The Evolution and Financial Implications of the March Madness Fan Experience

Michael Teague  |

Back in April of 2010, the viewing experience of March Madness was forever changed when the NCAA and CBS (CBS) in tandem with Turner Broadcasting, a subsidiary of Time Warner Cable (TCW), signed a 14-year deal worth $10.8 billion to broadcast the extremely popular men’s basketball tournament.

The previous deal between the NCAA ($6 billion for 11 years) was in keeping with CBS’s traditional format of broadcasting three to four games per day on a regional basis. This was limiting in that viewers in one part of the country were out of luck if, say, their favorite team or alma mater was located in a different part of the country from where they lived.

The new deal, on the other hand, provides complete national coverage of the tournament, doing so across four channels: CBS, TBS, TNT, and TruTv, and is just one more instance of sporting events large and small migrating from broadcast to cable television. Under the terms, 26 games will be shown on CBS, while Turner’s cable networks split the games three ways: 16 for TBS, 12 for TNT, and 13 for truTV, with pre- and post-game shows for each contest.

Originally, until 2016, coverage was to be shared between the four channels up to the regional semifinals, at which point CBS gets exclusive coverage for the rest of the way. But from 2016 onward, the networks were to share coverage of the regional semis, and TBS and CBS will split coverage of the final four , and the championship game will alternate between the two from year to year. It was recently reported that the 2016 date has been moved to 2014, however.

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The benefit for CBS was more a matter of the losses they avoided rather than the gains that they made. The previous contract had an opt-out clause for the last three years of the deal, which the NCAA took advantage of in an attempt to get more than the $700 million it would have received for each of the last three tournaments. Now, the NCAA will be getting $771 million.

For CBS on the other hand, though the profits from the new deal were not remarkable, they could have lost $50 million had the contract gone to ESPN, the rival bidder at the time. Meanwhile, CBS continues to have its name associated with the tournament, as it has since 1982.

But this all changes when considering the advertising revenues. According to Bloomberg, advertising revenue from last year’s tournament alone raked up more than $1 billion for CBS and Turner, with spots during the final game costing as much as $1.45 million. The $1 billion figure is the largest of any sport’s post season, beating out the NFL, NBA, and Major League Baseball, in roughly that order.

And where does this leave ESPN? The network that was originally favored to win the bid for tournament coverage has come up with an interesting, if lo-fi, way of getting in on the action, though without the benefit of ad revenues.

The sports network will cover the games this year through Bill Simmons’s online magazine ESPN, a subsidiary of the Walt Disney Company (DIS), won’t be paying anything for this experiment, which involves a live stream from Simmons’s home, in the company of the network commentators Jalen Rose and Rembert Browne.

The stream can be accessed for free from the Grantland website, as well as on Youtube (GOOG), with the most formal aspects involving some sort of pre- and post-game commentary, with some sort of banter during games, which may be preferable to the official commentary being provided by CBS/Turner. While ESPN is not selling any ad space through this just yet, it could certainly do so for future tournaments if the idea proves to be a success.

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