In the ever-changing world of broadcast television, sporting events remain a constant. While people stream a ton of content, save shows on their DVRs, and generally watch very little programming in real-time, they still watch live sports as they air.
That has made pretty much any sport with a following a valuable broadcast commodity. The National Football League (NFL), of course, sits at the top of the sports pyramid with Sunday and Monday Night Football ranking among TV's top programming each week.
NBA games don't generally get anywhere near the same audience NFL games get, but they draw viewers who watch in real-time, meaning that they actually see the commercials. In addition, live sports draw demographics that advertisers want which means the companies airing them can charge higher ad rates.
Walt Disney (DIS) airs NBA games on both ESPN and ABC in a deal that lasts through the 2024-25 season. That deal profitably fills countless hours of programming with live games. It also gives ESPN all sorts of ancillary programming and the right to air highlights across its channels.
It's an important deal for Disney, but it's not one that the company will renew at any price. That could have a ripple effect across not just pro sports, but the quasi-sport of pro wrestling including All Elite Wrestling (AEW), which airs on Warner Bros. Discovery's (WBD) TNT and TBS.
What's Happening With ESPN and the NBA?
Disney CEO Bob Chapek addressed the upcoming NBA rights negotiations during his company's third-quarter earnings call.
"As you know, we've had a great history with the NBA. Really proud of our partnership there. And the past season and the ratings for the Finals have been absolutely extraordinary," he said. "So we're interested in a renewal with the NBA. But like all of our decisions that we make in terms of content, we'll only do it if it's accretive to shareholder value."
Basically, given the financial pressures Chapek and Disney face,, he's not going to make a deal with the league where ESPN and ABC can't make money. The CEO made it clear he wants to be in the NBA business, but not at any price.
"And I think that remains the overall guidance, whether you're talking about India with IPL, whether you're talking about college sports, whether you're talking about Formula One racing or you're talking about NBA. So we have an interest to do that. We're really happy with our portfolio of sports rights that we have. But of course, the continued relationship with the NBA would be something that would be very attractive to us," he added.
Why Is the NBA/ESPN Deal Good News for AEW?
AEW has turned itself into a viable rival to World Wrestling Entertainment (WWE) in its nearly three years of airing on TNT and TBS. The company, however, only gets a fraction of the television revenue that WWE gets from its deals with Comcast (CMCSA) and Fox (FOXA) .
When it comes to sports rights -- especially for sports that aren't the NBA and the NFL -- getting a much better deal often comes down to multiple channels needing the programming. Having a second bidder (Fox) drove up the price Comcast paid to keep "Raw" on USA Network while leading to Fox paying a premium to air WWE's other prime-time show "Smackdown."
AEW has greatly outperformed its contract with TNT and TBS, but whether Warner Bros. Discovery will offer a large rights increase remains a question given how much that company has been cutting its budget. If Warner Bros. Discovery has to pay a big increase to keep its own NBA package, it may decide that it only wants AEW at a certain price.
Conversely, if either ESPN or TNT loses the NBA, a steady ratings performer at a relatively cheap price like AEW becomes more attractive. ESPN could also make a deal for AEW's pay-per-views like its deal with UFC, which has proven profitable for both companies.
It's possible both ESPN and TNT retain the NBA and that leaves AEW looking for a second bidder to drive its price up, but if one or the other loses basketball then pro wrestling all of a sudden looks like a much safer bet.