CBS Sports and News president Sean McManus, by his own admission, is "a strong advocate of Duke basketball." David Levy, president of Turner Sports and advertising sales, wasn't happy that his alma Syracuse, fell in the regional semifinals to Butler, the runner-up to the 2010 men's Division 1 basketball champion Blue Devils.
"Duke-Syracuse would make for a very interesting final for the new brotherhood of CBS and Turner," said McManus.
Indeed, Levy and McManus and their companies, which have partnered in the past on the Winter Olympics and the PGA Championship, are now teammates in "March Madness," following their 14-year, $10.8 billion rights deal with the NCAA that tips off with next year's tournament. The contract will put the Final Four and national title game on cable for the first time in mid-decade. It's also expected to mean an increase in affiliate fees for Turner down the road.
TBS, TRUTV, TNT IN THE GAME
The deal, superseding CBS's $11-year, $6 billion contract, will see TBS, TNT and TruTV join with the broadcast network in presenting all of the games in an expanded 68-team field, up from 65, giving each of the contests in the first and second rounds a national window, a first for the 73-year-old tournament. Under the existing contract, which the NCAA opted out of with three years remaining, those games were regionalized by CBS.
Subsequently, CBS and Turner, which outbid ESPN, then will split coverage of the regional semifinal games, with the broadcast network providing coverage of the regional finals, as well as the Final Four and the national championship game through 2015. Tipping in 2016, coverage of the regional finals will be split by CBS and Turner with the Final Four and the title tilt alternating every year between the broadcaster and Turner's TBS.
"We expect the look and feel of this programming to be consistent across CBS, TBS, TNT and TruTV," Levy said, noting that there would be distinct network branding.
The contract, in which the parties -- Levy and McManus began talking last October -- outbid ESPN, marks the second big score from broadcast for the Time Warner unit in two weeks: Conan O'Brien, late of NBC's Tonight Show and the Peacock's ill-fated push of Jay Leno into primetime, will headline a Monday through Thursday night show at 11 p.m., starting in November.
However, the deal, which also includes digital, mobile and marketing rights and over its term would see almost two-thirds of the games air on the Turner outlets, also provides more fuel for those bemoaning the continued migration of marquee sports properties from broadcast to cable. Indeed, sports rights' stories over the past few years have chronicled Turner's acquisition of much of Major League's Baseball's postseason and ESPN securing college football's Bowl Championship Series.
Asked if Turner would seek a surcharge as it had in the past for NBA and NFL rights deals, Levy, who called the agreement "a landmark deal" and the tournament "must-see TV," said: "At some point, we're going to come to our affiliates and ask for an increase, reflective of the value of the NCAA tournament."
SNL Kagan estimates TNT, TBS and TruTV's monthly subscriber license fees at $1, 50 cents and 10 cents, respectively.
Although the schedule has not yet been determined, Levy called the addition of games a natural for TruTV. "It's a top 10 [adults and men 18 to 49] male-skewing network, growing with a younger audience. Sports programming is a logical extension for TruTV," he said.
Levy also said it was "too early to talk about" about Turner potentially obtaining other college basketball properties as a means to round out its schedule and upsell tournament advertising. TBS added a regular-season package of ballgames, subsequent to its gaining MLB Division and Championship Series rights.
If that were to occur, Levy said, it would be based on the same four criteria it uses to gauge any acquisition: the property's ability to drive growth in audience, ratings, advertising and distribution.
Levy, who noted that the tournament's popularity "outgrew the ability of one network to provide everything that fans are looking for, "said the NCAA deal, in which the parties will share expenses, revenues, production and promotion, would be "meaningfully profitable" for Turner and parent Time Warner Inc.
McManus, during the press conference announcing the pact, said the partnership "puts us on solid footing for lasting profitability." In a later interview, he sidestepped whether the escalating rights fee had resulted in CBS losing money on the tournament in 2010, saying instead that it "would have been very challenging under the last three years of the deal."
Published reports put those figures at $657 million in 2011, $710 million in 2012 and $764 million in 2013, with similar rights expected for the first three years of the new deal.
McManus pointed to CBS gaining retransmission-consent funds, the affiliate fees gathered by Turner and the national windows for the early-round games as revenue enhancers, noting that the tourney's full-game coverage will result in more impressions, GRPs and advertising sales.
Published reports indicate that Turner will shoulder more of the rights fee load. A Time Warner regulatory filing on April 22 indicated that CBS's potential for red ink is capped at between $30 million and 90 million annually and $670 million of the course of the deal, with the rest of the shortfall to be borne by Time Warner. CBS, according to the filing, expects to "capture more retransmission consent and other revenue in the coming years, which would help offset shortfalls during any given year."
For its part, ESPN, whose game plan also included tournament coverage on ESPN2, ESPNU and ABC, issued the following statement." We made an aggressive bid and believe our combination of TV distribution, digital capabilities, season-long coverage and year-round marketing would have served the interests of the NCAA and college fans very well. We remain committed to our unparalleled coverage of more than 1,200 men's and women's college basketball games each season."
OTHER CHAMPIONSHIP RIGHTS
The rights to 22 other NCAA championships, including the women's basketball and softball tournaments and the College World Series, for now figure to remain in ESPN's suite. Asked on the conference call if the other championships were up for bid, NCAA senior vice president for basketball and business strategies Greg Shaheen said the organization had to conclude the first step with the men's tournament before considering "weighing the other media rights over the long term."
The NCAA receives some 90% of its revenue from the Division's I men's basketball tourney and uses the funds in part to help stage its other championships.
Subsequent calls to the NCAA, seeking clarification, were not returned. However, Shaheen said in interview after the tournament's March 9 media day at CBS headquarters in New York said: "We are open to flexible proposals and would consider that separately. We're considering the broadest activation of our assets as possible."
ESPN, on April 23, said it had not been informed by the NCAA that it intends to opt out of that deal, which is co-terminus to the pact for the basketball tourney. "We expect to continue to show those events over the next three years-and hopefully beyond," said an ESPN spokesman.
McManus said CBS had not been approached by the NCAA about those properties, which could be valuable in enhancing the cache and stoking further distribution growth for its 38-million-subscriber CBS College Sports Network. McManus said CBS and the cable network would certainly be interested if some or all of those properties became available.
Other conference deals, and/or football and basketball packages could also serve as marquee programming additions for CBS College Sports, which he said had rung up impressive distribution growth. "I know it's difficult to gain clearances," he said of the 10 million subs the service has added over the past year.
Asked if CBS might use some of its rights-fee savings from the NCAA package for a bid if the other championships became available, McManus said the pact with Turner wouldn't "really affect" that. "That's a separate deal fore revenue and profits."
DIGITAL DOINGS AND DIRECTV
Under the new NCAA agreement, CBS College Sports will no longer air the two out-of-market games it had during the tourney's first two days, but McManus said it "will still be a part of the coverage with a studio show and highlights."
On the digital side of the new rights agreement, NCAA March Madness on Demand, the video player that provides live streaming video of the tournament, will continue to be launched from NCAA.com and CBSSports.com.
For its part, Turner has secured the rights for any Time Warner digital property. The player will be operated and developed by Turner and have enhanced digital rights allowing the NCAA to deliver content for multiple Turner and Time Warner platforms.
"We're going to look to find ways to provide a richer experience" online with March Madness, said Levy.
It was unclear if DirecTV's "Mega March Madness" pay-per-view, out-of-market package would continue under the new deal.
"Now that the TV arrangement is in place, we'll look at all other distribution platforms," said McManus. Added Levy: "There are a lot of rights involved, a lot of opportunities. We'll talk to DirecTV and see if we can figure something out."
On April 21 the NCAA Men's Division I Basketball Committee unanimously recommended that the Division I board of directors increase the tournament field size to 68 teams; that recommendation will be reviewed by the Division I board of directors at its April 29 meeting.
Shaheen said the TV rights deal was not contingent upon the NCAA approving the expansion to 68 teams. He and NCAA interim president Jim Isch said no timelines were attached to any other tourney adjustments and neither ruled out a possible expansion to 96 teams -- which many had expected to become the new norm for the Madness -- in the future. Isch said the board would likely approve the committee's recommendation, noting that 68 teams was "probably where we will be for now.".
McManus said the deal provides the partners with "flexibility" if the tournament changes, but CBS is very comfortable with a 68-team field: "That deal meets are financial and programming needs."