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THE STATE OF NBA PROPERTIES, THE NBA ABROAD, MULTIMEDIA
Published February 14, 1995
THE SPORTS BUSINESS DAILY interviewed NBA Properties President Rick Welts during the week leading up to NBA All-Star Weekend. In Part II, Welts addresses the focus of NBAP in '95, their international efforts, and their strategies for dealing with new interactive technology. THE DAILY: What is the state of NBA Properties at the All- Star break? WELTS: You're talking to us at an interesting time, because we are undergoing a major transition. It is the result of having a maturing domestic business that has grown at an incredible rate over the last twelve years, and the entrance into the phase of our business where we can be truly described as a global property. We've had aspirations to be that for a long time, but the infrastructure, the consumer interest, the sponsorship and television interest are at a point right now where you could truly describe us that way. So, it's a huge change in our organization. THE DAILY: Is NBA Properties the instrument the league uses to spearhead its entry into new markets? WELTS: At the core, if you put it in a circle, you would have the game, the players and the teams. What NBA Properties does is deal with everything that surrounds that circle that is an opportunity. We think of ourselves as content. So whether that's television programming, consumer products, publishing, trading cards, non-game programming --whatever it is -- those are all the businesses that we're engaged in. And, NBA Properties has the mission to try to expand that from a North American business to an international business. THE DAILY: What is television's role in opening new international markets? WELTS: Television leads. We are now in 148 countries. We are the most widely distributed sports television property in the world on a year-in and year-out basis, putting aside the Olympics and the World Cup. But, in terms of revenue generation, the rest of the world is not in the rights fee payment game the way U.S. broadcasters are. It sets the stage and sets the atmosphere for your product to be successful, but it doesn't generate nearly the kind of dollars that we're used to from our American model. Because of that, we've gone a couple of additional directions in the media area. One, we're now producing programming dedicated to just one market [e.g. Japan, Germany, U.K. -- with Mexico under discussion] ... Then, what I think is most unique, we've created for an advertiser a syndication or un-wired network so that we retain, wherever possible, inventory in our own game broadcasts. It makes it possible for us to go to Coca-Cola or Nike for example, and say, we, through New York, have an opportunity to give you a presence in every single broadcast of an NBA game or of our half-hour highlight show, "NBA Action" which airs in 130 countries. We can actually do the sale on the commercial insertions before the tapes are ever delivered to the broadcasters. That is something nobody is doing, and it has been part of our strategy to create media opportunities for a few companies that are truly going to be global in nature with us. That already is Coke, Nike and Reebok, but I think that list is going to include IBM, also AT&T and McDonald's -- companies that see basketball and the audience we're reaching working for them not just in North America, but also the world. THE DAILY: Are there international markets that are particularly hot for the NBA? WELTS: Believe it or not, I would say that the hottest market for NBA basketball outside North America is Australia. ... It's really an amazing market for us. From there, I would say that Western Europe, by far, represents our biggest opportunity. Germany, France, Spain, Italy and the U.K. -- the five markets that we're focusing the majority of our attention on -- have the most immediate economic opportunity for the NBA. We're also focusing a lot of time and attention on Asia. Europe is today's opportunity; Asia is our 20-year opportunity. THE DAILY: What are the league's plans to move into multi- media and other interactive technologies? WELTS: Because this is changing so fast we have created a task force within our own company that is dealing with every new opportunity -- many that come knocking on our door, but also going out proactively and trying to identify the path we want to follow. Historically, we tend to sit back a little longer than others to try to sort out the options and take a solid first step in any new area. We didn't have a CD-ROM product prior to this year. Microsoft's CD-ROM NBA product on the history of the NBA did tremendously well at the holidays, and I think it was the result of a lot of time and effort deciding what the first entry into the CD-ROM market should be for us. We're spending a huge amount of time deciding what exactly our presence should be on the Internet rather than just jumping into it. We're going to be there, and we're going to be there very soon, but we didn't jump in the first chance we got. You can see that in our direct broadcast satellite service with DirecTV that was launched this year. It was something we could have done a year ago. We really believe that the beauty of being content, as I described us before, is whoever figures out how to get that information superhighway into your home needs content and products that people are interested in. And we are lucky enough to be in one of those businesses that can provide a lot of valuable content. So whether it's going to come in through your phone line, through your cable television, through a dish on your house, the NBA is going to be there. We are devoting a lot of people's time to focusing on the path we should be taking in a lot of these technologies. THE DAILY: With all the focus internationally, are there concerns about maintaining the domestic audience? WELTS: There's no question that in the center of our world are the North American teams, the players, and our fans. And nothing we do can ignore that core. The intense focus on the health of that core is what allows us to do all these other things. As soon as we take our eye off of that, none of the rest of this is going to matter.