July 11, 2024 10:48 GMT
WBD To Consider Matching Offers As NBA Reportedly Finalises Deals With Peers
COMMUNICATIONS
Profile: Baa3/BBB-/BBB-
- The Athletic reported yesterday that the NBA has finalised USD 76bn worth of 11-season TV deals with ESPN, NBC, and Amazon.
- NBC reported to pay $2.5B/year, Amazon $1.8B/year; ESPN maintains its $2.6B/year deal. WBD’s existing contract is for USD 1.2bn and they are reported to have walked away from a USD 2.2bn deal.
- WBD claim matching rights against rival bids though it is unclear what obligation the NBA must accept any matched offer, creating the potential for legal action. The Athletic indicates that WBD would consider targeting Amazon’s package in particular; decision due five days post-board approval.
- We have seen equity analysis speculating on a USD 0.8bn gross profit hit were they to have renewed at a price equivalent to the new NBC deal while moving to an Amazon-equivalent package would necessitate USD ~1.2bn in alternative revenue to breakeven. For context, WBD had FY23 revenue of USD 41bn and gross profit of USD 17bn but with an operating loss of USD 1.5bn and a net loss of USD 3bn.
- EUR spreads have outperformed MTD against the backdrop of the Paramount-Skydance deal, seen by the WBD CEO as supportive of the sector, and also reports on talks of a joint venture between Paramount’s Paramount+ and WBD’s Max streaming platforms – access to Paramount+ sports content potentially limiting NBA fallout.
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