NBA, ESPN deal drafts streaming-only service for cord-cutters

NBA games are poised to make a fast break out of the pay-TV package, thanks to a deal with ESPN set to give basketball diehards and cord-cutters more games to watch online.

The pro basketball league and Disney's high-value sports network signed a nine-year licensing deal that "established a framework" for the two to launch an online-only streaming offering. The NBA will be part owner of the service, but official statements from the companies provided no further details. A representative for ESPN couldn't provide specific details about pricing, timing and content that would characterize the coming service, and the NBA didn't respond to messages.

The ESPN/NBA deal is the latest example of how businesses holding some the most valuable video content in their hands are loosening the reins for more digital offerings. For long, the live-viewing appeal of sports, lucrative fees for it and the model of "bundling" -- linking the rights for the most popular networks with niche ones -- made rights holders skittish about putting it online, or "over the top."

However, companies like ESPN and Comcast's NBC have thrown increasing volumes of high-profile content onto the Web and often found it helped viewership rather than hurt it. The boldness only goes so far: The most sought-after programming -- in this case, in-market high-profile games -- are often held in reserve for expensive cable and satellite subscriptions.

Monday, ESPN and the NBA said that their wide-ranging licensing deal also included enhanced digital rights to provide NBA content for multiple ESPN platforms, including ESPN.com and WatchESPN, the network's app that streams the channel for people who pay for television.

The deal was previously reported by The Wall Street Journal.

The NBA also announced an agreement with Turner Broadcasting that renewed their joint management of NBA's digital assets. That includes NBA TV, NBA.com and NBA League Pass, an offering that launched in 2008 and provides "out-of-market" game streaming for $149 a season. Turner is under the umbrella of HBO-owner Time Warner.

Live sports are some of the most valuable television content for pro leagues and traditional television networks. ESPN extracts industry-topping licensing fees from cable and satellite companies to carry the programming, which researcher SNL Kagan estimates more than quadruple the fees paid to No 2 TNT. (TNT is part of Turner Broadcasting.)

Leagues, networks and the distribution companies like cable and satellite providers have feared that a cheap, "a la carte" option to watch sports would undermine the high-priced pay-TV packages that make up the foundation of the television business. But as more networks put more content online (most often in ways that shore up the pay-TV system, such as authenticating that you pay for cable to see the goods), they've generally found it to help viewership rather than hinder it. NBC and ESPN already took this leap by putting tons of extra content online for the Olympics and World Cup, respectively, only to see their ratings soar

The anxiety in the industry centers on striking the right balance between putting enough content online to keep the next generation of consumers -- those raised in a streaming world -- interested in being fans without dismantling the pay-TV system that makes most of the money for all the players in the game -- the leagues, the networks and the distributors.

That's why Monday's deals will put the NBA Finals on ABC, the early playoff games on ESPN -- and will likely leave subscribers of the coming "over-the-top" service in the lurch for all but the scraps.