CBS says the Super Bowl was profitable. (EPA )
In a new report, the industry consulting firm SNL Kagan says CBS "likely broke even or lost a little money" on its broadcast of the Super Bowl last Sunday.
SNL Kagan arrived at that conclusion with some simple arithmetic. CBS, the firm said, took in $240 million in ad revenue from the game and calculated that its production cost and license fees were probably more than that.
But that calculation might be a little too simple for something as complex as figuring out whether the Super Bowl was as happy an event for CBS as it was for the Baltimore Ravens, who beat the San Francisco 49ers to win the Lombardi Trophy.
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Let's start with the hard numbers Kagan is not factoring in to its conclusion. While the $240 million might be in the ball park on what the CBS network made in commercials from the game, that is not the only source of ad revenue for the Super Bowl.
Kagan seems to be forgetting that CBS also owns dozens of TV stations -- including outlets in Baltimore and San Francisco -- that had local commercial spots to sell in the game, and those spots went for a premium too. Maybe not the close to $4 million per 30 seconds that the network got, but there were lots of high six-figure and even seven-figure deals there. Overall, the network took in tens of millions in local advertising, a CBS spokesman said. In New York alone, CBS sold local commercials for more than a million dollars per-spot.
CBS also sold ads for the Internet coverage of the game, which was basically found money for the network.
Now let's look at some other factors that need to be considered before determining whether the Super Bowl broadcast was a boom or bust. CBS uses the NFL as leverage when it negotiates distribution deals with the pay-TV operators that carry its stations. That revenue stream, which is still relatively new, has to be included before one can determine whether the Super Bowl and all these contracts are in the red or the black.
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Then there's all the promotional muscle that having the game gave CBS. The amount of money that CBS would have had to spend elsewhere to get the same reach would be astronomical. Whether it works is another story, but that has to be considered as well before the bean counters decide whether the Super Bowl was a win or a loss.
CBS pays the National Football League about $650 million in its current deal and gets a Super Bowl every three years. How much of that license fee CBS attributes to the game is something only the company knows. Producing the Super Bowl -- just the game itself -- runs between $1 million and $4 million, according to people familiar with the economics of the game. In other words, about the cost of one commercial.
This is why determining whether a game was a profit or loss is not as easy as adding up the commercials and making a guess. Even if the Super Bowl was break-even for the CBS network, the revenue CBS got from its TV stations and Internet carriage, and what having the NFL means in terms of the distribution fees CBS gets, has to be included before making a bold declaration about the bottom line of the game.
A CBS spokesman said the NFL, including the Super Bowl, was profitable for the company.
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