UPDATE, 12:00 PM: NBC says it paid $4.38 billion for the four Olympics matches. But the network won because NBC’s track record with the games “speaks for itself” and the company “has a clear and innovative vision of where it wants to take the broadcast of the Games between now and 2020,” International Olympics Committee President Jacques Rogge says. Investors initially appear to be satisfied with the price that Comcast authorized NBC to pay. Even if the network loses money “we continue to see the Olympics as less of a financial decision and more of a strategic and branding initiative” for NBC, Wells Fargo Securities analyst Marci Ryvicker says. Comcast expects the Olympics to help stabilize NBC, which the cable company has vowed to revive. In addition. Comcast plans to use the games to beef up its cable networks Versus and The Golf Channel.
PREVIOUS, 10:00 AM: Deadline has now confirmed that NBC has retained the U.S. Olympic television rights in a 4-games deal through 2020. The AP was first to report the news out of Lausanne where the International Olympics Committee is meeting and puts the bidding number at “worth more than $4 billion” — which is $1 billion less than expected. The decision has not yet been officially announced by the International Olympic Committee, but NBC is acknowledging it won a 3-way bidding contest against ESPN and Fox. It will have exclusive rights to the 2014 Winter Games in Sochi, Russia, the 2016 Summer Olympics in Rio de Janeiro, as well as the 2018 Winter Games and 2020 Olympics, whose sites have not yet been chosen. NBC has broadcast every Summer Olympics since 1988 and every Winter Games since 2002.
Executives from NBC, ESPN and Fox submitted sealed envelopes into a see-through plexiglass box, then left the building to let IOC officials open them and consider the offers in private for the first U.S. rights auction for the Olympics since 2003. All three networks kept emphasizing in their presentations that the Olympics would be presented live, something which NBC has come under fire for because of all the tape-delaying of the games to air during primetime in recent years. Here’s hoping that NBC changes its ways without Dick Ebersol at the helm. That said, the NBC win is going to help Comcast’s long-range plans to make its sports network into a juggernaut able to challenge both ESPN and Fox Sports.
NBC’s presentation to the IOC included new Comcast owners Steve Burke and Brian Roberts. Missing, of course, was longtime NBC sports czar Dick Ebersol who resigned last month after butting heads with Comcast. But the 17-member NBC delegation included mainstay Olympics host Bob Costas. “My message was we’ve done it well and we’d like to do it again,” he said from Lausanne.
But ABC/ESPN and Fox pulled out all the stops as well. Reports said ESPN president George Bodenheimer cited the “unrivaled” assets of parent company Disney, its appeal to young viewers, and plans for live coverage of all events. “We think sport should be enjoyed live by sports fans, so we would televise every minute of the Olympics live,” Bodenheimer said, adding that ABC would also broadcast taped footage in primetime. ABC dominated the Olympics broadcasts until NBC won the rights. ABC’s last Olympics was the 1988 Winter Games in Calgary.
Fox from the start made clear that it intended to bid for the four-games package. “If you look at amortization, you have to make a major investment in technical hardware,” Fox sports chairman David Hill said after Monday’s presentation. “Anyone will tell you if you advertise that over four years rather than two years, you’re financially in a much better place.”
SUNDAY: Three things have come to define NBC since 1988: Jay Leno, Law & Order – and the Olympics. But next week the No. 4 network is in danger of losing the every-two-year sports fest as its new owner, Comcast, engages in a bidding war with Disney and News Corp that could reshape sports television. Top executives of the three companies will converge on Lausanne, Switzerland at the beginning of the week and try to persuade the International Olympic Committee to license them U.S. broadcast rights to the 2014 Winter Olympics in Sochi, Russia, and the 2016 Summer Olympics in Rio de Janeiro. There also is an option to bid on a four-game package through 2020. It’s estimated that a winning bid for the four games could go as high as $5 billion, a step up from the $2.2 billion that NBC agreed to pay in 2003 for the 2010 Vancouver Winter Olympics and next year’s London Summer Olympics.
Are the games worth that much? Possibly not if you just look at the revenue they generate, mostly from ad sales. NBC reportedly lost $223 million in Vancouver. Pundits said that demonstrated former NBC Universal CEO Jeff Zucker and former NBC Sports & Olympics Chairman Dick Ebersol overbid, although they could not have foreseen the deep recession that trashed the ad market in 2008. Still, Comcast — which acquired a controlling stake in NBC Universal in January — has said that it won’t tolerate another big Olympics loss. It recently pushed aside Ebersol, who had championed the idea of spending lavishly to turn the Olympics into television’s most watched event. The IOC chairman was so taken aback that he called Comcast to make sure NBC was still in the running.
But it may be more complicated this time around to measure how valuable the Olympics could be to the bidders. The advertising market still hasn’t fully recovered, and economists say we’re in for a bumpy ride over the next few years. At the same time, the television audience for the games is growing older: The median age of TV viewers for the Winter Olympics rose to 53 in 2010 from 48 in 1998, and for the Summer games was up to 48 in 2008 from 39 in 1992. That may reflect the fact that young audiences in the digital age aren’t interested in waiting until primetime to see a taped replay of an event that took place hours earlier (that’s certainly the consensus among our readers, judging from reaction to Ebersol’s departure last month). There’s an eight-hour time difference between Sochi and New York, but Rio’s just one hour ahead.
The only way the bidders can justify a huge offer would be to show lots of popular events on cable, the center of power in sports television. Cable and satellite companies pay Disney’s ESPN an industry leading monthly fee of $4.76 per subscriber — a figure that could reach nearly $6 in 2014 — according to research firm SNL Kagan. That’s troubled Comcast for years. It has said that it couldn’t fight ESPN’s price increases because subscribers consider it to be a must-have channel. So Comcast has a double incentive to do whatever’s necessary to land the Olympics: It needs to play defense and protect NBC. Comcast also can go on offense and use the games to turn its cable channel, Versus, into a sports power that might challenge ESPN.
Disney faces the same considerations, but in reverse: It would love to add the Olympics’ popular programming to ABC. And it will do almost anything to protect ESPN, the company’s most dependable cash cow. Indeed, CEO Bob Iger told analysts recently that before 2014 ESPN has “a number of rather large negotiations” coming to renew its contracts with pay TV providers — and he could demand a big price hike to help cover any Olympics costs. News Corp also sees sports as a key growth driver at Fox, the company’s collection of regional sports networks, and — more recently — at its cable channel FX. On Thursday, CBS chief Les Moonves said CBS would not bid on the Olympics; it would need a cable partner to make the money work, and potential teammate Turner has been lukewarm about entering the arena.
It all adds up to an open race Monday and Tuesday, when the three companies make their presentations and hand over sealed bids to the IOC (the Olympics’ top governing body could select a winner as early as Wednesday). For the first time in almost two decades, who crosses the finish line first is anybody’s guess.