ESPN Sees Bump For Week 14 "MNF" Tennis/Comcast Dispute Could Go To Supreme Court WWE Net Expected To Launch In '14 Verizon Looks To Expand Mobile Sports Content App Review: Yahoo Sports For iPhone Media Notes Week 14 NFL Overnight Ratings SEC Championship Leads CFB Overnights ESPN Unveils New Details On SEC Network Hershiser Leaving ESPN For Dodgers RSN
SBD/Issue 154/Sports Media
CBS Gets Help From Turner To Keep NCAA Men's Basketball Tourney
Published April 23, 2010
|Every March Madness Game Will Be Televised
Nationally As Part Of 14-Year, $10.8B TV Deal
Every NCAA men’s basketball tournament game will be televised nationally as part of a new 14-year, $10.8B TV agreement announced Thursday by the NCAA and broadcast partners CBS Sports and Turner Sports. The agreement goes into effect in '11, when the tournament is expected to expand from 65 to 68 teams. Tournament expansion must be approved next week by the NCAA’s BOD, but approval of the new TV deal is not required. The average TV rights fee of $771M over the 14 years of the new arrangement represents a 61.1% increase over what CBS paid during the last eight years of the old contract with the NCAA. Turner and CBS will share revenue and expenses in the joint venture, the networks said. Internet and wireless rights are included, as well as the corporate marketing program. The $10.8B figure represents just the TV rights fees. Other revenue from the corporate partners program is expected to push the value to more than $11B in total and close to $800M annually. CBS will provide coverage of the regional finals and the Final Four through '15. Beginning in '16, coverage of the regional finals will be split by CBS and Turner, with the Final Four games alternating each year between CBS and TBS. Turner will also use its other networks, TNT and truTV, to broadcast early-round games nationally.
WE CAN WORK TOGETHER: CBS News and Sports President Sean McManus said the partnership with Turner “puts us on solid footing for lasting profitability.” The escalating rights fees in the old deal, which jumped 8% a year, had put a financial strain on CBS, multiple industry sources said, and the network was seeking relief from the continued rise in fees. Partnering with Turner will help CBS share some of those expenses, while also broadening its advertising sales because all of the games will now be televised. Turner and CBS will jointly sell the tournament’s ad inventory. “This is not a bailing out,” McManus said. “We were prepared to do the last three years. It was going to be very challenging because of the rights fees, but the NCAA came to us and they were interested in putting a new programming system in place. This works out much better than if we’d had the last three years” of the old contract. "Through this partnership, we’re going to be able to expand the reach and visibility of the tournament,” said Turner Sports President David Levy. “The tournament outgrew the ability of one network to provide everything that fans are looking for. We’re going to provide unrivaled access for viewers, who can watch all of the games in their entirety" (Ourand & Smith, SportsBusiness Journal). McManus: "The system we had worked well for 29 years. But to generate the kind of revenue and exposure to complete this deal -- and you know who we were competing with -- we needed a cable partner" (N.Y. TIMES, 4/23). Sports media consultant Neal Pilson: "It's yet another indication that major rights fees deals are going to have a cable component" (WALL STREET JOURNAL, 4/23).
DOLLARS & SENSE: The first three years of the new deal are expected to be comparable to what was outlined in the old deal: $657M in '11; $710M in '12; and $764M in '13. The final 11 years of the contract will average $790M (Ourand & Smith). The HOLLYWOOD REPORTER's Georg Szalai cites sources as saying that Turner "will shoulder a bigger portion" of the rights costs than CBS. The two will "split production costs and ad revenue," with Turner parent company Time Warner Cable "also expecting to benefit financially via higher affiliate fees." A TWC regulatory filing Thursday revealed that "should the tournament turn a loss, CBS' annual maximum red ink will be capped" at $30-90M and at $670M "during the course of the agreement period, with the rest carried" by TWC. CBS expects to "capture more retransmission consent and other revenue in the coming years, which would help offset shortfalls during any given year." CBS and Turner's bid trumped ESPN's offer to the NCAA, and Miller Tabak analyst David Joyce said, "It looks like CBS and Turner partnered to pay up to keep ESPN from approaching a monopoly on TV sports rights" (HOLLYWOOD REPORTER, 4/23). ESPN Exec VP/Content John Skipper Thursday said, "We love the event, we love the sport, so it was something we were anxious to acquire. We were outbid" (N.Y. TIMES, 4/23). On Long Island, Neil Best suggests ESPN "might be conserving resources for a run" at U.S. rights to the '14 and '16 Olympic Games (NEWSDAY, 4/23).
|Levy Does Not Anticipate Any
Pushback From Congress On Deal
HOW THE TABLES HAVE TURNED: In L.A., Joe Flint notes Turner overall will carry "about 65% of the tournament's games on its cable channels" over the life of the contract. Turner likely will "try to use the NCAA deal to pressure cable and satellite distributors to pay more to carry its cable networks." SNL Kagan noted that TNT "gets about $1 per subscriber per month from cable TV providers" while TBS and truTV get $0.50 cents and $0.10, respectively. Flint notes the "exodus of sports to cable has been of concern on Capitol Hill," but Levy Thursday said that he "did not anticipate any pushback from Congress on the deal" (L.A. TIMES, 4/23). Levy said, "This is a landmark deal for our company for sure. I don't anticipate any pushback. ... These (Turner properties) are fully distributed national networks, and we're not apologizing for that." McManus noted that CBS College Sports "could not be included in the deal because its distribution lags well behind the Turner nets" (CABLEFAX DAILY, 4/23). USA TODAY's Michael Hiestand notes Turner "might use its TNT NBA announcers -- Marv Albert, Doug Collins, Reggie Miller -- on its NCAA action." Levy said Collins "would be a tremendous asset for this portfolio." He stressed that the games "will share a consistent look" on all four networks. Levy: "We're going to look at all (on-air) talent across the board" (USA TODAY, 4/23).
STILL IN DEMAND: The NCAA Thursday said that its "March Madness on Demand" streaming video player "will continue on both NCAA.com and CBSSports.com, and will now also appear on Time Warner digital properties." The NCAA said, "The player will be operated and developed by Turner and have enhanced digital rights allowing the NCAA to deliver content for multiple Turner and Time Warner platforms" (VARIETY.com, 4/22). PAID CONTENT's Staci Kramer noted Turner will control "all digital rights, development and operation" (PAIDCONTENT.org, 4/22). Meanwhile, the networks Thursday said that they "will look into keeping DirecTV's contribution to the package as the satellite dish owner has been offering all games" through its "Mega March Madness" subscription package (L.A. DAILY NEWS, 4/23). While many of the "production responsibilities remain undetermined," Levy said that each of the four TV networks "will have the option to have 'look-ins' at other games in progress, but there will be no switching between games on each of the individual networks" (HOUSTON CHRONICLE, 4/23).