It's one of the fastest-growing, most lucrative departments at CBS Corp. right now. But the company's president, Les Moonves, has a far more blunt way to describe how the network has turned March Madness basketball into an Internet gold mine.
“People sit at their computers and waste away their afternoons watching basketball games while their bosses are looking the other way,” Mr. Moonves told analysts recently in New York.
When asked about the advertising dollars CBS expects this year from online broadcasts of the annual U.S. college tournament starting today, Mr. Moonves simply added: “We are having our best year, by far. Ever.”
It started almost as a joke three years ago when CBS began offering the online games at no charge to see how many slackers at the office would tune in during the first two days of the competition.
The massive response in 2006 nearly bogged down the network's servers, proving the at-work audience for Web TV was formidable. Revenue surged from $250,000 (U.S.) the year before, when a subscription model was used, to about $4-million from advertising alone.
Despite a jittery economy that threatens to throw a wet blanket on the advertising market this year, CBS said yesterday it expects to rake in $23-million of ad revenue over the next few weeks. Advertising space during the online broadcasts was 95 per cent sold out by late February, a number more suited to events like the Super Bowl than to college basketball.
But the secret that has turned March Madness into one of the shining examples of how TV can work on the Internet lies in a deal struck 10 years ago between CBS and the National College Athletic Association (NCAA), which governs U.S. college athletics.
With the Internet still in its infancy, the contract placed almost no restrictions on how the digital rights to the games could be exploited by the network. CBS has been allowed to experiment online like few other TV networks, using the tournament as its proving ground.
“We're very fortunate that the rights with the NCAA, back when they were done in the late nineties, were all encompassing,” said Jason Kint, senior vice-president of CBSSports.com. “The people in charge appreciated where this was headed.”
The move to a no-charge, ad-supported model pushed the online audience to more than a million, almost immediately. This year, the network has unshackled things further by eliminating blackouts that were in place to protect local CBS stations. The company doesn't expect TV ad sales will be cannibalized.
CBS is also pushing the games further onto the Internet this year, allowing social networking sites such as Facebook and MySpace to link to the games directly. The network expects to shatter last year's record of 1.4 million unique users, which will also drive up ad rates for next year.
“Rather than trying to get a user to come to one specific [website] to find the content, we're bringing it to them, wherever they are on the Web,” Mr. Kint said.
Most TV networks, particularly in Canada, are tangled up in numerous rights restrictions with studios and producers that prevent them from going online in a big way. Even CBS, which has most of its prime-time programming online in the United States, remains conservative, not allowing shows to be shared, and blocking them from being viewed in other countries.
March Madness, on the other hand, can be accessed anywhere in the world where there is a high-speed Internet connection. Mr. Moonves couldn't help but marvel at the model: The $23-million CBS expects this year is “brand new revenue for the same old content,” he said.
In Canada, the broadcast rights to the tournament are held by cable network The Score, but the online rights remain with CBS.
The NCAA places few rules on showing games on other platforms, such as cable video-on-demand services, or repackaging highlights for the Web or mobile devices.
“They're pretty free that way – they get it,” said David Errington, executive vice-president of Score Media Inc.
1
