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can lick its wallet
Latest step in the long march of sports to cable
By Gabriel Spitzer
Losing the rights to broadcast NBA basketball may not be the worst thing that ever happened to NBC, even if it does leave the network without a "big three" sport on its roster.
Sources say the network was losing "hundreds of millions of dollars" on the league, and NBC Sports chairman Dick Ebersol has been vocal about stopping the bleeding.
If, as expected, the NBA announces today that it has struck a four-year deal with ABC/ESPN, it would mark the third time in four years that NBC has walked away from a major sport.
It bid farewell to pro football in 1998, and it did the same with baseball last year.
"NBC's not having the NBA now is kind of like when Macy’s stopped carrying toys. It marks the end of an era," says Robert Thompson, director of Syracuse University’s Center for the Study of Popular Television.
"News has already been so usurped by CNN, MSNBC and the rest. I think the same is true of sports now."
ABC will reportedly carry less than half the 33 games NBC currently airs, with the rest headed to ESPN.
Disney has not publicly revealed the amount of its bid for NBA rights, but reports put it at about $1.6 billion, significantly more than the $1.3 billion sources say NBC bid.
NBC declined to comment on the NBA’s reported deal with ABC/ESPN.
NBA ratings have declined about 40 percent since the NBA and NBC became broadcast partners in 1990.
Meanwhile, the rights fees have increased steadily, as in most major sports. Those economic realities appear to be pushing more regular-season games off the broadcast networks and onto cable.
Throw in the NBA’s expected deal with Turner Sports and the new AOL Sports network, and cable could be telecasting up to 200 NBA games next season, compared to just 15 or so on broadcast networks.
"Ebersol told me about a year ago that he thought that in the future the vast majority of major-league sports would be broadcast on cable, and not network," says Dean Bonham, chairman of the Denver-based sports consulting firm the Bonham Group.
"His prediction is proving to be true. As we look into the tea leaves three to five years from now, it may be that 90 percent or more of all major-league sports will be on cable."
With much of their money coming from fixed subscriber fees, cable networks seem to have a more solid financial footing when it comes to risky prospects like investing a billion dollars in a sports TV contract.
"For the first time, the full weight of the dual revenue stream on cable sports channels has outmaneuvered the over-the-air broadcast networks," says Neal Pilson, former president of CBS Sports and currently president of Pilson Communications, a sports consulting company based in Westchester, N.Y.
"ESPN is the most profitable sports network, and it makes over half its revenue from subscriber fees. Those fees seem to be recession-proof. The critical element here is that ESPN and Turner are better prepared to take that risk than NBC because they know where their revenue is coming from. That gives them more economic power, and they used it."
Without the NBA, NBC Sports still has the Olympics, half of the NASCAR season, and sundry tennis and golf properties.
While the Olympics and NASCAR do good audience numbers, neither delivers young men like basketball. NBC will also lose a major platform to promote the rest of its lineup.
"The thing about the NBA, or the NFL and Major League Baseball, is that they are a predictable, seasonal sort of thing. The NBA season is like a television series. The Olympics are like a miniseries; you get your time slots all dressed up with nowhere to go," says Syracuse University’s Thompson.
Still, basketball’s timing and declining ratings have probably made it less of a valuable promotional vehicle.
"The highest point of the NBA, ratings-wise, was at the end of the TV season. So there was nothing promotion-wise going on then," says Tom McGovern, director of sports marketing at OMD.
"It certainly was solid programming at the end of May, beginning of June. They added a lot of hours in the past few years on Sunday afternoons, and those became difficult to sell. Ratings have declined; the game is not what it used to be."
Nevertheless, it seems unlikely that sports rights fees are going to decrease anytime soon.
"I don’t think this is the beginning of a downward spiral in rights fees. I just don’t see that happening. I think rights fees will continue to increase, and cable is going to become more involved, more competitive," says Bonham.
Bonham predicts that the internet and international broadcast rights will figure into rights fees negotiations in coming years, keeping upward pressure on the dollar amounts.
"I think the outcome of the recent negotiations between the NBA and ABC/ESPN, NBC and AOL is much more a function of an extraordinary economic climate and not the beginning of a trend," he says.
December 19, 2001 © 2001 Media Life
-Gabriel Spitzer is a staff writer for Media Life.
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