The media industry was expecting March Madness. What it got was absolute chaos.

Just a week ago, two of the top executives in TV sports were talking up the NCAA’s annual men’s basketball tournament, one of the nation’s favorite sports events and an economic juggernaut. Broadcasts of the March Madness games by CBS Sports and Turner Sports in 2019 generated a whopping $910 million in advertising, according to Kantar, a tracker of ad spending. Advertising slots for the 2020 games had sold out, according to Sean McManus, the chairman of CBS Sports.

Both McManus and Jeff Zucker, chairman of WarnerMedia’s news and sports operations, knew viewers across the U.S. were worried about the spread of coronavirus, a contagion that nations around the world have yet to defeat. But the games, they said, would provide a sorely needed distraction. “I think this tournament comes at an important time in the country,” said Zucker, speaking on a recent conference call. “Notwithstanding the incredibly serious nature of what’s going on with the virus, I think that the tournament can hopefully be an outlet of emotional and psychological relief for much of the country. I think we are all looking forward to that.”

Within days, the NCAA canceled the tourney.

And that’s not the only sport that’s been taken off the field. In a 24-hour period, the National Basketball Assn. (the first to postpone games) and the National Hockey League suspended their seasons. Major League Baseball canceled the rest of spring training and pushed back its Opening Day. Major League Soccer has suspended its season for 30 days, with Europe’s Champions League and Europa League matches canceled indefinitely. The PGA Tour has pulled the plug on its Players Championship and all events through next month. The XFL ended its season. Augusta National postponed the venerable Masters golf tournament. And NASCAR said it would suspend its coming races. The Kentucky Derby, a rite of Spring, has been pushed back to August.  All the leagues and sports organizations were acting in response to the coronavirus crisis, hoping to slow down the spread of the illness by eliminating the huge crowds that love to attend their favorite sport.

Oklahoma City fans consider their options after it’s announced that the March 11 basketball game between the Thunder and the Utah Jazz has been shelved.

But in doing so, they’ve knocked out — at least for now — one of the most enduring pillars of the media business. In an era when couch potatoes can watch many of their favorite scripted dramas and comedies via on-demand streaming, live TV sports are one of the few things networks (and the advertisers who support them) still have to draw large crowds of simultaneous viewers to generate big ratings and sell soda, smartphones and Swiffers.

“We are going on the assumption that there will be no live sports for the rest of the first quarter and a majority of the second quarter,” said one media-buying executive familiar with discussions between advertisers in sports programs and the TV networks. “This is unprecedented and unchartered territory — a pretty wild and surreal situation. Things are changing hourly, so we are working with our clients and video partners to come to an agreement on where our ad dollars land.”

Billions of dollars are at stake. Madison Avenue put down more than $972.5 million on last season’s NBA playoffs alone, according to Kantar, and another $288 million on the NBA Finals. If the league does not finish its season, ESPN and ABC, which air those games, would presumably either not get the ad money committed to them or would have to find a way to offer a “make-good” — a different package of commercials that reach a similar number of viewers as the basketball championships.

Given the state of TV ratings these days, that could be difficult. ESPN is filling the hours it might have devoted to live games with more “SportsCenter,” documentaries and simulcasts of its radio programs. CBS says it will replace March Madness broadcasts with its regular programs, including repeats of “Young Sheldon” and the series finale of “Hawaii Five-0.” It’s hard to see those shows bringing in the numbers expected of the sportscasts.

Will they get the ad money? “We are not sure if it’s going to vanish or if it’s merely being deferred,” says David Carter, an associate professor of sports business at the University of Southern California Marshall School of Business.

“We’re optimistic the Olympics are going to happen.”
Brian Roberts, Comcast CEO

If sports are absent for a prolonged period, the networks will have a hard time justifying the staggering rights fees they pay to air NBA games, NHL matches and MLB contests. Consider that AT&T’s Turner Sports and Walt Disney’s ESPN agreed to pay around $24 billion to secure contracts with the NBA over the course of a nine-year deal. And Comcast’s NBC-Universal struck a 10-year deal with the NHL that’s said to cost around $2 billion. These sums are paid out in annual installments, but so long as the leagues stage an agreed-upon minimum number of games, the networks are likely liable for payments even if part of the season is in question, says Daniel Cohen, senior vice president of global media rights consulting at Octagon, the Interpublic Group sports marketing agency.

The frenzy for sports has sparked a number of big-ticket deals in recent months. A significant absence of games could erode the business behind those pacts. Sinclair Broadcasting in August agreed to buy a passel of regional sports networks previously owned by Walt Disney for $9.6 billion. Sinclair — with Amazon and other partners — also bought a controlling stake in YES, the regional sports network devoted to Yankees baseball, for $3.47 billion. ESPN, ViacomCBS and NBCUniversal last week struck a nine-year rights deal with PGA Tour valued at $680 million to $700 million. ViacomCBS last month re-signed the popular football analyst Tony Romo to a new $17 million a year deal. ESPN launched an entire streaming service, ESPN Plus, to capture mobile sports fans who want to watch games on the fly. Casino operator Penn National Gaming recently agreed to spend $163 million for a minority stake in Barstool Sports, the upstart sports site, in an effort to move more directly into the growing business of sports betting.

The sports shutdown arrives at a critical juncture. All the big media companies — Fox, ViacomCBS, NBCU and Disney — are gearing up for talks with the NFL over new rights contracts. The most recent agreements with CBS, NBC and Fox went into effect in 2013 and are nearing the end of their nine-year term. The three networks are believed to be paying a combined $3.1 billion per year for Sunday games. ESPN’s rights to broadcast “Monday Night Football” cost around $1.9 billion per year, and its contract comes due sooner.

And then of course there are the Olympics. NBCUniversal, which has U.S. rights to the sports extravaganza, said earlier this month that it sold more than 90% of its ad inventory for the Tokyo Games, a haul valued at more than $1.25 billion. The company’s parent, Comcast, agreed to pay $4.38 billion for the U.S. media rights to four Olympics from 2014 to 2020, and $7.75 billion for broadcast rights to the Olympic Games between 2021 and 2032. NBCU vaulted away from its last Summer Olympics, the 2016 Games in Rio, with approximately $250 million in profit. Discovery, meanwhile, in 2015 agreed to pay approximately $1.44 billion for the European rights to broadcast the four Olympic Games between 2018 and 2024.

Both companies have been sanguine about their prospects. “We try to anticipate for big events what might happen so that we’re protected there, and we also have insurance for any expenses we make. So there should be no losses should there not be an Olympics,” said Brian Roberts, Comcast’s CEO, earlier this month. “There wouldn’t be a profit this year. But again, we’re optimistic the Olympics are going to happen.” Discovery executives offered similar sentiments in a recent call with investors.

Fans watch from the center field berm during the eighth inning of a spring training baseball game between the New York Yankees and the Washington Nationals in West Palm Beach, Fla.

The sports economy doesn’t just fill the coffers of the nation’s biggest media conglomerates. It also floats the multimillion-dollar salaries of athletes; fuels big marketing deals with prominent advertisers; and, perhaps most important, puts cash into the pockets of working-class Americans who staff stadiums, auditoriums and racetracks. It may be hard to feel sorry for an athlete who misses out on a few hundred thousand dollars in salary, says Patrick Rishe, director of the sports business program at Washington University in St. Louis, but “I worry more about the guy in Atlanta making $25,000 who is now not able to see success in the arena because they can’t sell hot dogs.”

The media companies are traversing unmapped terrain. Both ESPN and Fox Sports called their situation “unprecedented,” and indicated they would work with the sports leagues to find a new path. ESPN’s Burke Magnus, the executive who oversees programming acquisitions and scheduling, said in a recent statement that the sports-media giant would likely tap a mix of “SportsCenter,” talk shows, documentaries, and, potentially, previously-scheduled original programming. Fox Sports, NBC Sports, CBS Sports and Turner Sports declined to make executives available for comment.

Even as the entire sports infrastructure cascades around them, some sports executives are trying to dig a way out. The decision by the NBA, NHL and MLB to suspend or delay seasons, not cancel them, is seen as encouraging. “When you’re spending $4 billion, $5 billion, $10 billion to acquire the rights to a certain property, you’re going to figure something out,” says Octagon’s Cohen. Suggestions abound: Could the networks and leagues play out the rest of the NBA and NHL seasons in summertime, or early fall? Could they stream some of the games that remain to be played?

The question, of course, is whether advertisers will see the same value. “I might not be as excited as I was when I was thinking I was buying something down the stretch in mid-April,” says Carter.

Meanwhile, the sports networks might have a chance to prove new value to die-hards. “There is an opportunity to cultivate a fan base,” says Charles Coplin, an independent producer who previously served as vice president of programming at NFL Network. League-owned networks can make coaches, players and even executives available to tell fans what’s happening on a regular basis. The mainstream outlets, he suggests, ought to first serve as “news and information” centers, but as weeks pass, they could curate their content libraries in smart fashion or even organize a “town hall” with players and officials in multiple locations. ESPN might consider a “30 for 30” marathon or could move up some of the documentaries or specials it had planned for later in the year. Some of the networks might borrow a concept from esports.

“There’s an opportunity to have a dialogue with all of the individuals who are affected by this,” says Coplin.

No one can afford to sit on the sidelines for long in an era when people have all sorts of other entertainment options available at the click of a button. The nation may love sports, but it can find other things to obsess over — quickly. “Sports fans are really going to be hungry,” says Cohen. “If they can’t get fed through live, they are going to find another way to eat. It’s incumbent upon the leagues, the players and the broadcasters to figure out how to make different kinds of food.”