The NCAA and CBS Sports are discussing an extension of the network's contract to broadcast the Division I men's basketball tournament that could be worth $3 billion to $4 billion. The deal also could involve CBS acquiring NCAA marketing and licensing rights while enabling the NCAA to deliver live video and audio coverage of some of its other championships via the Internet.
The NCAA's seven-year, $1.73 billion contract with CBS expires in 2002, but the parties have entered an exclusive negotiating period for the next contract.
NCAA President Cedric Dempsey said the organization has been exploring "how we look to the future," but he said no deal with CBS is imminent and the NCAA has indefinitely extended the network's exclusive negotiating period.
"We will continue [the exclusive negotiations] until we have defined whether we will go beyond our discussions with CBS," Dempsey said. ". . . We want to make sure we are examining all avenues that would be in the best interest of the association. If that was just an extension of the [current television-only] contract, we would be through that in 15 days. What is the role of the Internet? No one knows, but everyone knows it could be a formidable delivery system."
CBS Corp.'s holdings include the popular Internet site CBS Sportsline.
When the current deal was made in 1995, the NCAA received a 73 percent increase in its rights fee from CBS, which has broadcast at least part of the basketball tournament since the 1981-82 season. Harvey Schiller, president of Turner Sports, said he expects CBS will have to increase the value of a new deal by more than the 73 percent to prevent the contract from going into open bidding. If that occurred, bidders could include Walt Disney Co., the parent of ABC and ESPN; Fox; and ISL United States, whose parent company, ISL Worldwide, holds the television and marketing rights to the soccer World Cups.
"I would guess [CBS] would have to go for $3.5 billion to get it done," said Schiller, whose cable network has NBA cable television rights and would not be a bidder for the NCAA tournament. "It's a good buy for the networks. It'd be good for the affiliates."
The NCAA has contracts with CBS; ESPN, which exclusively televises the Division I women's basketball tournament, as well as the championships of other NCAA sports, and Host Communications, a media company based in Lexington, Ky., that holds NCAA corporate sponsorship, marketing, licensing, Internet and radio rights. All of those deals expire in 2002.
Leslie-Anne Wade, a spokeswoman for CBS Sports, declined to comment.
In another development, Dempsey said that the NCAA Division I men's basketball committee has approved a one-year extension of a deal with DirecTV in which CBS provides feeds of tournament games to the satellite carrier so subscribers can watch any game not available on their affiliate. The experiment last year netted the NCAA more than $1 million and "was reasonably successful" for its first year, Dempsey said.
Dempsey said the purpose of the Internet exploration is to provide more exposure popular sports such as men's lacrosse; ESPN holds the rights to the Division I, II and III tournaments. The technology exists to provide live Internet video and audio coverage of sports events, but quality pictures can be received at this time only by satellite and cable lines, not by telephone lines, through which most people access the Internet, said Neal Pilson, a sports television consultant and former president of CBS Sports whose company has been retained by ISL United States.
"That's why you have companies like AT&T and TCI [a major cable systems provider] talking" to each other, Pilson said.
These negotiations "may be the last without significant competition from Internet companies," Pilson said. "TV has the money now. Internet companies will have it in five to six years."
As for the market and corporate sponsorship elements of an NCAA-CBS deal, it would follow deals made by several conferences, including the Atlantic Coast and Southeastern, under which some of those rights are packaged with television rights.
"There's a trend for television companies to link up the TV rights with the marketing rights when you're making a deal for a major property," Pilson said. "The demands on the television side for revenue is so significant, the companies are looking for opportunities to expand their revenue."