After a $2.6 Billion Hit, TV Races to Bring Back Live Sports

San Francisco Oracle Park, where the San Francisco Giants play, on March 12, 2020 - Getty-H 2020
Ezra Shaw/Getty Images

With the NBA and MLB returning in late July, ESPN, Turner and Fox hope for a "glass half-full" advertising market.

With the NBA and Major League Baseball scheduled to return after pandemic-fueled delays (NBA players began arriving at Disney on Tuesday), it’s clear that the relationship between the leagues, the TV networks and big-name advertisers is one of mutual necessity.

The lack of live sports between March and the end of June resulted in $2.6 billion in lost revenue for the TV networks, according to the ad sales intelligence platform MediaRadar. Now, with games starting up again, the race is on to try and recoup some of that cash.

“There is demand both from the audience and from the advertisers, who like the television media format,” says MediaRadar CEO Todd Krizelman. “Dollars on television may be expensive, but they're also really well-studied. It is a competitive market but it is very measurable.”

Still, with tweaked formats for both leagues, discussions are underway between networks, leagues and marketers to figure out the financial details, technical elements and content strategy of a return-to-play. The NBA and MLB, for example, are looking for new ways to incorporate sponsors into fan-free stadiums.

“When the NBA stopped play, and said they would come back later, advertisers said ‘OK, I don’t want to cancel my money, I want to move it to whenever the NBA comes back,’” Disney’s president of ad sales Rita Ferro says, speaking to The Hollywood Reporter about the company's virtual upfront pitch.

Ferro adds that most advertising agreements are multi-year deals. Long-term partnerships mean that both sides are eager to find a resolution, with the hope that next season could be a return to normal.

That being said, the NBA and MLB broadcasters, which include ESPN, Turner Sports and Fox Sports, are also being opportunistic, trying to poach some advertisers that had been committed to NBC’s 2020 Tokyo Olympics coverage. Some companies, such as automakers, still have new products coming out for the fall, and without the high-profile action of the Olympics, they are seeking scale elsewhere.

“They both need each other,” says media consultant Brad Adgate. “The networks are paying a boatload of money for the rights fees, and advertisers need the audience to reach them, and are willing to pay.”

And while no one expects ESPN or Fox to make up for all of the revenue lost by the postponed seasons, audience and advertiser excitement should make for a positive story to tell Wall Street in the third quarter.

“Even though [ad revenue] will be down from last year’s numbers, it will be a net positive,” Krizelman says. “Right now there’s nothing at all, so when people are creating their year-over-year charts on revenue, it won’t be what any of us want to see, but on the other hand it won’t be zero. I think people look at it like, there’s a glass half-full here.”

Still, most observers see the return of the NBA — with stars like LeBron James, Giannis Antetokounmpo and Zion Williamson — and the daily games of MLB as a harbinger for TV’s 800 lb gorilla: The NFL, which is proceeding with plans for a normal season starting Sept. 10. "The NFL itself is giant in terms of ad revenue for the networks," Krizelman says, noting that the games represent "41 of the top 50 most-watched events" on TV.

But S&P Global senior director Naveen Sarma notes that if the NFL gets delayed, it could have a significant impact on the stock and debt rating for TV networks' parent companies: "If sports gets postponed — especially the NFL and college football — certainly the equity markets will hit those companies, but I think the credit markets will take a dim view on a recovery as well."