Following the 2015-16 season, the NBA will have negotiated a historically large television rights deal, which could cost networks like ABC/ESPN and Turner (TNT/TBS) close to $15 billion for an eight-year agreement — double their current contract. In anticipation of such a cataclysmic cost to televise live NBA games, and to address a dearth in original programing, John Martin, the CEO of Time Warner’s cable television division, which includes TNT, TBS and CNN, is looking to buy out employees, and if that doesn’t work, he’ll go with pink slips, with 550 employees getting let go.
A source familiar with the plan tells the New York Post, “The pain will be spread across the board. [Former CEO Phil Kent] ran it for many years and the nature is that fatty tissue builds up.”
Martin began what he called, “future-proofing” the company back in June right after he took over as a way of trimming the fat before 2020.
“Division leaders now are reviewing the working groups’ reports on their respective areas of oversight,” Martin wrote in an internal memo the Post obtained, dated August 19 of this year.
“Our plan is to begin communicating in the next two months both general and specific changes we will make to structures, models and roles.”
The reason beind the cuts stems from the lack of original programing, but primarily the augmented fee to televise live NBA games:
Martin is looking at a big jump in costs to renew TNT’s contract to air basketball games on TNT and TBS, with the league said to be seeking to double its fees.
Turner is seeking to renew the last major US sports deal up for grabs until 2021. Live sporting events like the NBA are critical to boosting the fees cable providers pay to carry the networks.
Here’s where we see the other side of the NBA’s popularity boon in recent years when the game has expanded internationally and stars like LeBron James and Kevin Durant have inherited the off-the-court mantle that had been exclusively reserved for Michael Jordan.
While the influx of new money television money will likely increase the cap line and luxury tax line for the NBA, it’ll also affect networks like Turner and Disney, who owns ABC/ESPN. That means some people will lose their jobs, 550 of them in the United States alone, which makes up about 7 percent of Turner’s domestic work force.
This is awful, but it’s what happens when advertisers realize just how important live sporting events have become; it’s the only time TV watchers are forced to sit through commercials if they want to see the outcome of a live sporting contest. Advertisers know that’s where the big exposure happens, and the increased cost of televising those games is the direct effect. That trickles down to the workforce, unfortunately, but it’s another sign the NBA continues to climb in the eyes of consumers.
What do you think?
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