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

Aug 26, 2014, 11:14 AM EDT

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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.

  1. mackcarrington - Aug 26, 2014 at 11:27 AM

    That 550 employees most likely won’t include any on-air talent. Too bad.

    • romestar82 - Aug 26, 2014 at 11:32 AM

      was hoping they finally get rid of Joe Buck

      • asimonetti88 - Aug 26, 2014 at 11:37 AM

        Doesn’t Joe Buck work for Fox?

    • hdsnake867 - Aug 26, 2014 at 11:44 AM

      At the top of my layoff list would be “Mr. Marble mouth”, Reggie Miller. Great players don’t automatically become great announcers.

  2. mp4philly - Aug 26, 2014 at 11:32 AM

    I’d be ok if Shaq was on the lay off list. He’s awful.

    • rodyaugu - Aug 26, 2014 at 12:20 PM

      YAKKEM!!

    • amlowlife - Aug 26, 2014 at 12:57 PM

      Shaq is a terrible announcer and consistently shows he’s a very petty person.

  3. spursareold - Aug 26, 2014 at 11:38 AM

    So, they get like one drop in the bucket of the NINE HUNDRED MILLION they need, and a bunch of people are out of work now. Nice.

    • devarajaswami - Aug 26, 2014 at 12:01 PM

      Not really a drop in the bucket. Say each of the 550 employees gets a base salary of $75K. With bonuses, medical/vision/dental insurance, life/ADD insurance, 401K matching, pensions, office space, travel and computer expenses, and about 10% payroll tax, and other overheads, the total cost to the company per employee could be about $150K/employee/year. So letting go of 550 employees at $150K each saves them about $82.5 million a year.
      If the new deal is worth about $2 billion/year to the NBA, and Turner and Disney pay half each, then Turner’s share of payments is about $1 billion/year.
      The $82 million they save by letting employees go is about 8% of their cost.
      Not a whole lot, but not trivial either. Companies go to extreme lengths to save even a few % of their costs.

      • sportsfan18 - Aug 26, 2014 at 1:34 PM

        $82.5 million is over 12.1% of 1 billion, not about 8%.

        Also, those 550 employees help bring revenue to the company so that has to be included along with the $82.5 million the company “saves” by letting them go.

        Most all large companies track revenue by employees (divide total revenue by the number of employees).

        So, the company isn’t really “saving” $82.5 million by letting them go. That number, the savings, is only one part of the equation.

        I mean most companies wouldn’t keep 550 folks on board if they weren’t doing something to make the company profitable and bring in revenues.

        If a company can whack 550 folks and not lose any revenue/profits, then the shareholders should be asking senior management why those 550 folks were around in the first place.

      • devarajaswami - Aug 26, 2014 at 9:14 PM

        AFAIK, employment in this country is at will. Employees can leave for whatever reason at any time (sometimes with 2 weeks notice), and they do that all the time. By the same token, employers can let employees go at any time (sometimes with 2 weeks notice) and they do that all the time too. Goes both ways.
        Usually big companies like Turner give attractive severance packages, which increases with the tenure of the employee with the company. I won’t see any employee refuse that.
        In fact, in Silicon Valley I’ve known of lots of people who wait for Cisco and other big companies to offer layoffs because they can get great severance packages with 6 months pay.
        All this scare-mongering and rabble-rousing about companies laying off people is pretty hypocritical. Nobody is stopping the employees from getting other jobs, either while they are employed, or after they are let go.
        Free country, and thank the Lord for that.

      • 00maltliquor - Aug 27, 2014 at 2:37 AM

        Look at sportsfan18 coming through in the clutch!

        Amen.

    • azarkhan - Aug 26, 2014 at 1:49 PM

      If you really feel that way, you should protest by not watching basketball on TNT.

  4. asimonetti88 - Aug 26, 2014 at 11:39 AM

    Reports say the new DirecTV NFL Sunday Ticket package will be around $1.3-1.4 billion… somewhat unbelievable to me that the NBA rights would be more than that.

    • spursareold - Aug 26, 2014 at 11:58 AM

      Why? The NBA season is WAY longer with more games, and includes the playoffs up to the Finals.

      • azarkhan - Aug 26, 2014 at 1:46 PM

        The NBA is also WAY less popular than the NFL.

        In 2014, 35 percent of fans call the NFL their favorite sport, followed by Major League Baseball (14 percent), college football (11 percent), auto racing (7 percent), the NBA (6 percent), the NHL (5 percent) and college basketball (3 percent).

        http://espn.go.com/nfl/story/_/id/10354114/harris-poll-nfl-most-popular-mlb-2nd

      • asimonetti88 - Aug 26, 2014 at 3:26 PM

        I don’t mean this as a statement of which is better between the NBA or NFL (I absolutely love both, they’re my two favorite sports) but the NFL is far more popular. The NFL absolutely dominates the ratings and advertising dollars. Even with more games in the NBA, NFL broadcasts are more valuable real estate for advertisers… In fact, having less games is actually what probably makes it even more valuable… a 30 second spot in the most recent Super Bowl cost just over $4 million on average… a 30 second spot during one of the NBA Finals games probably does not even sniff that… there are more eyes trained on a “one-off” event (for lack of a better term)… so more dollars.

      • pbtunpaidwriter - Aug 26, 2014 at 5:03 PM

        @azar

        I didn’t click that espn link but there is no way auto racing is more popular than the NBA. Even if that is true, there is no way that the NBA is 6% and the NHL is 5%. That can’t be right.

  5. bevan18 - Aug 26, 2014 at 12:23 PM

    -let go of Reggie Miller
    -keep Marv Albert around even when he’s 90
    -hire A.I. for Inside the NBA if Shaq ever leaves

  6. spyder9669 - Aug 26, 2014 at 12:52 PM

    NBA…where caring happens?

    • devarajaswami - Aug 26, 2014 at 4:46 PM

      where caring happens … rarely.

    • mackcarrington - Aug 26, 2014 at 7:19 PM

      The NBA isn’t the one doing the layoffs.
      But I’m sure there are around 500 employees they could probably let go without feeling any pain.

  7. flickflint - Aug 26, 2014 at 12:56 PM

    I’m fine with no court side/sideline reporters literally useless information

  8. zackd2 - Aug 26, 2014 at 1:06 PM

    Grumble grumble players union grumble grumble

  9. mrlaloosh - Aug 26, 2014 at 1:09 PM

    The working men & women lose their jobs so the billionaire owners and millionaire players can keep getting even more wealthy. Capitalism at its best.

  10. cantonbound13 - Aug 26, 2014 at 4:02 PM

    They’ll keep Sager, his suits don’t cost much.

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