Why CBS Will Share March Madness With Time Warner's TBS

NEW YORK (AdAge.com) -- March Madness is no longer solely a broadcast-TV event. Starting in 2011, CBS and Time Warner's Turner Broadcasting System will share multimedia coverage of the popular National Collegiate Athletic Association men's basketball championship tournament games -- and the ad dollars that flow to them. But the economics of broadcasting marquee sports events have prompted TV networks to enter into complex deals that loosen their control over the telecasts and associated ad revenue. The latest and most surprising case in point came today when the NCAA said it had agreed to a $10.8 billion 14-year TV, internet and wireless rights agreement with both CBS Corp.'s CBS Sports and Turner Broadcasting System to present the Division I Men's Basketball Championship from next year through 2024. As part of the agreement, all games will be shown live across four national networks beginning in 2011 -- CBS, TBS, TNT and TruTV -- marking a first for the 73-year-old tournament. More games on TV for more viewers and dollars The two media companies hope their agreement will broaden access to the games, many of which have not been televised nationally in the past, and thereby increase the value of the event to marketers. Viewers' ability to watch on up to four networks "has to result in more eyeballs, more gross ratings points and more coverage of the tournament, thereby, I would say, creating much more value," said Sean McManus, president of CBS News and Sports, during a press conference. The big event already brings in big interest. CBS has sold large NCAA sponsorships to companies such as Coca-Cola, which in 2002 agreed to an 11-year deal worth approximately $500 million. Such deals have typically included ad time in other NCAA events broadcast on CBS, with the basketball tournament serving as the biggest part of the arrangement. Just five years ago, top-tier sponsorships for just the basketball tournament went for about $30 million a year, while second-tier sponsorships cost about $10 million. CBS and Turner will mount a unified sales force -- along with a unified production crew -- and share revenue. The companies expect that the deal will give them leverage in the marketplace to raise prices for sponsorship packages, which ought to be "a deeper and richer combination of both CBS and Turner" inventory, said David Levy, president of sales, distribution and sports, Turner Broadcasting System. Cable taking more broadcast turf Yet the arrangement spotlights the difficulties facing broadcast networks in maintaining dominance over the nation's most-watched video properties. "Monday Night Football," long a staple on Walt Disney's ABC, is now shown on sibling sports-cable network ESPN. Oprah Winfrey is leaving her daytime program, syndicated on broadcast TV, to start a cable channel owned by Discovery Networks. And just recently, Turner's TBS said it would start running a new late-night talk show featuring former NBC host Conan O' Brien in November. As broadcast TV sees ratings erode thanks to new digital methods for consumers to get news and entertainment, the networks are finding it more difficult to come up with the increased fees necessary to license big sports. General Electric recently told investors that its NBC Universal unit lost $223 million on its broadcast of the Winter Olympics, in part because of the substantial rights fees it had agreed to in order to telecast the event across its networks. Mr. McManus noted that CBS "had escalating costs" but that the new agreement "puts CBS on solid footing for lasting profitability." He acknowledged that "in a changing marketplace," the network's best option was to find a way to keep the event from being shown by a rival broadcast network while ensuring the telecast "will remain an important part of the fabric of CBS." Under terms of the deal, first- and second-round games will be shown nationally on CBS, TBS, TNT and TruTV starting with the 2011 championship. CBS and Turner will split coverage of the regional semifinal games. CBS will provide coverage of the regional finals as well as the Final Four including the national championship game through 2015. Beginning in 2016, coverage of the regional finals will be split by CBS and Turner with the Final Four and the National Championship game alternating every year between the CBS Television Network and Turner's TBS. NCAA March Madness on Demand, the video player that provides live streaming video of the tournament, will continue to launch from NCAA.com and CBSSports.com. Turner has secured rights for any Time Warner digital property, with a video player to be operated and developed by Turner, and that gives Turner the ability to deliver content for multiple Turner and Time Warner media venues. One reason the media companies have for optimism is that the NCAA is expected to increase the number of teams involved in the tournament to 68 from the current 65. That would add more games to the schedule. The NCAA is expected to review a recommendation to increase the size of the tournament at an April 29 meeting.

Why CBS Will Share March Madness With Time Warner's TBS

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