Welcome back to What I’m Hearing+, live from Manhattan, where I’m on my way to catch George Miller’s Furiosa in Imax, my preferred format. Yes, I tend to go to movies midweek, when prices are lower. But the experience always reminds me of Sony Pictures chairman Tom Rothman’s argument that studios are hastening the destruction of theaters by offering them fewer movies, which forces them to jack up prices to account for the loss in volume. Not great!

On a more positive note, yesterday I exchanged notes with my colleague and sports media prophet John Ourand in his fantastic private email, The Varsity. We talked about Netflix and Amazon streaming ambitions, the under-discussed role of Google, and the fate of Warner Bros. Discovery without the NBA. (If you haven’t already, add John to your media diet here.)

Tonight, I’m offering more thoughts on that final topic. David Zaslav obviously wants the NBA, as my partner Bill Cohan noted yesterday. But, given WBD’s mountainous $39 billion in debt, and rival NBCUniversal and Amazon bids for rights, Zaz must plan for life without the league. Tonight, I put a little structure around that decision architecture and answer related questions, namely: What happens if WBD loses out on those rights, and does Zaslav need the NBA as badly as many think?

But first…

• A quick correction: The wrong chart made its way into the subscriber version of Matt’s What I’m Hearing last night—which was a shame, because it underscored how much Netflix’s top shows generally rack up massive viewership quickly before falling off as members binge and move on. Of course, this contradicts the widely touted supposition that algorithms perfectly pair content with viewers. Apologies! Here’s the correct chart:

• 💼 A personal WIH+ update: Longtime readers know I also have a day job as head of Parrot IQ and V.P. of strategy at Parrot Analytics. Well, perhaps inevitably, I’m changing things up and will be taking a full-time role at a major streaming company. (You’ll know which one soon enough!)

  As a result, I’m going to be stepping back from my usual weekly sends. Starting next Tuesday, What I’m Hearing+ will feature contributions from an all-star team of Puck authors, starting with Eriq Gardner’s dispatches on entertainment law… Matt Belloni will oversee it all, and yes, you’ll still get analysis from yours truly, just less frequently.

That said, does WBD truly need the NBA? Bankers and investors suggest that Zaslav and C.F.O. Gunnar Wiedenfels should continue deleveraging the company and, eventually, re-rate its $39 billion net debt. And if Zaslav doesn’t end up with the NBA, he’ll have $2.5 billion a year laying around with which to do so.

If Zaz does have a strategy for transitioning WBD’s audience from linear to streaming, he’s playing it close to the vest. While he has proven he can tear down a streaming ecosystem, he hasn’t demonstrated he can build in this new space. Can he build without the NBA? It’s sorta like trying to climb Everest and tossing half of your oxygen cylinders off the mountain. Not impossible, but why on earth would you do it?

WBD needs sports for ad revenue, yes, but mainly as ballast for its cable business in negotiations over carriage fees. In particular, the WBD sports strategy is just enough. As the company manages its debt, Zaz has made deals that fill his brands with just enough content and just enough leverage to negotiate with the carriers. As part of the recent $7.7 billion NASCAR rights deal—which also included Amazon, Fox Sports, and NBC Sports—WBD will get just five races per year, and their 3 million eyeballs apiece, compared to 14 races each for the senior partners. The company also bought a third of the Bundesliga (German soccer) package, and recently struck a deal to license a few College Football Playoff games from Disney. (WBD also has European rights to the Paris Summer Olympics, which will be carried by NBCUniversal domestically.).

NBA basketball is vital to this strategy. TNT, in particular, makes up nearly 30 percent of all affiliate revenue for Warner Discovery, and is the only reason the company accounts for about 7 percent of live sports viewership in the U.S., according to MoffettNathanson. The NBA also makes up about 50 percent of time spent watching sports on Warner Discovery-owned networks.

Disney and Fox were incentivized to work with WBD because certain rights fill holes in their schedules and audience profiles at certain times. The NBA certainly boosts Fox after the NFL season, and between Disney and WBD they’d have a near monopoly on the NBA. But if other premium sports, like NASCAR and potentially the UFC, can just as capably help Zaslav achieve his apparent goal of re-creating Discovery’s success—i.e., becoming a strong enough player inside a much larger machine—then just enough actually kinda works. He needs just enough to complement other partners.

So, should Zaslav pony up for the NBA, presumably by trying to wrench the “C package” from Amazon for $1.8 billion-plus? It’s within this context that I actually think Zaz and Gunnar should take the L and instead find other hyper-engaged sports audiences to monetize. Attention, the core economic metric in a digital age, is rapidly fragmenting into two sects—implausibly large and targetably small. There is no middle class in media anymore. There is Taylor Swift and the NFL, or there is F1 and UFC. This puts the NBA in an interesting position. Commissioner Adam Silver is able to charge more for less because the playoffs fall into the implausibly large bucket, even if regular season games are getting incrementally smaller. This may be the last round of negotiations that can command this level of interest and cash.

Warner Bros. Discovery may want to compete with the giants, but it has the potential to succeed in leaning into just enough small but highly targeted and highly monetizable buckets. The UFC, which comes up next for bidding, is one of them. (Disney will likely put up a fight to keep it for similar reasons.) NASCAR is another. After the success of Caitlin Clark mania and women's professional soccer, investors are pushing college volleyball as the next potential “big” sport. Cycling, sailing, and tennis are all high-interest, high-income sports that aren’t being targeted by the biggest brands.

If I were advising Zaslav, and I am most certainly not, I’d suggest taking those NBA billions, paying down debt to decrease leverage, and finding smaller—but growing and profitable—sports in the U.S. and abroad that can be monetized through new methods that streaming allows (tiers, add-ons, etcetera). I believe WBD’s best outlook is becoming just sticky enough in the number of bundles it finds itself in. It doesn’t need the NBA to do that; but it does, however, need a strategy, and it needs to communicate that strategy more effectively—even Charles Barkley might agree that it’s not a terrible plan.