Wednesday, October 29, 2014

How TV's Sports Addiction Could Destroy Its Business

http://www.theatlantic.com/business/archive/2014/10/how-televisions-sports-addiction-could-ultimately-destroy-its-business/381147/

 Over the weekend, the NBA signed a deal with ESPN and TNT worth $24 billion between 2016 and the 2024-2025 season.  The association got this deal for a couple of reasons.
  1. The decisive leadership of the new commissioner Adam Silver, most known for the handling of the Donald Sterling racism issue, is making the NBA something fans can watch and respect at the same time.
  2. The league's superstars (LeBron James, Kevin Durant, Blake Griffin, Chris Paul) are international stars that can make the NBA more marketable globally.
  3. The NBA's rating have grown in the last ten years.
 In the new deal, the NBA will make 10% more money from television networks despite of what the averages imply (jumps from $930 million to $2.6 billion, which would nearly be a 3x leap).  This deal comes when the costs of sports rights on television, radio, and digital devices is growing by 19% a year, and the cost of basic cable has been increasing by 6% annually since 1995.

I think this deal is good for the NBA even if expanded basic cable keeps getting more expensive and unaffordable.  ESPN is strong enough to handle any threat to pay-TV's business by directly charging its core fans.  Consumers and potential consumers will purchase TV bundles because of live sporting events.

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4 comments:

  1. UnknownNovember 24, 2014 at 1:16 PM

    This is a great thing for the NBA. It finally looks like the NBA is becoming as popular as the NFL and MLB. You made a great point about Adam Silver and how he handled the Donald Sterling situation. If he would of handled that any differently this deal would not have been made.

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  2. UnknownNovember 24, 2014 at 4:56 PM

    This is very good news for the NBA. The fact that the NBA is trying to globalize will most likely increase it's popularity, and possibly increase the popularity of the sport of basketball internationally.

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  3. EmmaNovember 24, 2014 at 5:22 PM

    I also agree with you that the deal is a good thing for the NBA and the networks. The influx of money will allow the NBA and TNT to allow new deals for consumers.

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  4. BillyNovember 24, 2014 at 6:50 PM

    The NBA's popularity has been going up the past few years. I am not surprised they made this huge deal. I think it is good for the league to make these deals to expand their popularity

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