Programming Execs: Sports Rights Nearing Ceiling


New Orleans -- Sports-rights costs haven't peaked yet, but a group of top
programming executives assembled for a National Show panel here said costs were
getting close to the limit.

They added that at current rates, programmers without the luxury of being
able to amortize rights costs over several different networks would be at a

The Walt Disney Co. president Robert Iger said sports-rights costs won't peak
unless there is no competition. But it is getting increasingly harder for
networks, especially broadcasters, to pay high prices without being able to
spread the costs over several different properties.

Iger pointed to NBC, which dropped out of the running for National Basketball
Association programming basically because it couldn't afford it anymore. Disney,
through its ABC broadcasting and ESPN cable network, won the NBA bidding war
with a deal worth $2.4 billion over six years.

'We figured out a way to amortize the cost. We're not only buying the product
-- we're producing the product across both our services, ESPN and ABC, to sell
it effectively and market it effectively to the consumer,' Iger said. 'We also
saw it as a way to deliver more value for ESPN going forward.'

News Corp. president and chief operating officer Peter Chernin said
sports-rights fees could be hitting their peak, primarily because there are few
broadcast networks that make money with the programming.

'I think that there probably isn't a sport that is on free broadcast right
now that doesn't lose money,' Chernin said. 'I think that there are clearly
limits as to how much we can and should pass on sports-rights fees to cable
people. I think if you look at sports rights around the world, they are coming

Turner Broadcasting System Inc. chairman and CEO Jamie Kellner -- whose
Turner Network Television network will have an expanded NBA package as part of a
$2.2 billion renewal deal -- said whether sports fees are coming down remains to
be seen.

'I think we are right at that magic moment where we are going to find out,'
Kellner said. 'We're going to see how the industry behaves.'