NBC's NBA streaming rights key to Peacock's streaming growth

Executives in ComcastNBC Sports has had the renewal of NBA broadcast rights on its calendar for years. They wanted the NBA back after losing games against the… Disney in 2002. But it wasn't until January of this year that NBC Sports chairman Rick Cordella had confidence the company could make a big offer.

On January 13, Peacock, NBCUniversal’s subscription streaming service, aired its first-ever exclusive NFL playoff game: a 26-7 victory by the eventual Super Bowl-winning Kansas City Chiefs over the Miami Dolphins. There was no doubt that the game would be popular. It reached 27.6 million total viewers, according to Nielsen, the largest live-streamed event in U.S. history.

What happened after the game made NBCUniversal feel comfortable shelling out a whopping $2.45 billion per year to distribute NBA games starting with the 2025 season, a bet on making Peacock profitable as the pay-TV model erodes.

Research firm Antenna estimates that Peacock added 3 million new subscribers by acquiring the rights to that NFL game, which cost $110 million. More than 70% of those subscribers stayed with Peacock about two months later, Antenna said in March.

That gave Cordella confidence that NBA fans would stick with Peacock even after the season ended. But it wasn’t just the lack of churn that convinced him of the value of popular sports. It was what those new subscribers saw once they signed up.

NBC Sports executives assumed that the millions of new Peacock subscribers would be able to engage with other live sports on the service, including the NFL's “Sunday Night Football,” golf, Premier League, WWE and IndyCar. What they didn't expect was the number of subscribers watched non-sports entertainment on the platform, such as movies and episodes of “The Office,” “30 Rock” and “Parks and Recreation.”

“Our highest video-on-demand usage was the week after the wild-card game,” Cordella said in an interview. “Churn rates among those new subscribers have been lower than average. Sports fans are not monolithic. You're getting an entire family to watch other entertainment similar to what NBCU offers.”

Media executives broadly understand that the traditional pay-TV ecosystem will continue to shrink over the next decade and that their companies will need to rely on streaming to survive and thrive. For NBCUniversal, securing NBA rights helps ensure sustainability in a fight to attract viewers against streaming giants like Netflix, Amazon Prime Video and Disney+.

Sports fans may subscribe to a streaming service to watch a particular game, but evidence suggests they will stick around and watch other content once they've committed to spending money.

“We know that with Paramount+, having multiple genres of content on the same platform is very beneficial,” said David Berson, head of CBS Sports, in an interview. “We know that when a fan comes to Paramount+ to watch sports, they spend 90% of their time on the service watching entertainment programming, non-sports content.”

The streaming wars have increasingly become a fight for engagement. Companies invest in algorithms and user interface technology to keep viewers tied to their particular service. With the future of Paramount+ as foggy as Paramount Global seeks to merge with Skydance Media and with Warner Bros. Discovery Comcast, which is actively seeking mergers or partnerships, wants Peacock to endure for years, even decades.

That’s why it was so important for NBCUniversal to have games that consumers can only watch on Peacock. Beginning in the 2025-26 season, Peacock will have about 50 exclusive NBA regular season and postseason games nationwide, including national Monday night games and doubleheaders.

“The NBA is a must-watch sport for fans,” Cordella said. “We need to build Peacock for the future. Having exclusive NBA games is really important to that mission.”

Peacock, which until now is a U.S.-only service, has 33 million subscribers, far fewer than platforms with international reach like Netflix (about 278 million) or even Paramount+ (68 million). While Netflix has been profitable for years and Disney’s collection of streaming services turned a profit for the first time last quarter, Peacock remains unprofitable, losing $348 million in the second quarter and $639 million in the first.

That makes spending $2.45 billion a year a big risk. Cordella hopes a steady stream of live sports content will help make the service essential for sports fans no matter the season. The NBA, including the playoffs, runs from October to June.

Comcast needs to pull a number of levers to make its investment profitable, a feat that Bank of America analyst Jessica Reif Ehrlich acknowledged was plausible.

“We see a path to profitability for Comcast under the new agreement,” Ehrlich wrote in a note to clients earlier this month.

While Peacock’s steady subscriber growth will help, NBCUniversal will also rely on the NBA to help drive higher retransmission rates for NBC among pay-TV operators and generate increased advertising revenue.

The NBA can also help market other NBC projects, including television series, movies and theme parks, although the league The viewership pales in comparison to the NFL. This was one reason Warner Bros. Discovery decided not to compete with NBCUniversal for NBA rights once the price tag soared to more than $2 billion per year. While “Sunday Night Football” averaged 21.4 million viewers per game last year on NBC and Peacock, NBA games averaged 1.6 million viewers last season on TNT, ABC and ESPN.

Ehrlich noted that Comcast’s cable service could also benefit from the NBA by boosting broadband usage by moving more people to Peacock. Comcast could also save itself future membership fee payments to Warner Bros. Discovery if the rival media company loses its NBA streaming rights.

There are other competitive advantages NBC gains by taking the game package away from Warner Bros. Discovery, which is suing the NBA in a NBCUniversal can use the NBA as a show of strength, relative to other media companies, when negotiating with other sports leagues to sell rights or even with Hollywood creators looking for the best streaming service for their next project.

Even without taking into account potential cost savings from reduced affiliate payments to Warner Bros. Discovery, Ehrlich expects the NBA deal to be profitable for Comcast in its second year. He estimates the company will see Peacock’s additional $192 million in revenue is attributed to new subscribers in the first year of the deal, and rises to $420 million in the fourth year. She estimates $850 million in additional ad revenue in the first year for NBC from the NBA and $160 million from Peacock’s ad tiers.

Disclosure: Comcast's NBCUniversal is the parent company of CNBC.

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