“We’re about to go into the nuclear winter of the N.B.A.,” David Stern, the league’s commissioner, told ESPN on Monday after the players rejected the latest offer and moved to dissolve their union.
Big media companies are likely to feel the chill, with months of empty television time that would typically be filled with N.B.A. games. ESPN and ABC, owned by the Walt Disney Company, and Time Warner’s Turner Sports pay a combined $1 billion a season for the rights to games. The N.B.A. drives ratings in the coveted 18- to 34-year-old male demographic that advertisers pay a premium to reach. And it gives cable networks leverage in negotiating carriage fees, or the price cable companies pay in order to offer subscribers a network.
The N.B.A. said on Tuesday that at the end of the current season it would discuss repayment to networks for fees associated with canceled games. If the entire season is wiped out, the league could add an additional year to Turner and Disney’s contract, which runs through the 2016 season.
Last season, from October 2010 to June 2011, marketers spent $806 million to advertise during games, with 53 percent of those dollars spent during the playoffs, according to Kantar Media, a division of WPP.
John K. Martin, Time Warner’s chief financial officer, said in an earnings call this month that a drop in ad revenue would be “relatively immaterial” because it would be offset by a reduction in rights costs.
But in addition to ratings and ad revenue, N.B.A. games provide valuable marketing cachet and help promote other shows. For example, TNT promoted its original series “Rizzoli Isles” during last spring’s playoffs.
ESPN will offer marketers time during other live sporting events, when viewers are less likely to skip commercials using digital recording devices. “We are working closely with our advertisers and are prepared to re-express dollars currently committed to the N.B.A. to other properties,” Nate Smeltz, an ESPN spokesman, said.
For now, TNT has replaced N.B.A. games with episodes of “C.S.I: NY.” Marketers will have the chance to advertise on shows on sister networks that reach similar demographics like TBS, Adult Swim or reality shows on TruTV, the network said.
Those lower-rated alternatives will appease advertisers only in the short term, said Brad Adgate, senior vice president for research at Horizon Media, a media buying firm. Last season, a playoff game on TNT between the Chicago Bulls and the Miami Heat drew 11.1 million viewers, compared with an overall nightly average of 1.3 million, according to Nielsen. “There’s no substitute for live sports,” Mr. Adgate said.
The lockout could have a disproportionate impact on regional sports networks that rely on a hometown team’s games to bring in viewers and local advertisers. The MSG network, owned by the Madison Square Garden Company, typically has Knicks games three nights a week. It will now rely on shows that mix archival Knicks games with player interviews. MSG will still have live National Hockey League games.
Instead of New Jersey Nets games, Yankees Entertainment and Sports, known as the YES network, will have “Yankees Baseball Daily,” an off-season news and analysis show, five nights a week, and live college basketball games.
Networks braced for further N.B.A. delays after players said Monday they had rejected the league’s latest offer. Had they reached agreement, a 72-game season would have started on Dec. 15. A 204-day lockout in the 1998-99 season led to a truncated 50-game season and the cancellation of the All-Star Game. Television networks largely made up for the missed games by charging advertisers a premium for end-of-season and playoff games.
Some were still holding out hope that the season, and valuable television programming, would not be totally lost. “We believe in the strength of the N.B.A. brand and hope for an outcome that preserves as much of the 2011-2012 season as possible,” David Levy, president of sales, distribution and sports for the Turner Broadcasting System, said.
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