Tight economy may choke NBA rights
Turner and NBC appear to be offering less for next 4 years
By Allison Romano -- Broadcasting & Cable, 12/16/2001 7:00:00 PM
There's a silver lining in the economic recession for some TV networks: The days of escalating sports-rights fees may be numbered.
The National Basketball Association is the first pro league to feel the pinch. A weak economy and slumping ad sales could spark the NBA's first decrease in rights fees since the 1980s.
Earlier this year, league Commissioner David Stern was predicting a 20% increase in fees. Now it appears the league's next TV deal will likely yield less cash than the combined $2.64 billion the NBA collected for the current four-year deals with NBC and AOL Time Warner Inc.'s Turner Sports, which expire after this season.
Turner, NBC and Disney's ABC/ESPN are dueling for the TV rights. Officials from the networks would not comment on ongoing negotiations.
With the situation still fluid at press time, it appears AOL Time Warner's Turner Broadcasting will win out as the league's primary cable partner. According to reports, the NBA and AOL Time Warner have a handshake deal that includes a new basketball channel, but, as of last week, there was no signed deal and no comment from the parties.
Disney's ABC/ESPN and NBC continued negotiations with the NBA late into last week. Widespread speculation was the NBA would wrap up all its new TV packages some time this week.
The door opened for ABC/ESPN last month after NBC's and Turner's exclusive negotiating windows closed without a new deal. Some reports peg Disney's offer in the $2 billion to $2.4 billion range.
NBC is reportedly offering from $1.3 billion to $1.4 billion, down from $1.75 billion under the current deal. And while Turner is offering about $1 billion, up from $890 million, that deal is tied to the NBA's investing in a jointly owned basketball cable network.
The new network, which could be called AOL Sports, would take over for CNNSI, the company's fledgling 24-hour sports-news channel. CNNSI is thinly distributed, with about 20 million subs. and hasn't been able to compete with cable rivals ESPN and Fox Sports Net. The NBA would own a piece of the network, which could air up to four NBA games a week, along with preseason and classic NBA games, and some WNBA action.
"Both sides are trying hard to find non-cash elements to these new negotiations," said former CBS Sports President Neal Pilson.
Building out a new network is a taxing chore, even for AOL Time Warner. "You don't go from a start-up to 75 million households overnight, even if you are offering the NBA," said Denver-based sports consultant Dean Bonham.
And operators may scoff at another high-priced sports channel. "Only 25% of customers want sports, and 75% don't care," said one MSO exec. "It's the highest-priced genre we pay for."
If the Golf Channel and the Speed Channel can gain distribution, a basketball channel should have a fighting chance, Pilson noted.
Turner would likely keep two games a week on TNT but take all action off TBS. So far this season, NBA games are averaging a 1.5 rating on the Turner nets, up from a 1.3 average last season for 80 regular-season and about 35 playoff games.
|The contract story|
|Source: Broadcasting & Cable research
|1998-2002||NBC: $1.6B||Turner: $840M|
|1994-98||NBC: $892M||Turner: $397M|
|1990-94||NBC: $600M||Turner: $275M|
|1986-90||CBS: $188M||Turner: $25M (first two years);$50M (last two years)|
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