Nike (NKE) - Get NIKE, Inc. (NKE) Report shares fell Tuesday after China's state-backed broadcaster said it would stop airing NBA games as the fallout from a tweet from the Houston Rockets general manager threatened reprisals against U.S. companies operating in the world's third-largest economy.
The CCTV Sports channel of China Media Group said it would suspend NBA broadcasts, which attracted some 800 million viewers last year.
The move came after NBA Commissioner Adam Silver defended Daryl Morey for earlier this week sending a tweet that expressed support for the pro-democracy demonstrations in Hong Kong. Morey later apologized for the tweet.
Tencent Holdings (TCEHY) , which cut a deal to broadcast NBA games online in 2015 and renewed it in July for a reported $1.5 billion, said it would join the CCTV blackout.
Nike told investors last month that China growth "continues to set the pace" for the company's global growth, lead by the iconic Air Jordan brand, which helped drive a 27% year-on-year increase in first-quarter sales.
In terms of online sales, the numbers were even more compelling, with digital revenue rising 70% from the year-earlier period, thanks to partnerships with online giant Tencent's Tmall and WeChat.
- China State TV Suspends NBA Broadcasts as Houston Rockets Tweet Dispute Deepens
Nike shares traded down 1.5% to $91.75.
Reports from China suggest Alibaba Holding Co. (BABA) - Get Alibaba Group Holding Ltd. Sponsored ADR Report has already removed any reference to the Houston Rockets from its online search engines, while others are said to have removed NBA products from e-commerce websites.
Nike's China-growth strategy, coupled with its decades-long connection with professional basketball, could make it vulnerable to similar consumer boycotts in the weeks and months ahead.
That's particularly so if trade talks between Washington and Beijing, which are scheduled to resume this week, collapse amid the increasing acrimony between the two countries.
"Historically, we've effectively navigated through excessive duties, and we're confident that we'll continue to do so under the current dynamic," Chief Executive Mark Parker told investors on a conference call following the group's first-quarter earnings last month.
"In China, specifically, we continue to extend Nike's lead. In our key cities of Beijing and Shanghai, we serve a generation of digital-first consumers and we support their love of sport by helping to grow participation through grassroots programs."
"As I've said before, Nike is a brand of China for China and the results continue to prove it out. We've driven double-digit growth in Greater China every quarter for more than five years," he added.