THB #550: Waiting On The Eclipse To Pass

When will this filmed entertainment industry eclipse pass?

I would guess we will feel a new normal around the end of 2026 or so.

Right now, not a single major content delivery company - with all that means before they get to delivery - has a clear path to where they want to be in the next couple years. That’s right. Not even Netflix.

Wednesday’s news of the impending NBA rights agreements in the Wall Street Journal was a stark reminder of where things are… even more so than the Paramount Global “Give me my billions and let me get back to my life and not having idiot gossip columnists who I wouldn’t let in the gate of my house if they were impaled on my fence bleeding to death calling me, “Shari” like they know me” saga.

Paramount is not a shiny object. They are a yard sale. Other companies see all kinds of things they could take home for the right price… but they don’t really need any of it. We all hope, earnestly, that David Ellison isn’t “stupid money.” But we won’t really know the answer to that until he flips Paramount into a forward-moving successful operation… which it really hasn’t been, despite enormous industry scale, for the last 15 - 20 years.

But the NBA… sports rights… super shiny… now more than ever.

The entire WSJ story is worth reading, but here is the simple version…

Current Deals
TNT - $1.2 billion a year
ESPN - $1.5 billion a year

The Reported Rough Numbers For The New Deals
ESPN - $2.6 billion - fewer games, keeping the championship games
NBCUniversal/Peacock (replacing TNT) - $2.5 billion, 50 games on NBC, 50 games on Peacock
Amazon (new deal extracted from the schedules of the old deals) - $1.8 billion

The NBA has created new points of focus, like the in-season tournament and play-in games for the postseason… both of which are part of the new Amazon package.

In making the barely-profitable-for-the-2-rights-holders $2.7 billion into a $6.9 billion a year haul, the NBA assures that they will be a loss leader for each of the 3 rights holders, with ratings significantly less impactful than the NFL.

And the sense in the world is that having these rights is an absolute requirement for building each of the rights holders’ position in the television future.

Likewise, the NFL has continued to make up more games and spread themselves across more rights holders. For the next season, that means, CBS, FOX, NBC, ABC, Amazon, Peacock (aka NBC Streaming), Netflix, and with Sunday Ticket, YouTube/Google. Hail, hail, the gang’s all here. Total value, about $12 billion a year.

Sports are the only perceived dry land in television with advertising right now. So the majors are taking advantage. At the same time, the MLBaseball structure of local production delivering most of the games every year has fallen apart a bit with Diamond/Bally’s going into bankruptcy.

Nationally, MLB has 7 different delivery outlets: ESPN/ABC, Fox/Fox Sports, TBS, AppleTV+, MLB Network, Peacock, and The Roku Channel. The total of the national deals is just over $2 billion a year. The local rights and advertising are worth about $2.5 billion.

My concern about all of this - for the highest level of winning with television rights these days - is that the major sports leagues are doing what every suddenly super hot segment in this industry seems to do… getting so greedy so fast that the opportunity gets burned out long before it should.

Personally, I pay for a lot of this stuff. I have been a Sunday Ticket subscriber from the 1st season and a MLB.TV subscriber from, I think, its 2nd year of existence. I am a Dolphins and a Yankees fan. Every year, the Sunday Ticket offers fewer and fewer games for the same or more money. MLB.TV is a massive bargain compared to Sunday Ticket. And because of the local structure of game production, I have a relationship with the broadcasters for “my” team.

As a resident of Los Angeles, I haven’t seen an Angels or Dodgers game on TV, aside from the post-season, in years now. I go to those stadiums more often than they are available on local TV. At least with the NFL, local teams have always had their games available on local TV. With MLB, the only Yankee games that get blacked out in Los Angeles are games with the Angels (or occasionally the Dodgers)… which sucks. I don’t even have the option to pay more for that access. Dumb.

Isn‘t what has made these sports rights more and more valuable the live games combined with the fan’s relationship with the games, their teams, and the network broadcasters? In 2024, fans are now doing all that work - if they choose to - for themselves. Flipping around week after week from one broadcast team to another, one style of production to another, one paid outlet to another. Even with the 2 Broadcast networks that still have the majority of games, a couple years ago, the NFL broke their long-held structure of the AFC on CBS and the NFC on FOX… allowing themselves more scheduling flexibility while destabilizing the experience for viewers. Not only are you unsure where your game is every week, but again… your relationship with the announcing teams is undermined.

None of this is making the televised NFL experience any better. It’s just putting more money in the pockets of NFL owners and players as the going rate for a top-third-of-the-league QB is now $50m a year and Wide Receivers are now getting $35m a year.

And we are just starting to see Streamers assert pricing muscle… which may end up weaker than expected over time.

I don’t mind Netflix having the 2 Christmas games, buying them from those greedy fucks at the NFL who are sucking in a few hundred million more on CHRISTMAS DAY!!! Ho, ho, ho! Nice gift to the fans.

Do the majority of American TV households have Netflix already? Yes. A lot more than Peacock had when they got a playoff game last season. But that’s not the point. If you force the consumers to wonder where your games are every week and create a gun to the head to add paid subscriptions in see everything that used to be on Broadcast TV, eventually they will put that gun in their mouth or your mouth and pull the metaphoric trigger.

This is all an implosion waiting to happen. No one seems to want to give an inch. Bundled channels - via Cable, Satellite or Virtual Cable - aren’t getting cheaper, moving quickly towards the unhappy place that has caused all the cord cutting in the first place. All of these Streamers are looking to increase prices in the next couple of years to make up for all these rights expenses.

Is there anyone left claiming that Disney made a mistake getting out of the Indian Cricket business? You might want to consider that series of transactions on your way to hyping up the increasing sports rights madness. Cricket meant a giant footprint in India… but there was almost no price elasticity and by far the largest group of subscribers were only able to spend a couple dollars a month.

Back when FOX broke into the NFL package business, it was a legitimate way to build that TV network business. NBC, who lost the package, didn’t go under as a result of losing it. These days, the argument has become that you MUST have these loss leader level sports spends or you are going to disappear from the face of the earth. It‘s just not true. Sports is a piece of business. If you can use it effectively, great. If not, find another avenue that fits better.

But in the end, we are going to have a “musical chairs” moment, above and beyong sports rights, and it won’t be, as the media fantasy goes, a neat series of M&A events creating a clear set of 3 or 4 or 5 SuperStreamers. It’s going to be another bloodbath.

But I am getting farther away from my original theme…

I’ve been going on about how The Best Segment of content is being treated, aka self-screwing.

All the other content is being treated like the ugly stepsister in the basement of a dark fairy tale.

And the big problem is… this isn’t wrong.