NBA lockout threatens TV ad revenue
Networks rely on advertising to recoup the money they pay to broadcast league games.
Those networks own the national broadcast rights to NBA games, and they collectively pay about $930 million to do so. Normally, they get back $1.25 billion in ad revenue, according to TheWrap.
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That's a pretty smart investment -- except when the league and union officials lock horns. The NBA canned the first two weeks of the season Monday night. That's 100 games that won't be broadcast. And if no agreement is reached by the end of October, the rest of November will probably be scrapped as well, The New York Times reports.
Shares of Disney were down more than 1% Tuesday to $32.65, and shares of Time Warner were up less than 1% to $32.30.
The lockout could drain local advertising revenue as well, reports FierceCable. That's because cable operators and satellite providers sell local ads on regional sports networks owned by Comcast (CMCSA), Fox Sports and others. Cablevision (CVC) also loses revenue from the New York Knicks, the team run by chief executive Jim Dolan.
Comcast shares were down and CVC shares fell 1.5% to $17.22.
"If the labor dispute runs longer than two weeks, ESPN, Turner Broadcasting and regional sports networks could be pressured to offer rebates on the license fees they charge cable and satellite providers," writes Steve Donohue of FierceCable.
Fortunately for the networks, broadcast revenue is more heavily weighted toward the end of the season, so missing these first two weeks isn't that huge of a deal. But as the weeks pass, the revenue loss will scale up.
ABC has weekend NBA games in the regular season, according to TheWrap, but a 30-second spot in the NBA Finals can bring $400 million. ESPN and TNT, which were supposed to broadcast preseason games, will start hurting right away, writes Daniel Frankel.
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