NEW YORK — NBC will pony up a total of $1.75 billion for exclusive broadcast rights to carry National Basketball Assn. games for four more years — through 2002 — more than twice the $750 million it forked over for the current four-year deal which expires at the end of the 1997-98 season.
And Time Warner’s TNT and TBS have together agreed to pay $890 million in toto for their exclusive four-year cable renewals after shelling out only $350 million in the current contract.
The release of these figures highlighted a press conference here Tuesday led by David Stern, commissioner of the NBA; Dick Ebersol, president of NBC Sports, and Harvey Schiller, president of Turner Sports, a Time Warner subsidiary.
Despite the huge increase in license fees, “we’ll break even or make money on the deal,” said Ebersol. His confidence arises chiefly from the 35% increase in the number of NBA playoff games (from 23 to 31 contests) and the 28% rise in the number of regular-season games (from 25 to 32) NBC will telecast each year, starting in 1998-99, when the new contract takes effect. The advent of additional games means, of course, that there’ll be more 30-second spots to sell to eager advertisers.
Schiller also said he’s convinced that TNT and TBS will make money, citing the 14% jump in the number of regular-season games the two networks will cablecast, from a total of 70 contests in the previous deal to 80 in the new one.
“Gerry Levin and Ted Turner wanted to do this deal,” Schiller said, referring to the chairman and vice chairman of Time Warner.
In addition to the extra NBA games, Stern said NBC would increase the number of weekend-daytime NBA-oriented TV specials from three to eight a year, and continue running the weekly half-hour “NBA Inside Stuff” series for another four years. “Inside Stuff” now plays on Saturday at 10:30 a.m.
Time Warner will also help the NBA expand its reach, Stern said, by scheduling NBA specials on HBO and the Cartoon Network, and merchandising the players and the logo in Warner Bros.’ Six Flags Theme Park. Also, according to Stern, Turner Sports will sell the advertising time on NBA games transmitted by the direct-broadcast-satellite distributor DirecTv and on the 15 Chicago Bulls games carried nationally by the WGN superstation.
Ebersol said that NBC will continue to share sales revenue with the NBA in the new contract. By the time the current deal expires after this season, Ebersol said there’d be $300 million in extra money to be split down the middle between NBC and the NBA.
That $300 million is what will be left over after the advertising revenue from the sale of 30-second spots on the NBA telecasts reaches a bottom-line sales figure that both parties have agreed on. That figure essentially allows NBC to get its money back —plus a small profit — from the license fees it pays the NBA and the production costs it lays out to cover the games.
TNT and TBS also share revenues in their similar, although smaller-scale, deal with the NBA. Stern said TNT and TBS will share a four-year total about $50 million in extra revenues from the current contract.
Ebersol said he’s confident NBC will be able to pass the cost of its increased license fees onto the shoulders of the advertisers, to the tune of a hike of about 10% over current 30-second-spot prices. Because NBA games appeal to young male viewers, which ad agencies covet, Ebersol said the cost of the average 30-second spot on a regular-season game has climbed to $100,000. A 30-second spot on the NBA finals cost $400,000 last year, double what a spot cost during the 1991 finals, he said.
Other broadcast and cable networks had discussions with the NBA about displacing NBC, TNT and TBS as rights holders to the games, Stern said. He even acknowledged that the NBA might have pocketed more money if it had opened up the new contract to bids from all interested parties.
But NBC and Turner “are the people who brought us here,” Stern said. “We finally got to a point where we decided: Let’s wrap it up and move on.”