SBJ/December 12 - 18, 2005/Media

CBS plans free online coverage of NCAA

The growth of online advertising hit another key milepost last week as CBS announced plans to offer free, out-of-market online coverage of the first three rounds of the NCAA basketball tournament, forsaking subscription revenue for the projected greater riches of selling ads.

The first three rounds of the NCAA
basketball tournament will be offered free online.

The online March Madness product was previously a subscription-only product sold by CSTV, which agreed to pay CBS $3 million over two years for rights to stream game coverage via broadband. CBS then announced plans to acquire CSTV last month, bringing those rights back in-house.

And with online advertising mushrooming in size, and major sports spenders such as Anheuser-Busch shifting dollars away from television and toward the Internet, the network believes it can make more money by putting games online for free and selling advertising, including online-only commercials that will run in place of those seen on TV.

“This is a hugely important step for us, and one that acknowledges the general acceptance of broadband and growth of how companies market in this space,” said Larry Kramer, president of CBS Digital Media.

The move undoubtedly will be popular with millions of fans — particularly office workers bound to their desks during the first two days of the tournament. But executives for DirecTV insist the move will not harm sales of its Mega March Madness package, which similarly offers out-of-market coverage of the event’s early rounds.

“This tournament has been available online before, and we’ve seen this in other sports, too, such as baseball,” said Chris Brush, DirecTV vice president of marketing. “The best viewing experience is still on TV, and we expect interest in our package to remain very strong. We’ll still do well with residential buys, but this is also one of our bigger packages for our commercial clients.”

DirecTV declined to disclose subscriber totals for Mega March Madness, which cost $59 last year for residential customers. The package is one of two exclusive sports offerings for the satellite carrier, along with NFL Sunday Ticket.

CBS executives agreed with DirecTV’s optimism. CBS sells the out-of-market rights to DirecTV on a year-to-year basis, and during negotiations for the 2005 pact, CBS’s online rights were expanded in anticipation of a venture such as what it plans for the 2006 tournament. Contractual terms were not disclosed, but DirecTV said its deal for 2006 is “basically the same” as ones for recent years.

“I honestly don’t see a lot of cannibalization,” said Michael Aresco, CBS senior vice president for programming. “They understood we wanted to do some additional things online. What we’re doing could be more of a workplace product. But when they get home, they’re going to want to watch the games on TV.”

Other industry watchers similarly saw this move as a potentially watershed moment.

“This completely speaks to the power of online advertising and where it’s gone,” said Chris Russo, president of CR Media Ventures.

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