The tournament is a lucrative TV event. Between 2000 and 2009,
network TV advertising during the men's tournament translated into
$4.55 billion of spending from more than 280 different marketers,
according to WPP's Kantar Media. Total 2009 revenue was $589
million, Kantar said, marking an 8.5% decline from the prior year
and just the first drop in ad dollars since 2001.
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
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
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
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
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
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
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.