With a throbbing headache brought on by its ratings disaster with the XFL season, NBC has another problem on the horizon that could turn into a full-blown migraine.
The combination of a soft economy and declining audience levels has depressed ad sales for the upcoming NBA playoffs, a time when the network can usually recoup the major portion of its $350 million annual television-rights fee. Media buyers report that only about 60 percent of the ad inventory has been sold for the two months of playoff telecasts, with earlier rounds being offered at heavy discounts.
"They've had a difficult time selling the NBA all year, and the economy has not gotten better," said one major media buyer. Season-to-date ratings entering this month were down 14 percent to a 3.0 in households, and down 18 percent to a 2.3 among men 18-49, according to Nielsen Media Research data.
NBC would not comment officially, but one insider confirmed that the later rounds are heavier sold than the earlier rounds.
Once the playoffs end in late June, NBC will have to decide if it wants to pay the NBA's still undisclosed asking price for a new multi-year contract. The current deal expires after the 2001-2002 season, and insiders believe the NBA could ask for a network fee in excess of $500 million per year, which could also include certain broadband rights.
A major obstacle for NBC is the possibility that ABC and its sister cable network ESPN could jointly bid on the entire network/cable package, which could drive up the price, even though NBC has a clause that gives it right of first refusal. Turner Broadcasting's TBS and TNT currently hold the cable rights.
"The NBA is the cornerstone of our sports programming," said Cameron Blanchard, NBC director of sports information. "We'd like to stay in business with them forever."
Whether the NBA wants to stay in business with NBC, however, is unclear, since no one from the organization is commenting.
Dick Ebersol, NBC Sports chairman, has a longstanding, close relationship with NBA Commissioner David Stern. But the NBA is also a business and must decide whether NBC, or another network, will be its best partner in the future to turn around the three years of ratings declines since Michael Jordan retired after the 1997-98 season.
One way for the NBA to enhance its image as a sport that can be watched by families, some buyers said, is to hook up with Walt Disney Co.-owned ABC. The thought of cross-promoting and cross-merchandising the NBA and its players with family-friendly Disney properties could be seen as a way to draw back viewers. And there are also cross-promotional benefits that could be tapped via ABC and ESPN, which do so with their coverage of the NFL's Sunday and Monday football games.
"We just don't comment on other people's rights deals," said Mark Mandel, vp of ABC Sports. But Mike Soltys, ESPN director of communications, said, "We have an extensive relationship with the NBA, airing games on ESPN Radio, the WNBA, and [plan to air] the NBA development league games [this fall]. If the opportunity came up, we would be interested in expanding our relationship to include domestic-television rights."
Turner plans to renew its contract, which now costs $178 million a year to carry weeknight games. But a Turner insider said, "While we will not abdicate it, we will not attempt to re-up at any cost."
Recent stories that Michael Jordan might again play in the NBA next season (however remote the possibility) adds even more pressure to the upcoming contract negotiations-even though a Jordan comeback might only last a season or two and could end before the new TV contract begins.
Initially, buyers said, Jordan's return to the court would provide a sizable ratings boost for NBC. "Ebersol would be a genius again," said Dan Rank, director of national broadcast, OMD. However, most buyers and sports media consultants agreed that Jordan cannot singlehandedly turn around the league's double-digit annual ratings declines.
"We all generally believe that if Jordan came back, it would certainly generate a spike in TV viewership," said Neal Pilson, a former CBS Sports president, who runs his own consulting firm. "But I don't think we'd see NBA ratings return to where they were three or four years ago." Pilson said too many games are being telecast. Reducing the number of games aired, he said, would tighten up ad inventory, which could increase demand among buyers.
John Rash, director of broadcast negotiations for Campbell Mithun, said the NBA's ratings erosion was accelerated by Jordan's departure, but the roots of audience decline had already sprouted during the Jordan era. "The NBA and its broadcast partners would greatly benefit from landing Air Jordan again," said Rash. "But they'd be wise not to forget their fundamental problems-that some of the league's most prominent players have a hard time being marketed outside their cities. For example, Latrell Sprewell may play well on Broadway, but not necessarily on Main Street."