Published on June 7th, 2011 | by Alan Abrahamson2
NBC’s $4.38 billion knockout punch
There’s an old maxim in boxing. If you want to beat the champ, you have to knock him out.
That’s pretty much the way it was always going to play out when it came to the contest for the U.S. broadcast rights for the coming editions of the Olympic Games, which the International Olympic Committee on Tuesday awarded to NBC — a $4.38 billion deal that stretches through the 2014, 2016, 2018 and 2020 Games.
Fox was in the game. The ESPN/ABC combination was, too.
Even so, NBC, which has televised every Summer Olympics in the United States since 1988, every Winter Games since 2002, was always the favorite, despite the resignation May 19 of Dick Ebersol. This process was always bigger than one man, no matter how towering a figure.
Eight years ago, the last time this process played out, NBC agreed to pay $2 billion for the rights to the 2010 and 2012 Games. A General Electric sponsorship bumped the full package up to $2.2 billion. That time around, Fox bid $1.3 billion. ESPN offered to share revenues with the IOC but never specified dollar figures.
This time, NBC swung the knockout punch — again.
ESPN opted to bid only for the 2014 and 2016 Games. According to Associated Press and Sports Business Daily, it offered $1.4 billion.
Fox put in a bid for 2014/16 and, as well, for 2018/20. Its two-Games bid was $1.5 billion, its four-Games bid $3.4 billion, AP and SBD reported.
NBC went big, for four Games and $4.38 billion.
What else did you expect?
As IOC president Jacques Rogge put it in a news conference Tuesday, referring to NBC, “I can say really that the Olympics are in their DNA.”
The IOC, like any institution, has a comfort zone. With NBC, the IOC has enjoyed growth, prosperity and — under Rogge’s direction in particular — financial security. While it might well have achieved those things in partnership with other networks, the fact is it is NBC that has been there through the ups, the downs, the Salt Lake scandal — everything.
This deal anchors the IOC’s finances through 2020. It figures to do the same for the U.S. Olympic Committee, which now gets 12.75 percent of the U.S. rights fee. The USOC and IOC are currently in active negotiations over the USOC’s broadcast and marketing rights shares, Rogge saying the new NBC deal figures to be a “positive factor” in those talks.
Here are the numbers: NBC will pay $775 million for the 2014 Winter Games in Sochi, Russia and $1.226 billion for the 2016 Rio Summer Olympics.
It will pay $963 million for the 2018 Winter Games and $1.418 billion for the 2020 Summer Olympics. Neither the 2018 nor 2020 site has been decided. The IOC will pick the 2018 city on July 6. Three cities are in that 2018 race: Munich; Annecy, France; and Pyeongchang, South Korea.
The IOC still hopes to reach a separate extension of the GE sponsorship, officials said Tuesday.
The IOC’s relationships with NBC, beyond Ebersol, run deep indeed.
To be clear: The IOC did not structure the process so that NBC could win. Hardly. The bids were what they were. The IOC didn’t tell anyone what to offer.
Nonetheless: If it was the case that the process was delayed so that there could be signs of life amid the global economic downturn, wasn’t it also patently obvious that the auction was pushed back so that the Comcast/NBC merger could be fully completed?
Wasn’t it equally obvious when the IOC went around dropping hints that a four-Games package would be welcomed? All those hints came after NBC lost $223 million in Vancouver. A four-Games package clearly would enable bidders for the next package to amortize costs over a longer term.
Brian Roberts, the Comcast chairman, said in that same news conference that the longer term was “strategically important” and of “great value to us.” He said Comcast expects to make money on the $4.38 billion deal, calling the company’s position “very comfortable.”
Roberts added, “We said all along we were going to take a disciplined approach were we would have a path to profitability. By having a longer term, we were able to come out and achieve that goal.”
It’s far too facile, meanwhile, to say that Tuesday’s deal is only about the money. To know even the first thing about the IOC and its culture is to know that.
So what else?
The IOC is actively trying to engage with young people. It last year launched a Youth Olympic Games in Singapore. It has a lively Facebook site.
NBC’s deal gives it the rights to television, tablets, mobile phones, broadband — to every platform now known or to be conceived, as Mark Lazarus, the new chairman of the NBC Sports Group, put it in that same news conference. “That’s part of the value for our new company, to bring the Games to more people across more platforms,” he said.
For years, the knock on NBC was that it held the good stuff back and showed it only in prime-time.
Fox and ESPN made clear they would show events live. But everyone knew NBC would be doing so, too — that was one of the main benefits of the Comcast merger. Before, NBC had to rely on prime-time advertising sales. Now there would be considerably less financial pressure because of the added revenue stream from cable sub-fees.
Starting in 2014, Lazarus said, NBC would make every event available live, on one platform or another. Of course, the best stuff presumably will be shown again, in prime-time. Prime-time still draws families together before the big screen; that remains one of the main lures for sponsors.
Beyond that, what the Olympics are about — what makes them different from every other property — is story-telling. That’s what Roone Arledge understood at ABC, when the Olympics first became a television event in the United States, when screens showed only black-and-white grainy pictures.
Story-telling is Ebersol’s passion.
That passion has been passed on to the NBC team. It’s the DNA thing Rogge talked of. It was at the core of the message delivered Tuesday to the IOC in a presentation that included Bob Costas and that, by all accounts, was simply first-rate.
“We were blown away by the presentation,” Richard Carrion, the IOC’s lead negotiator, said. “The passion [the NBC team] had for the Olympic Games was very impressive and very evident to all of us. They know — they have been doing this for quite a while. We knew that they know what this is about. They know the values that are important to all of us. It was a combination of all those things.
“… We are happy to renew it.”