NBA pushes limits

Basketball's new contract with AOL TW and Disney would top previous by two more years and $1 billion

With the National Basketball Association poised to ink a new TV deal with AOL Time Warner's Turner Sports and Disney's ESPN/ABC, testy cable operators sound a lot like fans in the stands: The ticket costs too much.

Last weekend, the NBA's new six-year TV deals were all but officially signed, with ESPN/ABC ponying up $2.4 billion and AOL Time Warner's Turner Sports offering about $1 billion for the cable portion. As part of the Turner deal, sources say, CNNSI would relaunch as a jointly owned NBA-AOL Time Warner sports channel to carry 100 NBA games per season. Officials from ESPN/ABC, Turner and the NBA would not comment on the deal.

"They've pushed the NBA onto cable, and now everyone pays for it. It's a disaster for the industry," said a cable company exec. "You had declining viewership on the networks, and they can't sell ads. Now two cable companies bid up the rights and pass the cost onto subscribers."

Operators love to argue costs hurt their subs, but rising rates cut into their bottom line. ESPN already levies cable's heaviest sub fee, as high as $2. Operators worry that to leverage the NBA cost the net might try raising rates even higher. Insiders say ESPN isn't planning to introduce an NBA surcharge.

A new AOL Time Warner-NBA sports net, tentatively coined AOL Sports, might look for a fee of 50 cents per subscriber. According to estimates from Kagan World Media, only a few other channels command a fee in that league, including Discovery Channel (73 cents), TNT (57 cents) and USA (38 cents). (Kagan's estimates are averages for all MSOs, which brings down their figure for ESPN to 72 cents per cable sub.)

Published reports have said if operators bristle at that price, games may air instead on the NBA's digital net NBA.comTV, currently in about 10 million, mostly satellite, homes.

The NBA comes up pretty rosy in the deal, particularly since it arrives in lean economic times. The league's overall take, about $3.4 billion, would surpass its current $2.65 billion pact with NBC and Turner, though the annual payout would be smaller. The new six-year deal would pay out about $570 million per year, compared with the current $660 million per year.

Disney offered fringe benefits that piqued NBA Commissioner David Stern's interest. NBC was willing to pay $1.3 billion for a new four-year deal, but Disney's deal includes broadcasts on ABC, ESPN and ESPN2, along with ESPN radio broadcasting and the league's Web site.

Turner would put about 50 games— including some conference-finals playoffs and the NBA All-Star Game—on TNT.