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The Internet Isn't Killing Broadcast TV, But Does CBS Make Any Money on the NCAA Games?

Categories: ',Internet TV

Written By

April 20th, 2008

Few people are more enamored with the Internet than I am, but I hate to see journalists spin "Internet as bigger than XYZ" when it's not true.  It's true enough  The Internet has trashed the newspaper business - heck even the New York Times is losing money, and it's one of few entities that I think has a shot at surviving the Internet age.

I also think the Washington Post stands a chance, but not because of stories like this one, where it spins a tale of how Internet advertising is more lucrative than television advertising, but does so under the guise of lies, damn likes, and statistics.

The story talks about CBS free offering of the Men's NCAA tournament this year via CBSSports.com.  It used a calculation based on data from CBS and media research firm TNS to concludes that on per person basis, CBS made $4.83/online viewer and only $4.12/television viewer.

This isn't in any way a slam on the CBS web offering, which I thought was great.  But the way the above calculations were done was based on 4.8 million online users who at some point watched online and 132 million television viewers who at some point watched on TV.   CBS wouldn't confirm, but said the advertising on a CPM (cost per 1000 viewers) basis was as high or higher for the web offering.

The subsequent discussion of why advertisers are willing to pay a premium for the online viewers was not that interesting to me considering the the lower premium broadcast rates reach 27.5 times as many people.

What business do you want to be in: a $4.83 per person business that reaches 4.8 million or a $4.12 per person business that reaches 132 million?  The correct answer is of course: both, which CBS is, but if you could only pick one, there's no question which one would be picked.    

By the Post's math, CBS cleared $567 million in advertising revenue.  With CBS paying $545 million a year for the rights to broadcast the games that leaves $22 million or so to cover the expenses of actually broadcasting the games and what's left over, if anything, would be profit.  Though viewed by many and an opportunity for CBS to plug its own shows, the games surely are not hugely profitable for CBS. 

A point missed completely by the Washington Post story.

 
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