NBC pays $4.4B for Olympic TV rights through 2020
Bob Costas made the pitch and NBC met the price.
The peacock network outbid Fox and ESPN by almost a billion dollars Tuesday to win U.S. television rights to four more Olympics and keep the games through 2020.
The result: a $4.38 billion US knockout for NBC.
Despite a recent change in ownership, the sudden departure of longtime Olympic chief Dick Ebersol and an uncertain economy, NBC and its parent company, Comcast, defied speculation that its grip on the Olympics was coming to an end.
"I can say the Olympics are really in their DNA," International Olympic Committee President Jacques Rogge said. "We've been together with them for so many games with great success."
Executives with direct knowledge of the proposals told The Associated Press that Fox bid $3.4 billion for four games and $1.5 billion for two, while ESPN offered $1.4 billion for two. They spoke on condition of anonymity because the IOC declined to say how much the other networks offered.
NBC has broadcast every Summer Olympics since 1988 and every Winter Games since 2002, and it was the network's experience and familiarity with the IOC — as well as its money — that won over the Olympic body again.
"My message was, 'we've done it well and we'd like to do it again,"' Costas, who has hosted NBC's coverage of eight Olympics, said shortly after all three networks dropped their envelopes with sealed bids into a clear plastic box.
NBC now has exclusive rights to the 2014 Winter Games in Sochi, Russia, and 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. The deal includes all broadcast platforms, including Internet, mobile and hand-held devices.
"You think definitely of the finances, but you think also of the past experiences, you think of the enthusiasm of the team, the technical qualities," Rogge said. "We thought that was the best combination."
IOC TV rights negotiator Richard Carrion said NBC would pay $775 million for Sochi, $1.226 billion for Rio, $963 million for the 2018 Winter Games and $1.418 billion for the 2020 Summer Olympics.
"This secures the financial future for the next decade of the Olympic movement," Rogge said.
"I'm bitterly disappointed," Fox sports chairman David Hill said.
ESPN had played up the potential impact of parent company Disney, including its appeal to a young audience.
"To go any further would not have made good business sense for us," ESPN said in a statement. "We put our best foot forward with a compelling offer that included the enthusiastic participation of all of The Walt Disney Co.'s considerable assets."
In the last rights auction in 2003, NBC outbid Fox and ESPN to secure the 2010 and 2012 Olympics in a deal worth $2.2 billion. That included $2 billion in straight rights fees, plus a $200 million global sponsorship deal with NBC's former parent company, General Electric.
The IOC had said it hoped to exceed that deal this time, and it did — slightly. The $4.382 billion figure for four games represents a small increase only in rights fees compared with the previous two-games package. Carrion said the IOC still hopes to reach a separate extension with GE as a top-tier sponsor.
"This was not a component of the deal," Carrion said. "We wanted to just focus on the broadcast rights."
More than just the money and long-term nature of the deal, though, was the powerful impact that Costas and the rest of the 17-person delegation made in the two-hour closed-door presentation to the IOC. They hit hard on the emotional aspect, including a tear-jerking video about the network's love and dedication for the games.
"We were blown away by the presentation," Carrion said. "The passion that this team has for the Olympic Games was very impressive and very evident to all of us. … I'd be less than honest if I said the numbers didn't come into play. It was all of it.
"Even Bob Costas made a very emotional appeal."
Three weeks ago, NBC's Olympic future looked shaky after Ebersol, who led its coverage for two decades, quit after what he said was a contract dispute with Comcast, which took control in January. Yet, NBC pushed forward under Comcast CEO Brian Roberts and new sports chief Mark Lazarus.
Doubts were also raised whether Comcast would put up big money after NBC lost more than $200 million on the 2010 Vancouver Games and projections of a similar hit on next year's London Olympics. But executives made clear Tuesday they expect to make money on the future games.
"We think this will be a profitable relationship," Roberts said. "I believe we will be profitable and build value for our shareholders."
NBC has been criticized for not showing Olympic events live and packaging its coverage on tape delay for prime-time audiences. Lazarus said the network would offer new options to follow the games live.
"We will make every event available — on one platform or another — live," he said. "It is for television. It is for tablet. It is for mobile. It is for broadband. It is for every now-known or to-be-known or still-to-be-concenived set of rights. It's all encompassing."
Lazarus said NBC plans to air more live coverage of the Rio Games because of the similar time zone to the East Coast. Sochi, in southern Russia, is in an unfavorable time zone for live U.S. coverage.
"Going forward, we have a smart plan that will allow the super fan to watch events live and not detract from the prime-time audience when we are in host cities that time zones make it difficult to be live in prime time," Lazarus said.
Traditionally, the IOC awards the rights for two games at a time, but the networks expressed interest in going for a four-games package. They did so without knowing where the last two will be held. The IOC will select the 2018 host city on July 6. The candidates are Annecy, France; Munich; and Pyeongchang, South Korea. The host of the 2020 Olympics will be chosen in 2013, and Rome is the only official contender so far.
"What was very important was the four-games bid," Carrion said. "That is what put us over the line."
The last time NBC bid, New York was in the running for the 2012 Olympics, which it eventually lost to London. Chicago then failed in a bid for the 2016 Games. NBC is now putting up the money without any U.S. city currently in contention to host a games.
With the deadline for 2020 candidacies set for September, the U.S. Olympic Committee has not announced any plans for a bid.
"If there is a bid coming in 2020 from the United States of America, we would be very happy," Rogge said.
Present at the TV bidding were USOC chairman Larry Probst and CEO Scott Blackmun.
The USOC currently gets a 12.75 percent share of U.S. TV rights deals and 20 percent of global sponsorship revenues, figures many international officials consider too high. Both sides are negotiating a new revenue-sharing deal to take effect in 2020.
The USOC and IOC will renew those talks Wednesday, and say they also hope to have an agreement in place by early July.