Proposed Merger Impact on Turner Sports Strategy
A potential deal between Paramount and Warner Bros. Discovery (WBD) could significantly alter Turner Sports' strategy. For nearly two years, since losing NBA live game rights, Turner Sports had invested in acquiring less expensive sports rights to maintain network distribution.
Turner Sports had strategically invested in acquiring less expensive sports rights to maintain network distribution after losing its NBA live game rights.
These acquisitions included sublicensing early-round College Football Playoff games from ESPN (starting in 2024), a 10-year agreement for French Open rights, a multi-year agreement for the Unrivaled women's basketball league, and a renewal of its deal with All Elite Wrestling. This strategy aimed to support the distribution of TNT, TBS, and TruTV during critical carriage renewal negotiations with pay-TV providers. Early indications, such as a late 2024 deal with Comcast, suggested this approach was effective, with TNT's carriage fees remaining stable despite the absence of NBA games.
Implications for a Combined Entity
If the WBD-Paramount deal is approved, the importance of these smaller sports rights may diminish for the combined company. Paramount already holds significant sports rights, including the NFL, The Masters, March Madness, and Big Ten football and basketball.
For such a large entity, Tier 2 or Tier 3 sports, including regular-season MLB and NHL games, might not be considered an optimal use of capital. This is especially true with a strong focus on achieving $6 billion in synergies and producing 30 theatrical films. The NFL is expected to seek increased fees from its media partners in upcoming renewal talks.
TNT's current MLB and NHL rights agreements conclude after the 2028 season. While Paramount may still desire playoff games, it could reduce its investment in extensive regular-season packages. MLB is reportedly planning to restructure its media rights after 2028, and the NHL has expressed interest in renewing its packages before the NFL.
Potential Shift in Broadcast Landscape
Conversations with sports executives indicate that CBS, potentially overseeing TNT Sports post-merger, might reduce the amount of sports content on TNT to a minimum. CBS's existing portfolio includes rights for NWSL, UEFA Champions League, Italy's Serie A, and Pac-12 football and men's basketball, which could potentially be aired on TNT.
This potential shift could make more sports rights available to other media companies, such as Versant. Industry leaders, including Fox CEO Lachlan Murdoch and Versant CEO Mark Lazarus, have acknowledged a potential rebalancing of sports portfolios.
The combination of the NFL's new media deal and a WBD-Paramount tie-up is anticipated to catalyze a major reshuffling of sports rights after 2028.
Future of Paramount President Jeff Shell
Paramount President Jeff Shell's role in a combined WBD-Paramount entity is uncertain. Sources familiar with the matter indicate that Shell, a proponent of sports programming, has not been involved in the deal discussions or strategic planning for the merger. He was notably absent from a recent Paramount investor call. Shell is also reportedly subject to an internal investigation. Paramount and Shell declined to comment on the matter.