Warner Media’s Baseball Deal Shows That Even With Cord-Cutting, Sports Are Still Big Money

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September 24, 2020 Topic: Economics Region: Americas Blog Brand: Techland Tags: SportsMBLBaseballWarner MediaStreamingCableCord Cutting

Warner Media’s Baseball Deal Shows That Even With Cord-Cutting, Sports Are Still Big Money

Warner is betting big on the future of broadcast sports, but with declining numbers is that a huge mistake?

There’s been a great deal of talk in the last few years about cord-cutting, with millions of cable customers dropping their subscriptions. There’s also been talk about declining ratings for sports, since their return from a months-long pause during the coronavirus pandemic.

However, that hasn’t stopped networks from still wanting to be in the sports business, and to drop even more money than before for the privilege of staying in it.

Sports Business Journal reported Thursday that Major League Baseball has reached a $3.7 billion agreement with Turner Sports, which is a subsidiary of AT&T and Warner Media, to extend its broadcasting agreement with baseball through 2028. The deal will reportedly pay baseball $535 million per year, which is an increase from the $325 million a year Turner paid under the previous deal.

Turner is only one of multiple broadcast partners for Major League Baseball, which also places national and postseason games on Fox, ESPN and MLB Network, and Fox retains the rights to the World Series, and re-upped its own deal two years ago. Meanwhile, the majority of regular season games are broadcast as part of local rights agreements negotiated by the individual teams, most of which are with regional sports networks.

The new deal will move TBS’ weekly national game to Tuesday, while giving the network one more playoff game than it had previously. The network will also establish a new studio show that will be hosted by Ernie Johnson, who also hosts Turner’s acclaimed “Inside the NBA” studio show.

“Economics are always important,” baseball Commissioner Rob Manfred told the publication. “Another factor that weighed on our decision making was that Turner came to the negotiating table with a lot of new ideas about exactly how we were going to make our combined efforts better.”

So, why is TBS paying so much when so many viewers are cutting the cord? The deal, according to the report, will have a “digital component.” TBS has gained the rights to “carry the games on its platforms to authenticated viewers.”

Still, there were some questions when the numbers came out.

“Turner’s current deal with MLB started in 2014, cable/sat subs were ~95 million and Turner paid ~260 million/year,” Rich Greenfield of Lightshed tweeted Thursday, over a gif of Homer Simpson being hit by a pitch. “When new contract ends in 2028, they will be paying ~$600 million/year and cable/sat subs will be well below 50 million. How does that math work?”

At any rate, the deal means that even with uncertainty about the future of sports as a spectator sport in the age of coronavirus, the leagues will still have billions coming in over the next decade.

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters