SBJ/April 16 - 22, 2007/This Weeks News

NBA tests market on new digital package

The NBA has initiated a series of conversations with media companies to try to put a value on a package of digital rights that includes NBA.com, NBA TV and NBA League Pass.

Adam Silver
Deputy Commissioner, NBA

The league still hasn’t decided whether it will put such a package up for bid, but the stream of interested parties that has visited the NBA’s Fifth Avenue headquarters suggests strong interest in a deal that could create a new multimillion-dollar revenue stream for the league.

“Our digital rights are developing into very valuable assets and we are analyzing the best way to exploit them in our business,” NBA Commissioner David Stern said.

The league is in deep discussions with current television partners, Turner and ABC/ESPN, and hopes to have a new agreement in place by the end of the NBA Finals in June. Any new television deal undoubtedly will have digital rights included, but the NBA is also interested in carving out a separate digital rights package that would include broadband and wireless rights.

“We’re out in the market with our TV partners for a new deal, and what they are telling us is that they expect to keep some kind of digital streams as a byproduct of the huge rights fees they will pay,” said NBA Deputy Commissioner Adam Silver. “We also expect to be able to keep an appreciable amount of digital rights in order to package and sell them to others, and to reserve some of those for use by ourselves and our sponsors.”

NBA owners will be briefed on the issue during the upcoming board of governors meeting in New York set for Friday.Digital rights are a main part of negotiations with broadcast and cable networks, and network executives say they would never cut a deal that doesn’t include some digital component.

Turner has had its hand in several of the league’s digital applications. Not only does its parent, Time Warner, hold a small stake in NBA TV, but Turner operates a broadband channel, TNT Overtime, on NBA.com.

ESPN has been particularly aggressive on this front, creating marketing, sales and editorial plans that cut across all of its platforms.

Under Stern, the NBA has long been one of the most technologically savvy leagues in the country. It was the first to launch its own, dedicated TV channel, NBA TV, in November 1999. By comparison, the NFL launched its channel four years later and Major League Baseball plans to launch its network in another two years.

In the past, Stern has pointed to his decision to schedule more games — including playoff games — on cable as the start of a trend that other leagues have followed.

The NBA is not looking to create a separate entity like MLB’s Advanced Media division that runs MLB.com and the league’s other interactive business, but it sees a potentially valuable asset that could reap it millions annually in revenue.

“The NBA is trying to determine the path they’re going to go down,” said one media executive with knowledge of the NBA’s plans.

In February, the NBA also signed a short-term deal with YouTube through the end of the 2007-08 season when the league’s current TV deals expire.

“We are looking at the next steps,” Stern said.

Staff writer Terry Lefton contributed to this report.

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