Long article, but basically explains why NBA is done with WBD and why James Dolan gonna
at this new media rights deal.LAS VEGAS -- The NBA is on a hardline collision course with Warner Bros. Discovery, Charles Barkley or perhaps even the Knicks. But hurt feelings or not, tomorrow is the league's official get-even (or get rich) moment, when 30 Board of Governors will be asked to vote yay or nay to $76B over 11 years. At worst, it's going to be 29-0 -- with one abstention -- in favor of excess.
Finally, after half a year or more of media rights negotiations, the NBA is about to put a bow on a trio of bids that prove the league is the "growth stock" Commissioner Adam Silver always claimed it to be. ESPN will pay roughly $2.6B annually, NBCUniversal $2.5B annually and Amazon $1.8B annually -- leaving a 40-year but now out-in-the-cold partner, WBD, threatening to exercise an archaic matching rights clause from 2002.
Lawyers live for these moments, and the NBA has one of the best in its lead media rights negotiator Bill Koenig, who wrote the matching right language himself 22 years ago, nearly removed it 10 years ago and who, if all else fails, may have to litigate against WBD to prove its wording is outdated.
For instance, sources have told SBJ that WBD -- although it believes it can match the portions of NBC's and Amazon's bids that contain games it currently televises -- realizes it is both fiscally and legally prudent to try to just match Amazon, if they're going to match at all. But because Amazon is a streaming entity, the NBA is expected to say a linear network such as TNT is not one in the same and that a match would be null and void.
"That's where lawyers could enter and start an argument," said one source close to the WBD. "Or maybe they would just call it a negotiation or a conversation. A [lawsuit] is certainly one of the scenarios. I can't speak to the likelihood of it happening. I can't even couch, is it a 50% likelihood? Or 10% or 90%? No one can really couch that because it's all going to be contingent upon factors preceding it, meaning: What are the deals? What will the NBA come back to them with? What do those conversations consist of?"
What the NBA is going to do Wednesday, the day after the BOG approves the deal, is turn the bids over to WBD, wait for a response and have their lawyers on speed dial. Sources have said Silver "100% expects to be sued," which is why Koenig will specifically be standing by.
"Bill Koenig is a lawyer's lawyer," said one of his acquaintances. "Listen, Bill runs every scenario out. Like, if it's a 3% scenario, he runs it 100%. With Bill, that's how prepared he is."
One of those scenarios -- and perhaps the wisest scenario for Turner, according to sources -- is for WBD to match the Amazon streaming package with its own streaming platform, Max. In other words, WBD could tell the NBA that they'll stream Amazon's exact package (Thursday night games, Friday or Saturday night games, the Emirates NBA Cup, alternating conference finals, early round playoff games, international rights and WNBA games) strictly on Max instead of on linear TNT.
The NBA would surely say that's not a match in totality because Amazon's ad-supported, 200 million world-wide reach purportedly dwarfs Max's, whose number is currently unavailable. The league could also point to Nielsen data from May, which showed that Amazon Prime Video accounted for 3% of how Americans watched TV among all platforms, while Max was at just 1.2%
To close that gap, WBD could propose simulcasting all Max games on TNT, which is available in 220 countries/territories. But the league, according to sources, has definitively moved on from Turner, which has fans of the iconic studio show "Inside the NBA" asking: Why?
The answer is both personal and business. About a year and a half ago, WBD's CEO David Zaslav publicly said the company didn't need the NBA. And as much as some TNT employees believe that is a non-factor, it set a contentious tone, according to sources. "This is somewhat about ego," a source close to negotiations said. But those same sources said it's more that Silver believes Turner is a dying media platform compared to Amazon, and that the commissioner considers the customization and global reach of streaming to be a must-have.
Sources also said Amazon is benefitting from a key and fortuitous relationship between Koenig and Amazon's Principal of Sports Partnerships Andy Oh, who literally used to work side-by-side with Koenig during a 12-year sting at the NBA. The value of Oh now negotiating with a former associate, directly on Amazon's behalf, should not be underscored.
Not that the NBA's other network relationships aren't solid, either. Sources said Silver is still a hearty believer in ESPN, that its direct-to-consumer ambitions make it an obvious long-term "A" partner. But sources also said Silver covets the idea of NBC being the first free over-the-air network to telecast multiple regular season NBA games a week (Tuesday and Sunday under this new proposal), considering ABC does one a week at most. All of that adds up to TNT's demise, even though Turner studio analyst Barkley went on the offensive last week, calling the NBA owners "greedy" while hoping for a "last-minute reprieve."
Of course, all of the current WBD drama would be moot if Koenig and Co. had tried eradicating the matching rights language the last time the NBA's media rights deal was negotiated in 2014. In fact, sources said memos were sent internally throughout the league office then, urging executives to negotiate it out of that year's deal with ESPN and Turner or at least reexamine it. "It just felt weird to people," one source said. "They normally would never offer [matching rights] to anybody." Instead, the league left it alone, considering ESPN and Turner were eager to quickly wrap up an aggregate $26B deal. The source said the NBA just "had no desire to disrupt the apple cart. Keep the gravy train running."
Either way, the league is about to triple its 2014 rights number through these three new deals, although that could still lead to contentious moments during Tuesday's BOG meeting from a team such as the Knicks. Local media rights are more lucrative for some teams than others, and the Knicks -- who are believed to have a local media rights payout of roughly $100M via the MSG Network -- will likely lose significant money with so many exclusive national telecasts coming to the NBA's future.
Last season, for instance, the Knicks lost 11 MSG games due to national TV appearances, and -- when NBC, ESPN and Amazon start televising exclusive games every night of the week by January of 2026 -- an appealing NBA team like the Knicks could lose as many as 18 local broadcasts, sources said. The Lakers, for instance, earned $3M in revenue for every local broadcast last season, so losing 18 would cost them $54M. The now-valuable Knicks might now lose even more than $54M in local broadcast money, which is why both the Lakers and Knicks could use tomorrow's BOG meeting to squawk at Silver about the high number of national games -- though it is more likely to be the Knicks alone.
Lakers governor Jeanie Buss notoriously sides with Silver at BOG meetings, sources said, whereas Jim Dolan of the Knicks has openly opposed the commissioner, resigned last year as a member of the influential advisory/finance and media committees, and no longer attends BOG events. And while he probably would not instruct his replacement -- new COO Jamaal Lasane -- to vote "no" on the new media rights deal, Dolan could urge him to abstain from the vote or, at the least, push back with pointed questions.
Silver's answers could very likely harken back to the late Commissioner David Stern, who -- when he used to be asked why he divvied up national TV packages -- would say he was in favor of "slicing up the salami. ... You can slice it thicker, you can slice it thinner, there's various ways to go about it."
It was classic Stern, considering he used to work at his parent's deli in his formative years. So, in the end, that's what Silver is doing tomorrow, and then some. He's slicing up a salami between ESPN, NBC and Amazon, figuring the audience will eat it all up
