UPDATE 3-NBA TV deal allows for ESPN Internet streaming channel

Mon Oct 6, 2014 7:07pm EDT
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(Adds details on streaming product)

By Liana B. Baker and Lisa Richwine

Oct 6 (Reuters) - The NBA's agreement on a new more than $20 billion multiyear contract with broadcast partners Walt Disney Co and Time Warner Inc was overshadowed by news that Disney's ESPN is joining with the basketball league to create an Internet sports channel available without a pay TV subscription.

A new streaming channel planned by ESPN, which sources familiar with the plans said would be widened to include other sports, is an early step that could upend the traditional cable and satellite companies if it leads more consumers cancelling their pay TV service.

Cable and satellite providers pay Disney and Time Warner richly for their sports-heavy content. ESPN executives insist they are committed to the current pay TV system, and that any programming sold directly to consumers will complement rather than compete with the content available through pay TV packages.

But others said the streaming channel could have the same kind of transformative effect on sports programming that Netflix Inc has had on dramas and sitcoms.

"This is the first crack in the structure of the television business that has been in place for decades," said Forrester analyst Jim Nail.

Under the new deal, ESPN will make a limited number of regular season NBA games available on the streaming channel, the sources said. The offerings will be expanded to include other sports, they said. The sources could not speak on the record because terms of the deal were not public.

ESPN said in May that it was considering selling online access to live Major League Soccer games to consumers without pay TV subscriptions.   Continued...