MediaTalk | Season 3 | Ep. 12 - March Madness' Evolution from Loss Generator to Advertising Slam Dunk

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Mike Reynolds: Hi, I'm Mike Reynolds, a senior reporter covering the media industry with S&P Global Market Intelligence's Tech, Media, and Telecom news team. Welcome to "MediaTalk," a podcast hosted by S&P Global, where the news and research staff explore issues in the ever-evolving media landscape. Today, I'm joined by S&P Global Market Intelligence's Kagan principal analyst Justin Nielson, who specializes in broadcast, among other things; principal analyst Scott Robson, who tracks US TV networks; and research analyst Michael Johnson, who's on the US sports watch. We're going to talk about what is perhaps my favorite part of the sports calendar, March Madness, the big dance, if you will. How goes it, Scott? You ready for some madness?

Scott Robson: Yes, this is one of my favorite times of the year. Really looking forward to some buzzer-beaters.

Reynolds: All right. What about you, Mike? Dancing shoes on?

Michael Johnson: Oh, yeah. Great to be with you again, Mike. I'm ready to go.

Reynolds: And Justin, I know your Arizona State Sun Devils are not in the field, but the Big 12 is well represented otherwise.

Justin Nielson: Yes. Thanks, Mike. Sad to say that ASU's men's basketball team didn't have the same success as the football team in their first year as part of the Big 12, but it's exciting to see how the conference fares overall with conference champ and top seed Houston, my pick to win it all. We're going to talk about both the men's and the women's tournaments, so a lot to cover.

Reynolds: This is the 14th year of the two media conglomerates teaming up on men's March Madness. CBS Sports, now under the auspices of Paramount Global, and what is now called TNT Sports, which is owned by Warner Bros. Discovery. A unique collaboration in terms of two big companies working hand in hand, so to speak, in terms of teaming on talent, production, promotion, scheduling, and ad sales aspects. Mike, your thoughts on the teammates assisting each other and some of the tournament's dollars and cents, if you will.

Johnson: Yes, the CBS Sports and TNT Sports partnership has been a part of March Madness for almost a decade and a half now, which is crazy to think about, and you can get a sense of the synergy between the two companies during their virtual media session last week. So CBS took over the entire package in 1991. But by 2010, I believe it was, they were estimated to be losing around $50 million per year televising the tournament, and unless viewers had DirecTV or paid extra for the, I think it was called the Mega March Madness package, they were at the mercy of their local CBS affiliate over which games they were able to see. The tournament was outgrowing just one network and thus led to the partnership between CBS and Turner in 2010. The original deal was 14 years and it gave multimedia and streaming rights to both networks as well as TNT Sports taking over the operation of the NCAA website and marketing rights to various NCAA championships. And in 2016, they signed an eight-year extension, with the overall deal jumping to over $1 billion in average annual value beginning this year, actually.

Reynolds: Scott, this event has helped raise retransmission consent rates for CBS and licensing fees for TBS, TNT, and TruTV. It's also been a boom from the ad sales side. It's a $1 billion or more property that way.

Robson: Yes. So as you mentioned, the networks rake in about a billion dollars in ad sales over the course of March Madness, which is increasingly valuable as the rest of the ad market for linear TV networks is challenged. It really speaks to the importance of live sports programming. Aside from advertising, the license fees are also very important, especially when you look at Warner Bros. Discovery, which is going to lose the NBA at the end of this season. Having marquee sporting events justifies a higher license fee from the paid TV operators. And when you look at a network like TruTV, which has rebranded as a sports network, this is a really important property for them, as they don't have a whole lot of standalone sports.

Reynolds: Gotcha, Justin. Again, this tournament is always sold out, near sellout, with pricing increases. Why does it work so well from an advertising perspective?

Nielson: I think the attraction outside of just cheering for your alma mater or college team or player you follow is the drama of winning a home tourney. Anything can happen with the buzzer-beater. Plus, you have to watch it live, and the engagement is very high across all the key demographics, which advertisers want and is rare outside a few other major sporting events. Let's say the Olympics or Super Bowl. So I think advertisers are continuing to spend big money on the tournament, and the women's tournament has been a hit past the men's last few years with star power like Caitlin Clark and her run at Iowa.

Reynolds: This year, the final four and championship game are on CBS. So maybe there's a bit of a bump in audience there versus their cable counterparts. And I guess they alternate every year in terms of the most marquee games. But let's dig in a little more into the viewership. The UConn men won their second consecutive NCAA crown last year, beating Purdue pretty handily. The game averaged 14.8 million the year before UConn beat up on San Diego State, coming through with 14.7 million viewers on average. These are not numbers to sneeze at, but they're low as far as the tournament goes. I don't know, maybe people don't like Dan Hurley or Storrs, Conn. Still, this is something that performs very well overall over the course of three weeks. Scott, can you give us a little bit more sense of what the audience was like last year?

Robson: Sure. So the games are a big draw for the networks. A lot of the games are averaging over 10 million viewers. I think the average across all games was just under 10 million last year and was up 3 percent from the previous year. Last year's elite eight matchups were the highest in five years. There was a game between North Carolina State and Duke that drew over 15 million viewers. So it's very matchup-dependent. I think this year is primed for some big matchups, and I think that the title game could break the slump that you mentioned, especially if Duke makes the final. The game is starting half an hour earlier at 8:50 p.m. ET, which should help.

Reynolds: Yeah, I think that's going to be interesting to see how that plays out, that East Coast versus West Coast in a different sense. Anyway, multiplatform for the tournament also plays a big role. Mike, there's a lot of streaming in play here.

Johnson: Yeah, absolutely. What's made the tournament great for many years now is that people have had the ability to stream the games from pretty much anywhere, whether it be home, work, at the bar, wherever you're at. Along with the four major television networks, TBS, CBS, TNT, and TruTV, fans can also stream games on the traditional NCAA March Madness Live platform with additional streaming on Max for games that are broadcast on TBS, TNT, and TruTV. And then for those games on CBS, live streaming is accessible through Paramount Plus as well.

Reynolds: Yeah. They give you a lot of different ways, and if they saw me do this, they know I'd be cheating, but I guess the boss buzzer is still in play. You're watching the games at your desk, and your boss pops into the area, and you hit a button, and all of a sudden you've got a spreadsheet in front of you. I don't really know how much that works. I'm not a spreadsheet guy. So Sarah would know that I would not be doing that. Scott, Justin alluded to a little bit before there's alumni, different interests. Again, what do you think this event really plays so well over the three weeks?

Robson: Yeah, I think people enjoy filling out the brackets and the social appeal that has. With so many games, the potential for a dramatic finish is high, which is exciting. I think the one-and-done format is also more appealing to the casual sports fan than sitting through a seven-game series. The broad appeal is really also amplified by so many regions of the country having a horse in the race.

Reynolds: Mike, there's other appeals, maybe a few dollars and cents going along.

Johnson: Yeah. Just a couple of years ago, the American Gaming Association reported that a record 68 million Americans placed bets in some form on March Madness in 2023. Of these 68 million, 31 million engaged in traditional bets through traditional sportsbooks, with another 20 million just engaging in bets with casual friends, things along those lines. And then in 2024, last year, it was reported US bettors legally wagered a total of $2.7 billion on the men's and women's tournaments combined over the course of the tournaments, and that's more than just about double what this February's Super Bowl between the Chiefs and Eagles raked in.

Reynolds: It's interesting though, Scott, because sports betting is legalized in 38, 39 states and in D.C. When it comes to watching these games, they're sportsbook-free, right?

Robson: Yeah. So while these games will be bet on heavily, the gambling companies won't be able to run ads during the tournament. So that's still a bit of a gray area. And then there's also laws in place where you can't bet on local college teams in certain states.

Reynolds: And then there's brackets, including the one held by yours truly's alter ego, aka Mikey Brackets. Mike, you have some interesting stuff in terms of bracket numbers.

Johnson: Yeah, so each year there are around a hundred million brackets filled out for March Madness, and I think technically if you were to flip a coin for each game, the odds for a perfect bracket are something like one in, I think it's nine quintillion for the tournament. If you were to use strategic logic picking favorites over underdogs, that drops to about 1 in 120 billion for odds. Still a long shot. But the closest attempt at a perfect bracket was in 2019 when I think a bracket went 49 games before their first loss. So, technically, there's a chance, but probably not in our lifetime.

Reynolds: Still at 49 games, it's a 67-game event.

Johnson: Exactly. Long way to go from there.

Reynolds: All right. Justin, what do you make of St. John's? It's a number two seed. Under Rick Pitino, the club has had a great year. St. John's hasn't won a Big East tournament since 2000. Does having a strong New York metro area team with a chance to maybe go a little bit of distance make a difference for viewership?

Nielson: I think it will. The return of Coach Pitino to the national stage at St. John's after multiple national championship years at Kentucky and Louisville and a bad exit from Louisville, and then stints in the NBA with the Knicks and Celtics. It's a new college sports landscape with the NIL. It's good to see St. John's prominence from all those runs in the eighties and nineties. I remember filling out brackets with St. John's back then. So I think having somebody return to power, I guess you would say, like what we saw with UConn over the last few years, I think it's great for the sport.

Reynolds: Cool. We'll see how they do. Guys, we discussed this somewhat last year. There was talk about expanding the field from 68 to 76 or maybe even 96 teams. The rattle this year seems to be towards 76 during the virtual March Madness Media Day that Mike alluded to earlier. Warner Bros. Discovery's Head of Sports Louie Silverwasser and CBS's Dave Burson said they've engaged with the NCAA about possible expansion. At the same time, a little reticent, they talked about the event's integrity and that it works well now. Scott, your thoughts here? Are we at the right number?

Robson: Yeah, it's an interesting time to be a sports fan in the U.S. As there are new high-profile sporting events just being created. We saw this with the expanded football playoff, the NHL's four nations tournament. The NCAA and Fox are debuting a new college basketball tournament this year called the College Basketball Crown. So there's really no shortage of events. I think with March Madness, we already have all the conference tournaments leading up to the big dance. So I think the field of 68 is enough. You don't want to water it down to the point where the first few rounds seem meaningless or filled with blowouts. Now, that being said, I think if you were a fan of West Virginia or any other team that got snubbed by the committee this year, you'd probably be lobbying for a 96-team field.

Nielson: Okay, Justin, do you agree?

Nielson: I agree. They already expanded to 68 with the first four play-in games. I think that's a great number. If you were to expand to 76 or 96, what does that mean for the conference tourneys, right? That'd be less important in terms of the automatic bid. So I like it where it is. And Mike, last word to you on the subject here.

Mike Johnson: Yeah, I'm in agreement as well. I'm sure it'll just come down to the economics and the scheduling between the NCAA and the partners. But there have been reports that it could just further stress the schedule even more now that it's perfectly spread across three weekends in March and April. So I'm sure there'll still be a debate on the final four teams, no matter how far they expand. But who knows? They might expand it even more, and we could see all 16 SEC teams in the field.

Reynolds: All right. There you go. Only 14 made it, a record three more than the Big East when they had 11 in 2011. I guess the expansion, if they were to go in that direction, would also go over to the lady's side. And we're going to talk about that side of the bracket. Scott, there's some new finances in play for the Women's Tournament as well this year.

Robson: Yeah, so ESPN is paying $920 million to broadcast 40 college championships over eight years, which includes the Women's Tournament. The Women's Tournament is valued at around $65 million per year. Huge step up from the previous deal. The women's teams will be paid for playing in the tournament this year. I think it's $15 million that will be spread out, and that will grow to $25 million by 2028. Good news there for the women's side.

Reynolds: Justin, you mentioned Caitlin Clark before. She's now with the Indiana Fever in the WNBA. Last year, record-setting viewership on a number of occasions. There were also big-time players like LSU's Angel Reese, Stanford's Cameron Brink, and Camilla Cardoza from the undefeated South Carolina team. Is there a sense you have this year's tournament may be tough to live up to that?

Nielson: Possibly, there's still some star power this year with Paige Bueckers at UConn, who just signed a major NIL deal, Hannah Hidalgo at Notre Dame, and JuJu Watkins at South Carolina. So I think it'll be interesting because, who knows, will South Carolina defend its crown? But I think UConn, Texas, and UCLA may have a chance here. So maybe a little bit more parity. But yeah, I think there's still star power.

Reynolds: I think, going forward, maybe this is her showcase, and if not, she's got a couple more years to go. JuJu Watkins from USC, she's ahead of where Caitlin is in terms of, if she continues on her pace, she's going to unseat Caitlin three years later as the all-time scorer. So there are some storylines there. I was talking to Disney ad sales executive Jacqueline DuBois last week, and she told me the women's tournament is 95 percent sold out. They've held some inventory back for last-minute opportunities. The championship game has been sold out for months. Pricing is up. There are a lot more new advertisers. There are new categories. Mike, what does this say about the tournament specifically and women's sports in general?

Johnson: Yeah, so this is just further showcasing the power of women's sports and the growth that is taking place over the last few years. Women's sports is producing viewership numbers that haven't really been seen, and that's resulted in record-setting advertising figures. I think last year, it was reported that a 30-second ad unit for the tournament's final game, the championship game, cost around $500,000. And you're also seeing advertisers increase budgets to take advantage of this increase in interest in women's sports and the women's tournament in general.

Reynolds: Yeah, it's something that's definitely been going on. Disney's been at the forefront of the women's games, and I think some of the other media players have been trying to catch up as well. We've gone through some of the teams here and some of the players. I guess the question will come down to if it falls way short of last year, does that kind of stop women's sports' momentum? I'll ask all three of you guys that. Scott, what do you think?

Robson: I think it's going to be hard to live up to last year's tournament from a viewership standpoint. While the audiences might decline a bit year over year, I think they still should be pretty strong. I think a lot of the people that tuned in to see Caitlin Clark last year will return this year. I'd be surprised, though, if the women's final outpaces the men again this year. Still, though, 95% sold out. I think there's a lot of advertising interest. And so I think it will still do pretty well.

Reynolds: Justin, your thoughts here.

Nielson: I would have to agree with Scott. I think it'll do very well. I don't think it will hit the numbers and outpace the men's like it did last year.

Reynolds: And Mike, that's okay. There are always high watermarks, but your sense here.

Johnson: Yeah, I agree with the guys. You might see a slight pullback in viewership numbers, but you'll see the lasting impacts of last year's viewership totals continue to grow the women's collegiate game especially with star players like Hannah Hidalgo for Notre Dame, who's only a sophomore, but continuing to transcend the sport.

Reynolds: Getting to the end here, fellas. And for those of you who may want some help with your brackets, this is clearly the most important part of this “MediaTalk” installment. Selection Sunday is behind us. Who do we have making the final four? We're going to go with the women first. Mike, who's your ladies' final four?

Johnson: Yeah, so I'm going to go with UConn, Notre Dame, South Carolina, and UCLA in the final four. And then I'm going to go with South Carolina to win it all again over UCLA.

Reynolds: All right. All right. Scott, you want to share your brackets?

Robson: Yeah, so I don't follow women's basketball very closely, but I like Texas's odds this year as a one seed. I think USC might be the team to beat and wouldn't be surprised to see LSU and South Carolina also make the final four.

Reynolds: Maybe Scott for everybody. He lives in Austin, so there may be a little home talking. Anyway, Justin, who's your four?

Nielson: Yeah, I'd have to agree. I've got South Carolina and UConn in the final, but if you look at UCLA, USC, and Texas, it's going to be a tough championship to make it to, and to the final four. So I'm expecting a lot of upsets, to be honest.

Reynolds: All right, me, I'm going to go for South Carolina, Notre Dame, LSU, and USC. I don't know, my kid went to LSU, so there's some sentiment there, but I think it'd be great for the game if maybe USC won. We'll see. How about on the men's side? Scott, can you go first this time?

Robson: Yeah, I think this year there are going to be a lot of top seeds advancing to the Final Four. I think Florida is the team to beat right now after steamrolling the SEC. I like Texas A&M, Florida, Duke, and Tennessee in the Final Four.

Reynolds: Alright, Mike, who you got?

Johnson: Yeah, I'm going to go pretty chalk as well. I got Florida, Auburn, Duke, and Tennessee with Florida beating Duke in the Final.

Reynolds: All right. I'm going to say Michigan State, Duke, Houston, and I'm going for the local guy in St. John's over Florida. Justin, you're last here. Who you got?

Nielson: Like I said, I have Houston winning it all. Duke without Cooper Flagg, he's suffering from that ankle injury. I would have picked Duke. And for the other brackets, Florida, yeah, Florida and maybe St. John's. I don't know. I'm waffling a bit. Florida's tough. But yeah, I think the SEC is going to be well represented in the final.

Reynolds: All right. There you have it, everybody. A little bracket advice from a group of absolute experts. Follow our leads to bracket heaven or take the George Costanza approach and go totally opposite as much as you can. That concludes this edition of “MediaTalk.” I wanted to thank Mike, or MJ as he's called here, Scott, and Justin for musing about March Madness with me. Appreciate it, guys.

Nielson, Robson, Johnson: Thanks, Mike.

Reynolds: This is Mike Reynolds. Until next time on “MediaTalk,” enjoy the Madness, and we'll catch up again soon.