NBA near richer TV contract, Stern says

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NEW YORK -- National Basketball Assn. commissioner David Stern said Tuesday he expects to sign a new television deal, one that includes a "healthy" increase over the current $4.6 billion terms, before the end of the 2006-07 basketball season.

Stern, speaking at the Reuters Media Summit, said the NBA was already in talks with existing broadcast and cable partners Walt Disney Co. and Time Warner Inc about a deal to replace the current six-year contract, which expires after the 2007-08 season.

"We have begun the discussions a couple of years early," Stern said. "We would very much like to remain in business with our current partners."

The NBA also is exploring selling a stake in its digital assets, which includes its cable TV network and Web site, to a media company, and establishing an NBA-sponsored league in China, he added.

Stern said the new TV deal would likely be an expansion of the current contract, noting that it could include digital assets and overseas markets, and run over six years.

"I would say it's going to be a larger deal," Stern said, referring to the current terms, which pays the league $4.6 billion over the life of the contract, or $767 million a year. "We expect a healthy increase."

The NBA's current TV deal increased the league's annual payment by 25% from the prior four-year deal.

Regarding a deal involving the NBA's digital assets, Stern did not name possible investors, but pointed to the current TV partners.

"We are thinking about expanding the ownership base of our digital assets to include a media company," he said. "We anticipate a new deal will make both NBA TV and NBA.com more robust. We have made it clear that for us a discussion of all of our assets on a global scale is available.

"To be engaged with a company like Time Warner or a company like Disney on either a digital or global scale is to engage partners who bring their expertise and the scope of their businesses in ways that we don't have yet and might not even be the best investment of our resources," he added.

Time Warner owns a 2% stake in NBA TV and Stern said the cable company and the league are discussing an increase in that stake.

"As those negotiations unfold, you will see (Time Warner) having a larger opportunity in our digital assets," he told Reuters Television.

NBA TV, launched in 1999, airs about 100 NBA games a season. It is available in 70 million U.S. homes and has 12 million subscribers.

The league's NBA.com Web site averaged more than 2.6 million daily visits last year, up 35% from the previous year. About 20% of the traffic originates from the league's Mandarin Web site, Stern said.

While the NBA in the past has discussed setting up a league in Europe, China is the more likely destination in the short term, he said.

"The model that we're working on now is the placement of all of our assets in China in an enterprise with all NBA rights," Stern said. That would include rights to sponsorship and merchandise revenue, TV deals there, and the ability to operate a league "such as NBA of China."

"It's something that will be articulated by the close of the (2008) Beijing Olympics," he added.

The key to the NBA's future success will be a geographic division of league assets, rather than by businesses, with each region including the right to operate a league under the NBA brand name.
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