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SBJ/20100412/This Week's News
NCAA close to decisions on rights, tourney
Published April 12, 2010
Interim NCAA President Jim Isch is expected to reveal his decisions on tournament expansion and media rights at an executive committee meeting April 29.
Isch could come to a decision as early as this week on whether the NCAA should opt out of the last three years of its 11-year, $6 billion media contract with CBS. Several NCAA and media executives expect Isch to recommend that the association opt out of the deal and expand the tournament from 65 to 96 teams. That would likely mean that either CBS will partner with Turner Sports to carry the games, or ESPN would pick up the tournament on its own.
The executive committee, which is chaired by Oregon State President Ed Ray, already has met twice regarding the NCAA’s media negotiations around the men’s basketball tournament.
Some sources have cautioned that the decision is not final. The NCAA believes that keeping the tournament as it is remains a viable option.
There is a financial problem, however, with not opting out of the media deal. Because of the heavy escalators in the contract, the deal’s final three years are worth $2.13 billion, which is more than a third of the total value of the deal. Industry sources say that CBS wants relief from a $710 million average rights fee over the next three years.
CBS is contractually obligated to share its business results with the NCAA each year, and the network has showed that it didn’t turn a profit on the tournament this year, sources said. “It’s pretty clear that an over-the-air network can’t afford this event by itself,” said one executive with knowledge of the discussions.
By teaming with Turner, CBS would have a partner that would help pay that rights fee, which isn’t expected to grow much beyond the current deal. If the NCAA goes that route, the Final Four would alternate from over-the-air to cable each year.
The consensus among NCAA and media executives interviewed for this story is that CBS carries an advantage as the longtime incumbent broadcaster. CBS has carried the NCAA tournament since the early 1980s.
But another reason the NCAA has warmed to a joint CBS/Turner bid is due to Turner’s work in the digital space, according to industry insiders. The NCAA is especially intrigued by Turner’s strategy of operating NBA.com and NASCAR.com. Adam Silver, the NBA’s deputy commissioner, attended the Final Four in Indianapolis, and sources said he has met with NCAA executive Greg Shaheen to discuss Turner’s work on NBA.com.
ESPN also has a robust digital platform, but all of its content falls under the ESPN brand. The NCAA likes Turner’s strategy because it highlights the brands of each property. ESPN is basing its bid to acquire the tournament’s rights on its position as college basketball’s dominant network. With ABC, ESPN, ESPN2 and ESPNU, it also has the shelf space to show each game nationally, rather than the current regional schedule used by CBS.
The tournament is critically important to the NCAA, which derives 98 percent of all revenue from March Madness. The NCAA distributes nearly all of that money to its member schools.