Cabler’s develop a new game plan

NFL, NBA bet that single-sport networks will win plenty of fans

Ad-supported cable-network spinoffs may be all the rage among the Big Three professional-sports leagues, but no one knows whether the NFL Network, NBA TV or a still untitled channel from Major League Baseball will end up as lucrative businesses or money-draining white elephants.

In terms of actual deals, the National Basketball Assn.’s NBA TV is off and running.

Three cable operators — Time Warner, Cox and Cablevision — signed up for NBA TV earlier this month, adding to its previous agreements with DirecTV and Echostar.

By contrast, the National Football League’s NFL Network, which plans to kick off on Nov. 4, has yet to sign its first cable deal, although it can boast a contract with DirecTV that will make it available to the satellite distrib’s 11.2-million subscriber base.

Baseball is holding back, says Tim Brosnan, exec VP of MLB, content to let the NFL and the NBA fight in the trenches while MLB figures out what programming to funnel to its cable spinoff.

The MLB’s strategy may be smart. The NBA seems to be moving too fast by permitting cable operators to slot NBA TV on a digital sports tier, the equivalent of cable Siberia.

At an extra five bucks a month, these sports tiers could have a hard time finding customers already weighed down by all the analog and digital channels that come with the high-tech cable box.

Besides NBA TV, candidates for a digital tier consist of networks pushing sports with limited appeal: tennis, ice skating, martial arts, horse racing and various college sports not picked up by mainstream broadcast and cable networks.

Even after a few years, these tiers could be languishing, pulling in only about 10% of a cable system’s subscribers.

Even as the marquee draw on such a tier, NBA TV would not reach enough people to induce advertisers to buy time on the network.

These sports tiers might have a better chance if the NFL Network allowed operators to add it to the mix. But the NFL is saying no, demanding that cable systems guarantee a specific number of subscribers each year throughout the life of the contract.

Steve Bornstein , president and CEO of the NFL Network, says his ambition is to get the channel into 50 million homes by the end of the first three years.

That’s an almost impossible task, even if the NFL were able to lock in dial positions on digital basic cable, avoiding tiers completely.

The NFL must get into as many homes as quickly as possible, Bornstein says, because it plans to spend $100 million both to program and market the NFL Network, and sell it to cable operators.

At the other extreme is NBA TV, which, says Gregg Winik , has such an efficient programming operation that its costs will come to only a fraction of NFL Network’s $100 million.

NBA TV also has a global reach that puts it in 30 other countries, Winik says.

Thus, he says, NBA TV can afford to forego significant ad revenues by accepting limited-circulation tiers for at least the next few years.

Compromising on tiers may give the NBA an advantage in getting more cable deals.

But sports consultant Neal Pilson says the NFL “will eventually be able to use the strength of its Sunday Ticket out-of-market games to achieve the U.S. clearance it’s seeking.”

DirecTV paid the NFL a staggering $2 billion for a five-year renewal of exclusive rights to Sunday Ticket in 2002.

The license fee was probably worth it, because DirecTV uses Sunday Ticket as a bludgeon against cable operators, who have lost tens of thousands of football fans to their satellite rival.

These operators are seething, and will ante up when the DirecTV contract opens a window for cable beginning in 2006.

At that time, “Sunday Ticket will be a heavily fought-over prize,” says Kevin O’Malley, a sports consultant. “And it could end up as the leverage the league needs to get cable operators to do the NFL Network deal.”

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