The NBA Kills Cable

Cable TV is on its deathbed, and the NBA might be pulling the plug June 25, 2024 | Peel #737 Silver banana goes to... In this issue of the Peel: - 🏀 Cable TV is on its deathbed, and the NBA might be pulling the plug - 📈 Trump’s wealth surged on Monday, while Nvidia’s bubble may pop - 🤖 OpenAI’s latest acquisition signals where the AI market is headed Market Snapshot 📸 Banana Bits 🍌 - The S&P 500 is getting to 2021 [levels of expensive]() - Demand for travel continues to show [no sign of slowing down]( - Disney’s “[Inside Out 2](” is reviving the box office, and [analysts love it]( - Europe is flexing its old, dusty muscles [on Apple]( Investments That Offer Numerous Benefits to Any Portfolio Democratizing Agriculture Investing: Harvest Returns makes it easier for qualified investors to access agriculture investments, traditionally reserved for large institutions. Diversify & Earn: Invest in farms, ranches, and agribusinesses offering stable returns, inflation protection, and passive income. Positive Impact: Be a part of the solution! Your investment supports a sustainable food system and strengthens rural communities. Explore Opportunities: Sign up for free on Harvest Returns to discover AgTech, sustainable livestock, specialty crops, and controlled environment investment options. [Sign up for Harvest Returns]( Macro Monkey Says 🐒 Balling On A Billion Actually, they’re balling on *$76bn (maybe). After the Boston Celtics solidified what we already knew—that they’re the best team in NBA history—with the franchise’s 18th championship, the economics of the National Basketball Association (NBA) are starting to look a little different. Media companies are ready to throw money at the league as if players were twerking on stage and dancing on poles. Let’s get into it. What Happened? Considering that the primary audience for American cable TV now consists of people who eat dinner at 4 pm and think 'streaming' refers to a problem with their plumbing, it’s no surprise that sports leagues are rushing into the arms of big tech giants. [Source]( Slow and steady growth has been the story of NBA league revenue, but now, a consortium of NBC, ESPN, and Amazon is ready to take it to turbo mode. An 11-year deal worth $76 bn is in the works. Under this agreement, streaming providers would share airtime and, for some games, exclusive broadcasting rights in return for paying the NBA an amount close to its total earnings over the past 15 years. Amazon would pay $1.8bn/yr for regular season and playoff games, along with rights to the “in-season tournament” that literally no one on Earth cares about. NBC is shelling out $2.5bn/yr for ~100 regular season games with exclusivity rights on about 50 of those, so they would only be available on Peacock. ESPN (a.k.a. Disney) is paying $2.6bn/yr for similar rights and to secure access to the Finals. That total of a very nice $6.9bn/yr represents a ~150% increase in broadcast value per game, speaking to the importance of sports for cable and streaming providers. Traditional cable companies like Warner Bros Discovery, owner of TNT, simply don’t have the balance sheets to compete after years of contraction and debt loading. [Source](=) Who Cares? Big money is coming to the NBA in some manner, but this is far from the most popular professional sport in the U.S. There are 2,460 regular season games played in any given season. Meanwhile, the U.S.’s most popular league, the NFL, plays just 272 games. Amazon has been paying $1bn/yr to stream Thursday Night Football alone since 2021. That values a TNF game at $58.8mn, while the ongoing negotiations for NBA games value a regular season game at ~$2.8mn. There’s big money in NBA streaming, but it doesn’t hold a candle to the blood sport negotiations to get Taylor Swift’s boyfriend on your streaming service. The loss of sports could be the final blow that puts cable companies on the ropes. Why else would anyone get cable—to watch f*ckin’ Young Sheldon? To be fair, my grandmother loves that show, and that might be the exact problem for these cable firms. She is 90 years old and the only person I know who regularly watches cable. The Takeaway? News and politics are the last legs of cable TV. Hence, the Civil War-era division that these networks, like Fox and MSNBC, seek to create. On Thursday, CNN is exclusively airing the first Presidential Debate between two elderly men hopped up on Adderall, epinephrine, and who knows what else. Millions are expected to tune in, but I’m sure even more will ignore it and watch the clips on YouTube and TikTok the next day. What's Ripe 🤩 Trump Media & Technology Group (DJT) 📈21.2% - Traders have become traitors in the past month as yet another clearly political witch hunt seeks to bring down one of the U.S.’s great media firms. - TMTG, with its entire $3.8mn in annual revenue and dozens of users, rallied Monday after weeks of falling faster than Rudy Giuliani’s reputation. - Investors are apparently excited at all the dilution coming their way now that insiders can sell, as discussed last week. Shares are off >30% this month. Affirm (AFRM) 📈12.8% - Officially invited to the cool table, Affirm has been making friends with Wall Street royalty. - After partnering with Apple to incorporate its buy-now-pay-later service in Apple Wallets, Affirm is getting an alley-oop from Goldman Sachs. - GS initiated coverage of the BNPL leader on Monday, slapping on a “Buy” rating and calling for a 40% upside from Friday’s close. What's Rotten 🤮 Sleep Apnea Stocks (RMD, INSP) 📉11.5%, 📉16.7% - The world’s largest healthcare company, Eli Lilly, is out for blood as its new sleep apnea drug threatens to take market share from traditional device makers. - Eli Lilly’s weight loss drug apparently minimizes the effects of sleep apnea. Resmed and Inspire Medical Systems, who make sleep apnea devices, weren’t too happy about it. Nvidia (NVDA) 📉6.7% - Nvidia shareholders have been bumping DJ Khaled for the past few days as the stock is Suffering From Success. - Shares are sh*tting the bed without much reason. Profit-taking has reigned supreme since the AI firm’s claim as the world’s most valuable company. - Since then, shares have lost market value equivalent to that of Walmart or Exxon Mobil. Thought Banana 🤔 AI Pincer Movement OpenAI is taking notes from the Battle of Marathon as it looks to copy the Athenian strategy of attacking the enemy from both flanks. But in this case, instead of attacking both sides of a Persian army, OpenAI is attacking both sides of the AI market—consumer and enterprise. Let’s get into it. What Happened? Microsoft’s subsidiary, OpenAI, just completed an acquisition of Rockset, a real-time analytics database. Although no price tag was disclosed, the all-stock deal values Rockset at a “few hundred mn dollars.” The goal is to enhance OpenAI’s abilities in real-time analytics and data handling, especially in the enterprise AI sphere. Interesting lens: When I asked ChatGPT to create an image summarizing the deal, this is what I got: A notable aspect of the acquisition is that Rockset is a broad-based SQL database provider, allowing OpenAI to handle a much wider range of data than a vector database. Quick Explainer: Rockset: - Handles all kinds of data (like tables, JSON files, and text) and processes it in real time. - Example: Helps an online store track sales, customer behavior, and inventory instantly. Vector Databases: - Focus on finding similarities in complex data (like images or text) by comparing numerical representations. - Example: Helps a photo app find pictures that look similar. Essentially, this means OpenAI is prioritizing its real-time analytics capabilities on structured, semi-structured, and unstructured data over enhancements to specific AI challenges like the accuracy of recommendations or NLP. Imagine you’re in hell, I mean—*working for a large corporation and need certain data or company-specific questions answered. Normally, you’d have to pour through documents/databases or continue to annoy your boss to find the answers. Now, at least in theory, you can get answers on a much more streamlined basis with basically a company-specific LLM. The Takeaway? The launch of ChatGPT marked OpenAI’s first significant foray into consumer AI applications. In less than two years, it led to a more than 1,000% increase in revenue and is expected to more than double again to ~$3.4 bn in 2024. [Source]() While the exact breakdown between enterprise and consumer revenue remains undisclosed, the acquisition of Rockset underscores OpenAI's strategic shift toward the enterprise market. This move signals that the next major expansion phase in the AI industry is targeting enterprise solutions, particularly through real-time analytics of proprietary data. Now, all eyes are on OpenAI's competitors, such as Anthropic and Perplexity, wondering if they’ll adopt a similar strategy by focusing on enterprise growth or if they’ll continue to prioritize the consumer market. The Big Question: Is venturing into the enterprise AI space the right move? What opportunity costs does an investment like this create? Banana Brain Teaser 💡 Previous 🗓 In a box of 12 pens, a total of 3 are defective. If a customer buys 2 pens selected at random from the box, what is the probability that neither pen will be defective? Answer: 6/11 Today 🕐 At a certain fruit stand, the price of each apple is 40 cents and the price of each orange is 60 cents. Mary selects a total of 10 apples and oranges from the fruit stand, and the average (arithmetic mean) price of the 10 pieces of fruit is 56 cents. How many oranges must Mary put back so that the average price of the pieces of fruit that she keeps is 52 cents? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says 🤓 “AI will probably most likely lead to the end of the world, but in the meantime, there'll be great companies.” — Sam Altman How Would You Rate Today's Peel? 😁[All the bananas](=) 😐[Meh](=) 😩[Rotten AF]( Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE]() // [WSO ALPHA]() // [ACADEMY]() // [COURSES](=) // [LEGAL]() [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis") 14435 Big Basin Way PBN 444 Saratoga, California 95070 United States