(Reuters) – Walt Disney Co and Time Warner Inc will more than double their annual payments to the National Basketball Association under a nine-year deal that underscores the importance of sports to an increasingly fragmented TV industry.
The NBA said yesterday it renewed broadcasting agreements with both Disney’s ESPN and Time Warner’s Turner Broadcasting System, beginning with the 2016-17 season. It did not disclose financial details.
But people familiar with the deal said it will more than double annual payments to the league by the two networks to over $2.5 billion from $960 million in the past agreement. Over nine years, the deal could be worth more than $22.5 billion.
ESPN paid a bigger share than Turner because its deal includes international and radio rights, as well as WNBA games, according to people familiar with the matter.
The agreement comes just days after satellite provider DirecTV agreed to pay $1.5 billion a year to extend its exclusive contract to sell its “Sunday Ticket” package of National Football League (NFL) games.
Both deals are a reminder of the unique allure of sports programming for broadcasters and cable networks, whose non-sports lineups have been losing viewers to streaming services like Netflix or are being watched on digital video recorders that allow users to skip commercials.
At the same time, ESPN is also negotiating with the NBA the launch of an Internet-based network that would allow subscribers to watch games without having a cable or satellite hookup, people familiar with the deal said.
ESPN said in a statement that it has a “framework” in place with the NBA for such a service, and that the league would have an equity interest in the future. More details on the service should be available by early next year, sources said.
An Internet-only sports service could undermine the traditional cable and satellite companies and enhance the trend of “cord-cutting” by former subscribers. It could also lead to more content being made available in Internet or “over-the-top” format.
“This is the first crack in the structure of the television business than has been in place for decades,” said Forrester analyst Jim Nail.
ABC and ESPN, which are part of Walt Disney, will televise 100 regular-season games per year, and TNT, which is owned by Turner Broadcasting, will televise 64, the NBA said.
ESPN said it will increase its NBA-focused programming with 750 new hours of content.
The NBA’s current eight-year deals with ABC/ESPN and TNT expire at the end of the 2015-16 season.
ESPN’s current deal covering NBA games on television began in 2002, when the network won the rights from NBC. TNT has been covering the NBA since 1988.
