NBC courting the NBA with a $2.5 billion media deal that could permanently bench TNT

Comcast’s NBCUniversal could nab the rights to a package of NBA games when the league’s current media deal comes to an end next year.

NBC is preparing a $2.5 billion bid, according to the Wall Street Journal. The network hasn’t carried an NBA game since 2002, but now it’s planning a comeback at a time when live sports rights are gaining renewed importance in the media industry. Sports rights are some of the last bastions of linear cable ratings, which have been in consistent decline for years as a result of cord cutting and streaming. For cable channels, live sports come with a ready-made audience who will reliably tune in when they air. Streamers also covet live programming because the regular interruptions make it ripe for commercials, which means they can show ads to subscribers in ad-supported tiers.

All that has pushed media rights valuations to sky-high levels. Warner Bros. Discovery’s current deal averages out to about $1.2 billion a year, much lower than the figure NBC is reportedly offering. NBC’s bid would likely mean that Warner Bros.’ TNT would miss out on NBA games, according to the Wall Street Journal.

The NBA is looking to bring in its first-ever streaming partner to stay abreast of the viewing habits of consumers as they gravitate away from cable. As a result the NBA plans to add a third media partner to its existing television deals with Disney and WBD (or possibly NBC). That would mean all of the NBA’s TV broadcasters would walk away with fewer games in the upcoming media rights deals, despite having to pay more to carry them.

Current reports indicate the NBA is in advanced talks with Amazon for a package of games. Amazon CEO Andy Jassy has been open about the company’s interest in acquiring even more live sports rights. Under Jassy, Amazon has already shown a willingness to spend for major, blue-chip sports rights, getting the rights to the NFL and European soccer. Netflix is also said to be eyeing the NBA. No company embodies the industry-shifting strength of streaming quite like Netflix, which is rumored to be interested in the NBA’s new In-Season Tournament that started this year. If that were the case, it would bring a heavyweight streamer into the fold, further weakening traditional television’s grasp on one of sports’ most appealing properties.

Investors did not react well to the prospect of WBD missing out on the NBA. WBD’s stock fell 10% after the news broke on Tuesday. At press time, the stock sits at its lowest price ever, $7.62. In comparison, the stocks of streamers potentially courting the NBA have been soaring. Amazon is up 77% to $182.68 over the past 12 months, while Netflix’s rose 71% over the same period and sits at $557.50.

TNT has aired NBA games since 1984. Its popular studio show Inside the NBA, featuring Charles Barkley, Shaquille O’Neal, Ernie Johnson, and Kenny Smith, has become a staple of the channel’s coverage and a critical brand asset for WBD. Losing its NBA rights would be a major blow to WBD because it would make negotiations with cable providers harder, according to an analyst note from Bank of America.

“Flagship content, such as an NBA, are typically used as a hook for negotiations with distributors that can drive carriage rates across the rest of the portfolio,” the note reads.

That’s to say nothing of the fact that TNT itself would be behind the eight ball in carriage fee negotiations. BofA says TNT “earns by far the highest affiliate fee of all [WBD’s] cable networks” with an estimated $3 per subscriber. It would be unlikely to command that charge without the rights to NBA games. In a note released Tuesday, shortly after the news broke, Citigroup analyst Jason Bazinet estimated TNT’s carriage fees would fall by about 45% and that it would lose out on about $270 million in ad revenue.

The alternative for WBD is to overpay for the NBA. In the past, WBD CEO David Zaslav has been reluctant to do so. “We don’t have to have the NBA,” Zaslav said in 2022. Whether that was a negotiation tactic or a glimpse into the company’s content strategy is unclear. Following that, Zaslav repeatedly softened his stance on the NBA, saying he considered it an important asset for the company. This year WBD began putting some NBA games on its Max streaming platform. Doing so, according to Zaslav, would help Max differentiate itself by having a slate of live content, including sports and news channel CNN, that competitors lacked. Without its marquee sports property, WBD’s plans for a sports streaming joint venture with Fox and Disney could get complicated.

NBC’s bid came after WBD’s exclusive negotiating window ended on April 22. WBD does retain the right to match any incoming offer, according to a person with knowledge of the matter.

Comcast and NBC would be able to add the NBA to its existing roster of sports competitions, which already include the NFL and the Olympics. Earlier this year, Comcast tried its hand with live sports on streaming when it put an NFL playoff game on Peacock. The results were gangbusters, with Peacock adding 2.8 million new subscribers as a result. If Peacock did the same with the NBA it would help Peacock further grow its subscriber base and reduce the likelihood they’d leave the platform, BofA said in its note. Although the bank was a little more muted on the overall benefits of a potential NBC-NBA deal, calling the impact “mixed.”

The NBA’s other broadcast partners include Disney, across both its ESPN and ABC channels. Disney is expected to renew its NBA rights contract for about $2.6 billion a year, an increase from the $1.5 billion it pays now, according to the Wall Street Journal. Disney currently has some of the league’s best assets including the NBA Finals, which air on ABC.

WBD declined to comment. The NBA, NBC, Amazon, and Netflix did not respond to a request for comment.

This story was originally featured on Fortune.com