CBS, Turner to Share March Madness Rights

The NCAA is poised to announce a radical restructuring of the annual men’s Division I basketball tournament, expanding the field to 68 teams and splitting the TV rights deal between incumbent broadcast partner CBS and cable powerhouse Turner Sports.Per terms of a new 14-year, $10.8 billion contract with the collegiate sports association, CBS and Turner will share the rights to televise March Madness. (Sources said that while ESPN was in the running, the NCAA elected to go with the two-partner model.)Beginning with the 2011 tourney, all opening-round through Sweet 16 games will be shown in their entirety on CBS, TBS, TNT and truTV. Through the first five years of the new deal, CBS will cover the Final Four and the National Championship Game. Beginning in 2016, coverage of the regional finals will be split by CBS and Turner, with the Final Four and title game alternating every year between the broadcaster and TBS.CBS and Turner will share all expenses and revenues associated with the tournament. While financials weren’t disclosed, sources suggested that Turner would shoulder a greater portion of the rights fee in exchange for a bigger wedge of the ad sales pie.In the event the tournament loses money (i.e., rights fees and production costs outweigh ad sales revenues), the broadcaster’s maximum loss will be capped between $30 million-$90 million, and at $670 million over the full term of the agreement. Per a Time Warner 8-K filing with the Securities Exchange Commission, Turner’s share of the programming rights fee will be amortized based on the ratio of current-period ad sales revenue to the total projected advertising revenue over the term of the agreement. A unified ad sales team will be charged with securing sponsor dollars for the three-week event.Per Kantar Media analysis, the NCAA tourney is the second most lucrative post-season sports franchise in terms of national TV ad revenue, trailing only the NFL playoffs and Super Bowl. In 2009, CBS notched $589 million in March Madness ad sales revenue, down 9 percent from the year-ago $643 million. Over the last 10 years CBS’ tourney coverage has generated $4.55 billion in ad sales.In a conference call, Sean McManus, president of CBS News and Sports, said the deal “puts CBS on solid financial footing for lasting profitability,” adding that Turner’s involvement made the package viable. “We needed a cable partner,” McManus said. “It was a necessary component of getting this deal done.”CBS has broadcast the tournament since 1982. The network had three years remaining on an 11-year, $6 billion pact with the NCAA. According to McManus, the two sides first began discussing a collaboration in October 2009. Turner is no stranger to big-time sports. TNT has carried the NBA Playoffs for the last two decades and TBS enjoys the exclusive rights to all MLB Division Series playoff games and one of the two League Championship Series. According to David Levy, this newest addition may prove to be the most significant asset in the Turner Sports portfolio.“It’s a landmark deal for us,” said Levy, president of sales, distribution and sports, Turner Broadcasting System. “It gives us the opportunity to crown a champion, which Turner Sports has never been able to do. It’s a really big moment.”Levy said that while on-air talent has yet to be identified, the networks would strive for a unified presentation. “What you’ll see and hear will be consistent across all platforms,” Levy said. The deal comes a week after TBS announced it had signed Conan O’Brien to host a new 11 p.m. talk show. Team Coco’s show will bow in November, shifting Lopez Tonight to the midnight time slot.If Turner’s patronage of NCAA hoops adds even more luster to its sports holdings, the deal also can be perceived as yet another turning point for cable as a whole. “We’ve got sports, kids and news wrapped up,” Levy said. “The last shoe to drop is original entertainment programming, and look at how much traction we’ve been seeing there, with shows like [TNT’s] The Closer and Men of a Certain Age and [USA’s] Burn Notice.”On the distribution front, TNT and TBS both reach north of 101 million subs, or roughly 88 percent of all US TV households. TruTV is in 93 million homes.The expansion of the field from 65 to 68 teams awaits approval from the NCAA Division I board of directors. While the new format has not been ratified, both TV partners said they are happy with the proposal. “We are very comfortable with 68 teams,” McManus said. “That’s what the deal is based on and it meets all our programming and financial needs.” NCAA interim president Jim Isch said the much-rumored move to supersize the field to 96 teams was never a slam dunk. “A number of people made assumptions that we were going to 96, when we were just conducting our due diligence,” Isch said. “No decision had ever been made.”Further details on the structure of the 68-team bracket will be made available later this year. “We’re examining several options,” said NCAA senior vp of basketball and business strategies Greg Shaheen. “We will meet twice over the next few months and the particulars will be finalized by mid-summer.”

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CBS, Turner to Share March Madness Rights

Anthony Crupi

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Anthony Crupi