Mediaweek Feature -- David Stern's High-Def Vision

[Gregg Lengling]

OCTOBER 28, 2002 -

Back in October of 1991, National Basketball Association commissioner David Stern got his first exposure to high-definition television while attending a pair of season-opener NBA games in Tokyo, long before anyone in the U.S. broadcast community was factoring HDTV into their short- or long-term programming plans. By the time the NBA All-Star game was held in Charlotte, N.C., the following February, a sufficiently impressed Stern had a Japanese production crew produce the game in high-definition, not only to fuel interest in the NBA in Japan, but also to show the virtues of the budding technology to the team owners back home.

"I really believed high-definition would be an important technology here one day," recalls Stern. "I thought it would so enhance the viewing of the NBA game by audiences on TV that I wanted to tape the game so I could show it to the owners."

Rather than approaching the NBA's team owners right away, Stern tucked the tape away for a few years, then screened it at a cocktail party during an NBA owners' meeting in New York City in the mid-'90s. Stern had TV monitors set up around the room and ran the tape of the high-definition broadcast of that 1991 All-Star game to get the owners' feedback.

"Their attitude was that it was 'just another one of David's gadgets,'" Stern says, adding that he knew the skeptical owners were pretty much humoring him. "Let's just say they were not overwhelmed. They thought it was good cocktail party wallpaper." Stern admits the clarity of the tape was not the best, and that the TV sets were not the higher-quality HDTV monitors produced for sale in the U.S. today. He cuts the owners some slack for not realizing then the potential benefits of HDTV for the NBA and other professional sports telecasts.

However, about three years ago, when the Federal Communications Commission began mandating a shift by the broadcast networks from analog to digital, the owners -- many of whom are also cable operators -- began to see high-definition telecasts as something the league might want to embrace.

When Stern announced a new six-year, $4.6 billion television deal with ABC/ESPN parent Walt Disney Co. and with TNT/TBS parent AOL Time Warner in January, he also spoke of plans to partner with AOL Time Warner to start up an all-sports cable network, on which additional NBA games could be shown.

But when the league began feeling out cable operators on the issue, it became evident that rather than having to pay a carriage fee for a new analog network, the operators would rather pay the fee for a rejiggered digital network that could add value to their digital cable service and drive subscribers to it.

With the FCC's digital deadlines looming for all analog broadcast networks to convert to digital by 2006, and with many of the cable operators upgrading their systems to expand their digital offerings, Stern opted not to go ahead with an all-sports network deal but to instead relaunch NBA TV as a digital channel. The network, which is available only in about 15 million cable and satellite homes, will carry live NBA and WNBA games for the first time during the upcoming season, and will also show some games in high-definition. When NBA TV relaunches on Feb. 11, it will televise live games on Sunday, Monday, Tuesday and Saturday nights, with one game a week initially offered in high-definition.

By the start of the 2004-05 NBA season, Stern predicts, NBA TV's entire schedule, including all of the live game telecasts, will be shot and produced in high-def. "We're hoping to air more than 8,000 hours annually of programming in high-definition," he explains. "Certainly the live games and all the new programming. The classic stuff from our archives might be bit slower since we will need to go back and upgrade it so it can be shown in high-definition."

The ultimate goal? To be "all things basketball, all the time, a 24/7 network devoted exclusively to basketball," insists Stern. In addition to NBA and WNBA games, the network will also carry NBA developmental-league games (sort of an NBA minor league) and NBA summer-league games. Stern even envisions the network eventually airing some college and high-school basketball games from around the country. "I would liken it to the Golf Channel or the Speed Channel, but with more live programming," he says.

That said, Stern stresses that NBA TV is not being relaunched to compete with the NBA telecasts on ABC, ESPN and Turner, but rather to supplement them. He points out that since ABC will be televising only one game on Sundays this season, as opposed to the doubleheaders and tripleheaders that NBC aired in seasons past, the NBA TV games will not create an oversaturation. Also, NBA TV's limited distribution makes its reach far more modest than ABC's ubiquitous presence across the country.

Stern believes that with fewer games on ABC, ratings should go up, not only on ABC but also on ESPN and Turner, the latter having an exclusive Thursday-night window in which no other outlet -- including the regional spots networks that have local rights -- will be permitted to air an NBA game. "NBA TV will just be part of the mix," he says, although broadcasting the games in HDTV will be an additional draw. ABC currently airs much of its prime-time programming in high-definition and recently announced it will televise Super Bowl XXXVII and the NBA Finals in high-def. ESPN also announced plans to carry 100 hours of live sports on a new ESPN HD network beginning this spring, with live events to include some Major League Baseball, NBA and NHL games.

To avoid as much viewer cannibalization as possible, the NBA is currently negotiating a deal under which NBA TV's telecasts would be blacked out in the local markets in which Fox Sports Net telecasts are carrying the local game(s). Stern says talks also involve having Fox Sports Net produce the feed for some of the telecasts of NBA TV games, and vice versa. "Fox is an important rightsholder," Stern notes.

Stern is also negotiating with cable operators to determine what it will cost them to carry the relaunched NBA TV and how those costs will be passed on to subscribers. But he's confident that all will be worked out in plenty of time for games to begin airing on NBA TV by February. "We would like to see it offered in as many homes as possible, but we are trying to meet the cable operators' needs in letting them offer it however it best suits their needs," Stern says.

Neal Pilson, former CBS Sports president and now a media consultant, agrees with Stern that NBA TV will not cannibalize viewers from watching NBA games on other nights on the other networks. "I don't think people will be watching NBA TV instead of ABC, ESPN and TNT," Pilson says. "I think the avid fans will be watching NBA TV in addition to the games on the other networks."

Pilson believes Stern is heading in the right direction by expanding the content of the league's own network. "Nascar has a channel, the NFL recently hired Steve Bornstein to look into starting up a network for the league, and the NHL is also examining the possibility," he explains. "The NBA is the league that is leading the charge in terms of applying new technologies and means of distribution."


ONE COULD ALMOST SAY the underlying principle of Stern's efforts is, if you build it, they will come. If as many fans see the game on TV -- especially in high-definition -- and are excited by it, they will at some point come out to see a live game. "As a TV experience, high-definition gets a viewer closer to the game experience. [HDTV] will whet their appetite," says Stern.

The ad-supported NBA TV will be repped and sold by an NBA Entertainment sales staff. Stern says initial ad dollars will come from current NBA "marketing partners" (read: an add-on to their existing expenditures), but down the road other inventory will be sold in the scatter market. "By the time we relaunch, we should have about 20-25 advertisers involved," Stern believes. "We will make sure our marketing partners get first crack at filling sponsorships in their product categories, and then open it up to others." The main source of revenue, however, will come from cable operators, admits Stern, who adds he expects the network to be profitable three to four years after the relaunch.

Stern insists that when the NBA Entertainment sales staff begins selling ad time on the network, they will be charging "premium" rates. "The one thing you won't find us doing is cheapening our product," he argues. "We believe our network partners are pricing their advertising rates moderately. My guess is our rates will be higher [cost per thousand]." Stern doesn't foresee his sales squad bumping into the sales teams of his network partners, "because our audience will be smaller and we will charge more for it."

While there is no shortage of advertisers for the NBA telecasts, Stern hopes to see more marketers jump on board for WNBA telecasts. "I think we will start to see more traditional advertisers add the WNBA to their TV ad buys as they begin to realize that hard-to-reach working women are heavy viewers and many of them are now the decision-makers in their homes," Stern says.

But Stern's enthusiasm may be a little out of line with the realities of the sports marketplace. "NBA TV on digital means viewers will have to pay more to receive it, and when high-definition is offered, it will mean it will be targeting a very upscale audience," said one sports media buyer who's a little skeptical about the ambitiousness of the league's plans. "Many NBA advertisers are targeting a younger, and a bit more downscale audience. Maybe the Golf Channel can work on a digital tier because its audience is
real upscale, but an NBA channel could be tough."

Another major sports media buyer said a network with a 15 million-subscriber universe can do no better than a 2.0 rating, which would translate to a rate of about $3,000 per 30-second spot, not a big moneymaker for the league.

Stern concedes that while the network can ultimately turn a profit on NBA TV, the relaunched channel will never replace the existing TV rightsholders -- network, cable and local -- since they provide the league with the lion's share of its revenue. To one day run all NBA games on NBA TV "would not be feasible," he says.

Pilson agrees. "You cannot do this if you are going to diminish or replace the revenue stream from the broadcast and cable networks," he says. "But you do it as an experiment. You sample new forms of distribution. You want another revenue stream."


BEYOND NBA TV, the commissioner also is excited about this year's announced Spanish-language rights deal with the Telemundo network, which will air 15 NBA games exclusively on Saturday afternoons and next summer picks up some WNBA games. Stern sees it as a way to broaden the NBA's audience base in the U.S. "We have been in discussions with all the Hispanic networks over the years, with Telemundo, Univision and TV Azteca, which televises our games in Mexico," he says. In an ironic twist, the deal with Telemundo -- which NBC acquired earlier this year -- was reached just as the broadcast deal with NBC had expired. NBC chose not to enter a bidding war to renew its multiyear deal.

Charter sponsors of the Telemundo telecasts include General Motors, Universal Pictures, Miller beer and Pennzoil/Quaker State, which are among the NBA's marketing partners. Just two weeks ago, the NBA announced it had named Andres Cantor, the renowned soccer play-by-play announcer, to host Telemundo's NBA pregame show. Cantor, who also currently hosts a SportsCenter-type show on Telemundo, believes that since the Saturday-afternoon games will be exclusive to Telemundo, they will draw many non-Hispanic viewers. And Cantor is using his role as soccer play-by-play man to promote the NBA telecasts, which begin Nov. 10. "I think it will be extremely successful," Cantor says. "The NBA is the second most-followed sport among Latin Americans after soccer."

Stern's effort to expand the NBA audience will not be limited to expanding telecasts. Down the road, he says, NBA shoulder programming will be created for a number of different networks, including Nickelodeon, BET, Food Network and Comedy Central. He says to also expect some NBA-related nongame programming on ESPN. "We believe in ubiquity," he says with a smile.

Stern also plans to develop the NBA's relationship with ABC and ESPN parent Walt Disney Co. beyond coverage of the court to perhaps include merchandising and other things. Pressed to elaborate on those "other things," Stern demurs with, "Let's get the TV relationship off to a good start first."

The NBA also plans to draw in younger audiences with interactivity, by offering videogames on the NBA's Web site, game replays, and live games in which the viewer can select the camera angles from which to watch. Stern concedes, "This will only be for a small percentage of the fans, but the hardcore fans will love it."

Whether Stern is right on all his future bets -- particularly the still-unproven lure of high-definition TV -- remains to be seen. Many media buyers today are skeptical about the impact of a relaunched NBA TV, but one buyer leaves the door open. "David Stern is a visionary. Maybe he sees something we don't. Maybe 10 years down the road, everyone will have upgraded to digital cable, NBA TV might be in 80 million or 100 million households, and the NBA will be able to run all of its games it on its own network and make a profit."