News

The Method to the Madness

3/14/2009 2:00 AM Eastern

Madness, it seems, comes in many forms.

In March and early April, it means people painting their faces or bodies in the colors of their alma mater or waving foam fingers for their favorite squad, all over the NCAA Men's Division I Basketball Tournament, more colorfully known as “March Madness.”

Rights-holder CBS has also gone a little mad, offering the tournament's 63 games this year on more screens and in more formats than ever before, extending March Madness past traditional game coverage on linear TV and radio, to tourney action and highlights on CBS College Sports Network and out-of-market pay-per-view packages in HD on DirecTV. Advanced services are also in play, with games streamed live online and an on-demand live-game, highlight and memories package available to video customers via 20 distributors. No TV or computer? There's assorted mobile offerings on iPhone and iPod, plus AT&T and Verizon Wireless video products.

But there is a method here. By offering varied means to the Madness, CBS News and Sports president Sean McManus believes his network is poised to capitalize on the demand for hardwood heroics.

“With the tough economic times, I think Americans are ready to jump up out of their chairs and cheer for something,” McManus said.

“We used to bring our cameras, shoot some basketball games and go home,” he said. “Now, there are myriad new things we're trying to maximize revenue.”

CBS is expected to come close to matching last year's ad sales, and while it's too close to call, many media executives consider little or even no growth to be a sign of strength in such a down economy. More than anything, the sales figures already reveal the enduring power of college sports — authentic athletic competition without the attitude of pro players and owners.

While it holds the rights through 2013, CBS is beginning to eye an even longer view of the tourney. McManus, noting that CBS is in contact with the NCAA on some level virtually every day, said “we talk about making the tournament more marketable for the NCAA and more profitable for CBS. If a deal makes sense, we certainly would like to keep it.”

Basketball fans and media partners have taken notice of CBS's full-court press.

“Initially, when CBS made the deal back in 1999, it was widely viewed that it vastly overpaid,” said LHB Sports Entertainment and Media principal Lee Berke. “But CBS rolled out different platforms in a logical way, and now you can say that this is the case study on how to exploit a major sports property.”

NBC also showed last year, with the Beijing Olympics, that events running on numerous broadcast and cable channels and online can still aggregate a huge TV audience: 211 million across NBC Universal channels.

For $6 billion, CBS gained TV and new-media rights, most of which were a gleam in a technologist's eye at that stage, over an 11-year pact that tipped off in 2003 and extends through the 2013 school year. The contract is valued on an escalating basis — this year's outlay is reportedly $571 million. Couple that with hundreds of millions in production and development costs, and it's a big bet to cover, even for a property that many argue is the most exciting in all of American sports.

“If you quantify everything we get in value, whether it's promotional, the advertising revenue we get on TV and the Internet, what it does for CBS College Sports and now mobile, plus the Corporate Partner program and radio and the other NCAA events we get,” said McManus, “add everything together and it's a deal we would do again that's financially good for CBS.”

Ad revenue has grown over the years — TNS estimated CBS's 2008 TV tournament take at $643 million — but is challenged this year by the faltering economy. With a little more than a week to go before the tournament began on March 19, CBS had sold about 90% of its inventory.

On the down side, media buyers report CBS has been at that level for a number of weeks, with units left in the high-profile and priced Final Four and national championship game, which this year takes place at Ford Field in Detroit.

CBS executive vice president for sports sales and marketing John Bogusz said that with a solid group of NCAA and returning sponsors and surprising strength with the auto category, the network has overcome financial sector defectors. CBS was also buoyed by growth from the March Madness On Demand Internet package of games, with sales expected to surpass $30 million in just four years. “Given the economy, we're at a good level,” Bogusz said.

Herewith a scorecard on where CBS stands with ad sales and the various Madness media, old and new, of March.

BROADCAST TV

While noting that no sector is “immune to the economic downturn,” McManus called sales for the tournament “a pocket of good news” in a tough ad environment.

The network was over 90% of its ad-sales goal in the middle of last week, with some units still available in the earlier rounds, according to buyers. Bogusz said there's limited inventory left in the Final Four and national championship games.

“I'd say that's about accurate. The tournament's a great place to reach men in general and young men in particular,” said Carat vice president and group director of national broadcast Mike Law. “They have NCAA corporate and returning sponsors in place, so there's a good base. But they've been at that level for a while now.”

Mirah Parikh, video innovation director at media agency Spark, agreed. “It's been 90% or so for a long time. They should be at 99% by now,” he said, noting that CBS typically holds an estimated 5% to 8% of inventory in reserve for audience deficiency units in case the tournament underdelivers. “Buyers could see some opportunities.”

Thus far, ad rates have held up reasonably well. Pricing for the championship game is anywhere from $1.1 million to $1.3 million per 30-second spot, according to sources, with the Final Four fetching $450,000 to $750,000, depending on whom one asks.

Neither McManus or Bogusz would discuss whether CBS would match or outpace last year's ad sales, which TNS estimated at $643 million, a figure most believe is somewhat inflated.

Bogusz said the financial category has been a problem. “We've lost AIG and Wachovia,” he said. “We're trying to make up some of that. The movie category has been good. Tech is up.”

CBS has also received a lift from the autos. Mercedes, Toyota/Lexus and Audi, a new sponsor, have joined troubled General Motors, which did not advertise in the Super Bowl or Academy Awards, on the network's roster.

Still, the CBS Sports sales chief knows there's a long road ahead to the Final Four. “I'm not going to make this all rosy. It's a challenge out there, but we're getting things done. We'll be in sale the next three weeks,” said Bogusz.

SATELLITE TV: DirecTV's Mega March Madness

In what was the first play to move tournament coverage past linear TV and radio, CBS Sports has been partnering with DirecTV for a decade now on its exclusive Mega March Madness out-of-market pay-per-view package.

Available for $69, the 2009 version will proffer 37 tournament games in HD, supported by an interactive mix channel showcasing four contests simultaneously, according to DirecTV Entertainment executive vice president Eric Shanks. Subscribers choosing a game from the mix channel will automatically be directed to that game's enhanced feed if they have an HDTV set, or to the standard-definition feed for traditional set owners.

While watching any game, fans can also call up an on-screen “L-wrap” to see scores from other games in progress and cycle through all the current-round matchups. Subscribers can also enter their tournament brackets into the computer, which will be automatically updated after each game ends.

Shanks would not share Mega March Madness numbers from last year or project subscribers for this year's package, but did concede that CBS Sports' free streaming of tournament games via March Madness On Demand has adversely impacted buys.

“It definitely hurts the package, but the pay package is still a great value to tournament fans,” he averred. “You can't get HD on the Internet, and it's still tough to circle 12 to 15 guys around a computer screen.”

Cable TV: CBS College Sports Network

While America tunes in CBS on Sunday at 6 p.m. for the Championship Selection Show, Steve Herbst, general manager of cable's CBS College Sports Network, joked that he will be “a couple of steps behind and to the right of [CBS Sports executive vice president of programming] Mike [Aresco], not to get in his way.”

Herbst's network will get a pair of first-round, out-of-market tournament games for a third consecutive year, and the chance to put its programming before an additional 20 million homes during a free preview from March 13 through April 7. During that span, CBS College Sports will showcase 75 hours of tournament fare, much of it under the heading of “NCAA March Madness Highlights powered by Pontiac,” the tournament's official highlights show, for a total of 50 million homes.

Among the top affiliates taking part in the preview, which in many cases, upgrades the service from a sports tier to digital basic: Dish Network, Insight Communications (across footprint), Bright House Networks (Indiana), Verizon Communications' FiOS TV, Bend Broadband, Charter Communications, Comcast (Seattle and San Francisco) and Time Warner Cable (New York City, Los Angeles and Texas).

Said Herbst, “The tournament is going to be a great showcase for our talent and network.”

NCAA TV VOD: The Best of March Madness

CBS College Sports is also doing its part to give some 20 cable, satellite and telco affiliates — including DirecTV, Comcast, Verizon, Charter, Mediacom Communications, Insight and Atlantic Broadband — an assist with on-demand tournament action.

The “NCAA: The Best of March Madness” VOD package comprises advertising-free customized highlights for the 63 tournament games, plus 40 archival vignettes, in both standard and high-definition formats. Last year, CBS College Sports executive vice president of distribution Bob Rose said, 25 memorable moments yielded about 75% of the on-demand viewing.

“That's about right,” said Comcast vice president of video content Diana Wechsler Kerekes. “We were just watching Christian Laettner's shot [from the 1992 Duke-Kentucky thriller] and you get excited. I think the memories, which we've had up since March 2, really get people pumped for the tournament.”

It's a ratio that figures to increase given the expanded slate, which this year includes the 30th anniversary of the Magic Johnson-Larry Bird final and Mario Chalmers' game-tying three-pointer for Kansas in last year's title-tilt triumph over Memphis.

As for game action, a highlights package will be culled from the tourney's first four days. Thereafter, from the Sweet 16 regional semifinals through the national championship game on April 6, there will be individual cutdowns, averaging three minutes.

ON-DEMAND, ONLINE

CBS's “March Madness On Demand” will stream all 63 games live again this year.

Comcast, through media agency MediaVest, will sponsor the “boss button” function, which users clicked 2.5 million times during last year's tournament to make it look like they were working. Diana Wechsler Kerekes said that this year, viewers will be taken to a spreadsheet with tournament data.

“This is the first time the boss button was sponsorable,” she said. “We think it's a valuable application and wanted to attach our brand to it.”

March Madness On Demand attracted 4.8 million unique visitors last year, said CBSSports.com senior vice president and general manager Jason Kint, a 164% jump from 1.8 million in 2007. About 90% of that occurred in the workplace, said Kint, underlining the boss button's appeal.

With 30 to 35 advertisers in tow, March Madness On Demand is expected to pass the $30 million mark, a 30% jump from $23 million for the 2007 tourney and $10 million in 2006.

TELEPHONE

CBS Sports is also taking the action to handhelds, via an application for Apple's iPhone and iPod Touch devices that will provide live streaming video and audio from the tourney's 63 games.

Developed by MobiTV, the mobile application is available for $4.99 from Apple's App Store on iPhone and iPod Touch, or at www.itunes.com/appstore. Those only interested in the action from Ford Field can purchase those games for $1.99 a piece, the day after the buzzer sounds.

Besides live video, the NCAA March Madness on Demand iPhone and iPod touch application lets fans access tournament brackets — updated in real-time with up-to-the minute scores — and click directly from brackets to live video. During the contests, users can access in-game box scores and player stats, as an overlay on top of the video.

The Apple apertures aren't the only mobile play/gambit for CBS, which also sank a deal with AT&T to carry the complete tourney schedule on all of its Mobile TV packages for free.

AT&T, which provides live TV packages starting at $15 per month, through Qualcomm's MediaFLO subsidiary, will have a quartet of live TV channels dedicated to the tourney in more than 50 metro markets.

Competitor Verizon Wireless is also in the game with MediaFlo's live TV service and will offer a single March Madness channel, with either an East or West coast feed, depending on the customer's market.

RADIO

On the radio, syndicator Westwood One, which sublicenses tournament rights from CBS, will provide full play-by-play coverage of 29 games. The schedule includes action from all eight first-round sites — via five broadcast windows on the hectic two opening days — and second-round sites and four select regional semifinals. Coverage extends to all four regional finals and all three games from the Final Four.

Westwood One vice president, executive producer for sports Howard Demeroff said the games will be available terrestrially on about 450 stations nationwide.

In addition, all of the tournament games will be broadcast in their entirety on Sirius Satellite Radio, as well as on March Madness On Demand. “There's a built-in radio button on the player, so you can hear us,” said Demeroff, noting that the audio feeds are closer to real time than video (owing to satellite-delivery lags).

Last year, MMOD audio clicks grew 42% to 870,000 for the tournament, up from 605,000 in 2007, with hours jumping 53% to 95,000 from 62,000.

Todd Spangler and R. Thomas Umstead contributed to this report. For more on CBS's March Madness play, please visit Multichannel.com.

NET GAINS
Growth estimates for NCAA Men's Basketball Tournament network-TV ad revenue, by year:

Year Total Ad Spend ($ Millions) * Total Audience (Millions)**
SOURCE: *TNS Media Intelligence; ** Nielsen Media Research
2000 310 140
2001 310 133
2002 348 137
2003 362 122
2004 436 120
2005 468 142
2006 497 129
2007 520 133
2008 643 132
September