Like the jet planes in the old airline ad, the TV-rights fees for sports are going up, up and away. The latest stratospheric sum—the $1 billion CBS agreed last week to pay for exclusive rights to the NCAA basketball tournament from 1991 through 1997—raises a host of questions: How can CBS afford that kind of money? How will the colleges decide to divvy up the riches? And what does the deal mean for cable TV, which was supposed to be the sports ticket of the future?
For CBS there's method to this apparent madness. Last week's landmark deal, which obliges the network to pay the NCAA an average of $143 million a year, compared with $55.3 million annually under their current, three-year package, puts CBS firmly on the path to its goal of becoming the preeminent sports network of the 1990s. Mired at the bottom of the ratings in recent years, CBS recently, in effect, surrendered the NBA rights to NBC, which paid $600 million for a four-year contract that begins next season (SI, Nov. 20). Faced with a choice of keeping the NCAA tournament or the NBA, CBS apparently considered the college tournament a more cost-effective springboard to first or second place in the ratings.
Though the TV rights to major sports may cost major money—even $1 billion—CBS figures the huge outlays can be worth it. Because big sports events are such imposing promotional tools, CBS may be able to significantly increase its entertainment income by using time during sportscasts to hype its prime-time programs and thereby build larger audiences for them. And whereas the ratings for new sitcoms are at best unpredictable, a sporting event like the NCAA tournament is an almost surefire success when it comes to attracting an audience advertisers will love.
Enormous rights payments by CBS and NBC have sharply altered the economic faces of most major sports over the past 18 months. CBS has anted up $1.06 billion for major league baseball and $543 million for the 1992 and '94 Winter Olympics, along with the $1 billion for the NCAA tournament. NBC has put down $401 million for the '92 Summer Games in addition to the $600 million for the NBA.
Clearly, CBS president Laurence Tisch and the network's head of sports, Neal Pilson, have emerged as TV sports' big daddies. Have they overspent? Not really, Pilson says—and there's logic in his position.
Shortly after he took over at CBS in 1987, Tisch established what some observers described as a $3.5 billion programming war chest by selling off most of the company's nonbroadcasting assets, including the music and publishing divisions. CBS insists that the recent sports-rights purchases have been financed not by the subsidiary sales but by anticipated profits from the newly acquired sports programs.
Whatever the calculus, Pilson has spent lavishly on sporting events to create what he calls a 1990 "dream season." CBS will open with the Super Bowl and follow that with the Daytona 500, the World Figure Skating Championships, the NCAA men's basketball tournament, regular-season baseball, the Masters, baseball's All-Star Game, tennis's U.S. Open, baseball's playoffs and World Series, and, in all probability, the NFC regular season. In succeeding years, CBS should retain most of those events while adding the aforementioned Winter Games. Says the delighted Pilson, "We have achieved a dominance in sports that no other network enjoys."
The NCAA tournament attracts more total viewers to CBS than does any other sporting event or championship series. In 1991 CBS plans to televise all 63 games of the tournament. Under the agreement, CBS will also air the championship rounds of 15 secondary NCAA sports, more than twice as many as have been shown on over-the-air national TV before. Among the new offerings: men's lacrosse, wrestling and soccer; and men's and women's gymnastics, track and field and swimming and diving.
Now that Tisch and Pilson have committed such riches to the NCAA, the colleges must decide how to dispose of it. As CBS basketball commentator Billy Packer says, "If this money is used in any way except to improve the educational process, and instead just continues the process of winning at all costs, it could be very damaging."
The $1 billion could go a long way toward easing the financial crises that many college sports programs face, but it won't buy harmony. The 293 Division I basketball schools may soon be fighting over how the TV funds should be apportioned. Some officials have discussed determining a school's share of the loot on the basis of the graduation rate of its athletes. ACC commissioner Gene Corrigan says there has been talk about dividing the added revenues among those schools that are needy and have a wide variety of athletic programs.