NBC and Turner Broadcasting System, nearing the end of four-year deals valued at $2.64 billion to the league, have first rights to re-up. But the NBA won't have an easy time selling through big increases.
Before the TV ad market hit its current soft spot, the NBA knew this year's TV rights negotiations would be trickier. Since superstar Michael Jordan's retirement three years ago, ratings have plummeted, no one else has picked up his mantle as a marketable force and the league's push to be a cross-border player has been dealt a severe setback by the expected relocation of its Vancouver team to Memphis.
Add in the advertising market's hiccups to the mix, and logic suggests Commissioner David Stern and the league-heading into its last pre-negotiation playoffs April 21-will have trouble obtaining a significant increase in the dollars they command from the networks.
But logic rarely seems to apply to sports rights deals. Professional baseball and hockey have seen ratings declines, and both received huge rights fees increases in recent deals. Networks trip over themselves to throw money at the National Football League even though executives speculate those deals are money-losers.
The NBA, however, will be the first major rights-fees deal to be negotiated during the economic downturn.
"It certainly changes the negotiating posture," Mr. Stern said.
The current four-year contracts expire after the 2001-02 season. The economy could be stronger by then. But negotiations on the TV deal are expected to start after this season's NBA Finals, amid a weak economy and ad market.
General Electric Co.'s NBC, which pays $438 million a year, and AOL Time Warner's Turner, which pays $223 million annually, will have an exclusive negotiating window to reach a deal before competitors would be allowed to bid.
"It is our hope to renew with our current partners," Mr. Stern said.
An NBC spokeswoman declined to comment.
"We are hopeful that we can reach terms," said Mark Lazarus, president of Turner Sports. "We expect to."
Paying an increase might prove difficult for the networks because advertisers say they are not prepared to pay more for NBA programming.
"I hate to be blunt about it," said Chris Geraci, senior VP-director of national TV buying at Omnicom Group-owned media buying agency OMD, "but it's just not our problem. It's that simple."
"Certainly the advertisers aren't going to carry that burden in its entirety," said Bob Flood, senior VP-national electronic media at Publicis Groupe's Optimedia. "It's going to be driven by the marketplace. It shouldn't be an assumption that the ad community's going to step up."
One factor helping the NBA's position is the sputtering fortunes of NBC. The network has lost Major League Baseball and the NFL, and its alternative experiment, the XFL, has been deemed largely a failure. That means if the network loses the NBA, it risks being relegated to a bit player in TV sports.
Turner, meanwhile, bases several evening programming lineups around the NBA on TNT and TBS. If those cable networks don't offer the NBA the deal it wants, others are waiting to make a play. Walt Disney Co.'s ESPN is interested in the cable package, and its broadcast companion ABC could fight for the network rights. The competition will drive the rights-fee price up even in the face of the league's struggles.
"That's more important than whether the ratings are down and the [ad] market is soft," said Barry Frank, senior VP of sports marketing outfit International Management Group.
Mr. Stern declined to comment on whether the league would split the rights among more than one network and cable outlet.
Mr. Stern and sports TV experts agree the league will be able to seek a healthy increase. Advertisers still covet males ages 18 to 34, who don't watch as much TV as their female counterparts, and the NBA still delivers strong ratings in that demographic.
Networks use programming like the NBA to promote other shows, which is one way a sports property that loses money on its own for a network holds broader value. A professional league deal also enhances the relationship between a broadcast network and its affiliates and a cable network and local operators.
Sports still hold an allure that even top-rated dramas and comedies don't: In the increasingly instant-information world, viewers want to watch events as they happen.
"People don't record us to watch," Mr. Stern said. "They want to watch us live. That's very important to networks."