MediaTalk | Season 4 | Ep. 11 -Big Dance, Bigger Business: The New Economics Powering March Madness

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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, “MediaTalk” is talking about what is perhaps my favorite part of the sports calendar: the Big Dance — March Madness, the NCAA Men's and Women's Division I Basketball Tournament. Joining our hoops discussion is a trio of S&P Global Market Intelligence Kagan Research analysts: Head of Research Justin Nielson, who specializes in broadcast among other things, is in our virtual arena as our principal analyst; Scott Robson, who tracks U.S. TV networks; and research analyst Michael Johnson, who is on the U.S. Sports Watch. This year, Selection Sunday came on March 15th, with Duke and UConn ranking as the top overall seeds on the men's and women's sides, respectively.

Before we get deep into it, Mike, I want to start with you — just some quick thoughts on how the selection committee did on the men's side.

Mike Johnson: Hey Mike, thanks for having me on. Yeah, there's always some back and forth with the first four in, first four out. But overall, I think the committee did a pretty solid job. I think the East looks pretty tough for Duke, with UConn, and I think Michigan State's in there. Kansas could make a run.

Reynolds: Right?

Johnson: I was a little confused on St. John's five seed. I thought that was pretty low, and I think they have a tough first-round matchup, but you never know this time of year.

Reynolds: I gotcha. Scott, how about you? You ready for the madness this time around?

Scott Robson: Yes, absolutely. I think that the selection committee did pretty well overall. I think there was going to be a lot of backlash if they didn't shoehorn the Red Hawks in there with their undefeated regular season. I'm a big fan of the Big East, so it's disappointing that only three teams made it this year to the tournament. But that's just the way the cookie crumbles sometimes.

Reynolds: I gotcha. Justin, your Arizona State team is not in the tournament, and now Bobby Hurley — he of Duke, early nineties fame and brother of UConn coach Dan Hurley — is no longer the coach of the Sun Devils. If I can ask, and I won't ask you to use the four-letter word, but do you dislike Arizona a lot? The Wildcats are the Big 12 champions.

Justin Nielson: Yeah, absolutely. It is our, our, our feared enemy, I guess you would say. But in the same vein, you’ve got to support the Big 12 and the state.

Reynolds: Okay, alright. The men's version of March Madness has been an anomaly in the sports world. This is going to be the 15th year that CBS Sports, which is now under the ownership of Paramount Skydance, and TNT Sports, which is still under Warner Bros. Discovery, are working together on production, ad sales, on-air talent, and the tournament. Mike, can you give us some background on how this all kind of came together years ago?

Johnson: Yeah, so it's pretty interesting. CBS has actually been broadcasting the tournament since, I think it was 1982, so they've been in the game for a while. And then, the major deal started way back in, I think it was 1994, when the NCAA signed a huge eight-year deal with CBS. I think it was close to $2 billion overall for that, which was massive for the time. But fast forward to 2010, that's when CBS kind of joined forces with TNT Sports for that groundbreaking 14-year partnership — over, I think it was over $11 billion. That collaboration really changed the way we all watch the tournament now. They brought in new talent, different production styles, things like that. They extended the deal in 2016 for another eight years and $8 billion, so that's locking in the coverage all the way to 2032. It's been a long journey; CBS has dominated it for a while now. But the collaboration is what makes it great.

Reynolds: Scott, again, as Mike just alluded to, another contract — so in essence, they're only in the second year, I think, of the deal now that goes into the early part of next decade.

Robson: Yes. As Mike mentioned, they're under a new contract. I think this year both Paramount and Warner Bros. are reportedly set to pay about $1.02 billion combined, with annual escalators in there. So the overall deal is $8.8 billion over eight years. And I think that's a very interesting figure. It's in line with the recent UFC and NASCAR deals, almost.

Reynolds: Right?

Robson: Interestingly, on the average annual amount. So obviously three very different deals, but I always think it's interesting to see where things line up with these media rights deals across sports.

Reynolds: Okay, Justin, we mentioned Paramount Skydance, and after much back and forth and persistence, they wound up outbidding Netflix for Warner Bros. Discovery. So TNT Sports and CBS Sports have been partners, but now they're going to be corporate teammates. Do you think this deal's going to happen by next year?

Nielson: That's a great question. I don't think it's going to happen by this time next year. Twelve to eighteen months is where they're picking their best in terms of when this deal closes. Obviously, from Paramount Skydance's perspective, they wanted to close earlier. But they have a lot of regulatory hurdles to jump over before then. I would say in terms of the branding, it's going to be probably a broadcast and streaming-first type of distribution arrangement. Obviously, the cable assets are valuable, but they're probably going to take a back seat to the broadcast and streaming delivery.

Reynolds: I gotcha. Mike, do you feel the same way? Given all the different properties these two companies possess, I mean, there's going to be a large schedule and many ways to air the games, whether on different platforms.

Johnson: Yeah, absolutely. That's a great point. So yeah, if this merger gets the green light, we're looking at a pretty big shakeup in how these sports properties are handled. Instead of TNT Sports spinning off like we thought might have happened with the Netflix deal, they'll actually join forces with CBS Sports. So that means they have all the big events and leagues — the NFL, March Madness, obviously. We've got college football playoff games, UFC, NASCAR, things like that. And it pretty much probably means wider access to the biggest games for fans. You see some events move around between cable, broadcast, streaming on Paramount Plus. Now, I guess we'll see over the next three to five years which sports kind of stick around in this package. A lot of the rights deals are set to expire within the next five to seven years, so there could be some changes taking place. But we can bank on probably March Madness sticking around for a while.

Reynolds: Okay, Scott. The idea is, as Justin and Mike both mentioned, broadcasting and streaming. You want to expose your marquee events to the widest audience, which I guess would bring CBS into the mix this year. The Final Four and the championship games are on TBS, and I'm sure they're going to be flanked by different telecasts from TNT and truTV. But CBS aside, you want to have the games on cable because there's money there.

Robson: Yeah, so I remember when I first cut the cord, it happened on a year like this where the Warner networks got the Final Four, and I was scrambling to access the games at the last minute. Broadcast does have the advantage of a wider reach over basic cable. I think it's more consumer-friendly to have the Final Four on CBS every year. It has the over-the-air component, so technically free. But this is also very important to those cable networks in terms of being able to show value to the pay TV operators. Networks like TNT and TBS have high license fees, and that's because of these marquee sporting events. We've seen TNT take a hit recently with the loss of the NBA, right? So maintaining this event is big for revenues at those networks.

Reynolds: Yeah, it makes sense. So we'll see how that goes. Alright. Digitally, there are three outlets in play here. There's March Madness Live, which shows all the games — that's a collaboration of TNT Sports and the NCAA. The CBS games on the tournament are also available through Paramount Plus. And the games that are on the Turner networks — truTV, TBS, and TNT — are also available on HBO Max. Justin, you said earlier we might not have this deal in place by next year in terms of Paramount Skydance owning Warner Bros. Discovery, but afterwards, do you think that we'll still have a trio of digital platforms? It would make more sense to combine.

Nielson: Yes. And I think that is the strategy going forward — a combination of the streaming platforms and a cohesive branding strategy. You see a similar situation that's happening with the Disney properties, right? With Disney Plus and Hulu and ESPN. I think that there will be a convergence at some point if this deal gets approved.

Reynolds: Okay. Alright. Guys, we talked about this with the college football playoffs — a move for expansion. We talked about this last year when we discussed March Madness. Sixty-eight team fields both on the men's and the ladies' side. Some people want 72, 74, 76, 78. I think we're all in agreement — not a good idea. Anybody want to say something different on this front?

Johnson: Yeah, I don't think it's necessarily a great idea to expand beyond the 68 teams. Definitely a hot topic right now. On the football side, like you mentioned, there's a big push for expansion. When it comes to basketball, it seems a little bit less — maybe just up to 72, 76, like you mentioned, but nothing too massive. I think it was last year, the CBS, TNT Sports execs were pretty clear that they like the current format and want to keep its integrity. Any changes won't be happening overnight. It'll be a well-thought-out process. I know there's been some that have come out saying expansion would be detrimental to the tournament. I think Coach K came out recently and said something in that regard. But historically, every time a tournament expands, people are worried about it, but things always seem to work out. Nothing imminent, but definitely going to be a hot topic to be discussed for the foreseeable future.

Reynolds: If in fact it gets larger, Scott, where do they put the games? The way they have it set up now, the teams are selected on a Sunday; Tuesday and Wednesday are play-in games, and then the tournament starts in earnest on Thursday and Friday. Where would you put the extra games if you had to?

Robson: Yeah, that's a great question. And I think that, as a sports fan, there has to be some respect shown for the sports calendar. So you look at the championship this year being held on April 6th, and then we have the Masters starting up on April 9th. So if the tournament were to run just a week later, you'd be running into competition with the Masters, which isn't great for CBS. I think they'd have to shrink the regular season to accommodate this. It just doesn't seem like the right move, in my opinion.

Reynolds: I gotcha. Justin, I guess in terms of this, always talked about every year this time — the last four out and the first four out — conferences, teams, alumni, fans, somebody's always going to be moaning that their team didn't get there. By expanding to 72, 74, 76, 78, that process is not going to stop.

Nielson: No, it's going to continue. And you've seen the same thing in the college football playoff, right? When they expanded, it's like, we need to expand again and again. I understand the point, and maybe it's in the last four — maybe they open up additional slots in that regard. But I think it's very representative of the best teams in the country.

Reynolds: Okay. Alright, before we move specifically into this year's men's tourney, there's a matter of NIL — name, image, and likeness. In essence, Scott, this is payments for the players, and there are changes afoot. There were some big meetings a couple of weeks back.

Robson: Yeah, there's been a lot of discussions about treating players more like employees. President Trump recently had a roundtable on this. Apparently, he has a solution, but I think it's a very complicated issue and it's going to continue to linger on. These media rights deals are escalating and bringing more money to the universities, so it's a good problem for them to have right now. I think mostly people are upset with how rapidly things are changing. It's created somewhat of an uproar. You've got the transfer portal and players jumping around to different schools over the course of their careers. It isn't great for fans because they're looking to cheer on familiar faces, but that's just the nature of college sports fandom these days. As far as the division of conferences and the Big Ten and the SEC having the biggest rights deals and therefore the ability to spend the most on players, we'll see what happens this year. Florida and the SEC won last year, but we haven't seen the same type of conference dominance in basketball like we have in football, with the Big Ten winning the last three and the SEC dominating. So we'll see how that goes.

Reynolds: Mike, Scott mentioned the SEC and the Big Ten are the big players — the most teams, high profile, most media dollars. But again, there are people that want to level the playing field. Going through the College Sports Competitiveness Act, can you give us a sense for what that is?

Johnson: Yeah, exactly. There's big changes potentially on the horizon in regards to media rights between every conference. Right now, each conference does their own thing, negotiating separate deals that bring in very different amounts of money for each conference, with the big players taking in the most money, obviously. But there's a new bill being floated in Congress — the College Sports Competitiveness Act — and it could shake things up a bit. The idea is to let conferences and schools join forces and sell their media rights collectively, which could unlock a lot more revenue for college sports overall. The idea behind this bill is that college football actually draws way more viewers than the NBA — almost double — but brings in only half the media rights revenue. And they see that as a problem, especially with schools, even in the biggest conferences, running deficits, having to cut women's and Olympic sports. And this bill is aimed to fix that imbalance.

Reynolds: Justin, that movement's going to run into problems. Again, hate to keep bringing up the Big Ten, which is what, 20 teams now, and the SEC, but again, they're doing well. They're not going to want to let this go, right?

Nielson: Yeah, the incumbents want to keep the status quo for sure. And I would say in that regard, the leverage that they have in terms of the biggest teams in the largest conferences — they want to keep that status quo. And I would also say that, in terms of college football — I know we're on the March Madness podcast — but college football basically trumps all of college basketball and other sports. So it's going to definitely determine what the outcome is in terms of this particular piece of legislation and then going forward in terms of just the economics of college sports in general.

Reynolds: Alright. Scott, let's go back to the NIL for a minute here. There could be a revitalized SCORE Act, which I guess is Student Compensation and Opportunity through Rights and Endorsements. If this were to happen, the federal government would be in charge of NIL rather than states.

Robson: Yes. So yeah, the SCORE Act — a lovely acronym there — basically prohibits student-athletes from being considered employees, which is going to block their ability to unionize and have basic labor law protections. So it gives the NCAA some power to set limits on payments. It provides a cap on agent fees, things like that. So the SCORE Act, while it will bring some stability to NIL, which seems like the Wild West right now...

Reynolds: Yep.

Robson: ...it also has a limiting factor on players' rights and earnings potential. So a bit of a double-edged sword.

Reynolds: Alright, we'll be keeping our eye on that for sure. This year, college basketball — viewership-wise, Mike — a good year, and that should bode well for the madness in the weeks ahead.

Johnson: Yeah, absolutely. So it's been a fantastic year for college basketball ratings. You had Fox — they hit a new record with over 1.2 million viewers for men's games, which is a huge jump from last year, I think it was nearly 40%. FS1 was up as well. You had CBS with its best season in seven years, averaging more than 1.4 million viewers. You had some of the biggest games — how you had Michigan State, I think it was almost 3 million viewers tuning in for that one. And you had the game of the year as far as ratings go with Duke-Arkansas — almost 7 million viewers. I think that was actually the most-watched regular season game in over 30 years, which is pretty incredible. And then it's not just the men — the women's basketball is also continuing to rise as well. You had Fox averaging 700,000 viewers, FS1 setting new records. So all of this collectively bodes well for each of the tournaments.

Reynolds: Scott, last year, the tournament did well. I guess what's good for advertisers and for fans is it consistently draws in people.

Robson: Yes. So I think that there are a lot of casual fans tuning into the tournament, filling out office brackets — it draws strong audiences every year. Last year, the championship game drew 18.1 million viewers, which was up 22% from the prior year. I think the average audience across all games was around 10 million. Top 3%. So big audiences there.

Reynolds: Alright, Justin, last year in the men's tournament, all four of the top regional seeds made the finals — Duke, Houston, Florida, and Auburn. Are blue bloods, or at least brand names, good for viewership, or is it better if the tournament winds up with a long shot or Cinderella like a Loyola of Chicago making a deep run?

Nielson: Yeah, obviously if you look at the numbers, the amount of blue bloods or those top brands getting to the Elite Eight and the Final Four does make a difference. I think it increases excitement in the lower rounds, in the first and second round, when you've got those Cinderellas. But the viewership drops off when you get into the later rounds.

Reynolds: Makes sense. Alright, let's turn our attention, guys, to the women's side of the tournament. UConn is the defending champion. This year's Huskies team is undefeated. Paige Bueckers is the top pick in last year's WNBA draft. Zia Fudd, Clark's teammate from last year and friend, is projected to be the top pick in this year's draft and join Paige on the Dallas Wings. Meanwhile, Fudd's teammate Sarah Strong is regarded as the top player in the country. Justin, are we going back to what was the case for probably 15, 20 years — it's UConn's world and the rest of the teams are just living in it?

Nielson: Uh, yeah. UConn and South Carolina. And I believe that's the case. You have some names out there that you identified that are going to get some viewers, but it's not going to be the Caitlin Clark effect, right, that you saw in years past, and even the Paige Bueckers effect. So I think there will be a little bit of a drop-off. From a specific team's perspective, it is a good case to have those legacies and those teams that you follow over the years. But it does diminish the excitement around the lower rounds.

Reynolds: Okay, alright. Before we get fully into the women's tournament, I'm going to try to do a little scheduling scorecard, if you will. Most of the women's conference tournaments are decided more than a week earlier than the men's. The final regular season rankings come out six days before the tournament field is selected. Then the first four games are on Thursday and Friday, going against the men's first two full rounds. I'm not so sure that's good for viewership. Then as it progresses — what I'm trying to say, Mike, there's a lot of overlap between the men's and the women's. Would it behoove them to start earlier on the ladies' side?

Johnson: Yeah, it's a tricky situation, and it's always bugged me throughout the years. So on one hand, if you start the women's tournament any earlier, you're running into the men's conference championship games, right? Yeah, that's a good point — the previous week — which would make it tough for the women's games to get the attention that they deserve. And then on the other hand, the way it's set up now, there's a lot of overlap, like you mentioned, with the men's tournament, especially those first four and early round games, which isn't ideal for viewership. So it's a lose-lose when it comes to scheduling. The women's tournament either gets overshadowed by one end of the men's conference play or the start of the national tournament. But I guess the one bright spot is those Monday and Tuesday games in the second round, where they have pretty much the college basketball spotlight to themselves. So maybe that's something they can build on in the future, but who knows?

Reynolds: Alright, Justin, we're going to go Unrivaled now. The three-on-three league just concluded its second season. Viewership was way down, but they had a couple of schedules go on the road in Philly, and I guess they had the semifinals in the Barclays Center in Brooklyn — did really well. CBS Sports has been part of the WNBA rights holders for the last however many years — not the case right now. They haven't done a renewal as TNT Sports and Paramount Skydance come together. Is Unrivaled going to wind up being Paramount Skydance/TNT Sports' women's play from a basketball perspective?

Nielson: Could be, yeah. Or it could be a broadcaster like Ion and others. I would see Unrivaled — they're on the uptick. They still have some big names like Cameron Brink and others, and there's been a lot of marketing around it. But it coincides with the FIBA World Cup as well — a lot of the athletes are overseas in those games. So it was a great second season in the sense that they were able to build upon the success they had the prior year, but they didn't have the big names, so it didn't push the ball forward enough, I would say, to get that major rights deal.

Reynolds: Mike, you had started us before in terms of the women's game this year. The college game had picked up viewership, and ESPN's the major player here — they have 90 games, averaging 333,000 viewers, up almost 20%. It's the second most-watched regular season for the sports network with the women's college games since 2008–2009. Again, that's going to help the tournament this year. You would think, maybe not Caitlin Clark level, but it's going to do pretty well.

Johnson: Yeah, you would think so. Definitely, all that momentum is great news heading into the tournament. Even though last year there was a predictable dip in viewership, it was still a pretty big ratings hit for the game. I think the championship game averaged close to 9 million viewers, and throughout the tournament there were 20 games that topped over a million viewers. Last year's tournament, I think, was up 22% from 2023 and nearly double from 2022. So yeah, there's definitely a growing audience, and hopefully that trend continues and we don't see another dip this year.

Reynolds: Alright, and Scott, like other sports, things are pointing in the right direction when it comes to Nielsen's new measurement, right?

Robson: Yes, so the big data plus panel methodology — it's been good for sports for the most part. I think it's expected to provide a 5 to 10% boost in audience viewership this year. We've spoken about it in the past when talking about the Super Bowl, and Nielsen has basically married set-top box data with panel data to get a bigger picture of what's going on. Now, I've read reports that not all shows are experiencing audience lifts from this new methodology, but sports seem to be doing well.

Reynolds: Alright. For most of us, the action on the court is what we find most intriguing. But then again, there are more than a few that have a little of their own action going on with wagers, whether legal or illegal. Mike, can you take us through the legitimate province of where March Madness stands in the sports betting realm?

Johnson: Yeah, like you mentioned, for a lot of folks, March Madness isn't just about the games — it's about the brackets and getting in a little friendly wagering. While the Super Bowl is the biggest single event for betting, March Madness takes the crown. It's the most bet-on overall event during the U.S. sports calendar this year. Legal sportsbooks are expecting to handle around $4 billion in bets on the NCAA tournaments. I think it's up 7% from last year's $3.7 billion. So yeah, whether you're betting legally through a sportsbook or just joining friendly office pools, it's a prime time for sports wagering.

Reynolds: And Scott, that number grows higher if we factor in the burgeoning prediction market business.

Robson: Yeah, so the prediction market apps like Kalshi and Polymarket are certainly filling in the gaps by providing people in non-legal states like me with the chance to wager on the tournament. It's estimated that there was around $2 billion wagered on college basketball on Kalshi alone in February. So I'm expecting that number to be much greater in March and probably bring in a couple more billion to whatever has been predicted by the AGA.

Reynolds: And just so you know, everybody, Scott lives in Texas, which, along with California, the U.S.'s two most populous states, do not have legalized sports betting at this juncture. So the prediction markets are filling in a nice gap there. That being said, it's that time all “MediaTalk” listeners have been waiting for — maybe not. It's Selection Thursday, as it were in this case. Without further ado, drum roll please. Which team makes the men's Final Four, and who cuts down the nets on April 6th in Lucas Oil Stadium in Indianapolis? Scott, you're up first.

Robson: Okay. Nothing exciting here. I'm going to go with Duke, Arizona, Houston, and Virginia, and I think Duke wins it all.

Reynolds: Alright, Justin, your crystal ball has...

Nielson: Yeah, I think I'm going to go with the same, but I'm going to have Arizona cutting down the nets.

Reynolds: Okay, alright. Mike, I think you listened in on the March Madness Media Day, and Grant Hill, who will be calling the Final Four, is high on Michigan. Are you?

Johnson: Yeah, I am. I think that Michigan will get to the Final Four. I think they'll play Arizona and lose. And I also think on the other side, we have Houston and Michigan State. But I'm going with Arizona as well to cut down the nets.

Reynolds: Alright, I'm going to go local with St. John's and East Florida from the South, Purdue out West, and Iowa State from the Midwest. And then I'm going golden — despite Coach Tom Golden and the Florida Gators getting crushed by Vandy in the SEC semifinals, I think they repeat as the Gators did back in 2006 and 2007. So we'll see how that goes.

Alright, let's move over to the ladies' side. I'm going to go first. I'm going pretty chalky with UConn, UCLA, Michigan, and South Carolina making the Final Four. UConn beats South Carolina — a rematch of last year's final in one semi — and then UCLA beats Michigan in the final on the other side. And then, I hate to say it, but Geno's going to win it. Scott, you live in Austin. Lady Longhorns are one of the top four seeds. Is Madison Booker's team going to make a run?

Robson: It would be nice for Texas to get a win after a disappointing football season. But have you seen the spreads on some of these women's games in the first round? UConn is a 54.5-point favorite. So I'm going to agree with you and keep it chalky with a UConn victory.

Reynolds: Alright, Mike, how about you? What's your sensibility this season?

Johnson: Yeah, I'm going straight chalk as well. I'm going all four number one seeds to reach the Final Four, and definitely picking UConn to win it all.

Reynolds: Alright, perhaps ironically or poetically, this year's Women's Final Four is at Mortgage Matchup Center in Phoenix, and the host team is Arizona State. That makes you, Justin, our last select.

Nielson: Yeah, I'm more interested in the first four with our Lady Devils playing the UVA Cavaliers, but wow. But yeah, I'm going to go chalk as well with UConn. And, but yeah, it'll be interesting. I was actually just in Mortgage Matchup for a Suns game, so it's a great venue.

Reynolds: Okay, alright, there we go. Our picks are in. Many thanks to our March Madness men for their media business acumen, and we'll see whether our picks are air-balled or prevail in a couple of weeks. Thanks, gentlemen. Appreciate you being here.

Nielson, Robson and Johnson: Thank you. Thanks, Mike.

Reynolds: And thanks to all of you for listening. Enjoy the tournaments, and we'll catch up soon on the next installment of “MediaTalk.”