Television Broadcast Rights to the Olympic Games and the Olympic Winter Games
Television Broadcast Rights to the Olympic Games and the Olympic Winter Games
Chicago Tribune
By Philip Harsh, Tribune Olympic Sports Writer. Tribune staff writers Steve Nidetz and George Lazarus contributed to this report
December 13, 1995
NBC struck historic $2.3 billion deal for the U.S. television broadcast rights for the 2004 and 2008 Summer Olympics and the 2006 Winter Olympics, even though the host cities for those Games have yet to be selected.
Television Broadcast Rights to the Olympic Games and the Olympic Winter Games
Television Broadcast Rights to the Olympic Games and the Olympic Winter Game
NBC STRIKES GOLD
By Christine Brennan – Washington Post
August 8, 1995
More than a month before negotiations were scheduled to begin for the television rights to the 2000 Summer Olympics in Sydney, NBC swooped in with a massive bid of $1.27 billion and snatched both the Sydney Games and the 2002 Winter Games in Salt Lake City.
NBC's unprecedented preemptive strike ended CBS's domination of the Winter Olympics and shut Fox owner Rupert Murdoch out of the 2000 Games in his own country. It also halted any possible Olympic dreams of Disney, which just last week bought ABC. And it ensured that NBC will televise three of the next four Olympics, with CBS left with the 1998 Winter Games in Nagano, Japan.
The deal, agreed upon Friday and announced yesterday, called for NBC to pay $705 million for the Sydney Games and $545 million for the Salt Lake City Olympics, plus another $10 million each for promotional considerations in Australia and Utah.
Those bids easily shattered the previous records paid for the Olympics. NBC's bid of $456 million for the 1996 Atlanta Olympics had been the most paid for a Summer Games; CBS's payment of $375 million for the 1998 Winter Games was the record for the Winter Olympics. Never before had one network bought the rights at the same time to televise two Olympics.
"This was just too good a deal for us not to say yes to," said Dick Pound, chairman of the International Olympic Committee's television committee.
"This unprecedented Olympic rights agreement is perhaps the most significant contract in U.S. sports history," said John Krimsky, interim executive director of the U.S. Olympic Committee. The USOC receives 10 percent of the total rights fees paid by U.S. television networks.
NBC clearly jumped the gun on the rest of the television world. The bidding for the Sydney Games was scheduled to begin Sept. 16, and TV rights for the 2002 Olympics would not have come up for bidding for another two years.
Last Tuesday, NBC officials began discussing what they would offer to broadcast the Sydney Olympics. The next day, NBC Sports President Dick Ebersol met with network president Bob Wright and, Ebersol said, "in the course of that meeting, Mr. Wright suggested we might be better off to go for two Olympics."
Ebersol boarded a corporate jet that night to Goteborg, Sweden, to meet with IOC President Juan Antonio Samaranch, who was attending the World Track and Field Championships. Thursday afternoon, Ebersol and his associates discussed their idea with Samaranch. Ebersol hopped back on the jet and flew to Montreal, where he found himself in Pound's law office Friday morning, drafting an agreement.
"By 4 p.m., I signed and Dick Pound signed and we had a deal," Ebersol said.
NBC, which now has won the rights to four consecutive Summer Olympics, wanted a quick acceptance from the IOC -- and in fact said that if word leaked of the offer, the agreement was off. The IOC was willing to play by NBC's rules because it has become familiar with the network and its telecasts of the Games. It also liked the offer.
NBC, meanwhile, knew it didn't want to get into a bidding war with other networks, Fox especially. In December 1993, Fox spent $1.58 billion to steal the NFL from CBS. Furthermore, the worst-kept secret in television sports was that Murdoch was intensely interested in bidding for the Sydney Olympics. To show Olympic officials his network could put on a multisport event, Murdoch paid $11 million for the rights to a future Pan American Games.
After the deal with NBC was finalized, Pound called the other networks to break the news.
"Their reaction was disappointment and a reluctant admiration for the initiative NBC took," he said.
As for NBC's preemptive move, Pound said it broke no rules.
"This didn't circumvent our process as such," he said. "It's kind of an ad hoc process. We don't have anything set in stone."
As Fox officials publicly wished NBC well, Pound said the IOC was not wondering what might have been.
"What Fox would or wouldn't have done is more or less moot now," he said. "That's the nature of a preemptive bid. We just know that this is a much higher figure than both organizing committees had planned for."
Salt Lake City, which less than two months ago became the first U.S. city to host a Winter Olympics since Lake Placid, N.Y., in 1980, was planning on receiving $400 million from U.S. TV rights. Now, it has $545 million, plus the promotional fee.
"We're not in the business of gambling," said Tom Welch, president of the Salt Lake City Organizing Committee. "This assures us that one-third of our budget is there."
NBC had its reasons for taking the action. It has found a strong and receptive advertising market for the 1996 Atlanta Games; television ratings for the Olympics have never been higher; it likes the idea of packaging two Olympic Games back-to-back, as CBS did with the 1992 and 1994 Winter Olympics; and it has two cable outlets -- CNBC and America's Talking -- that can meet the IOC's needs for expanding the coverage of so-called minor sports.
NBC also promised an Olympic show every week from the end of the 1996 Olympics to the 2002 Games, to be shown primarily on CNBC.
Reference -- NBC STRIKES GOLD - The Washington Post
NBC MAKES $2.3 BILLION BET ON OLYMPIC TV RIGHTS
Philip Hersh, Tribune Olympic Sports Writer. Tribune staff writers Steve Nidetz and George Lazarus contributed to this report
CHICAGO TRIBUNE
Talk about buying site unseen.
NBC announced Tuesday it had struck a historic $2.3 billion deal to obtain the U.S. broadcast and cable TV rights for the 2004 and 2008 Summer Olympics and the 2006 Winter Olympics, even though the host cities for those Games have yet to be selected.
It is the first time Olympic TV rights have been bought from the International Olympic Committee before the host cities were named.
It also is the richest deal in TV sports history, topping the $1.27 billion NBC agreed in August to pay for the same rights to the 2000 Summer Olympics in Sydney, Australia and the 2002 Winter Olympics in Salt Lake City.
To put all this in some perspective:
- NBC has bought 48 days of Olympic sports programming for $2.3 billion.
- Fox gets 93 days of pro football games, including a Super Bowl, for $1.58 billion in its 4-year deal with the National Football League.
- CBS gets 80 days of NCAA basketball tournament games for $1.725 billion in its 8-year deal with the NCAA.
- NBC gets about 150 days of pro basketball games, mostly playoffs, for $750 million in its 4-year deal with the National Basketball Association.
"I think this shows the tremendous interest in the Olympics that exists worldwide and particularly in the United States," said IOC Marketing Director Michael Payne.
While NBC gets a significant amount of live, prime-time Olympic programming from both Sydney and Salt Lake City, it would have none from 2004, 2006 and 2008 unless one of those Games goes to a country in the Far East or the Americas.
Montreal lawyer Dick Pound, TV negotiator for the olympic committee, said at a Tuesday news conference in New York that NBC would have "no input on site selection at all." Although that statement seems ingenuous, the IOC's 107 members guard voting for host cities as their most important right.
"NBC has made this commitment knowing none of the Games involved is likely to be in the United States," said Pound, also an IOC member.
"I think NBC should and will have some influence, but it won't be decisive," said John Krimsky, the U.S. Olympic Committee's deputy general.
Bids close in January for the 2004 site, to be selected in 1997. Six European cities, one South African city, two South American cities and San Juan, Puerto Rico are likely to be among the bidders. Beijing, a bitter loser to Sydney for 2000, apparently will bid again only if it has strong assurances of winning.
"Bet on Rome for 2004," Krimsky said. "It would be an ideal (photo) backdrop for a broadcaster."
The 2004-through-2008 deal includes a 3 percent annual inflation factor over what NBC paid for Salt Lake City ($545 million) and Sydney ($705 million). The 2004 Summer Games cost $793 million, the 2008 Summer Games $894 million and the 2006 Winter Games $613 million.
The response NBC has received from advertisers for the centennial 1996 Olympics in Atlanta undoubtedly was a major factor in driving the network to make a long-term commitment.
After paying $456 million for Atlanta rights, NBC already has sold slightly more than $700 million worth of air time.
The 2004-to-2008 deal followed the precedent set in the 2000 and 2002 negotiations of not involving other potential U.S. network bidders. While that risked not maximizing the property's value, it allowed the IOC to strike the deals without paying a percentage to an agent or consultant.
Spokespersons for CBS, ABC and Fox had no comment on Tuesday's announcement.
"We had an idea of what others were willing to bid, and we think we have maximized the value," Payne said.
The NBC bids for 2000 and 2002 were 150 percent greater than what U.S. television paid for 1996 and the 1998 Winter Games in Nagano, Japan (CBS).
Pound said the IOC was willing to accept a relatively small increase over the next 13 years partly because of a revenue-sharing arrangement with NBC.
The IOC gets 50 percent of all NBC advertising revenues once the rights fee has been covered. That arrangement is in place for the Atlanta Games but is not part of the 2000 and 2002 contract.
Starting in 2004, the IOC also keeps a larger share of worldwide TV rights. After the record U.S. deal for 2000 and 2002, the IOC reduced the host city's share of those rights from 60 to 49 percent, with the IOC's cut increasing from 40 to 51 percent.
Pound said the IOC also found the deal attractive because it provides long-term stability for the committee and NBC; allows cities bidding for those Games to know in advance the exact amount of their largest single-revenue item, the U.S. TV rights; and helps the U.S. Olympic Committee to enter into long-term sponsorship deals.
The USOC also makes $230 million from the new NBC agreement under a 1986 agreement with the IOC that has given the USOC 10 percent of all U.S. TV rights beginning with the 1992 Olympics.
Finally, the deal gives NBC an identification with the Olympics matching what ABC had from 1964 through 1988, when it was the U.S. rights-holder for 10 of the 14 Summer and Winter Games. NBC did the 1988 and 1992 Summer Games.
NBC Sports President Dick Ebersol has been an Olympic junkie since dropping out of Yale for a year to be an ABC research go-fer at the 1968 Summer Games in Mexico City.
"There is nothing like the Olympics," said Betsy Frank, the Manhattan-based executive vice president of Cordiant PLC's Zenith Media. "They (NBC) know the value of a branded commodity like Olympics programming."
Reference – NBC MAKES $2.3 BILLION BET ON OLYMPIC TV RIGHTS - Chicago Tribune
https://www.chicagotribune.com/news/ct-xpm-1995-12-13-9512130286-story.html
NBC struck a historic $2.3 billion deal to obtain the U.S. broadcast and cable TV rights for the 2004 and 2008 Summer Olympics and the 2006 Winter Olympics, even though the host cities for those Games have yet to be selected.
It is the first time Olympic TV rights have been bought from the International Olympic Committee before the host cities were named.
It also is the richest deal in TV sports history, topping the $1.27 billion NBC agreed in August to pay for the same rights to the 2000 Summer Olympics in Sydney, Australia and the 2002 Winter Olympics in Salt Lake City.
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