NBA to Tip a 25-Cent Digital Service

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Unable to get operators to pay 50 cents for its analog All Sports Network, the National Basketball Association is now pitching a 25-cent digital NBA channel that would offer up to 98 live games.

The NBA is planning to morph its current NBA TV barker channel into a full-fledged digital service — complete with interactive, electronic-commerce and high-definition capabilities — as well as the live telecasts, NBA Commissioner David Stern said last week.

NBA TV, created as a complement to the league's NBA League Pass
out-of-market pay-per-view service, is currently available to 11 million In Demand digital homes and more then 10.5 million DirecTV Inc. households.

Although every In Demand LLC digital home receives NBA TV, only subscribers to DirecTV's sports package and NBA League Pass
can access the channel, which offers vintage NBA programming and live game updates during the season.

Unlike ASN, which was to be a 50-50 venture between the league and AOL Time Warner Inc., the NBA will own 89 percent of NBA TV. Stern said AOL Time Warner would invest $45 million for its 11 percent stake in the diginet.

Stern said the league decided to abandon the ASN plan after operators cited the need for a strong service to help them sell digital boxes to the home.

"The operators were telling us that their strategic goals were not being met by another basic service — that they wanted something that would reflect well on digital penetration," Stern said.

The league expects to have at least 10 million subscribers for the service by October, when the 2002-03 season begins, Stern said.

Still, the NBA TV digital service is a major downgrade from the league's initial and ambitious ASN analog service. The channel, announced last January as part of the league's new $4.6 billion TV package, carried a hefty 50-cent licensing fee.

The network needed to reach 13 million subscribers by September before co-owner AOL Time Warner would kick in its more than 12 million subscribers. The NBA had been counting on carriage from its other MSO team owners, including Charter Communications Inc. (Portland Trail Blazers), Comcast Corp. (Philadelphia 76ers) and Cablevision Systems Corp. (New York Knicks) to help it reach its goals.

But Stern said the current poor economic climate and MSOs' financial struggles made the ASN service a difficult sell.

But at least one operator said even a 25-cent price tag for the digital service could be hard to swallow. "While an NBA-branded channel would certainly provide value to digital, we'd like to see that price come down even further," said the operator.

Stern said an enhanced NBA TV service would not affect the league's out-of-market package, which generated an estimated $58 million in 2001 and is expected to pull in more than $71 million this year, according to the Carmel Group.

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