ESPN’s new NBA contract lowers value of Disney stock

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ESPN and Turner signed new national TV contracts worth $24 billion over nine years, a huge revenue increase triggering a corresponding salary-cap rise.

That wasn’t the only consequence of the deal.

Richard Morgan of the New York Post:

Drexel Hamilton analyst Tony Wible downgraded Disney stock on Monday in response to “a massive increase in NBA costs” for ESPN.

Disney’s deal to televise NBA games, with its increase in step-up costs over last year, could shave as much as 5 percent off pre-tax profits.

This isn’t necessarily bad for Disney-owned ESPN. It just shows how much more favorable the old national TV deals were for the TV networks.

The NBA is now getting a fair share of the money – which, if you’re the one paying the money, isn’t as good as paying a bargain rate.