The Biz: Uncertain scatter for NBA networks

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The National Basketball Association's season kicked off last week, and TV partners AOL Time Warner's TNT and Walt Disney Co.'s ABC/ESPN report that, so far, ad sales are on track. But media executives predict the uncertain outlook for the scatter market next year could wreak havoc on the remaining time the networks have to sell.

The most valuable ad time ABC/ESPN and TNT have to sell is the post-season playoff games, which represent 70% of the NBA's yearly gross national TV ratings points. The second-quarter scatter market is where the networks should be able to sell time most profitably. (Scatter markets are where advertisers buy national TV networks on a near-term basis.)

But with more of the NBA's games being shown on cable this year, NBA sponsors will likely spend less on TV than in previous years. And NBA sponsors, under new contracts, are required to spend less on TV time than in previous years, media executives say.

Cable typically delivers lower ratings than broadcast, and league sponsors, who are also TV advertisers, will likely spend less thanks to the cheaper TV time. General Electric Co.'s broadcast network NBC until this season had the NBA package for over 20 years and commanded most of the ratings points. TNT has aired NBA games for the last 19 years, while ABC/ESPN is a new partner.

up and down

Currently the fourth-quarter scatter market has delivered cost-per-thousand price increases of 20% to 40% over the upfront selling period, where advertisers buy a season's worth of commercial time on a network. About 20% fewer gross ratings points are projected for the yearlong NBA TV package due to more games on cable. Networks are hoping the smaller supply will drive up demand.

Turner Sports, the sports-advertising selling arm of the NBA on TNT, says ad sales are off to a good start, with 75% of its inventory sold for the entire year-and is sold out in the fourth quarter and 80% sold for the first quarter.

Trish Frohman, senior VP-sales and sponsorships for Turner Sports, said, "We have got deals at high-single-digit CPM viewer increases. We are getting ready to do double-digits increases."

slight lead

Media executives believe Turner is ahead of ESPN in sales because of its longstanding relationship with the NBA. They track ESPN's sales at a slightly slower pace than Turner-selling just 50% of its inventory so far.

Ed Erhardt, president of ESPN/ABC customer sales and marketing, would only say, "That's wrong. We're close to 70%." He would not comment on price, but he did say ESPN/ABC would listen to advertisers who might want to package NBA with ESPN or ABC sports properties, including next year's Super Bowl broadcast. Media buyers anticipate ABC/ESPN pricing for the NBA will be close to that of the National Football League on ESPN-which is a $34 CPM for men 18-49.

Fees for the league and TV media commitments vary by client. Current NBA league sponsors include Coca-Cola Co., Anheuser-Busch, AT&T, American Express, PepsiCo's Gatorade and AOL Time Warner's America Online. New league sponsors include Adidas America, Lego Group and Reebok International. NBA executives had no comment.

National NBA advertisers also face another depressing trend-lower overall ratings. Since 1996 NBA ratings have plummeted 40%. One major athletic-shoe manufacturer is already planning to cut its national NBA TV budget to $3 million from $20 million the year before, according to network sales executives. "There are some advertisers that are up; some are down," Mr. Erhardt said. "It's about even."

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