PORTLAND, Ore. (TheStreet) -- Airing every game of a championship tournament is not only the wisest decision a sports broadcaster can make, but the most lucrative. March Madness taught us that.
More than four years after CBS and Turner signed a blockbuster television and Internet rights deal to broadcast the NCAA Men's Basketball Tournament, that event now brings in the most ad revenue and total viewership of any sports postseason in the U.S. It's also spawned a bunch of TV Anywhere look-a-likes trying to cash in on the March Madness blueprint.
Back in 2010, the NCAA reached a 14-year, $10.8 billion television agreement with CBS and Time Warner's Turner Broadcasting to show every game live on CBS, TBS, TNT and TruTV. There were some quips about where to find TruTV, but every game has been broadcast since. As of 2012, the broadcast partners' March Madness Live app streamed every game of the tournament over mobile devices. Advertising for the tournament alone brought in $6 billion for its network partners within the past decade, but that's the least of CBS and Turner's March Madness accomplishments.
When March Madness went mobile during the 2012 tournament, CBS and Turner generated little more than $1 billion in ad revenue from NCAA sponsors such as General Motors, AT&T, Coca-Cola, Capital One, Nissan and Lowes. Other heavy hitters including Anheuser-Busch InBev and SAB Miller, which can't partner with the NCAA because of its alcohol policy, contributed nearly $60 million on their own. That $1 billion total is more than the $976.3 million spent on the NFL playoffs and Super Bowl combined in 2012 and absolutely dwarfs the National Basketball Association playoffs and finals ($536.9 million) and Major League Baseball Playoffs and World Series ($354.1 million) that same year.
Last year, each game on the Big Dance's bracket averaged 10.7 million viewers. Combined, that's an audience of 727.6 million -- or at least that many opportunities to put a product in front of a viewer. The NFL Wild Card, divisional playoffs, conference championships and Super Bowl averaged little less than 50.1 million viewers per game. With only 11 games, though, that's only 551 million total, or about 176.6 fewer chances for networks and sponsors to catch a viewer's attention.
It doesn't matter that Super Bowl advertising and viewing audience vastly outnumbers the NCAA title game. It doesn't matter that the gap in ad spending between the Super Bowl and NCAA's Final Four doubled between 2009 and 2013. The Super Bowl drew only about 34 different companies as sponsors last year. March Madness brought in 90, which is still shy of its pre-recession peak of 125.
Suddenly, showing a whole championship event wasn't just a convenience, it was mandatory.
NBC learned that shortly after 2011, when NBC signed its latest Olympic broadcast deal for $4.3 billion. That agreement runs through 2020 and included $775 million for the rights to this year's Sochi Winter Olympic Games alone.
While the network lost $223 million broadcasting the last Winter Games in Vancouver in 2010, it made $88 million on the 2012 Summer Games in London thanks to limited digital and mobile ad sales and a programming strategy that ran pre-recorded events in prime time despite the fact fans could stream those events live and had the results hours earlier. This year, NBC expanded its mobile offerings to cover every event live (as opposed to just 89% of the games in 2012), expanded the breadth of coverage shown on its NBC Sports Network, USA Network, MSNBC, CNBC and other broadcast partners. It even included a Gold Zone online channel similar to the NFL's scoring-drives-only RedZone channel included in DirecTV's Sunday Ticket coverage. If a gold medal was on the line, connected fans had the opportunity to see it.
This multichannel, multiplatform approach is catnip for advertisers, but it's driving up the price of that access for networks. Back in 2005, Walt Disney and Univision paid a combined $425 million to broadcast the FIFA World Cup, soccer's biggest event, in 2010 and 2014. That's $100 million for the ABC/ESPN English-language rights and $325 for Univision's Spanish-language rights. ESPN pushed coverage onto its ESPN2 secondary channel, its ESPN3 broadband site and its Watch ESPN mobile streaming service.
When it came time to bid for the 2018 and 2022 World Cup in 2011, Fox won out with a $400 million offer that nearly beat the 2005 total for the entire U.S. market combined. Comcast-owned Telemundo, meanwhile, forked over $600 million for the Spanish-language rights that still amounts to less than half of what networks pay per event for the Olympics and NCAA Men's Basketball Tournament, but nearly double the former price.
In Fox's case, it required an almost complete makeover of its sports offerings. Apart from its main network and affiliates, Fox took a sledgehammer to its sports operations last year and came out looking a whole lot like ESPN's ecosystem. Fox Sports Network was replaced with Fox Sports 1. FuelTV turned into Fox Sports 2. Fox Soccer disappeared completely, with its programming shifted over to Fox Sports 1 and 2, but the Fox Soccer Plus channel remained. Meanwhile, Fox is wresting away Major League Soccer and U.S. Men's National Team coverage from NBC Sports in 2015 with a $70 million-a-year deal it made with ESPN. NBC retains the English Premier League, but anyone looking to keep tabs on U.S. soccer will have to go through Fox and ESPN to do so.
NBC, for its part, locked down the National Hockey League and its Stanley Cup Playoffs and Finals for a decade after paying $2 billion for those rights in 2012. It gave NHL fans the most access they've had to league game broadcasts since 2004 -- just before a league lockout forced ESPN to drop its coverage -- but, more importantly, it put every playoff matchup on NBC, NBC Sports Network or CNBC. No more time-zone-specific matchups and no more excuses for not airing a second of the postseason slate.
It's the one area in which the NFL finds itself lagging behind. While pro football was instrumental in opening up the market for out-of-town games with its DirecTV Sunday Ticket package and set the bar for revenue potential by squeezing $28 billion out of Fox, ABC, NBC and CBS for the rights to broadcast regular season and playoff games through 2022, it still hasn't quite mastered the "everywhere" portion of the TV everywhere approach to the playoffs. The NFL Mobile app is great for streaming playoff games and the Super Bowl, but is only available to Verizon customers. Fox lets viewers in on its NFL playoff matchups via Fox Sports Go, but only if you get your coverage through certain cable providers (Comcast, AT&T U-Verse, Cablevision, WOW, Midcontinent, Suddenlink). CBS Sports streamed the AFC Championship game for free over CBSSports.com earlier this year, but didn't allow those streams through mobile phones. NBC Sports Live Extra, meanwhile, streamed NFL Wild Card games for free.
That's all just a bit convoluted. Considering that March Madness streams through one source -- as does the World Cup, the Olympics and the Stanley Cup Playoffs -- why should NFL fans have to jump from app to app and cross their fingers hoping that their service provider allows it?
CBS and Turner put March Madness everywhere, but kept its mobile games all in one location. If any other broadcaster or league wants to match the Big Dance's success, that's the blueprint it has to follow.
-- Written by Jason Notte in Portland, Ore.
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