Originally created 12/13/01

NBA close to deal with AOL

NEW YORK -- Looking for a twist in its TV deals because of slipping ratings and a slow economy, the NBA is close to creating a channel it would own with AOL Time Warner.

An outline for such an agreement is in place, three industry sources familiar with the negotiations said Wednesday on condition of anonymity.

What the league still must do is decide who its other broadcast partner will be when the current four-year deals worth a total of $2.64 billion expire at the end of this season.

Those bidders are NBC, which paid $1.75 billion for its portion of the outgoing NBA package, and Disney Co. brethren ABC and ESPN. NBC is thought to have the edge.

Everything could be wrapped up as soon as Thursday, but the league and networks wouldn't discuss specifics.

"We're not going to negotiate through the media," NBA spokesman Mike Bass said.

Turner spokesman Greg Hughes said: "We're very interested in remaining partners with the NBA well into the future, but we don't have a deal right now."

AOL Time Warner is the parent of Turner Sports, which holds the cable part of the NBA's TV package and is airing games on TNT and TBS three nights a week this season.

Under the new proposal, the sources said, most games would be shown on the new channel - which probably would replace the AOL-owned CNN/SI - and some games would remain on TNT or TBS. CNN/SI started Dec. 12, 1996, and is in about 21 million U.S. homes, too few to register in the Nielsen Ratings.

The NBA's stake in the joint venture could mean it would receive less cash than it did in the old deal with Turner ($890 million for four years), but the league would profit if the new network were successful.

If such a deal is completed, former CBS Sports president Neal Pilson said, the league "gets increased distribution, it gets the opportunity for sharing in revenues from this distribution, and, most important, it gets the opportunity for its equity to appreciate dramatically if the channel grows.

"A channel that grows to 80 million homes is worth several billion dollars, so there's a real upside here."

That's saying a lot, given the climate in which the NBA is looking to sell its broadcasting rights.

Regular-season ratings on NBC dropped 35 percent from 1997-98 to last season, and Turner's NBA audiences have dropped, too.

In addition, with companies cutting back on spending for advertising, networks are less likely to throw around dollars the way they did in the late 1990s, when rights fees skyrocketed.

NBC has lost roughly $100 million a year on the old NBA deal.

Still, the network that lost major league baseball and the NFL in recent years would like to keep pro basketball. One possible solution would be for NBC to pay the NBA less money and air fewer games than the 32 or 34 it is showing under the expiring contract.

"We don't think it's appropriate to comment during the negotiations," NBC Sports VP Kevin Sullivan said.

NBC could have an edge over ABC-ESPN, in part because of NBC's 12-year relationship with the NBA, and because no one - ESPN, Turner or the league - would be thrilled if multiple cable networks had to vie for viewers and advertising dollars.


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