U.S. sports leagues eye digital for growth

By Ben Klayman

NEW YORK (Reuters) - The major U.S. professional sports leagues are looking to their digital assets, especially Web sites and television networks, to drive growth.

However, the commissioners of the National Football League, Major League Baseball and the National Basketball Association outlined different approaches at the Reuters Media Summit in New York this week.

The NFL emphasized expansion of its TV channel, while baseball is putting off establishing a cable channel to focus on digital media. The NBA is exploring partnering with a media company to drive growth in its digital media business or to build its presence in China.

"Each has to develop its own distribution and exploitation plan," said Neal Pilson, former head of CBS Sports and head of New York-based sports consulting firm Pilson Communications. "Each sport wants to build with its low-hanging fruit."

The leagues boast billion-dollar TV deals, with the NFL alone pulling in $3.7 billion a year, but are in the early stages of tapping into the Internet to build name recognition and profits. While international growth is another focus, the return on league TV networks and Web sites will be faster.

"Building the brand is important," said David Carter, executive director of the USC Sports Business Institute. "You can't expect people to consistently spend money on your product unless they believe in your brand."

The NFL Network already sports 41 million subscribers even though it does not have distribution deals with three of the largest cable providers. NFL Commissioner Roger Goodell told the summit the league has plans next year to top 50 million or even 60 million subscribers.

Some analysts say the network could one day challenge Walt Disney Co.'s sports cable channel ESPN. The league says its network's viewer base at three years is comparable to what ESPN, Viacom Inc.'s MTV and Comcast's Corp.'s Golf Channel had at six years.

"Promoting college football, promoting high school football, promoting youth football is all good for us," Goodell said of plans to air more than NFL programming. Plans could include games from other pro leagues, like Arena Football.

And the efforts go beyond TV as the NFL also will relaunch its NFL.com Web site next spring and has begun streaming a full slate of games on Yahoo Inc. in foreign markets.

CHINA BECKONS

For the NBA, Commissioner David Stern said its approach could include a media company taking a stake in the digital assets, which include the league's cable TV network and Web site, or its China operations.

He did not name the companies, but pointed to current TV partners, Time Warner Inc. and Disney. Time Warner already owns a 2 percent stake in NBA TV, which was launched in 1999 and has 12 million subscribers.

"We are thinking about expanding the ownership base of our digital assets to include a media company," Stern 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."

NBA.com averaged more than 2.6 million daily visits last year, up 35 percent from 2004. About 20 percent of traffic originates from its Mandarin Web site china.nba.com/, Stern said.  Continued...