CBS, Turner Strike $8.8 Billion Deal to Keep NCAA Men's Basketball Tournament Through 2032
13 April 2016 - 4:40AM
Dow Jones News
CBS Corp. and Turner have extended their media partnership for
the NCAA men's college basketball tournament known as "March
Madness" through 2032.
The current 14-year, $10.8 billion contract that CBS and Time
Warner Inc.'s Turner cable unit have with the National Collegiate
Athletic Association doesn't expire until after the 2024
tournament. But the three parties agreed to go ahead and continue
the deal for eight more years at a cost of $8.8 billion—showing the
media companies' willingness to pay more on average per year to
lock in the rights.
CBS and Turner said they expect the NCAA to remain a profitable
property through the length of the deal. Before CBS's agreement to
bring in Turner to share the rights, the broadcaster was losing
about $100 million annually on the tournament, according to a
person familiar with the matter.
The new pact is a big bet that sports will continue to hold its
value at a time when changing viewing patterns and emerging
platforms are straining the traditional television networks and
pay-TV businesses. CBS Sports Chairman Sean McManus said regardless
of how people are getting content in the years ahead, the deal will
be a success.
"Whatever new platforms develop, we have all of those rights. If
people are watching on a skinny bundle, a phone or Apple TV, we
have the ability to exploit all of those rights going forward," he
said.
The new agreement won't change the current sharing agreement.
CBS and Turner will alternate telecasting the Final Four and the
championship game.
This year marked the first time that championship aired on a
cable network instead of broadcast, capping a tournament that was a
disappointment in terms of ratings. Last week's championship game
between Villanova and North Carolina went down to the wire but the
audience was only 17.8 million, making it the least-watched final
since 2009, according to Nielsen. The previous year's final on CBS
between Duke and Kentucky drew almost 30 million viewers.
Turner President David Levy attributed the decline in viewing
for this year's tournament to a number of upsets that sent teams
with big national followings such as Duke, Michigan State and
Kentucky home early. "I think the event had some challenges this
year with the matchups," he said.
The willingness of Turner and CBS to share the wealth and risk
show that networks may have to embrace new models when it comes to
expensive content such as sports.
"I'm surprised there haven't been other deals like this," said
Mr. Levy.
While the National Football League's new Thursday package isn't
a partnership, it does spread the risk out among multiple partners
and platforms. CBS and Comcast Corp.'s NBC and the league's own NFL
Network will carry games as will the social media platform
Twitter.
NCAA President Mark Emmert said the renewal will provide the
association with long-term financial security.
"This is a revenue stream that 1,100 colleges and universities
depend on," he said, adding that 90% of the license fees from March
Madness go to support student athletes on 19,000 teams across 24
sports.
For Turner, holding on to the NCAA is part of a broader strategy
that big sporting events will continue to driver high subscription
fees from pay-TV distributors. Besides the NCAA, which is shown
across Turner's TBS, TNT and TruTV, the company also has NBA rights
and Major League Baseball.
CBS also banks heavily on sports but has been showing more
restraint as of late in the face of rising rights fees. In 2014,
the network walked away from the U.S. Open tennis championships,
which are now carried on ESPN.
"I work for a man -- [CBS CEO] Leslie Moonves—who believes we
should be making money on our sports investments," Mr. McManus
said.
(END) Dow Jones Newswires
April 12, 2016 14:25 ET (18:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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