It has been a busy season for NBA Commissioner David J. Stern--from ushering in the latest Michael Jordan era to negotiating the National Basketball Assn.'s new six-year, $4.6 billion TV contract. Now, the playoffs are in full swing, as a slew of teams tries to knock off the defending champs, the L.A. Lakers. Somehow, Stern found time to talk with Mark Hyman and other BusinessWeek editors about sports on TV, the future of women's basketball, and more.
Q: One of the new aspects of the latest NBA TV deal is the creation with AOL Time Warner of a sports channel, All Sports Network [which would compete against ESPN]. The programming will include more than basketball?
A: Yes. We're not envisioning this as a vertical channel. We're aware there's a golf channel...an announced tennis channel and an announced football channel. We have one of those already, called NBA TV. This is about a general sports network.
Q: Will fragmentation continue to erode TV ratings for the NBA and other sports leagues?
A: Yes, the decline in ratings is going to continue for all sports. It is arithmetic, geometric, regression analysis. If you start with three networks, you are going to get one series of ratings. If you go to 300, you get another. The amount of time people are sitting in front of their sets hasn't gone up dramatically. But the number of programming options has. So there's a huge impact on the aggregation of any one audience. That's why programming like the Super Bowl, Olympics, and the NBA finals becomes so important.
Q: How far will ratings for sports continue to fall?
A: We're all going to fight to minimize the decrease. This year, our overall ratings are up 3% on NBC and probably up 7% or 8% on Turner [Broadcasting System]. But I don't know that those are going to be holdable. We hope that by going to an exclusive night on Thursdays on Turner [with no local telecasts competing], and by going to a single game of the week on Sundays on ABC [instead of multiple games under the current deal], we might get increases in ratings. But nothing is certain.
Q: Still, as ratings decline, rights fees rise. Is that sustainable?
A: It depends how the model develops. Every technological advance as it relates to TV has included an important component for sports. Going back to when there were three networks, Roone Arledge used sports to make ABC a player. When cable first came in, sports and movies were drivers. We believe that will be true with respect to broadband and the functions people will be able to have delivered on their high-definition TV sets--which really do enhance sports viewing. So we think there's yet another ride left for sports in the next rollout, which is broadband and interactivity.
Q: The WNBA is about to start Year Six. Is it a success?
A: Yes, a great success. It came out of the box so fast, attendance was so much higher than we expected. [But]...when attendance dropped...it was all hands on deck in the media.
Q: Yet the league still isn't profitable. When will that happen?
A: Think about the bias of that question. The NHL doesn't make money, but no one asks them about it. Major League Baseball loses hundreds of millions. The NBA has lost, probably, hundreds of millions of dollars the last few years. We've invested $8 million in the WNBA, and the traditional male media [cry]: "Oh my God, it's losing money." It's not losing money; it's an investment. In a dot-com age when billions have been thrown into useless assets, the media that cover us are asking exactly the question you just asked. It's so unfair to the sport.
Q: How long is the NBA's commitment to the WNBA?
A: Indefinite. Unending. It's why we gave it our name.
Q: Michael Jordan's comeback season is over. What's your reaction?
A: It was the best of all worlds for us. We were in the post-Jordan era, and we had Michael Jordan.
Q: Dot-com billionaire and Dallas Mavericks owner Mark Cuban is an enthusiastic--some would say overly enthusiastic--NBA investor. Is he a challenge to your ability to manage the NBA?
A: [Long pause] No.