Kevin Durant’s signing with NBA’s Golden State Warriors is intriguing in a number of ways. First, Durant decided not to go the way of having the usual news conference announcing how he chose to play with Golden State before a room of sportswriters, internet, radio and TV reporters along with others thus rendering traditional sports reporting obsolete.
Durant signed a short term contract and one of the two years, the 2017-18 season, could be interrupted by a lockout. In saying this, he may be tossing the dice here in terms of giving up some cash with a short contract hoping even more money will BE available once the owners and players hammer out a new collective bargaining agreement. Durant and the other players will cost owners about three quarters of a billion dollars which is funded in a big part by cable TV money from Disney’s ESPN and Time Warner’s Turner Sports.
Durant and the others good fortune comes from a new cable TV deal that pays the NBA about $2.6 billion a year between now and 2025. It is an enormous figure that Disney and Time Warner think will work out well for them financially, but there may be a huge problem going ahead. Disney has acknowledged that about six million ESPN subscribers of all ages have cut the cable cord and simple math will tell you losing six million people will have a tremendous effect. At an estimated cost of $6 a subscriber, ESPN has $430 million less annually. Time Warner’s TNT has lost about seven percent of its subscribers since 2011. TNT’s cost is about $1.25 a month. Both companies know they have to develop new revenue sources. Rates will rise. Disney may buy into Major League Baseball’s digital business as Turner runs the NBA’s digital platforms. The NBA will get the money but if cord cutting continues, will Disney and Time Warner regret the $24 billion deal?
By Evan Weiner for The Politics of Sports Business.
This article was republished with permission from the original publisher, Evan Weiner.