The news this week that TBS would take over broadcasting the NCAA Men’s Basketball Tournament semifinals in 2014 and 2015 and the championship game in 2016 should be a sign to anyone who still believes televised sports have a future on broadcast TV.
The bottom line is the bottom line here. Cable networks have more money, because we give it to them. They can afford the escalating costs of broadcasting sports, as they don’t have to rely entirely on advertising. Keep in mind just how much advertising cost for this year’s tournament — $250,000 for a 30-spot during the opening weekend, escalating up to $1.6 million for a 30-spot in the final. That helped CBS and Turner generate an estimated $875 million in ad revenue this season.
CBS and Turner, however, are paying the NCAA $771 million per year to telecast this event. That leaves only $104 million to cover the production costs, which can spiral for a sporting event as big as this. That’s why Turner helped CBS foot the bill for TV rights. TBS, TNT, and TruTV collect more than $2.2 billion from pay TV subscriber fees every year. That allows Turner to cover its share of the production costs and still profit from advertising. Partnering with Turner allowed CBS to keep the Final Four away from ESPN, but now that Final Four weekend is drifting from broadcast TV to cable, it feels like Turner got the better end of this deal.
The timing of this announcement is curious for two reasons:
1.) CBS responded to Aereo’s recent court victories by following Fox’s lead and threatening to move its network off broadcast and onto cable. That this announcement happened just a month later suggests a first step in such a move — even if CBS and Turner had planned this as part of their deal two years ago.
2.) The recent whispers of a potential merger between CBS and Time Warner will only grow louder because of this. CBS and Turner, a Time Warner subsidiary, are already partners on many levels. The two companies share a broadcast network, The CW. CBS News and CNN share resources for news reporting. Warner Bros. Television produces shows for CBS. It’s a natural pairing. It’s not likely to happen right away — certainly as long as CBS Executive Chairman Sumner Redstone is still drawing breath (he’s turning 90 this year) — but announcements like this make a future merger almost seem like a forgone conclusion.
It should concern you, of course, if you’re worried about further media consolidation. The FCC and Congress seem a bit less than troubled by that, though, given that they let the NBC-Comcast merger happen. A CBS-Time Warner merger might require the sale of a few assets to satisfy regulators — which might be a secondary motive behind spinning off Time Inc. into its own company.
Either way, the Final Four’s slow march from broadcast to cable is just another sign that the cost of TV rights for major sporting events has grown too big for over-the-air networks and stations to handle. More and more, if you want to watch these games, you’ll have to start paying for them — and paying for everything else that comes with it. How much higher these costs can go before even dedicated fans decide they’re not worth it anymore?