NBA may lock out nets revs

Cablers can shift series to fill holes

With little movement in negotiations between NBA owners and players, television broadcasters and advertisers are uncomfortably waiting on the sidelines for what currently seems inevitable: the likelihood of the pro basketball season losing games from its regular-season schedule — or worse.

If the NBA doesn’t play any of its 2011-2012 sked (which runs from November into June), national carriers ABC/ESPN and TNT will lose as much as $1.25 billion in ad sales revenue, according to one estimate. Add in regional sports nets, some of which will struggle even harder than the national nets to find substitute product for the high-profile NBA, and there is no doubt a lot is at stake.

Still, since many sports fans don’t take notice of the NBA until winter (ABC’s first game is traditionally on Christmas Day), a shortish work stoppage like the one in 1998 (which trimmed the season from 82 games to 50) wouldn’t be all that devastating.

“The NBA is important sports programming … and if there is no season or if the season is curtailed, their sales revenue will be impacted,” former CBS Sports head Neal Pilson says. “Some of the money can be re-expressed by the networks in other sports or programming where there is a similar demographic, but it will have an impact.”

Considering the NBA’s ratings for marquee matchups and postseason contests in recent years, networks will be losing out on a strong performer. For example, all of the league’s TV partners showed nice ratings gains last season, and May’s compelling playoff action lifted TNT to the No. 1 spot for the month among all basic cable nets in every key ratings category.

“The figures the NBA hits among 18-35 males, or even 18-54 males, it is a pretty sought-after demographic and (broadcasters) are definitely at a loss there,” says SNL Kagan analyst Adam Swanson.

Still, the amount of damage that canceled games will have on the networks will differ greatly depending on their inventory of other programming options. For example, during the last NBA work stoppage in 1998-99, TNT was able to fill its NBA timeslots with films and other product that actually outperformed their expected NBA ratings. While this might not be the case now, TNT’s complementary lineup of entertainment fare will help.

“One of the reasons they (TNT) have the NBA is because it is a demographic that is compatible to a lot of their male-oriented programming,” Pilson says. As a result, they may be able to cover some advertising losses with shows that appeal to the same demographic the NBA draws, like the more male-skewing of its dramas, “Southland” and “Leverage.”

ESPN also has a deep roster of sporting options and sports docs to cover any lost scheduling. But for RSNs that rely on a single sport for different times of year — such as baseball in spring and basketball in the winter — matters will be more difficult.

“For the regionals, the impact is meaningful,” Pilson says. “ESPN can move advertising to college basketball and Turner can move some of the money to entertainment properties, but for RSNs that don’t have hockey, for them, this would be serious.”

But not everybody believes RSNs will take such a huge hit. Harvey Schiller, who previously served as president of Turner Sports and CEO of YankeesNet, points out that RSNs benefit from viewers that typically are interested in not only basketball but also whatever other anchor sports the channel provides. As a result, subscriber bases should not severely drop off.

At the same time, without the overhead of televising games, RSNs will be cutting a huge cost.

“(RSNs) still are getting their subscriber fees, which are really the heart and soul (of their revenue),” Schiller says. “The advertising revenue is typically equal to the cost of production, so without producing anything, their operating costs go down dramatically.”

If, in fact, networks will be OK in the short term or mid-term, the question becomes whether there will be meaningful damage for a lengthy stop in play.

In April, Mike Ozanian, co-host of the YES Network’s Forbes SportsMoney, estimated the NBA could expect at least a 30% increase on its national TV rights fees when contracts are set for renegotiation in 2016.

In terms of advertisers, Chris Russo, who is CEO of independent online sports property Big Lead Sports, says there will be creative options for dollars previously earmarked for the NBA. These include marketing opportunities with NBA personalities and some migration to digital outlets with sports that reach the same demos as the NBA.

But neither Russo nor other experts believe advertisers will stay away long when the NBA eventually returns to the hard court.

“You can see what happened with the NFL recently,” Swanson says. “At first some advertisers were trying to play hardball and they were saying, ‘We’re not even going to do business when they come back.’ They put up a front, but when it came down to it, when the ball got rolling on football, then all the advertisers signed and they were willing to pay premiums. Basketball isn’t as big as football, but it has been doing better than baseball in some respects. If you want to go after that market, it’s sort of a no brainer: Advertisers will be back.”