The following is industry reax to CBS' record-breaking
11-year TV deal worth $6B, giving the network exclusive
rights to the NCAA men's basketball tournament. Starting in
2003, the NCAA will receive an average of $545M per year,
more than double its current $215.6M average (THE DAILY):
THE GOOD? Salomon Smith Barney analyst Peter Sweeney:
"The real challenge for CBS here is to see if they can
create incremental revenue to offset these higher rights
fees, and we think that with the marketing, with the
merchandising rights, with the radio rights and most
importantly with the Internet rights, they're going to have
a real opportunity here to drive revenue higher"
("Moneyline," CNN, 11/19). In Boston, Howard Manly wrote
that "both sides appear to have acquired what they wanted.
CBS gets a time-tested vehicle to reach younger viewers and
the NCAA receives a steady stream of income for several
years." With the "new media" rights, Manly wrote that
"there's no telling whether CBS actually got a bargain" at
$545M per year (BOSTON GLOBE, 11/21). Also in Boston, Jim
Baker wrote that the Internet's "promise may make this deal
a bargain, potentially bagging more revenue than TV ad
sales" (BOSTON HERALD, 11/21). Veronis, Suhler & Associates
analyst Gene Jankowski: "I really believe [CBS has] done
their homework very well, and at the end of eleven years,
they're going to be saying, 'How did we manage to make such
a very inexpensive deal.'" CNBC's Andrew Glassman: "Merrill
Lynch issued a report [Friday] saying they feel CBS will
make a modest profit on this deal before factoring in the
new media, calling it a very positive deal" (CNBC, 11/19).
DID CBS OVERPAY? The FINANCIAL TIMES' "Lex Column"
stated that "it is hard to see CBS making a proper financial
return from this agreement. The group's real motivation
seems to be to hang on to its share of prestige sporting
events whatever the cost" (FINANCIAL TIMES, 11/21). POV
Magazine Editor-in-Chief Randall Lane: "[CBS] frankly
overpaid. I think they know that. ... There's no way they
can make money on this through the first five, ten years of
this deal. ... They're claiming that they're going to make
it up on the back of this contract. ... Those are the years
they're going to make money from hundreds of millions of
dollars of Internet [ad] sales. Who knows? They're
throwing darts" ("Biz Buzz," CNNfn, 11/19). In N.Y., Bob
Raissman wrote, "Let's face it, the tournament's ratings
have been declining -- headed for Toilet City -- but the
perception that the tournament is such a valued property led
CBS to pay through the big black eye." Raissman: "Looking
down the road, and applying network logic, the big winner
could be [MLB] when its national TV deal ends after the 2000
season. If NCAA hoops is costing CBS billions, what will
MLB's deal be worth?" (N.Y. DAILY NEWS, 11/21).
PER RATINGS POINT: In Houston, David Barron notes that
CBS paid $500M per year for its NFL package and will now pay
on average $545M per year for its NCAA deal, which comes to
about $3M per ratings point based on last year's tournament
(6.8 average rating for 26 broadcast windows equaling 176.8
ratings point). Barron: "That means the Tournament is
significantly more expensive, point for point, than the NFL
[10.3 average rating for 29 regular-season broadcast windows
equaling 298.7 ratings points or about $1.7M per rating
point], which everyone for years has thought was the crown
jewel of sports television" (HOUSTON CHRONICLE, 11/22).
NCAA'S IMAGE PROBLEM? CNN's Willow Bay reported that
"some argue" that college athletes are among the "losers" of
the deal. Sportscorp President Marc Ganis: "It's one thing
when the NFL signs an $18 billion deal and two-thirds of
those dollars goes to the athletes, the stars. In college
sports, none of the money goes to the players" ("Moneyline,"
CNN, 11/19). In Chicago, Ed Sherman lists the NCAA's "poor-
me image" as a "loser" in the deal. The "association can't
be claiming poverty" (CHICAGO TRIBUNE, 11/22). CNNfn's Dan
Ronan said that the deal is "imposing somewhat of a public
relations problem, ... [as] some are now calling for the
discussion of at least a stipend [for student-athletes]"
("In the Money," CNNfn, 11/19). ESPN's Tony Kornheiser said
Sunday, "I don't know how you do it with Title IX, [but]
you've got to pay these kids something if you want to keep
them in school" ("The Sports Reporters," 11/21).
