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TV Networks Face Huge Drop In Key Programming Category: Live Sports

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TV Networks Face Huge Drop In Key Programming Category: Live Sports

With live sports mostly on hold across the United States and in much of Europe, TV networks are considering the possibility of losing some of their most popular programming, a big key to keeping audiences with many other types of programming moving increasingly to streaming platforms.

The networks that carry NBA games are likely to see an ad revenue impact, though it's not yet clear whether they'll remain responsible for the rights-fees payments for games that may not be played because of the Covid-19 Pandemic. That includes the now up-in-the-air NBA and NHL playoffs and events already canceled such as the NCAA men's and women's basketball tournaments.

TV Companies Affected By Coronavirus

Decisions by league and NCAA officials this week to suspend or cancel play will certainly affect Walt Disney Co. (NYSE: DIS), parent of ESPN, which carries NBA games and was scheduled to televise the now-canceled women's college tournament. Also warily eyeing the situation will be AT&T Inc. (NYSE: T), parent of the Turner networks, which will miss out this year on the chance to televise NCAA men's tournament games - one of the nation's most popular sporting events.

Whether the networks will have to make rights payments for games they don't end up showing isn't yet clear. The Wall Street Journal noted in a story Friday the networks paid rights fees during the lockout-shortened NBA season of 1998-99, even though some games weren't played.

In addition to the women's basketball tournament, ESPN also has the rights to televise many Major League Soccer games. That league put its season on hold on Thursday.

Other media giants Comcast Corporation (NASDAQ: CMCSA), which owns NBC, and CBS Corporation (NASDAQ: VIAC) stand to lose sports programming. Sinclair Broadcast Group Inc. (NASDAQ: SBGI) stations carry NBA games in some local markets.

See Also: 'Fast & Furious 9' Release Delayed By A Year Due To Coronavirus, Comcast Other Businesses Also Hit

Stocks Up

Ironically, the problem of losing popular sports broadcasts comes as TV networks had been anticipating a strong spring and summer. But some analysts have said the networks could be boosted during the virus outbreak period as people stay home and many watch more TV, including increased news about the virus.

Investors may be taking that into account: stocks of many of the major TV network companies were up on Friday at time of writing, including Disney, which saw its shares up about 3.75%, AT&T, which was up more than 2.2%, and Comcast, which was up just under 2%.

But the outbreak also comes as TV networks that deliver content through cable, satellite, or over the air channels, have faced the threat of viewers moving to streaming platforms. One buffer against the exodus has been live sports, which have remained popular on traditional TV.

There's another huge TV sports event on the horizon: the 2020 Summer Olympics in Japan, which as of now, remains scheduled to take place. NBC has the rights to carry the Olympics on U.S. television.

Big Financial Hit To NCAA, Schools

While the networks may see ad revenue drop without the highly-rated contests, the bigger financial victim of the virus may be the NCAA because of how much it relies on March Madness for its revenue. The tournament is the organization's top source of money by far. The more than $800 million it brings in annually from television and marketing deals, and the roughly $180 million it gets from ticket sales to the games make up more than 75% of the association's annual revenue.

The schools also will suffer because much of that money from the tournament is funneled back to participating universities.

The professionals also are facing hits to their budgets from losses of games. In addition to ticket receipts, some leagues have TV contracts that require games to be played for them to collect revenue. Britain's Premier League soccer league has broadcasting contracts that would cost the clubs rather than the TV networks if games are canceled.

 

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