Will the Final Four head to cable?
Networks are joining together to handle soaring sports programming fees. And Time Warner's Turner Broadcasting may get more games as a result.
Time Warner's (TWX) Turner Broadcasting cable networks, which broadcast the early rounds of March Madness, is discussing a deal with CBS in which it would broadcast the more popular later rounds and the national championship next year, according to The Wall Street Journal.
Talks are underway two years earlier than expected and would be a huge win for Time Warner, especially because the fees Turner charges to cable and satellite providers are expected to rise by double digits over the next three years.
The reason why is simple: money. Sports programming costs are skyrocketing. CBS and Turner signed a 14-year, $10.8 billion deal with the NCAA in 2010. That was a 41% increase over what CBS paid under its previous deal. By splitting the costs with Time Warner, CBS is able to avoid generating "sizable" losses on its tournament coverage, according to the paper. Kantar Media estimates that the tournament generated $1 billion in advertising revenue in 2012, an increase of 38%.
Sports programs are very attractive to media companies because they attract huge audiences that prefer to watch live. The NCAA tournament has averaged 9.7 million viewers per game this year, an 11% increase over last year, according to The Journal. Whether the viewership will decline if more games are shown on cable isn't clear.
The basketball tournament could join a growing list of sports events only available on cable, including "Monday Night Football" along with Major League Baseball's League Championship Series and college football's Bowl Championship Series. Given the costs associated with airing sports programs, it seems likely that more will leave free television.
--Jonathan Berr is long CBS. Follow him on Twitter @jdberr.
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