Charles Barkley welcomed Dale Earnhardt Jr. to the TNT Sports family Wednesday morning with a bit of advice that also functioned as a nod to the $25 billion elephant in the room. Speaking to advertisers and media buyers at Warner Bros. Discovery’s upfront presentation, TNT’s NBA analyst encouraged the former NASCAR champ to not overthink anything while he’s calling the network’s slate of summer Sprint Cup races.
“Listen, I tell Ernie, Ken and Shaq the same thing before every show: ‘We’re not saving the f—ing world, it’s just basketball,’” Barkley said toward the tail end of Warner Bros. Discovery’s 90-minute upfront presentation. While the casually deployed F-bomb may have been designed to approximate candor, the remark didn’t do much to change perceptions of where things stand as TNT continues to try to fend off an NBA takeover bid by Comcast’s NBC Sports.
Aside from declaring that Barkley’s studio show Inside the NBA is “arguably the best show on TV,” TNT Sports chairman and CEO Luis Silberwasser didn’t say much to clarify matters during his brief spiel.
“We have enjoyed a successful partnership with the NBA for 40 years,” he said. “And we look forward to another season and reaching an agreement that makes sense for all the parties.”
Conspicuous by his absence was WBD CEO David Zaslav, who sat out the company’s pitch for the second consecutive year. (He was, however, spotted courtside at last night’s Knicks game.) While the NBA now seems to favor the NBC bid, which would see the network pay $2.5 billion per year to swipe the league’s “B” package from TNT, WBD still has the option to exercise its matching rights clause. In other words, Zaslav & Co. may be able to dig around in the sofa cushions for the money to retain the NBA rights; the company last year generated $6.16 billion in free cash flow.
Of course, the massive debt incurred by the merger of Discovery and Warner colors WBD’s fiscal decisions; according to the quarterly earnings statement issued last week, the company still has to pay down $43.2 billion in gross debt. Worth noting: WBD has eliminated $6 billion in debt in the last 12 months, a figure which includes nearly $1 billion in debt reduction during the quarter that ended March 31.
The dollars aren’t the only consideration in the league’s calculus. NBA commissioner Adam Silver has been vocal about his desire to maintain the league’s broad reach, and while traditional TV viewing continues to decline—in the last two years, linear TV usage has fallen 17%—broadcast TV remains the most reliable vehicle with which to reach a massive audience. Advantage, Comcast, even if broadcast’s reach is widely misinterpreted. (With an average penetration of 67% of all U.S. TV homes, the Big Four nets reach some 83.3 million households in their affiliate markets. As such, NBC’s advantage over the basic cable network TNT, while not modest, is now a little over 12.7 million homes.)
While the fate of the NBA’s long-running cable package remains up in the air, Zaslav finds himself in a no-win situation. If WBD outbids Comcast, it will be paying more than twice its current annual fee of $1.2 billion for less content. Should Amazon waltz off with the NBA’s streaming package—its $1.8 billion-per-season offer is said to be everything the league is looking for in a new partner—TNT could see its annual coverage of one of the Conference Finals series get reduced to alternate years. Investors would, perhaps, react unfavorably, although the share price ($8.25 as of Wednesday afternoon) has already been thoroughly battered over the last two years.
On the other hand, the economics of the basic-cable universe suggest that WBD can’t afford to whiff on pro basketball. At an estimated $3 per subscriber per month, TNT this year is on pace to rake in $2.56 billion in what amounts to passive revenue. In the event of a Comcast coup, that carriage fee will begin to contract soon after TNT carries its final NBA game in spring 2025. The loss of the NBA playoffs alone could lead to what amounts to the forfeiture of hundreds of millions of dollars in affiliate revenue.
Barkley’s Inside the NBA foil Shaquille O’Neal made good on his Contractually Obligated Appearance shortly after the Chuckster sauntered off with Earnhardt and Wayne Gretzky, who got a little fan service when he predicted a Stanley Cup Final victory for the Rangers. Shaq didn’t have much to offer on the NBA renewal front, spending his time onstage sleepwalking his way through some scripted banter with Conan O’Brien.
The world’s largest pitchman’s enthusiasm for WBD’s dog and pony show was made manifest by the zero-effort read he gave to the phrase, “I’m here because I love ad sales.” Naturally, this got the biggest laugh of the morning.
Buyers may have left the Garden without having learned anything new about the fate of Inside the NBA, but WBD isn’t quite ready to throw in the towel. NBA gadfly and media impresario Bill Simmons may have all but handed the B package to Comcast during a recent podcast stint (“NBC’s getting it. I’m just telling you.”), but it’s not over until the lady in the Viking hat belts out the aria. When Barkley celebrated “the funny stuff, the stupid stuff” he and the TNT crew get up to during their long overnight shifts in Studio J, it was apparent just how much the NBA means to WBD, and to the fans with the big media budgets who’d assembled in New York this morning.
Earlier this week, Barkley told ESPN Radio that he and the rest of the studio show regulars are “scared to death” at the prospect of losing the NBA, before adding that they’re as in the dark about the outcome as everyone else. “We have zero idea what’s going to happen,” Barkley said. “It’s 50-50 that we lose our part to NBC.” Barkley went on to add that the stress levels in Atlanta have been elevated by the fact that the institutional advantage earned by TNT over the past 40 years may not be enough to keep WBD in the NBA business.
“You would think if it was close in a bidding war we would get the benefit of the doubt,” Barkley said during his spot on Waddle & Silvy. “But clearly, that’s not happening.”
Despite Simmons’ eagerness to crown NBC as the triumphant spoiler, no deal has been signed. (Disney’s renewal, on the other hand, is a sure thing.) If the prospects of keeping the TNT squad intact is perhaps closer to 20-80 than Barkley’s projection of a toss-up, NBC remained mum about its chances during its own upfront presentation.
Not that anyone should have expected any of NBC’s disciplined execs to jump the gun in front of the advertisers who pay the freight for so much of the company’s portfolio. Upfronts, after all, are expensive, well-choreographed sales pitches, and nothing more. All’s fair when $20 billion in advance commitments are at stake, but it’s never good policy to try to sell something you don’t quite own yet. That said, with the NBA Finals set to tip off on June 6, NBC’s sales force is already starting to think about pitch decks and sponsorships.