John Kosner Spoke with Mike McCarthy of Front Office Sports About Sports Rightsholder Streaming Concerns

Original Article: Front Office Sports, by Mike McCarthy, February 9th, 2024

LAS VEGAS — ESPN, Warner Bros. Discovery and Fox Corp. may have overlooked some key stakeholders with their ambitious plans for a combined streaming service. Namely: the powerful sports leagues to whom they pay billions in media rights fees.

In Vegas for the Super Bowl, where seemingly all of the media world is amassed, I’m hearing that the leagues went on red alert as soon as the three media conglomerates announced the multisport streaming service Tuesday. The notion: They’re suspicious that the members of the unnamed streamer collective will eventually try to bid for live-game rights as a combined entity, likely reducing the total media rights fees paid out to the leagues.

The new math in sports media is that the more media partners leagues have, the higher the total rights payouts they reap. The NFL, for example, will pull in $110 billion in media rights fees through 2033 across its deals with ESPN, Fox, CBS, NBC, and Amazon Prime Video. Throw in the league’s seven-year deal with YouTube for Sunday Ticket and that’s another $14 billion in the NFL’s pockets. 

And other pro leagues are closely following the NFL playbook. That’s why the NHL switched to two national media partners, ESPN and TNT, receiving a combined $625 million per year. With one media partner, NBC—albeit years earlier, in 2011—they collected $200 million per year.

With the NBA’s media rights expiring after the 2024–’25 season, look for The Association to double its media partnership from two to four, say my sources. Incumbents ESPN and TNT could be joined by Amazon Prime Video and NBC, a former media partner. The goal, as always, is to maximize rights fee by signing multiple partners.

For their part, the three companies involved in the joint-venture agreement maintain that they will continue to negotiate and acquire their respective sports rights independently. Let’s take them at their word. But things could change down the road. It’s still a legit concern for rights holders, warns John Kosner, a former NBA and ESPN executive turned media consultant. “Anything that potentially cuts down on the number of competitors bidding on sports rights is going to be, by definition, a significant concern to sports rights holders. It has to be,” Kosner tells Front Office Sports.

Adding to the suspicion: The leagues were “blindsided” by Tuesday’s blockbuster morning announcement, according to The Wall Street Journal. Sports leagues like to be briefed in advance about any shifts in business strategy. Apparently that didn’t happen this week.

“An effort to notify the leagues wasn’t made until Tuesday, before a planned announcement. Many learned of it when The Wall Street Journal broke the news,” the Journal reported. “The reason for the cone of silence was to keep the plans from leaking prematurely during the months the companies were settling the details, people involved in the partnership said.”

With the dust settling, two days later, leagues are still looking for answers on what this thing is, when it will launch, who will run it, and, most importantly, how it will impact them. Until then, they’re playing catchup.

“While we look forward to learning more about this new venture,” an NBA spokeswoman tells FOS, “we’re encouraged by the opportunity to make premier sports content more accessible to fans who are not subscribers to the traditional cable or satellite bundle.”