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CBS cuts in Turner on NCAA basketball tournament

Under the new $10.8-billion deal, every tournament game will be on TV and production costs will be shared between the two broadcasters.

April 23, 2010|By Joe Flint, Los Angeles Times

The great programming migration to cable continues.

Turner Broadcasting, just one week after signing former NBC late-night host Conan O'Brien, has teamed up with CBS in a 14-year, $10.8-billion deal for television and Internet rights to the immensely popular NCAA March Madness college basketball tournament.

The move comes as broadcast television struggles with rising programming costs and greater competition for viewers and advertisers. Although the NCAA tournament is a strong performer for CBS, the costs of covering the games were starting to outweigh the benefits for the network. By sharing the load with Turner, CBS can hold on to a big chunk of a marquee event with fewer financial risks.

With many of its big postseason games now headed to cable, the National Collegiate Athletic Assn. joins Major League Baseball, the National Football League and the National Basketball Assn. in going where the money is. Next year, most of the major bowl games and college football championship will be on ESPN, formerly mainstays of the networks.

Both ESPN and Fox Broadcasting made a run at the NCAA tournament, but CBS and Turner were always the front-runners. The two broadcasters had initially discussed teaming up on a bid for the event last fall and are already partners on PGA golf.

Although CBS' previous $6-billion deal ran through 2014, the NCAA had the option after this year's tournament to void it. CBS wasn't opposed to the NCAA exercising that option because, under the terms of the current contract, its rights fees were set to shoot up dramatically in future years.

The new deal "puts CBS on solid financial footing for lasting profitability," said CBS Sports President Sean McManus. If a new pact had not been struck it would have been "very challenging" for the network, he said.

Under the deal, Turner will pay the NCAA the $10.8 billion over the term of the deal and CBS will pay Turner its share. CBS also acquires some protection against potential losses. According to a Securities and Exchange Commission filing by Turner parent Time Warner Inc., any losses greater than $670 million suffered by CBS will be covered by Turner.

For the first five years of the deal, TBS will carry first- and second-round games of the tournament, then in 2016 TBS will start to alternate coverage of the Final Four weekend and championship game with CBS. Overall, Turner will have about 65% of the tournament's games on its cable channels TBS, TNT and TruTV over the life of the contract.

Turner will probably try to use the NCAA deal to pressure cable and satellite distributors to pay more to carry its cable networks. According to industry consulting firm SNL Kagan, TNT gets about $1 per subscriber per month from cable TV providers while TBS and TruTV get 50 cents and 10 cents, respectively. Cable networks often use big sporting events as leverage for higher fees.

The exodus of sports to cable has been of concern on Capitol Hill. However, with more than 90% of the country now subscribing to some form of pay television, it has become less of a lightning rod over the last few years. However, as cable bills continue to rise in part because of sports, the issue could heat up again.

Turner Sports President David Levy said he did not anticipate any pushback from Congress on the deal.

For sports fans, the new arrangement means every game in the early rounds of the tournament will be on TV. When CBS had the rights to the event exclusively, it was unable to show every game on its network. It did stream the entire tournament online, a service that proved quite popular and will probably continue under the new deal, people close to the situation said.

There had been speculation that the NCAA would expand the number of teams that participate in the tournament from 64 to 96. Instead, it is boosting the size to just 68 teams. The NCAA said there were no immediate plans to expand to 96 teams, and the deal is not dependent on such an expansion.

joe.flint@latimes.com

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