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Volume 21 No. 1


TBS appears likely to carry the Final Four and two Elite Eight games next year, two years earlier than planned, thanks to an option in the agreement that CBS and Turner signed when they jointly acquired the NCAA’s media rights more than two years ago.

When the two networks won the NCAA’s rights in 2010 for $10.8 billion over 14 years, the original plan called for CBS to broadcast the Final Four and Elite Eight through 2015, with Turner picking up the Final Four and two Elite Eight games in 2016. The two networks then would alternate carrying the Final Four, while splitting the Elite Eight, for the remainder of the contract.

A little-known clause in the deal gives Turner the ability to take over the Final Four beginning in 2014.

No official decision has been made, and nothing is expected to be announced officially until later in the spring. But several industry sources expect Turner to act on that right and put the Final Four and two Elite Eight games on TBS next year.

Kevin O’Malley, a veteran media consultant who worked with Chuck Gerber to assist the NCAA on its media deal, said, “CBS and Turner do have the ability to make changes. It’s fair to say that a few years ago, they probably wanted to keep the finals on over-the-air TV, but that time really has passed. Cable now is considered just as good of a platform for big events as over-the-air TV. There used to be a rigid line there, but it really has blurred. This contract was sort of a sign that such a time was coming.”

Such a move, obviously, would benefit Turner. Picking up the Final Four two years earlier will help as it renews its cable and satellite affiliate deals. The Final Four is the type of marquee event that networks use to pressure distributors into agreeing on affiliate deals. Distributors currently pay 62 cents a subscriber per month for TBS, according to SNL Kagan. TNT brings in $1.27 and truTV makes 12 cents. Turner, through programming like the NCAA tournament, wants to increase those payments.

Moving the Final Four next year to TBS would continue the migration of big sports events from broadcast to cable. ESPN carries the BCS championships exclusively and an NBA conference final. Turner Sports carries an MLB league championship series and an NBA conference final. NBC Sports Network carries two exclusive Stanley Cup Final games.

CBS has broadcast the Final Four every year since 1982. The network certainly would miss out on the exposure that comes from hosting the highly rated Final Four and national championship game. Last year, the championship game generated an impressive 12.3 rating, while the Final Four’s late game posted a 9.6.

But sources said any potential move would not hurt the network financially, because the share of money CBS and Turner make through their partnership stays constant regardless of the channel that hosts the game. Through their deal, Turner is responsible for capping any potential losses CBS might incur each year.

No money or other assets are expected to change hands as part of the negotiations for the 2014 Final Four, sources said.

The NCAA has little, if any, role in the current negotiations. It has no veto power on the Elite Eight and Final Four’s potential move to Turner next year, sources said. The NCAA did not respond to questions about the CBS and Turner talks.

“You would think that, by signing the contract with both media companies, the NCAA’s approval would be implicit,” one source said.

The NCAA media deal is more complicated than most rights deals because CBS and Turner share the rights. The NCAA has one deal with CBS and Turner. The two networks also have a separate agreement that outlines how they will manage the rights jointly.

A statement from CBS and Turner last week acknowledged: “As part of the original 14-year deal, there was a provisional option for rotation of the Final Four and national championship to begin in 2014. There is currently no timetable for a decision.”

The original deal calls for the two media companies to operate as one team on broadcasts, marketing and sponsorship sales, and digital — essentially encompassing all of the rights included in the NCAA deal. When it comes to the NCAA tournament, CBS and Turner share everything from sales teams to their on-air talent during the tournament.

For example, the Final Four broadcast team is made up of Jim Nantz and Clark Kellogg from CBS and Steve Kerr from Turner. On the sales front, Turner’s Will Funk and CBS’s Chris Simko have worked to merge their sales teams when it comes to NCAA corporate sponsorships. The production trucks typically have a CBS producer sitting next to a Turner producer.

The first four rounds of the tournament are shared between CBS and three Turner channels: TNT, TBS and truTV.

Expect MLB Network executives to spend a lot of time in Philadelphia; El Segundo, Calif.; and Manhattan’s Time Warner Center during the next nine months.

That’s because the 4-year-old network’s affiliate deals with nearly every major distributor expire over the next two years. That includes deals with the industry’s biggest operators, including Philadelphia’s Comcast, El Segundo’s DirecTV and Time Warner Cable. When it launched on Jan. 1, 2009, MLB Network signed five-year carriage deals with distributors, sources said.

MLB Network has been airing more live games, and critics like its programming.
The situation of having so many deals expire at the same time is somewhat unique in the pay-TV business. Many other distributors, like ESPN, Fox and NBC, stagger their affiliate deals so they do not all expire at the same time. That allows the networks to focus on each distributor, rather than all at once.

Sources said MLB has not started formal negotiations yet to renew its deals. But some distribution executives said they’ve had informal discussions with MLB executives about what to expect, which includes a higher license fee offset by a more robust Extra Innings package that will include TV Everywhere rights.

MLB now gets 27 cents a subscriber per month, according to SNL Kagan. Distribution executives say they expect MLB Network to try to double that fee, to around 50 cents.

At 50 cents a subscriber per month, MLB Network would be the fourth-most-expensive sports channel, according to SNL Kagan, behind ESPN ($5.47), NFL Network (88 cents) and ESPN2 (73 cents).

As an enticement to get distributors to renew their deals at a higher price, MLB Network will allow distributors to offer its Extra Innings out-of-market package online to authenticated subscribers. That could be done either through a TV Everywhere scenario, where subscribers of the package are given online access, or in partnership with MLB.TV, the league’s online out-of-market offering.

MLB was successful in tying Extra Innings — the out-of-market TV package — to MLB Network five years ago. At the time, it refused to sell Extra Innings to distributors that did not carry MLB Network. The package was TV only and did not allow for online access.

In the ensuing years, however, some cable operators started to sour on Extra Innings because of viewer erosion. Distributors do not release the specific number of people who subscribe to Extra Innings. But Time Warner Cable executives, in particular, have complained about a drop-off in Extra Innings subscribers since they originally did the deal.

Distributors believe that baseball’s MLB.TV out-of-market online product, which costs $129.99, undercuts their price and takes away potential subscribers. The cost of Extra Innings varies by provider. DirecTV, for example, charges $195.99 for it.

Distribution executives plan to use the channel’s ratings performance as a reason for trying to keep its license fee low. In 2012, MLB Network ranked 81st of 97 Nielsen-rated cable networks in prime time. For the year, the channel averaged a 0.1 rating and 106,000 viewers, placing it behind NFL Network and NBA TV. NHL Network is not Nielsen rated.

But MLB Network’s programming receives high marks from critics — particularly its “MLB Tonight,” which has won two consecutive Sports Emmys for studio shows. The channel has increased the number of live games it airs from 26 in the early days to more than 100. And its schedule has some popular annual programming, including exclusive MLB playoff games and exclusive World Baseball Classic games. Over the past several years, networks have used those types of high-profile games to gain carriage on cable and satellite operators.

MLB Network launched Jan. 1, 2009, to about 50 million homes, making it the biggest network launch in cable TV history, and it’s now in nearly 71 million homes. It has the highest distribution of any league-owned network, slightly ahead of the NFL Network.

In addition to using leverage from Extra Innings, MLB Network’s strategy of giving equity stakes helped it gain carriage.

MLB owns two-thirds of the channel. DirecTV hold a one-sixth stake and cable’s In Demand consortium of Comcast, Time Warner and Cox split the final one-sixth ownership stake.

MLB Network negotiations will be led by a trio of executives: Tim Brosnan, MLB executive vice president of business; MLB Network President and CEO Tony Petitti; and Chris Tully, MLB senior vice president of broadcasting.

Turner Sports is predicting a bigger audience this year for March Madness Live, despite last year’s traffic dip and a further embrace in 2013 of user authentication to watch games on digital platforms.

The company last year shifted the business model for March Madness Live to a TV Everywhere structure in which users were encouraged to authenticate themselves as subscribers of the company’s TBS, TNT and truTV linear TV channels. Turner also offered a fallback option of paying $3.99 to watch the NCAA men’s basketball tournament games. The event drew 51.6 million total broadband and mobile visits, down 6 percent from 2011.

Live streaming of the tournament had never before shown a year-over-year audience decline since CBS began offering the games digitally in 2004.

March Madness Live this year does not include the fee option, and users who do not authenticate themselves will have the option of a four-hour free preview, time which can be spread over the tournament. Still, Turner Sports executives said they are projecting audience growth in 2013.

“We definitely think we will be at or above last year’s numbers,” said Matt Hong, Turner Sports senior vice president and general manager. “We think there’s now a far greater maturity in the market with regard to user authentication and TV Everywhere. People are more accustomed to authenticating, and we’re working to make it easier for viewers to do so.”

Several enhanced pieces of technology have been included in the latest version of March Madness Live to aid with the authentication process. Among those are modem recognition software that can automatically detect Comcast subscribers and simplified log-in procedures within the March Madness Live mobile applications.

Turner Sports also is banking on a traffic boost from Bleacher Report, which it acquired last summer and helped Turner’s overall digital sports portfolio rank fourth in February’s comScore reach rankings with 22.2 million unique visitors. Bleacher Report will be a new launch site to initiate the March Madness Live video player, along with and

While the aggregate audience last year showed a decline in size, those who authenticated were shown to watch for longer stretches of time and return more frequently for subsequent tournament games.

“We found those people who authenticated were definitely more invested in the event,” Hong said.