Deal for NCAA Tournament Helps CBS, Gets Busch’s Praise
A deal that will bring the NCAA men’s basketball finals to cable every other year after 2015 drew praise from the chairman of the CBS affiliate board, while others said it will help the broadcast network. The network, Time Warner’s Turner Broadcasting and the NCAA unveiled the $10.8 billion, 14-year deal Thursday. It calls for national distribution of every game of the tournament beginning next year on CBS and three Turner networks. In 2016, the finals and semifinals will be shared between CBS and TBS (CD April 23 p16). “I applaud his efforts for being able to retain such a premier property on CBS,” said Tim Busch, affiliates chairman and Nexstar chief operating officer. The network and affiliates ran the risk of losing the tournament entirely, he said.
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"As it has been witnessed with the [college football] bowl games that left Fox and went to ESPN, there stood a perilous chance that there could have been the same situation with the NCAA” basketball tournament, Busch said in an interview. Barclay’s Capital analyst Anthony DiClemente also praised the deal, saying it helps bring costs under control for CBS. Clemente called it a “judicious move” that improves “CBS profitability on March Madness in 2011 and beyond."
After the NCAA approached CBS in October, saying it wanted a new approach to TV coverage of the tournament, CBS knew it needed a cable partner, CBS Sports President Sean McManus told reporters Thursday. “To generate the kind of revenue and exposure that was needed to complete this deal -- and you all know who we were competing against -- we needed a cable partner and we needed the assets of TBS,” he said. “It provides a vehicle, in a very creative way with a very creative partner to make sure this event didn’t go somewhere else, that it stayed on CBS."
That CBS will keep the finals and semifinals until 2016 is good for affiliates, Busch said. “The way I have to look at it is, this could have been where we were looking to program those slots next year, as opposed to March of 2016.” Meanwhile, CBS affiliates will continue to help pay for the network’s tournament-related programming costs under a deal that expires in 2014, he said. “We're a partner in form of the distribution chain and in the form of helping to offset some of those fees that affiliates are paying directly to the network already,” he said. “I'm very satisfied with where we stand."
The deal benefits Turner as well, said David Levy, Turner president of sales, distribution and sports. “We all know that marquee sporting events are expensive propositions,” he said. “But we also know that it’s must-see programming that drives audiences, it drives ratings growth, it drives advertising and it drives distribution."
The $10.8 billion deal won’t affect Time Warner’s or CBS’s credit ratings, Moody’s said. “As many marquee sporting events such as this tournament are not directly very profitable, and in cyclical consumer-led downturns, they typically result in significant losses, CBS is shielded by Time Warner’s disproportionate exposure to bearing the brunt of the losses in years with either the highest costs or the weakest revenues,” the rating firm said. “The rights will certainly put upward pressure on future CBS O&O stations’ retransmission fees and the CBS network’s affiliate fees as they enter negotiations."
"However, we also expect greater resistance to rights fee” increases larger than those in the consumer price index, said Neil Begley, Moody’s senior vice president. “So contract disputes and programming blackouts may increase as a result of pressure from this contract.”