Olympic Television Broadcast Rights

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 

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