Disney and TNT go all in on a new NBA TV deal

Walt Disney's (DIS) ESPN sports cable channel and ABC broadcast network along with Time Warner's (TWX) TNT network today signed a renewal of their contract with the National Basketball Association said to be at a new value of about $24 billion. The deal highlights the growing dependence media companies have on sports programming, which attracts mass audiences that watch it live.

Under the terms of the nine-year contract, which will start when the current agreement expires after the 2015-2016 season, the media companies' payments to the NBA will rise to $2.66 billion annually from $930 million, according to a person familiar with the contract, confirming earlier press reports about the figures. A spokesperson for the NBA couldn't immediately be reached for comment about the money involved.

The companies will add more regular-season games to their schedules, and they'll continue to appear for the most part on Wednesdays (ESPN), Thursdays (TNT), Fridays (ESPN) and Sundays (ABC/ESPN). Turner and the NBA will continue to jointly manage the NBA's digital assets such NBA TV and NBA.com.

ESPN will be granted enhanced digital rights for ESPN platforms such as WatchESPN.com and ESPN.com. ESPN will also get hundreds of hours of new content such as highlights that can be shown in studio shows and will let fans live-stream games that they wouldn't be able to see in their home markets otherwise.

"This deal strengthens every part of our core business, and the NBA resonates very strongly with attractive key demos," wrote ESPN spokeswoman Katina Arnold in an email to CBS MoneyWatch. "Overall, the last four NBA seasons have been the highest rated for ESPN since we acquired rights."

In the fractured media market, sports is one of the few programming genres that attracts large audiences and is viewed live. Sports programs often top the ratings, especially during football season, on both cable and broadcast networks. The fact that men largely watch these programs makes them especially important for advertisers who would have difficulty reaching that audience otherwise.

ESPN, in particular, is a cash cow for Burbank, Calif.-based Disney. During the latest quarter, Disney's Media Networks business, which includes ESPN, earned $5.5 billion in revenue, the most of any Disney business. However, the self-styled "Worldwide Leader in Sports" is facing heightened competition from new rivals such as Fox, NBC and CBS (CBS), the parent corporation of MoneyWatch.

Surging costs for sports programming have become a lightning rod for criticism of the pay-TV industry. ESPN charges cable and satellite providers about $6.04 per subscriber to carry its channel, the most by far of any channel, according to SNL Kagan. Data from the Federal Communications Commission shows that the average monthly cable bill is now $61.63, a 24 percent increase from $49.65 in 2008.

"Sports programming is an essential part of cable's video service and one of the primary reasons that customers subscribe to a pay TV service," wrote Brian Dietz, a spokesman for the National Cable & Telecommunications Association, in an email. "The number of channels dedicated to covering all types of sports has increased significantly in recent years as the consumer appetite for sports coverage continues to grow."

Last week, DirecTV (DTV) announced that it had signed an eight-year, $12 billion contact extension for its Sunday Ticket National Football League programming block. That equals about $1.5 billion per year, a 50 percent increase over its existing contact.

In 2011, ESPN basically doubled down on the NFL, signing an eight-year, $15.5 billion deal to carry "Monday Night Football." On an annual basis, that works out to about $1.95 billion, nearly double the previous $1.1 billion rate. And NBC, which is part of Comcast (CMCSA), Fox, which is owned by 21st Century Fox (FOXA) and CBS signed an nine-year contract in 2011 with the NFL that runs through the end of the 2022 season that equals about $1 billion annually for each company, a 73 percent increase.

Fox Sports and Time Warner's Turner Sports agreed signed in 2012 to double the annual payment for Major League Baseball to $800 million, as part an eight-year contract signed in 2012.

Fox Sports also signed an eight-year, $2.4 billion deal last year with NASCAR that runs from 2015 to 2022 and is a 36 percent increase over the auto-racing circuit's existing Fox deal.