Report: Turner Broadcasting planning layoffs in advance of rising NBA rights fees

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Turner Broadcasting and Disney-owned properties ABC and ESPN exclusively share the national television rights to broadcast NBA basketball, and Turner wants to make sure that they keep their standing in this very lucrative partnership.

In advance of negotiations with the league on fees that are expected to soar in the next deal, Turner has reportedly planned layoffs in order to have the necessary cash on hand to pay whatever renewing the contract will cost.

From Darren Heitner of Forbes:

According to the New York Post, Turner Broadcasting is preparing to let go of roughly 550 employees in order to have enough money on hand to pay for an expected increase in NBA media rights fees.  The current media rights agreement with the aforementioned television networks is set to expire in 2016.  Rising rights fees, along with costs to broadcast more original programming, are predicted to lead to the layoffs at Turner owned TNT, TBS, CNN and truTV.

An internal memorandum circulated within Turner and dated August 19 reveals that the job cuts may be completed over the next two months.

“Information negotiations” concerning the NBA’s next media rights deal began in Summer 2013.  At the time, it was projected that a new deal would not be completed until Adam Silver took over the Commissioner position from David Stern.  Silver is now firmly established as NBA Commissioner.  The fact that Turner is seeking to move rather quickly in laying off a significant number of employees may be a sign that a new NBA media rights deal is forthcoming.

The current deal is worth more than $900 million per year to the league, but the next one could see those fees doubled.

Players are also planning for a new TV deal, in the form of signing shorter free agent contracts to wait and see how things play out. LeBron James is perhaps the most high-profile example, but others like restricted free agents Greg Monroe and Eric Bledsoe are considering playing under a one-year qualifying offer, in order to maximize their earning potential as the salary cap continues to rise in the seasons to come — something that is directly influenced by league revenue, which a new rights deal would help to dramatically increase.

TNT televises games on Thursday nights weekly throughout the season, and also chips in on the league’s bigger days on the schedule, which include the Christmas and Martin Luther King Jr. holidays. The company also shares in broadcasting the playoffs, all the way through to the Conference Finals, before ABC takes over exclusively for the NBA Finals.