U.S. Olympic TV rights up for grabs
NBC, ESPN/ABC and Fox to to make bids to IOC
With Dick Ebersol out of the picture, NBC's multi-billion-dollar hold on the most valuable property in sports faces a serious challenge this week when U.S. networks bid on the next set of Olympic television rights.
NBC, the Olympic network in the United States for much of the past two decades, goes up against ESPN/ABC and Fox in a high-stakes auction that could potentially command fees of more than $2 billion US for two games and more than $4 billion for four.
Network executives will make closed-door presentations and sealed bids to the International Olympic Committee on Monday and Tuesday, the first U.S. broadcast rights contest in eight years.
The implications are huge for both sides: The networks and their giant parent companies are weighing massive longterm investments in an uncertain economic climate, and the IOC is hoping for a bumper deal to keep the money flowing from one of its biggest sources of revenue.
On offer are the exclusive rights to the 2014 Winter Games in Sochi, Russia, and 2016 Olympics in Rio de Janeiro, Brazil. In a new twist, the networks are also free to bid on a four-games package including the 2018 and '20 Games, whose sites have not yet been selected.
The bidding comes less than three weeks after the sudden resignation of Ebersol, the longtime NBC sports chief who dominated the Olympic television scene for the past 20 years and turned the Peacock network into the home of the five-ring festival.
NBC has broadcast every Summer Olympics since 1988 and every Winter Games since 2002. It holds the rights through next year's London Olympics.
A contract dispute
Ebersol's departure followed what was described as a contract dispute with Comcast, the cable giant which took control of NBC in January. ESPN is controlled by Disney, and Fox by Rupert Murdoch's News Corp.
Although NBC and Comcast say they remain fully committed to the games and the bidding, Ebersol's absence clearly changes the dynamics of the contest and would seem to give ESPN and Fox greater hope of securing their first Olympics.
"The big question mark is what the disappearance of Dick Ebersol means to an NBC Comcast bid," Dick Pound, the IOC's former longtime U.S. TV rights negotiator, told The Associated Press. "That's got to be troubling for them if they are as serious as they say they are about trying to renew."
"I suppose if you're a conspiracy theorist, you say it's an opportunity for network 'X' to get the games instead of NBC and all of a sudden they'll hire Dick Ebersol," Pound added.
All three contenders are sending their heavy hitters to Lausanne. NBC's team includes CEO Steve Burke and Comcast chief executive Brian Roberts, ESPN has chief executive George Bodenheimer and Disney CEO Robert Iger, and sports chairman David Hill heads the Fox contingent.
Fox leads off the presentations on Monday afternoon, followed by ESPN on Tuesday morning and NBC on Tuesday afternoon. Each network has two hours to make its pitch.
After opening the envelopes, the IOC could announce the winner Tuesday evening. The IOC could also ask for another round of bids if it's not satisfied with the first offers.
The IOC said it hopes to have a deal in place before its general assembly in Durban, South Africa, from July 4-9.
Ebersol was a close partner of the IOC, negotiating several multi-games deals that kept the committee's coffers bulging and ensured the stability of the games in the Olympics' most important financial market. NBC outbid ESPN and Fox in a $2.2 billion deal in 2003 for the 2010 and '12 Olympics.
"We all got a shock when we heard our friend Dick was leaving," IOC marketing commission chairman Gerhard Heiberg said. "But I don't think it will change things very much."
Comcast executives have made clear they're not interested in a repeat of the 2010 Vancouver Games, when NBC lost more than $200 million in a rough economy. NBC also stands to take a similar hit from the London Olympics.
The IOC repeatedly postponed the U.S. negotiations at the height of the economic downturn but believes the time is now right to do the deal.
Richard Carrion, the IOC's current lead negotiator of the U.S. rights, has made it clear he hopes to surpass the previous $2.2 billion deal.
"Obviously no one wants to pay money that they find that they lose, and that's fine, we feel the same way," Carrion told the AP in a recent interview. "We don't want anybody to lose money. On the other hand, we want to make sure we get full value here. We think it's a fantastic event, much more than a product. It's something the whole world looks forward to. It's a unique event.
"We want to make sure we maximize the value of the rights, which we think are considerable."
Some industry experts have questioned whether the IOC can top or even match the previous fee at a time of continued economic troubles and high production costs. In addition, the value of the Sochi Olympics in Russia could pull down the fee because of the unfavourable time zone for U.S. viewers.
If the networks opt for a four-games package, they will do so without knowing where the last two will be held. The IOC will select the 2018 host city on July 6 in Durban. 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.