IOC Balances Finances, Familiarity in TV Rights Deal with NBC

(ATR) President Jacques Rogge tells Around the Rings the IOC considered finances and familiarity in awarding broadcast rights through the 2020 Olympics to longtime partner NBC/Comcast for a record $4.382 billion.

(ATR) President Jacques Rogge tells Around the Rings the IOC considered finances and familiarity in awarding broadcast rights through the 2020 Olympics to longtime partner NBC/Comcast for a record $4.382 billion.

The breakdown for the four-Games package is $775 million for 2014, $1.226 billion for 2016, $963 million for 2018 and $1.418 billion for 2020. The previous record was the $1.18 billion that NBC paid for the upcoming London Games.

Fox reportedly offered $3.4 billion for four Olympics and $1.5 billion for two. The New York Times reported that ESPN/ABC bid $1.4 billion for the 2014 and 2016 Games.

"It's always a blend of different factors," IOC president Jacques Rogge told Around the Rings. "You think of finance, that's for sure, you think also of the past experience, you think of the enthusiasm of the team, the technical quality of the team."

And he noted that with Sochi coming up in less than three years, "There is no learning curve for NBC."

NBC did not rely solely on its experience in televising the Summer Olympics since 1988 and Winter Olympics since 2002, its relationships with the IOC or its expanded platforms since merging with Comcast.

Instead, its executives also put together the best presentation, a passionate pitch with veteran host Bob Costas the closer making an emotional appeal.

"We were blown away by the presentation," said Richard Carrion, the IOC finance chair who led the negotiations over a two-day period at IOC headquarters in Lausanne. "The passion that this team has for the Olympic Games was very impressive, and very evident to all of us. They have been doing this for quite a while, so we knew that they know what this is about. They know the values that are important to us.

"I'd be less than honest if I said the numbers didn't come into play, but it was all of it."

Ebersol Absence Not a Factor

There was one notable absence among the NBC/Comcast team of 17 representatives – with a total of 120 Olympics among them – but in the end it didn't make a difference. Dick Ebersol, who has overseen Olympic coverage at NBC for almost two decades, sat out this negotiation after announcing his resignation last month. He reportedly couldn't come to terms on his new contract with Comcast.

Although NBC lost $223 million on the Vancouver Olympics and is expected to lose a similar amount broadcasting the London Games, Comcast CEO Brian Roberts said his company would not have bid so high if it did not think it could make a profit.

"We've been very clear from the beginning that we want to be disciplined and responsible and try to find a way to have profitability, and we think we've achieved that," he said.

Roberts said four more Games will give NBC/Comcast an opportunity to enhance its combined assets and build value for its shareholders.

However, television veteran Neal Pilson tells ATR that the Vancouver and London losses were reflected in the offers.

"Marketplace Reality" Held Down Offers

Pilson, a consultant with the IOC on the previous round of negotiations in 2003 and the former CBS Sports chief, said $4.3 billion represents "a standstill," since the amount for the next two Olympics is the same as 2010 and 2012. For 2018 and 2020, it is only a 15 percent increase. NBC paid $3.5 billion for five Olympics from 2000 to 2008.

"It's basically the same price for another eight years," he said. "It reflects the marketplace reality. In fact, NBC might be losing a half a billion in the current rights, and my guess is they hope to recover that or make up a large part of that over the next two Olympics, which is why the bid was flat. It also tells me the other guys were probably well below that number."

Pilson sees the win as a validator for the Comcast/NBC merger, which was finalized in January. The company also sealed a 10-year deal reportedly worth $2 billion to broadcast the National Hockey League and acquired the remaining 50% stake of Universal Orlando Resort's theme parks for nearly $1 billion.

"The NHL and the Olympics were part of a strategy," Pilson said, "and I think one of the reasons the merger took place was to createa multiplatform company that could handle major sports properties, and I'm sure the Olympics was on their discussion list."

And, he added, "The Olympics were still a more important franchise to NBC than they were to ESPN or Fox."

In a statement, ESPN said, "We made a disciplined bid that would have brought tremendous value to the Olympics and would have been profitable for our company. To go any further would not have made good business sense for us. We wish to congratulate the IOC on a fair and transparent process, and we offer our best wishes to Comcast/NBC. We put our best foot forward with a compelling offer that included the enthusiastic participation of all of The Walt Disney Company's considerable assets."

More Live Hours

ESPN, which dubs itself "The Worldwide Leader in Sports," was coming off a highly successful FIFA World Cup in which it showed every match live. Fox also promised an all-live broadcast, but NBC has been criticized for its "plausibly live" strategy of showing popular events on tape delay in primetime.

Mark Lazarus, chairman of the NBC Sports Group, said that every event would be available live on one of the NBC/Comcast platforms, but that storytelling would still be wrapped around premium events on tape delay for family viewing in primetime.

He said there would be a "smart plan" to allow the "super fans to watch events live and notdetract from the primetime audience" when the Olympics are in host cities in vastly different time zones.

Lazarus said all coverage from Rio, which is one hour ahead of Eastern time in the U.S., would be live and there would be more live hours ever on both broadcast and cable. The Sochi plan is too early to determine.

Said Carrion, "They understand the importance of live, they also understand the importance of telling the story and we think they have reached that right balance in the past. I think they'll continue to get it right."

The deal includes technological platforms as they evolve and develop, and comprises television, tablet, mobile and broadband.

"The depth of the coverage, the availability to the American consumer, will never be greater than it is in each successive Olympics," Roberts said.

Future Financial Security

Carrion stressed the "degree of certainty" the deal puts in the IOC finances for the next decade. That carries over to the U.S. Olympic Committee, which under its current revenue-sharing agreement with the IOC gets 12.75 percent of the broadcast fees.

CEO Scott Blackmun tells ATR that the USOC is "excited about the expanded reach that we'll have because of the addition of Comcast to the equation. We're excited about the additional promotional power, the additional distribution. It seems like a really good fit."

The contract includes a clause about a USOC Olympic Network, which was quashed in 2009. Carrion said if the USOC, IOC and broadcast partner want to do such a venture "there is nothing to prevent it, but all three of us would have to be in agreement."

"We remain open-minded about the Olympic network and I think the IOC and NBC feel exactly the same way," Blackmun said, "so my guess is that we will continue a dialogue on that subject in the near term."

The deal also includes an unspecified amount for the Youth Olympic Games and a contract between the USOC and NBC/Comcast to air U.S. Olympic Trials.

Comcast owns 51 percent of NBC/Universal while General Electric, its former parent company, retains 49 percent. In 2003, GE kicked in a $200 million TOP sponsorship to sweeten the deal for the 2010 and 2012 Olympics. Carrion said the IOC hopes to reach an extension of the sponsorship but said it was not a component of the broadcast deal.

The package guarantees that NBC will broadcast 17 Olympic Games, more than any other network. ABC has not aired the Games since 1988 in Calgary and Fox has never been the broadcaster in the U.S.

"There was only a gold medal," Carrion said, "and these guys won the gold medal and we're very happy to continue the relationship."

Written by Karen Rosen with reporting in Lausanne by Ed Hula.