CBS and Turner Sports have extended their joint deal with the NCAA another eight years to '32 for the men’s basketball tournament. The additional eight years are being valued at $8.8B total, or $1.1B per year. That marks a big leap from the $771.4M average annual rights fee in the original 14-year contract, which was signed in '10 and runs through '24. The NCAA’s rights include TV, digital and marketing/sponsorship for the tournament. Turner and CBS will maintain the same shared financial and programming structure as they have had for the first six years of the deal. “The NCAA tournament has exceeded all of our expectations on every metric,” Turner President David Levy said. “We’re way ahead of where we thought we’d be six years ago and that’s why we wanted to get this done.” Talks to extend the deal began in October when CBS/Turner and the NCAA opened up negotiations as part of a contractual look-in. SportsBusiness Journal reported in December that talks had centered on an extension to '32. Those negotiations were finalized in Houston at the Final Four earlier this month and signed shortly thereafter, despite historically low TV ratings for the three games, which were telecast on Turner. It marked the first time the championship game had been on cable TV. The dramatic April 4 final between Villanova and North Carolina on Turner pulled a 10.6 rating, or 17.75 million viewers, across TBS, TNT and truTV, down 34% from last year’s 16.0 rating for Duke-Wisconsin on CBS. But Turner, which manages the digital rights through March Madness Live, remains bullish on the growth of its digital and overall audience. MML generated a record 18.1 million hours of live viewing for this year’s tournament across more than 10 digital platforms.
TOURNAMENT TO REMAIN PROFITABLE: Despite the low TV ratings, both Levy and CBS Sports Chair Sean McManus said this year’s tournament generated the most revenue during the time they have shared the NCAA’s rights, and that it was profitable. The terms of the extension are intended to keep it profitable. “We weren’t going to do a deal unless it was financially responsible and profitable. This is,” McManus said. Levy added: “It certainly is profitable.” The growth in rights fees marks an important step for the NCAA. Such a long-term deal represents financial predictability and growth for the college game’s governing body. The current deal provides the NCAA with substantial annual increases, from $740M this year to $761M in '17, $782M in '18, $804M in '19 and $827M in '20. But those increases flatten over the final few years of the original contract, NCAA President Mark Emmert said. Some of the money from the extension will be used to beef up the numbers near the end of the current deal. “We needed to address that, and the extension does,” Emmert said. “That financial security and predictability is very important to the membership. … It’s obviously critical that we get it right [in the extension]. We have 90 championships, but only one -- basketball -- generates virtually all of the revenue that comes into the association and goes back out to the schools.” Emmert said the NCAA has been pleased with the way Turner and CBS have jointly presented the tournament and the desire to extend overrode any considerations to let the contract play out and go back to the marketplace in eight years. Turner pays close to 70% of the rights fee. “For our three organizations to come together the way we do on the tournament, it’s maybe unprecedented,” Emmert said. “We felt very comfortable continuing with such a unique partnership.”
IMPORTANT PROPERTY TO HOLD ONTO: Given the changing media landscape, Turner and CBS wanted to make sure they had a long-term grip on the NCAA’s rights, no matter what the future might hold. “There are very few premier sports properties out there that can produce the kind of value the NCAA tournament delivers to our distributors, our advertisers and our consumers,” Levy said. “This event captivates the nation for three weeks unlike anything else in sports. When you have the opportunity to re-up a contract like this -- the linear TV, the marks, the rights -- and distribute on many different platforms, these things make us very comfortable to know this event is something you want in your portfolio, no matter where the TV ecosystem goes.” Both sides said that CBS will have all three games for the Final Four in '17, while Turner will have the Final Four in '18. They will continue to alternate through the contract. Emmert credited NCAA Exec VP/Championships & Alliances Mark Lewis and VP/Men's Basketball Championships Dan Gavitt for directing much of the negotiations.
