the negotiations play out? The NBA is not expected to do deals of less than eight years, the length of the current rights deals, and is said to be amenable to doing deals of 10 years or more.

While some sources believe the NBA is not going to make the negotiations a pure money play, others think the league will at least let the exclusive negotiating window run out and put the packages in play for everyone interested to bid on.

“I think the NBA will test the waters and let that exclusive period run out,” said one observer familiar with the situation. “They aren’t going to lose ESPN and Turner if they do that, but it will allow them to better see what the market will bear.”