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NBA shoots for local streaming of live games

The NBA is poised to become the first major U.S. sports league to stream live games in local markets, an aggressive offering that will set up a showdown between cable operators and regional sports networks.

The move marks the latest evolution in digital rights and adds fuel to one of the most contentious issues in local sports media as teams look to broaden their reach while operators look to protect the rights to their most expensive programming.

The NBA has authorized its teams to launch three distinct digital services by the start of the 2008-09 season in late October: video streaming, interactive TV and video-on-demand.

But the service that is certain to create the most waves is the streaming, which is one of the reasons why the league is negotiating on behalf of its 30 teams to cut live local deals.

“We hope to have a model in place this season,” said Bill Koenig, NBA executive vice president of business affairs and general counsel. “Our opening up of the rights will certainly be done.”

The plan would allow viewers to watch live games online within their local market for the first time. That could mean Chicago Bulls fans could watch live action on or on the team’s local RSN Web site, in this case, Whether the online offering is free or not is still to be determined.

The NBA will use geo-blocking technology to ensure that people outside of a team’s territory will not be able to access its games online to comply with the league’s local marketing rules.

The NBA’s decision to open its broadband rights creates a minefield of issues between local sports networks and their cable and satellite carriers.

To date, the biggest U.S. leagues have resisted any kind of plan to stream live games locally, to protect the value of local television rights.

The NBA would use blocking technology to allow
access only in a team’s geographic territory.

Cable and satellite operators, in particular, don’t want to lose exclusivity over some of the highest-rated programming from one of their most expensive channels.

Regional sports networks also have said that they are wary about angering their cable and satellite affiliates, even if they like the idea of streaming games.

“I can tell you that we’re going to push back,” said an RSN executive, who asked not to be identified due to the ongoing negotiations. “[Cable and satellite operators] will hate this concept.”

At least one RSN group, Fox Sports Net, hopes to be able to convince cable and satellite operators that streamed games will not hurt their core linear TV business.

“We believe that new media rights can be additive and complementary to traditional broadcasts,” said FSN spokesman Chris Bellitti. “We’re going to work closely with our teams and affiliates in this process to deliver the most value to the fans.”

The NBA is hammering out the details and even league executives admit that questions remain about how the streamed games will be presented.

They don’t know whether the games will be free or not, though the NBA will leave that decision to teams. They also are uncertain whether the games will be hosted on the local team site, the RSN site, or both. Details of advertising within the feeds and who sells that are also still to be worked out.

Adding to the uncertainty is the fact that some teams do not even hold the necessary streaming rights, since some have sold them to RSNs along with their TV rights.

Team executives are deferring to the NBA to negotiate with the RSNs due to the unique nature of the deals.

The issue was discussed in detail at last month’s NBA team presidents meeting, with the league bringing in representatives from Comcast and Fox Sports Net to help explain the new model, Koenig said.

“We are on hold until the league works things out with the RSNs,” said one high-ranking team executive. “It’s a complicated issue that we are relying on the league to work out. We don’t know how big the market is, and that is the great unknown. This is something we view as inevitable, but we also have to protect the rights we have already granted.”

But the RSN executive was wary of the NBA’s timetable.

“It’s not going to be ready to start the season unless they present a more compelling business model for it,” the RSN executive said.

In terms of interactive TV and video-on-demand elements, each team will be able to sell those rights to a local media company, such as an RSN or a cable system.

The goal of live streaming and offering more interactive features, Koenig said, is to increase and sustain fan interest by offering more ways for fans to view NBA content.

“We believe that if we can draw more people to the interactive features, it will help bring in new [fans] and keep [fans] for a longer period of time,” Koenig said. “Having all the teams and the RSNs experimenting with stuff on the local level will help us on the national and international level. I am very confident that we will have it in place and we are excited about the prospects.”

Other leagues are also doing more with streaming games. MLB makes its out-of-market package available to Internet users. The NFL plans to stream NBC’s schedule this season.

“It’s not just us,” Koenig said, pointing to ESPN and NBC’s online offerings. “Younger people are consuming sports through platforms other than TV.”

Koenig expects ITV applications to include real-time scores and statistics, polling and multiple camera angles. VOD services will include replayed games and highlights packages. He said teams will have the freedom to be as creative as they want with these interactive elements.

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