March Madness posts up
for big financial score

But the “arms race” among major media companies bidding for mega sports events has pushed the price tag beyond levels where conventional advertising and marketing revenues make the deal a sure bet.

“As a general rule, for most sport rights deals you have to find other ways to justify the upfront cost beyond just the advertising that comes in return,” said Swangard.

In the past, broadcast networks have justified money-losing sports deals by pointing to the prestige these events bring to the network and the promotional value of touting new shows. Now, with rights fees rising every year over the life of the contract, CBS this year is trying to expand distribution — via digital cable television, satellite television and Web-casting over the Internet — to help make back its investment.

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One of those new sources of revenue will come from selling subscription packages that include all games — allowing homesick fans to watch a favorite team in an early round game that would be otherwise unavailable in a given market. For $59, DirecTv subscribers can buy a “Mega March Madness” package that lets them watch up to 37 games. Some CBS affiliates have also teamed up with cable operators to offer multiple games to subscribers with digital cable boxes.

And this year, the third year of offering live coverage on the Web, CBS is teaming up with College Sports Television, a private firm that launched two years ago. CSTV is selling $20 subscriptions for live streaming video of the games — in return for an undisclosed rights fee paid to CBS. (CSTV will also offer game highlights for free, generating additional revenue by selling video ad spots that will run with those highlights.)

“It has the potential largest live sporting event ever on the Internet; in a lot of ways, it’s the perfect storm for broadband,” said Brian Bedol, CSTV's CEO. “College sport fans don’t want to watch what they don’t want to watch. If you don’t care about Ohio State, no longer is that the game you have to watch.”

Fans can also sign up for the Webcast package at CBS Sportline.com and NCAA.com, where they'll be redirected to CSTV's Web site. Bedol says the site is expecting between 50,000 or 100,000 simultaneous streams and is set up to handle more.

Even if a million people sign up, that would represent just a tiny fraction of the revenue generated by television ad sales. And no one suggests that Webcasting will supplant the experience of big screen television viewing any time soon. In fact, makers of high definition sets could see a bounce in sales ahead of the tournament: CBS plans to broadcast 39 games this year in high definition — up from 12 last year.

But for devoted fans — some of them stuck at work behind a computer when their favorite teams are playing — new distribution platforms like Web casting offer one more way to keep up with the frenzy of dozens of games played simultaneously over several days.

“Its going to get even bigger,” said Swangard. “The next iteration is going to be the delivery of some of this content down to a cellphone or a wireless device and being able to provide fans that sort of real time experience without having to be in front of a TV.”

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