NBA rights costly despite declining viewership ratings

The NBA’s new media rights deals, valued at $76 billion over 11 years, are set to triple the league’s annual revenue compared to the current contracts.

However, this significant increase in revenue comes with a notable rise in cost per viewer, especially as NBA television ratings have either remained flat or declined.

For instance, ESPN’s ratings have dropped by 28%, drawing an average of 1.77 million viewers per game, while TNT’s ratings have stayed steady at 1.8 million viewers per game.

Under the new agreements, the cost per viewer is projected to average $12.12. However, there’s a wide range in what networks are paying.

Disney’s package costs an average of $6.40 per viewer, while Amazon’s package is significantly higher at $25.45 per viewer, as revealed in a Guggenheim research report shared with TheWrap.

Interestingly, the NBA’s new partners are paying more than three times the cost per viewer compared to the NFL’s current media deal. The NFL’s agreement, signed in 2021, delivers $110 billion over 11 years, but at a much lower relative cost per viewer.

According to Michael Morris, an analyst at Guggenheim Partners, this disparity doesn’t necessarily reflect poorly on the NBA deal. “Maybe the NFL is just a complete steal,” Morris suggested.

Nonetheless, the rising costs and declining ratings place added pressure on the NBA and its media partners.

“As ratings decline and the relative cost per viewer goes up, the pressure on generating additional revenue is greater in order to get the expected return on these rights investments,” Morris explained.