MediaTalk | Season 4 | Ep. 42 - Expansion, Disruption and the Growing Business of the NBA

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Mike Reynolds: Hi, I'm Mike Reynolds, the senior reporter covering the media industry with the S&P Global Market Intelligence Tech, Media, and Telecom news team.

Welcome to “MediaTalk,” a podcast hosted by S&P Global, where the news and research staff explore issues in the ever-changing media landscape. Today we're going to talk hoops, the NBA, my favorite sport. The '26-'27 NBA season is underway, and for the first time in 53 years, the New York Knicks are the defending champions.

I will have you know I'm sporting a T-shirt commemorating OG's tipping of Jaylen Brown's miss that gave the Knicks the greatest comeback in NBA Finals history in Game 4 of last year's championship round against the San Antonio Spurs. This is the second season of an 11-year national rights deal with ESPN, ABC holding an A package that concludes with the Finals.

NBC/Peacock and Amazon's Prime Video are the other primary rights holders, and there are a ton of national games, but this season will also feature many changes in the local TV market. Today's discussion will also touch on the league's prospective growth both here in the U.S. and in Europe. Here to discuss these subjects and others is a trio of S&P Global Kagan research analysts, in “MediaTalk's” virtual locker room.

Justin Nielsen, principal analyst, specialized in all things broadcast and many other things, Scott Robson tracks U.S. TV networks and sports, and Mike Johnson, who is on the U.S. sports watch. Before we get started, let's just check in on our NBA fandom. Justin, the Suns and Devin Booker, what kinda year we looking at?

Justin Nielson: On the upswing. This is my favorite time of the year, to be honest, with the NBA season kicking off. So we've got a new player in Miles Bridges after the trade. You got Devin Booker and Jalen Green. Let's see how they do this year.

Reynolds: All right. Mike, you're a Cavs fan. Do you agree with Coach Kenny Atkinson and James Harden that the Cavs were the better team despite being swept by the Knicks in the Eastern Conference Finals last year?

Michael Johnson: Yeah, thanks for having me on, Mike. I'm not so sure about that, to be honest, but yeah, getting swept hurt in the playoffs, but the Knicks seemed destined for the championship run last year. The Cavs are pretty talented again this year. Donovan Mitchell, James Harden, Peyton Watson was a good addition.

They also have Mobley and Allen in the frontcourt there, so they should be competitive. It's just to see if they get over the playoff hump here.

Reynolds: All right, Scott, as we talked last year, you and I share a basketball view of the world, and at least for now it's colored orange and blue skies.

Scott Robson: Yes. Yeah, it feels good to be a champion. I'm a little bit hesitant to call for a repeat, but looking ahead to the playoffs for sure.

Reynolds: All right. As I mentioned, 53-year title drought ended, so — good times here in New York. We'll see how the season unfolds. All right, let's get going here. Justin, year one, a national rights deal. It was a strong opening campaign on a lot of levels.

Nielson: It really was a great season for broadcasters with the return of NBA on NBC. We've got some of the streamers to talk about, but overall, I think it was a big push from the broadcast networks and stations and affiliates to really grasp that audience and that enthusiasm throughout the season.

Reynolds: Yeah, and I guess the Knicks and the Spurs was the best Finals in many moons, going back to the Jordan era, but the regular season was also very strong. Scott, can you talk about ABC and ESPN as well as NBC and Peacock?

Robson: Yes, absolutely. This might come as a shock to nobody, but the NBA gets good ratings. So — strong viewership for the league last year. There was a 16% uptick in viewers, with an average of 1.78 million per game. Now, some of this could be the result of Nielsen Big Data plus panel, some from the benefits of broadcast over cable distribution, some from exciting storylines. Who knows? But it's probably a bit of all three. Overall, this equated to an estimated $870 million in ad sales during the regular season — which was up from around $500 million the prior year. To no surprise, NBC led the way with 2.8 million viewers on Sunday and Tuesday nights. This was up over 100% compared to prior-year games on ESPN and TNT, and the games on ESPN and ABC were up 11% year over year. And that marked the best viewership since the 2019 season.

Reynolds: All right. We got off to a good start there. Mike, a lot more games on Prime Video, and they did — I think there might have been a slight dip — but there's some silver linings there as well, right?

Johnson: Yeah, Prime Video, they made a pretty good impression in the first national NBA season. I believe it was 67 games last year. Looks to be about the same this upcoming season. They averaged around one million viewers per game, I think, down compared to those previous TNT Thursday doubleheaders that they usually had. But I think Prime did really well in the key demographics.

So their NBA audience was younger, a little bit more diverse. I believe it was 11% more viewers in the 18-to-34 age group, 20% more in the 18-to-49, and a nice boost in the 25-to-54 range as well. I believe the average Prime NBA viewer was 47, I think that was reported, which I think is nine or 10 years younger than traditional TV viewers.

Doing well there. And it's not just the age thing, Prime's fans were a little bit more on that affluent side as well, with higher median incomes. So even if the overall viewership numbers weren't quite as high as ESPN or TNT the previous season, Prime is definitely connecting with that younger, higher-income crowd, kinda like what they're doing with the NFL side of things.

Reynolds: Absolutely. Justin, there's going to be even more national games this year, NBC stepping it up?

Nielson: Yeah, we see this from the season, so an increase on the broadcaster side in terms of games on NBC. You also look at it from the perspective of who's going to be in those games, and it's definitely weighted more to the major-market teams.

You've got the Knicks, you've got the Spurs, you've got the Warriors. You definitely have more emphasis on those national brands throughout the season.

Reynolds: Yeah, Scott, to that end, I think the maximum number of games that teams can go nationally is 34, and there are quite a few who are in that score column.

Robson: Yes. Yeah, as Justin mentioned, Lakers, Sixers, Knicks, Spurs, all being showcased 34 times this season. It really highlights the league's top talent. Of course, there's a growing rivalry now between the NBA and NFL competing for Christmas audiences — and things like that. And it should be an exciting Christmas with five NBA games, three NFL games, a replay of the NBA championship with the Spurs and the Knicks facing off as well.

Reynolds: Is there — I don't know, again, I know the NFL has the ability to flex games out. I don't know if the NBA can do that. These are a lot more games, but is that something that's...if one of the teams is beset by injuries and doesn't do as well as expected, can the league change the rights holder's telecast?

Robson: Yes. So the NBA has flex scheduling for its national broadcasts. Last year, ESPN and ABC were pretty aggressive in flexing games. Typically, there are about seven games flexed per season — and ESPN and ABC doubled that last season. Towards the end of the season, the flexing is more prevalent, and there's a focus on teams competing for a playoff spot, so not just the best teams, but some of the teams that are on the bubble there.

And another thing that goes into that is load management, and so load management is a big issue in the NBA. And when a game is flexed or it's just a high-profile nationally broadcast game, there needs to be a valid reason for a star player to be sitting out.

Reynolds: Mike, I know you're a big fan of the show. You must be happy there's going to be more “Inside the NBA” on tap this season.

Johnson: Yeah, always enjoy “Inside the NBA.” I'm definitely glad we're getting more of it this season. Uh, I got to admit, the vibe seemed a little bit off last year, to be honest. Might take more time getting used to it being on ESPN or something like that. This season they're putting it on 25 times, I think, compared to 20 last year. So we'll see Ernie, Kenny, Chuck, and Shaq a lot more, especially during the opening week, the Thanksgiving tripleheader, Christmas Day, and all those big January games that we'll have.

But yeah, honestly, it felt a little sparse last year. I think even Charles Barkley joked about not being on TV enough. No word yet on the playoff schedule or anything like that. But yeah, last season they were on-site for a lot of those matchups.

Reynolds: Absolutely. Sir Charles, he's always retiring. This year he says maybe Ernie Johnson's going to be his last year. Any sense for that? Is this the last season of that “Inside the NBA” lineup that we all know and love?

Johnson: Yeah, like you mentioned, he's talked about hanging it up before. And every time he seems to make a big announcement, it gets people buzzing... I think he's played this card a few times now, and usually comes back. I think Shaq even joked that Charles figured out how to go viral, so the retirement talk is part of the show now, but —

Reynolds: Okay —

Johnson: Yeah, like you mentioned, it's a package deal with Ernie.

So we'll see which direction they go.

Reynolds: All right. A little stock talk here. Madison Square Garden Sports is looking to separate the New York Knicks and the New York Rangers. Scott, can you give a sense of what's going on there?

Robson: Yes. So MSG Sports is splitting into two separate stocks, MSG Knicks and MSG Rangers. They start trading on October 27th. This gives investors a pure play into both leagues. So far, I think the separation was driven by a few factors. One of which was that the value of the Knicks and Rangers combined was worth more than the enterprise value of the stock. Okay. So Dolan might be thinking, separate the teams, make it more clear to investors how much these franchises are really worth.

I think the Knicks are valued near $10 billion now, and the Rangers are around $3.5 billion. So yeah, he'd like to see a full valuation behind that.

Reynolds: All right. We will see how that goes in a week or so. A little technology next, Justin. Adam Silver's got a technology ball that could influence referees' decisions and on-court action in the sport going forward.

Nielson: Yeah, potentially. It's still probably a year or two away, but they've got the partnership and sponsorship with Wilson basketballs, and they're trialing out a smart chip within those balls that can look at out-of-bounds plays, spin off the ball, also look at player stats. It would definitely be an interesting aspect, and we can talk a little bit about the betting aspect, but it would definitely help the game in terms of the refereeing, as well as end-of-game out-of-bounds or shot clock.

Reynolds: All right. Before we move on to something else, I guess the league, Justin, has put out some rules, told its sports betting partners you can't offer this kind of wager anymore?

Nielson: Yeah, it's happened in other leagues like the NFL. You look at it from a perspective of what's happened in the past with some of the players and betting. But you look at it for parlays or play-by-play prop bets, and they just want to do away with that, anything that can be influenced by a play or a player. You want to get that out of the betting scene.

Reynolds: Yeah, and I think a lot of it has to do with unders, which again, you know, if a guy's having a tough shooting night, is he missing on purpose?

Nielson: Yeah. Unfortunately, I'm an Arizona State University alumnus and I do remember the point-shaving scandal of the '90s, yes.

Reynolds: Let's go to team expansion. It's been a while. The Charlotte Bobcats came into the league in 2004. They replaced the original Charlotte Hornets, which had relocated to New Orleans in 2002. Scott, there's a few things going on in the expansion front here in the States.

Robson: Yeah, so exciting time across the sports ecosystem, with valuations popping. Lots of rumors out there now, with the NBA adding teams, NHL adding teams, NFL talking about expansion. So in the U.S., the NBA is looking right now at Las Vegas and potentially Seattle. This is not going to come cheap.

I think the Vegas expansion could come at a price of $9 billion for the franchise — potentially higher.

Reynolds: Wow —

Robson: Yeah, Seattle looks like it could be a little bit cheaper, maybe around the $5- to $6-billion range, but there are a lot of factors at play here. The Vegas team could move into T-Mobile Arena, where the Golden Knights play. Right. Possibly build the new arena. Vegas is not shy when it comes to building new arenas. And then Seattle's team will likely play at Climate Pledge Arena, and share time with the Kraken. I'm a fan of the old Supersonics logo during the days of Shawn Kemp.

Reynolds: Yeah. Yep. Absolutely. So nice to see the team come back to Seattle if it happens.

Reynolds: Yeah, that would be a nice return. We'll see how that goes. All right. Mike, there's also growth, probable growth abroad, NBA Europe. What do you know about that?

Johnson: Yeah. NBA Europe is coming. The league's aiming for a 2027 launch, I believe, with around 16 teams in the biggest cities. Like London, Paris, Madrid, you name it. So there's a ton of interest. I believe over 120 franchise bids came in. Geez. And even some European soccer clubs and big investors are trying to get in on it as well.

So recently, the NBA has tried to merge with the EuroLeague, which is the top competition in Europe right now. But their owners kinda turned it down, thinking the NBA was undervaluing their league. There's still some back and forth, but with that said, some EuroLeague clubs are still open to negotiating, and so the door isn't totally shut on that route if they decide to go that way.

Commissioner Silver seems pretty confident, saying rejection's just part of the negotiation process. The NBA is pushing ahead, working with FIBA and planning to build out this NBA Europe with or without the EuroLeague, regardless. So yeah, there's a lot going on. Got the franchise bids, negotiations going on continually. But I think the NBA is determined to make it happen.

Reynolds: Yeah, it'll be interesting. Again, there's a lot of balls in the air, and I agree. I think it's going to happen. Maybe next season's a little ambitious, but we will see. And I guess if and when it does happen, Mike, I guess we're going to go watch the games. Would this be like an NBA TV edition, or?

Johnson: Yeah. I guess, just thinking out loud, the broadcast plan could probably look like a lot like what we're seeing in the U.S. right now. The NBA's all about spreading games across different platforms and things like that.

So I wouldn't be surprised if we see games on NBA TV, like you mentioned, Amazon, maybe even Netflix or YouTube gets in the mix. And then, for sure, some local European channels as well. Amazon's the big player here. They've already got the huge U.S. NBA partnership — and reach in over, I think, it's 240 countries, has been reported. So I think they'll definitely play a major role.

And then you can't forget about Disney as well. They've started streaming NBA games on Disney+ in some markets. ESPN-branded content is popping up all over Latin America, Africa, and now I think they expanded that out even further to 11 different European countries.

Reynolds: Yeah, I guess we'll be busy. There'll be a lot to write about. So we've talked about last season, we've talked about this season, we've talked about future expansion both here in the States and abroad. Now let's get to the local side, which is a gigantic story.

There's actually a lot of local stories this year. Main Street Sports, the successor to Diamond Sports, went the way of the dinosaur in April, ending its relationships with the NBA and the NHL. Thirteen NBA teams had their games carried on RSNs owned by Main Street last year under the FanDuel Sports Network banner.

A lot of changes, Mike. Can you kinda start us off? DAZN is involved. What are we talking about with the RSN model of the past?

Johnson: Yeah, the collapse of Main Street Sports really just highlighted how much certain traditional RSN models have just kinda fallen apart.

For years, RSNs were the go-to for local sports, as we all know. If you were a fan, you always knew where to find your team, and those networks were valuable thanks to huge cable subscriber bases. But with cord-cutting speeding up and the pay-TV bundle shrinking, I think the model just couldn't keep up anymore.

So when Main Street went under, like you mentioned, it left NBA teams and a bunch of NHL teams scrambling for new local options ahead of their seasons. Honestly, I just think it's an end of an era. Like I mentioned, the RSN old system depended on steady cable money and big rights deals, but now, with fewer people even able to get RSNs, that revenue just kinda dropped off a cliff.

Teams and leagues are having to get creative now. You've seen turning over to over-the-air broadcasts, direct-to-consumer streaming, and these different hybrid setups. OTA brings games back to free TV, which is great for fans, but the money just isn't the same as what their old deals were worth.

And then, like you mentioned before, streaming services like DAZN have stepped in, but those deals are mostly short-term at the current time and haven't really made up for the lost cable money yet.

Reynolds: All right, Scott, you've been following this for a long time. NBC Sports still has some regionals. We have them here in the New York area, but is this the end of the RSN world as we know it?

Robson: Yeah, I think so. I think that the business model has just become outdated in the new environment that we're in of streaming and people having multiple video platforms as opposed to one big cable package, as Michael was mentioning.

I really think that MLB was the most important league for the Regional Sports Nets, and with most of them leaving, combined with the Main Street collapse, it just doesn't seem like the RSN industry as we once knew it will ever be the same.

I don't think this is necessarily a bad thing —

Reynolds: Okay —

Robson:  — for the league. It's just a natural progression here. It's also coming at a time when the leagues are generating a smaller percentage of their total revenues from local media rights deals. So it's easier to transition to a smaller local rights fee for most of these teams now that they're getting more from the national rights deal.

Reynolds: Justin, going back before the RSN boom, most of the local teams' games were covered by local stations. Are we back to the future here, or that'll be part and parcel going forward, do you think?

Nielson: I think it will. I think it'll be part of the distribution strategy for these teams. There, there are some teams that really leaned into the over-the-air or the free-TV audience, with the Suns and the Jazz, and others, and there are others that are looking at it more in terms of building and growing the base using 10- or 15-game packages of over-the-air in combination with streaming and the national rights deal.

So I think it's going to be a combination of all three. It's just really going to be team-by-team specific. So you've got the Nexstars, the Tegnas, the Gray Television stations that are going to be able, in certain markets, to have those over-the-air distribution deals, potentially working with a streaming partner, and I think it just builds the audience, right?

Reynolds: Yeah, it's a big, a wider base. ... Bigger reach. Mike, we mentioned DAZN. It's a really active offseason for those guys.

Johnson: Yeah, they're really making waves right now. It doesn't seem like some sort of a quick fix as a result of the RSN kind of collapse, and they've grabbed streaming rights for teams across, like we've been saying, the NBA, WNBA, NHL, and MLB, with a mix of exclusive and digital-only deals.

For NBA fans, DAZN's pretty much the go-to for teams like the Cavs and Spurs, Timberwolves, and even the Knicks and Nets on the streaming side following the MSG deal. DAZN's CEO says they're in it for the long haul, aiming to be the NBA's main streaming partner in the league, once it launches its rumored centralized hub in a year or two.

So they're thinking this isn't just a bridge. They're positioning themselves as a bigger player for the NBA streaming side.

Reynolds: Gotcha. Scott, Justin mentioned a couple of clubs, but there have been a few more NBA teams this year that are, in fact, going largely with broadcast packages.

Robson: Yes, so some of the former Main Street teams — the Hawks, Pistons, Heat, and Bucks — all went exclusive with local broadcast partners.

As mentioned, these deals come with a lower rights payment than they were getting from the RSNs, but these teams are really hoping to increase reach, ad revenue, and then everything else that comes along with that: higher merch and ticket sales, and just ultimately a larger long-term fan base, which seems like a good long-term strategy.

Reynolds: Justin, 15 is a popular number, too, for the broadcasters.

Nielson: Yeah, I think it's a good number of games that they can distribute from the local station's perspective. They pace them out throughout the season, get them in the local news and sports hours. So I think that's where we've landed in terms of the local rights deals for over-the-air.

Reynolds: Yeah, they're good carve-outs, and I think in many cases they are, like, whether it's a Saturday night or a Tuesday night, there's some consistency there, too. And as you mentioned —

Nielson: Yeah —

Reynolds:  — it builds interest on the local news, and you keep the team in the foreground.

Exactly. All right. Fellas, we're deep into the fourth quarter now. For some listeners, this might be the most important or most laughable part of this “MediaTalk” installment: fearless Finals predictions time. You probably don't want to go over on the over here, but tipping off with you, Mike, who's playing in the Finals and who's going to win?

Johnson: Yeah. I kinda had a hard time with this. I've got the Spurs and Philly in the Finals if Embiid and LeBron stay healthy, with Wemby and their young core, the Spurs winning it all.

Reynolds: Okay. Justin, how about you?

Nielson: Yeah, I think I'm going to go with the Spurs as well, even though I'm not a fan. You know — it would be great to have — the Eastern Conference is going to be a bloodbath, so we'll see what happens with the Sixers, with LeBron and the Knicks, you know, looking for a repeat. But yeah, there'll be a few teams out there that are on the upswing that we may see and be surprised by.

Reynolds: All right. I like the sound of the Knicks getting back to the Finals, but — and I'm going the rematch here — maybe the Wemby era really begins in earnest this time. We'll see the Spurs back on top. Scott, are you going still orange and blue?

Robson: Yes. I think, yeah, the window is getting shorter here, and this might be the last year for the Knicks to make another run at the championship with this lineup.

There are some big contracts coming up that might not get renewed, so I'm going to say Knicks repeat here.

Reynolds: All right. Hopefully, Scott will be right. That concludes this episode of “MediaTalk.” I wanted to thank Kagan's Mike Johnson, Scott Robson, and Justin Nielsen for talking hoops and the business of roundball with us.

Thanks, guys. And thanks to all of you for listening to “MediaTalk” on Spotify, Apple, and Capital IQ Pro, where you can also find Mike Johnson's extensive NBA preview. Enjoy the season, everybody. This is Mike Reynolds. We will catch up soon on the next installment of “MediaTalk,” and go Knicks.