SBJ/November 10 - 16, 2003/Media
CBS keeps Open, buys into new series
Published November 10, 2003
CBS has signed a four-year, $120 million extension to televise the U.S. Open through 2008 and agreed to provide network airtime for the proposed U.S. Open Series, a collection of tennis tournaments preceding the Open each summer.
The deal calls for CBS to pay a rights fee of $33.75 million for the 2004 U.S. Open, the final year of the old contract. The network will then pay $30 million a year for the next four years. Although the rights fees have been reduced from the final year of the old contract, the average annual payments are about the same, because the previous contract increased in value each year.
The U.S. Open broadcast schedule will not change, with CBS doing a total of 48 hours of coverage, including the women's final in a Saturday night prime-time slot. But CBS will provide some additional advertising inventory to the U.S. Tennis Association, including promotional spots that will run as early as May instead of just in the tournament, as they had in the past. The network also will pass along some commercial units to the USTA for the tennis governing body to offer to potential sponsors in categories that are currently untapped.
Neither CBS nor the USTA would comment on the rights fees, but both sides indicated they were happy with the new contract and that the negotiations were quick and smooth.
"Our goal was to renew the rights to this great sporting event in a financially responsible way," said CBS Sports President Sean McManus. "We were able to do that."
The new agreement gives the USTA the option of ending the deal after the 2006 tournament, something it will likely do should the sports rights fee market rebound between now and then.
The television market for tennis has been particularly challenged in the last two years, with the French Open and Wimbledon renewing deals for essentially flat rights fees for broadcast television, and taking decreases on the cable side. But the U.S. Open actually stands to see its television revenue increase by about 12 percent over the next five years, compared to the previous five-year period, largely due to the strength of its six-year cable pact with USA Network, which was signed last year at a 30 percent rate hike.
Next year the U.S. Open domestic television revenue will be close to $55 million, making it the richest annual sporting event in North America not tied to a sports league.
Wanting to emulate the league model, however, the USTA is creating the U.S. Open Series to build anticipation for the Open itself. The series will include existing ATP Tour and WTA tournaments that will now be under the U.S. Open brand.
Neither CBS nor USA is paying a rights fee specifically for the Open Series, but both have agreed to cover matches. CBS committed to 12 hours of airtime and USA 24.
The USTA hopes to kick off that series as soon as next summer, using CBS' commitment to help coax existing tournaments to become part of the series.
"We are building the U.S. Open Series brick by brick, and television is really the foundation," said Arlen Kantarian, USTA chief executive of pro tennis and champion of the Open Series. "This is providing existing tournaments who now buy television time — I don't think any non-Grand Slam event has ever gotten on television without a time buy — with a consistent, cohesive television package, so this is really a breakthrough."
CBS, the USTA and the events themselves will jointly sell advertising for the Open Series, with mechanisms in place to ensure that CBS does not lose money by covering them.
"If they weren't going to be profitable, we wouldn't be doing them," McManus said.
Donald Dell, tournament chairman and founder of the Legg Mason Tennis Classic, an ATP event in Washington, D.C., and senior vice president of sports television and sports marketing for Clear Channel Entertainment, said getting CBS to agree to be part of the Open Series is a big step forward.
"I think that could become the biggest thing for tennis in the last 50 years," Dell said. "If you could build a real concise, clear-cut lead-in to the Open and broadcast it on network, I think that's a historic step forward."
The Legg Mason, owned by Clear Channel, is one of the tournaments that would potentially become part of the Open Series.
Staff writer Langdon Brockinton contributed to this report.