Upfront season is upon us. Media companies, both new and old, will spend much of the next week courting advertisers to buy inventory on upcoming programming.
For most companies, sports will be a centerpiece of their pitch. Live sports remain some of the only programming on television that can consistently draw a broad cross-section of the American public. As such, the advertising inventory sold on live sports programming is as valuable as ever.
But one prominent media company is going into upfront season with a tough story to sell advertisers. Warner Bros. Discovery will be pitching advertisers this week without the luxury of live NBA programming next year. For the first time in nearly 40 years, the company will be without the NBA.
Instead, WBD has been active in securing other live sports rights to supplement its programming lineup. The company has secured the French Open, a handful of NASCAR races, some college football and basketball, the FIFA Club World Cup, and various other properties with the goal of maintaining healthy carriage fees from distributors. So far, it has worked. WBD has been able to ink deals with major distributors like Comcast, despite losing the NBA.
However, one part of the business that will almost assuredly take a hit post-NBA is ad sales. In March, media research firm MoffettNathanson predicted that WBD will lose $1.1 billion in advertising revenue next year as a direct result of losing NBA programming. The company is saving somewhere in the neighborhood of $2 billion by not paying for NBA rights, but it’s a wonder whether or not advertisers will look elsewhere altogether now that WBD has a decidedly weaker sports portfolio.
WBD ad execs don’t seem to think so. “We’re not intimidated by, like, ‘Oh my God, we have to fill so many hours of content.’ There will be content there,” WBD co-head of sales Ryan Gould told Deadline. “We’re going into these [upfront] conversations pretty sober and practical. The NBA was a big revenue driver for us,” he continued before saying, “The strategy has changed.”
That strategy, it seems, is purchasing cheaper sports rights and scrapping to maintain carriage fees, while trying to minimize any losses in advertising revenue.
It’s an unenviable position to be in as an advertising executive, but might be the right move for WBD as a business. If the company is saving billions of dollars by not paying for the NBA, but can scrounge up enough live sports where distributors are forced to keep its networks on their pay TV offerings, and advertisers don’t totally abandon ship, the economics could very well work out.
Whether that strategy pays off remains to be seen. But this week’s upfront will prove an important time for WBD to sell that narrative.