The MethodTo the Madness

New York — This week, basketball fans and office-pool players who’ve
waited all year for the tribal TV ritual known as March Madness will get
to view the tournament in an unaccustomed manner.

The tournament of basketball champions tips off an unprecedented
way of viewing the Men’s Division I Basketball Championship following
a record-shattering 14-year, $10.8 billion rights deal between Turner
Sports, CBS and the NCAA.

For the first time in the tournament’s 73-year history, every game
will have its own national window, instead of being presented in CBS’s
wraparound format. At times, that will put viewers in the role of director,
when they’ll have to choose between games airing simultaneously
on the broadcast network, TBS, TNT and TruTV. The expanded
68-team tournament starts with “First Four” games on TruTV, which
is known more for reality fare such as HardcorePawn and Operation
than sports.

The deal, superseding the final three years of CBS’s 11-year, $6 billion
pact, marks the continued migration of major sports properties
from broadcast to cable, with its dual-revenue-stream playbook of
license fees and ad dollars.

Facing escalating rights and red ink over the final years of the deal, CBS
needed to find a partner or lose a property it had aired for the past 29 years.
Come 2016, TBS will be home to Elite Eight action, the Final Four and the
championship game before alternating those marquee matchups annually
over the balance of the deal with CBS. Scheduling aside, the new teammates
are also collaborating on production, melding on-air talent from
both rosters and with ad sales, which are at near sellout level. It also figures
to cost Turner affiliates more over the term in increased license fees.

The architects of the deal, CBS Sports chairman Sean McManus and
David Levy, president of sales, distribution and sports at Turner Broadcasting
System, sat down with news editor Mike
Reynolds after the tournament’s media day here March 8 to discuss the
state of televised sports and how their alma maters, Duke and Syracuse,
will fare in this year’s Big Dance and their unique partnership. An edited
transcript follows:

MCN: Duke is the defending
national champion and
fifth in the polls; Syracuse
is 11th. What are the prospects
for your squads going
into the tournament?

Sean McManus: I thought
better about Duke before
Saturday night with a tough
road loss to North Carolina.
If they had the freshman,
Kyrie Irving, I’d feel really
good about them. They’re a
question mark, but I am always
optimistic going into
the tournament.

David Levy: Syracuse, the
Big East, they just beat up
on each other. When Syracuse
plays outside its conference,
they play actually
better because most people
don’t understand that zone
they play. So they’ll go as
far as they play away from
the Big East teams and
hopefully that’ll be drawn
by the brackets.

MCN: Sean, I guess you
were talking to ESPN
about taking the last
three years of the [old]
NCAA tournament deal,
and you gave David a
call. Take us through your
thinking, back in the
fourth quarter of 2009.

SM: It became pretty evident early
on in the process, when the NCAA
informed us they were going to start
having television discussions, that if
we were going to be competitive we
needed a partner to bid with us.

The first call that I made was to David.
We had a meeting shortly after and
came up with a plan that really is what
you see today on television about combining
the sales teams, the production
teams, the announcer teams, the
branding and marketing.

And the idea that David and I came
up with is one the NCAA liked a lot.
That both Time Warner and CBS were
going to be promoting college basketball, and
the tournament was very appealing to them.
And we did a thorough analysis on our own,
and then with Turner, on the value of the
tournament and came up with a figure that
was competitive enough for us to get the television
rights to the tournament with Turner.

MCN: Was this is all on the back of a

DL: You could say it was, in the sense that
what Sean mentioned, what we talked
about, really came to reality. The biggest
challenge was not really with the NCAA.
The hardest negotiation was with CBS and
Turner. Because when you’re trying to put
two large companies together, you tend to
negotiate by what things are going to go
wrong, not what’s going to go right …

Sean makes a good point in the sense that
every time something changed in our negotiation,
I had to work with CBS, then Turner,
then Time Warner, and then with the NCAA.

MCN: David, you said before this is a landmark
deal for the company. What about for
cable and continued the migration of big
sports properties from broadcast?

DL: You know, I know people keep talking
about this movement from broadcast to
cable. We looked at this deal as four distribution
platforms — TBS, TNT, TruTV
and CBS. And ultimately you’re seeing
programming, whether it’s Conan O’Brien
or the NCAA tournament, they’re finding
outlets to get to their fans. And this is
a way for us to do that. Our landmark deal
is that we’ve never crowned a champion on
a Turner network, and this is something
that’s very exciting for us as a company.

MCN: You guys have already mentioned
the cross-promotional aspect to both
media companies. You have a Kings of
Leon-driven marketing campaign. Is there
enough push toward the first Tuesday night
with TruTV?

DL: We won’t know until Tuesday night. I’m
sure Sean and his staff , during the [March
13 tournament] SelectionShow, will talk
about the Tuesday-night game. Monday
is going to be National Bracket Day, when
we’ll talk about filling out your brackets,
trying to finish your brackets by 7 [p.m.]
Tuesday night. The reality is, I think that
some people just won’t catch it, but that’s
what happens over a 14-year deal. At the
end, they will.

MCN: From a production standpoint, everybody’s
in the trenches together?

SM: Yeah, totally combined. We took the
best of Turner’s production and the best
of CBS’s production and we put them together.
[Turner Sports senior vice president
and executive producer] Jeff Behnke and
[CBS Sports vice president of production]
Harold Bryant have made every decision
together on the talent, with almost no disagreements.
They worked on the music together,
a brand new graphics package that’s
unique just to this event.

Jim Nantz can just as easily be on a Turner
game as he can be [on] a CBS game. And
it may very well be on Sunday, where he traditionally
has the game leading into 60 Minutes
that ends around 7 or 7:30, he may be on
a game that is on Tru at 9 at night on Sunday
night. We’ve never had primetime basketball
on that first Sunday. We do

DL: I love it. I don’t know
of a deeper sports lineup
as far as talent, both studio
and over the air, play
by play and color, that is
that strong. It’s hard to
find the B/C team when
you go down that list.

MCN: In the ad market,
the tournament is a virtual

DL: When you do your
business models and you
lay out what you think is going to happen, you cross your fingers
and you hope that things work out
that way. And I would only say that we
have surpassed what we thought we’d
be doing in sales in year one already.
So it’s a good start to a 14-year deal.

SM: I would just add the word ‘significantly’ [laughter], because we have. And
David is right, if you get off to a good
start in year one, that sets the tone. That
is now your benchmark, whether it’s 4%,
5%, 8% whatever it is, that’s your base. If
you are below that base it takes you a lot
of years to catch up. If you’re above it, it’s
a good situation to be in.

MCN: What if you don’t make your

DL: It’ll be handled within each network
and it’ll be compensated accordingly.

MCN: As CBS did with its game coverage
all these years, now you’re cuming
the audience across four networks.

DL: All of our research points out that
there’ll be more GRPs by the way we’re presenting
the event this year than there were
in past years.

MCN: Local has always been a big selling
opportunity for CBS affiliates. Does that
change now, with the fewer games?

SM: It does affect the dynamic. I mean in the
past, our station in Raleigh knew that they
were getting the Duke game or the North
Carolina game. That is going to be different
and not as advantageous for our stations,
obviously. But we had a choice of finding a
partner and programming this in a different
way or having the event go to ESPN. So if you
consider the alternative, it’s better to have a
part of what we had before. And we still have
the Final Four for the next few years; we still
have the championship game.

DL: From my perspective, I have to believe our
distributors are excited, maybe even ecstatic.
Because think about markets in North Carolina,
Virginia, the place where they can have
local avails now on TBS, TNT and TruTV. So
I think it’s a big opportunity for them and I
think a lot of the cable operators will work in
forming marketing opportunities in the local
market. Th ey’ll let people know about TruTV
and TBS and TNT having these games.

MCN: Last year, March Madness on Demand
generated some $37 million in ad
revenue. Things are trending up this year?

DL: Just as we talked about the linear side,
the digital side again is ahead, substantially,
of what we anticipated we’d have
in year one for March Madness On Demand.
All the money gets pooled in, and
we both benefit from this, even though
MMOD is being managed from a Turner

MCN: Are you splitting the money? Or is
Turner shouldering more of the costs, therefore
it’s getting more of the revenue?

DL: We’re really not going to talk about the
financial side of the business, but I will say
neither one of us would have gotten into
this deal if we didn’t think we were going to
both make money.

SM: This is an enormous deal for our corporations.
There is no way either one of us
would have ever gotten permission to do
this deal because it made sense for sports.
It made sense for our corporations.

MCN: Will affiliates pay more going forward,
with the tournament on the Turner

DL: We have had a great relationship with
our partners and we’ve always gotten our
fair value for our networks, and I believe
we’ll get our fair value for our networks
again with this tournament.