New March Madness TV Deal: Changes Are Coming

The announcement that CBS/Turner had locked up the NCAA Basketball tournament for the next 14 years officially ended the era of major championship events exclusively on over-the-air TV.

March Madness now joins the NFL, the BCS, the NBA and Major League Baseball as sports organizations who have shifted at least some of their championship events to cable TV.

CBS and Turner Broadcasting are paying pay $10.8 Billion from 2011 to 2024 to carry the NCAA men’s basketball tournament. The deal ends CBS' regional coverage of the early games, and assures that each and every contest will be seen nationally on one of four networks.

Here are the basics:

Under the new deal the NCAA will get $770 million a year. The first and second round games will be carried nationally on CBS, TNT, TBS and TruTV. CBS and Turner will split the Sweet Sixteen.

Starting next year and running hrough 2015, the Elite Eight and Final Four will remain on CBS. Then in 2016, CBS and Turner will split the Elite Eight, while the Final Four and National Championship Game will alternate between CBS and TBS.

Begining in 2016, TBS will air the National Championship Game five times (2016, '18, '20, '22 and '24), while CBS will air the game nine times (2011, '12, '13, '14, '15, '17, '19, '21, and '23).

Under the new agreement, 65% of the tournament games will air on cable through 2024.

Those are the basics of the deal, but the agreement has more value for all involved as it reaches across multiple platforms.

DIGITAL TIER

While every March Madness contest will be carried nationally on TV, this does not mean the end of March Madness on Demand. Live internet streaming of all the games has become very popular, especially in the early rounds when many fans are at work.

That part of the equation is being turned over to Turner, who has been very successful in producing the NBA League Pass as well as other internet services for NASCAR and the PGA tour.

In the past, MMOD has been free online, and this advertiser-driven model brought in another $100 Million per year for CBS.

This year, CBS 8.3 Million unique viewer use its March Madness on Demand platform.

It is obvious that the Turner business model will incorporate the TV Everywhere concept -- including mobile distribution through Apple iPhone, iPad and Google Android applications. It is believed that the multi platform distribution system would include a mixture of free and paid.

The long-term deal is attractive to all the leading characters, giving it a Win-Win look.

NCAA

For the NCAA it brings stability and security to its crown jewel, the event that provides the oraganization with over 95% of its working capital. It also ensures that March Madness will continue to be at the forefront of the digital age, as well as giving other NCAA athletic events other venues for publicity.

CBS

For CBS it was a way to escape a contract that was bleeding money while still holding on to a premier athletic event. The old contract called for CBS to pay $710 Million for the 2011 tournament, and the network would have lost close to $100 Million. There simply is no way for a broadcast network to produce the revenue needed to sustain such event. And while nothing official has been made public, it is believed that Turner is making the larger investment of the $10.8 Billion.

TURNER BROADCASTING

David Levy, President of Sales and Distribution for Turner Broadcasting, made the point that the deal was partly driven by what he termed, "All Revenue, All In." Levy made it clear that any revenue produced from the deal (TV, internet, etc) would be pooled after the event and then distributed. Since Turner is putting more in, they have a bigger upside when it comes to revenue distribution.

Of course part of that upside has nothing to do with CBS. Turner's dual revenue stream of advertising and cable subscriptions makes this deal possible. It's also why Turner included its TruTV network (formerly CourtTV). TBS and TNT have other sports packages and they are currently in over 100 million homes. Turner charges its distributors $1 per subscriber for TNT and 50 cents for TBS. TrueTV is in over 90 million homes, but Turner is only getting 10 cents a subscriber for that channel.

Turner will be negotiating renewal rates with a lot of its major distributors in 2016 -- when the Final Four will be on TBS.

Both CBS and Turner have pledged to make sure the joint venture has a seamless look between the various networks carrying the games.

But here is where I believe the biggest Win-Win. comes into play.

Charles Barkley working March Madness.