The Lakers' $12.5 billion valuation assumes media rights keep rising. But NFL network pushback from Fox's Lachlan Murdoch suggests the apex may be near.
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Bob Iger and Josh Kushner plan to buy the Los Angeles Lakers at a record $12.5 billion valuation. The price rests on a single assumption: that sports media rights, the one segment of TV that keeps growing, will continue to climb. Some media executives are questioning that assumption.
The Lakers currently generate $200 million a year from local TV rights. The NBA's new national deal pays $7.6 billion annually. Those numbers fuel the bull case for franchise valuations. But the bear case comes from the same media companies that write the checks.
"Media executives I talk to say, 'If they're basing the Lakers valuation on future media rights deals, that's a mistake,'" said John Ourand, who covers sports media for Puck. "The NFL will get more money. But cord-cutting's still happening. Broadcast TV is in distress. Media companies are saying, 'We could be at the apex of it.'"
Bankers and private-equity firms disagree. They see rights fees continuing to rise. The debate has been running for years, with sports rights defying the broader TV contraction. Live sports remains the last bastion of appointment viewing, keeping broadcast and cable networks profitable.
The most concrete signal that the trend may be shifting comes from the NFL. Fox CEO Lachlan Murdoch recently said the network is not currently negotiating a new deal with the league. Most media observers expected the networks to renegotiate early, paying more per year to lock up the NFL through the next decade.
"What Lachlan finally said was, 'We're gonna see this through to the end. So we can negotiate now, but we're not opening our deal up early. It's gonna run through to the end of the decade,'" Ourand said.
That stance is being treated as a bombshell in the industry. Early talk of an extra $1 billion per year per network, Ourand noted, "would put some of the networks out of business."
The NFL still holds the strongest hand in media. But the number of bidders is limited. Every broadcast network already carries a package. CBS is in flux due to a change of control, and the NFL is talking to Paramount about that deal. If the league opens that package for bidding, the pool of potential buyers is small.
"You need more than one bidder for the price to go up," Ourand said. "They have just enough bidders for just enough packages. I think right now we're seeing where the limits of that power lie a little bit."
The NFL did $110 billion in TV deals in 2021. Networks then cried poor, but later paid the NBA $76 billion. The NFL's response, Ourand said, was: "Wait, I thought you were crying poor?" When Fox found money to buy Roku, the league saw inconsistency.
The NFL's current deals run through 2030. Fox's Lachlan Murdoch has said the network will not reopen its contract early. The league will still get what it needs, Ourand said, but it may not reach its reach goal.
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