The National Basketball Association (NBA) seems to be closing in on a deal with Comcast’s (NASDAQ:CMCSA) NBC, Disney’s (NYSE:DIS) ESPN, and Amazon (NASDAQ:AMZN) to broadcast its games, according to an exclusive Wall Street Journal report. This deal is expected to generate $76 billion in revenues for the media companies over 11 years.
Details of the NBA Deal
According to the report, Comcast’s NBC is likely to pay $2.5 billion annually to the NBA for 100 games per season. It is expected that half of these games will be streamed on Peacock, Comcast’s streaming service. Meanwhile, Amazon’s $1.8 billion yearly package will include regular-season, playoff games, and some of the conference final games. The three media companies will air the conference finals in rotation.
In comparison, Disney’s ESPN will pay $2.6 billion annually, up from $1.5 billion currently, and will continue airing the NBA Finals but with fewer games. The new deal will allow Disney to air games on ESPN’s direct-to-consumer streaming service, which is expected to launch next year.
The WSJ stated that the deal is likely to exclude Warner Bros. Discovery (NASDAQ:WBD), whose Turner Sports network has aired NBA games for decades. According to Reuters, analysts have commented that this could be because the media giant’s heavy debt load has hindered its ability to compete for NBA rights.
The deal is likely to go into effect after the 2024-2025 season and will also include rights to telecast women’s NBA games.
Why is the NBA Deal Attractive?
The NBA’s new deal is projected to boost its annual fees over 2.5 times to nearly $7 billion, compared to the National Football League (NFL)’s $10 billion. Despite lower average ratings than the NFL, the NBA is extremely popular internationally with its numerous games and a young audience. These factors drive up its value for streaming services like Amazon’s Prime Video.
Moreover, rights to live sports events like NBA games are highly coveted among media companies as they attract a loyal audience, even as traditional pay TV channels are losing millions of subscribers to cord-cutting.
Is Disney Stock a Buy or Sell?
Analysts remain bullish about DIS stock, with a Strong Buy consensus rating based on 20 Buys and five Holds. Over the past year, DIS has increased by more than 10%, and the average DIS price target of $129.38 implies an upside potential of 27.1% from current levels.
