Live streaming games to bring in more bucks, viewers amid Covid: Here's what the NBA-Disney deal means for ESPN

Bob Chapek hits three-pointer as Team Disney targets fourth quarter comeback

Disney, the entertainment company which laid the foundations of its multi-billion dollar enterprise on the successful retelling of old Germanic fairytales, has a new yarn. In its latest adaptation of an old classic, Cinderella will ditch glass slippers for a pair of Air Jordans. King James and his court of hoopsters will move to Disney’s sprawling campus on the outskirts of Orlando, Florida. There will be a royal ball every night from July 31 at the Buena Vista castle - the pièce de résistance of Disney’s biggest theme park. Pumpkins, the size of basketballs, will turn into horse-drawn carriages. The Magic Kingdom’s famous mascot, the mouse with floppy black ears, will be transformed into a lanky coachman with wristband-caparisoned arms. In this tale, there is no fairy godmother. In her stead are two bald men – NBA CEO Adam Silver and Walt Disney CEO Bob Chapek. What happens at the stroke of midnight? Everybody gets a little richer.

The NBA’s Board of Governors, last week, approved a plan to restart the 2019-20 season by playing the remainder of the games at Disney World, Florida, presumably without fans. They apparently narrowed down on the facility because it had the requisite infrastructure to create a “bubble” to insulate the players and coaching staff from being infected by Covid-19. The 39-square mile facility boasts two resorts with a total capacity of 4,900 hotel rooms. Moreover, Disney’s campus is down the road from the ESPN Wide World of Sports Complex, which has more than its fair share of basketball courts. While the decision does seem to make sense, the choice of venue could have been influenced by financial considerations.


Disney-owned ESPN and AT&T’s TNT hold the broadcast rights for the NBA, having purchased it for $24 billion in a ten-year deal running through 2024-25. "We believe at the end of the deal, it will feel inexpensive," the then ESPN President John Skipper said at the time. He was not far off the mark. Last season, TV networks in the US brought in nearly $1.57 billion in ad revenue, according to research firm Kantar. This figure does not include revenue from other geographies, particularly Europe, which is the second-largest market for the NBA. Moreover, the games are streamed live on the new ESPN+ app for members paying an annual subscription fee of $50. With the games being postponed, TV networks are faced with the prospect of having to return advances on ad bookings. Losing the NBA to the coronavirus would not only leave TV networks with a hole in the prime-time schedules, but would also burn a hole in their pockets as lower ratings translate into lower ad rates, and correspondingly, lower sales.

The roll out of Disney+ just before the outbreak of the coronavirus pandemic was met with a positive response, but other products have been less fortunate. Almost all verticals under the Disney umbrella have been adversely impacted by pandemic. Cord-cutting and falling ad revenue have pushed its television networks on a downward slope. Studio entertainment and theme parks have been laggards. Disney said in a statement that the closure of its theme parks and cruises caused losses amounting to $1 billion in Q2 2020. This is where the deal with NBA will come in handy. Analysts reckon Disney’s parks division could earn “tens of millions of dollars” from the league as well as team owners for hosting matches. Moreover, ESPN gets to keep its advertising dollars if the league goes ahead. It’s a win-win game for Disney.

Disney World’s four major theme parks are expected to reopen in July, reported the New York Times. But footfalls are likely to be limited, given the resurgence of Covid-19 cases in states like Florida over the past week. A deal with the NBA could give Disney’s resorts a financial boost and also offer an opportunity to market its properties as being safe to visit. Analysts reckon that the NBA will spend millions of dollars at Disney World. However, the real coup will be for sister-concern ESPN, which, according to media analyst Michael Nathanson, stood to lose around $481 million in ad revenue if the season was not completed.

Once the league games are completed, a 16-team field will slug it out in the Playoffs for a berth in the NBA Finals. The league’s CEO, Adam Silver said that the present season would end no later than October 12. Where does this leave Cinderella? She could perhaps audition for the WNBA draft, given that the women’s league could also be headed for Disney’s Magical Kingdom. A Disney insider told Yahoo Sport that the theme park would be “happy” to host the remainder of the WNBA season as well. But even if she does strike out a promising career in basketball, this fairytale might not have the rags-to-riches ending of the original.

According to analysis by CNBC, the average WNBA player makes $79,000 a year, which is closer to the compensation of a warehouse employee at Amazon, as opposed to the $38.3 million that the LA Lakers pays LeBron James each year. The gender pay gap is nothing new. The US women’s football team are embroiled in a legal battle with their association for the same wages as their male counterparts. Disney is also the subject of a major class-action lawsuit filed by ten women alleging gender discrimination. Abigail Disney, the great niece of the company’s founder, spoke a few conciliatory words at the time on the importance of income equality between the sexes. But nothing has changed. The case is pending. Fairy godmothers are an endangered species.