Variety: Warner’s Bleacher Report Takes Pivotal Role in Sports Streaming

Story from Variety:

Bleacher Report has a new type of game to analyze.

Surf on over to the sports-commentary site that has been part of the Warner Bros. Discovery stable since 2012, and you’ll see the usual stuff: a ranking of the best superstar duos in the NBA; speculation over whether the Atlanta Hawks will trade for the Toronto Raptors’ Pascal Siakam; and an aggregation of a story about the Kansas City Chiefs and defensive tackle Chris Jones. Missing is word of the site’s new function for its parent company.

This fall, according to two people familiar with the matter, Warner will bring its sports portfolio — previously the domain of the two cable giants TNT and TBS — to its Max streaming service, under the Bleacher Report name. Warner Bros. Discovery declined to make executives available for comment. Executives from Warner last week hinted at the debut of a new sports offering on Max, suggesting that they might seek to charge subscribers an extra fee in order to view them. Warner Bros. Discovery declined to make executives available for comment. CNBC previously reported new details about the plan.

Warner will be using the digital sports outlet to help it thread a very tight needle. The company’s schedule of NBA games, NHL contests and MLB matchups are a critical part of the economics of TNT and TBS, which, last year secured $1.6 billion in advertising, according to data from Kagan, a market-research unit of S&P Global Intelligence — nearly 5% of the company’s overall revenue from 2022.

Warner Bros. Discovery CEO David Zaslav may be eager for consumers to subscribe to Max — a streaming amalgam that offers sublime HBO series such as “White Lotus” and reality fare like “Naked and Afraid — but he likely doesn’t want to give up such a flow of cash, nor does he want to cede the distribution fees the two cable outlets generate. That likely means keeping a required number of games from each league on its cable networks, rather than trying to drum up a new digital business with streaming-only extras.

Using Bleacher Report as a topic tab on Max offers Warner the illusion of providing a view of games that seem different from what the average cable subscriber gets on TBS or TNT. And though Max games are likely to simply be a simulcast of the TNT and TBS feeds, these people said, the cord-cutting Max subscriber may not care, so long as they can get instant access to a live sports broadcast. Meanwhile, Warner will no doubt hope its cable and satellite distributors won’t take umbrage.

Left unanswered, for now, is whether Warner might seek to place commercials on a tier that requires subscribers to pay extra for access to it. The company might be smart to try and force the issue, at least from Wall Street’s perspective. Advertisers in pre-game, in-game and post-game MLB, NHL and NBA programming on TNT and TBS forked over $852.6 million in 2022, according to Vivvix, a tracker of ad spending – just a few percentage points higher than the $846.3 million they spent in 2021. In the TV industry’s most recent “upfront” market, when networks try to sell the bulk of their commercial inventory, Madison Avenue has been peeling dollars out of linear TV and sending them to sports and streaming. There would no doubt be interest in sponsoring Bleacher Report streaming games.

Warner has other reasons to start streaming sports. Yes, traditional rivals like Disney and NBCUniversal already do so with Sunday baseball on Peacock and NHL games on ESPN+ and Hulu. Of more concern, perhaps, are digital giants like Amazon and Apple that have dipped their toes into similar waters. Apple offers Friday-night MLB streams while Amazon last year unveiled a deal to stream NBA games for Prime Video subscribers in Brazil.

If that’s a sign that Amazon has designs on NBA rights for the U.S., Warner should be wary. The current U.S. rights deal for NBA games, split now between Warner Bros. Discovery and Disney, ends after the 2024-2025 season, and some behind-the-scenes jockeying has already begun. The NBA will likely have a broad array of suitors, some of whom may see a chance to stream games just for local markets, and others who want a slice of the national pie.

In November of last year, Zaslav raised eyebrows among league officials and even his own employee base when he told investors during an earnings call that Warner Brothers Discovery doesn’t “have to have the NBA.” The efforts and figures described above would suggest that it does. Whether Warner will agree to what is sure to be a significantly higher price for the same package or try to cut its spending by narrowing down its NBA offering remains to be seen.