March Madness profits on demand

Marketplace Staff Mar 15, 2007
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March Madness profits on demand

Marketplace Staff Mar 15, 2007
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TEXT OF INTERVIEW

MARK AUSTIN THOMAS: It’s March…bring on the Madness. The NCAA Tournament games begin today and CBS is back offering online video for free. This is the second year for the network, which made a lot of money doing this in 2006. Some of those advertisers which helped CBS boost its profits are manufacturers of alcohol and they’re being criticized in ads in some small college papers. David Carter is the Executive Director of the USC Sports Business Institute. David, just how big was March Madness on Demand for CBS last year?

DAVID CARTER: Well gosh, it’s been growing really impressively the last couple of years and it’s expected to be up about 70 percent this time around. So I think even with this growth of the last year or two, there’s a lot more on the way. In fact the demand is anticipated to be so high by CBS that it’s going to limit the number of users at any given time to about 300,000 so that its system doesn’t crash, which is a pretty nice problem to have.

THOMAS: Yeah I’ll say. What kind of profit is the network looking at this year?

CARTER: Well, it’s kind of hard to say, but when you take a look at this very impressive growth you can’t help but believe that the profits are not going to be far behind that. Les Moonves, the CEO of CBS, suggested earlier this week that online advertising may grow to about $8 to $10 million this time around.

THOMAS: Is this extra money that CBS is getting, is any of this going back to the schools at all or is that separate?

CARTER: Well that’s the important thing about March Madness and about college basketball in general. That is funding the NCAA’s budget to the tune of about 85 percent and I think one of the things we’re gonna see this year is an ongoing and constant roll of public service announcements to make sure that the NCAA is not thought to merely be all about money. So they’re really gonna go out of their way during the tournament to promote themselves and the good works that they’ve done and hopefully along the way they think that they can strike that balance, communicate that balance among academics, athletics and commercialization.

THOMAS: You mentioned perception problems, what about this issue of alcohol ads during the games?

CARTER: I think that’s a great one. It seems to pop up every year because someone steps up to question not just the appropriateness of the beer manufacturers during the basketball tournament but I think, even more generally, the link between collegiate life and alcohol in general. And this time around there’s a campaign, a small one, a targeted one by the American Medical Association that really doesn’t like the fact that college sports is so closely tied to beer. But those that are opponents to the AMA campaign are stepping up to say you know what, 90 percent of the people that are involved in the tournament are adults, the average age is 48, and so they’re trying to diffuse the situation by letting people know that tournament viewership actually skews a little bit older.

THOMAS: Thanks David.

CARTER: Thank you!

THOMAS: David Carter is the executive director of the USC Sports Business Institute. And in Los Angeles, I’m Mark Austin Thomas. Thanks for joining us. Have a great day.

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