SBD/13/Sports Media

OLYMPIC MEGADEAL: NBC SCORES RIGHTS THROUGH 2008

     The IOC and NBC announced a partnership yesterday in which
the network was granted exclusive U.S. broadcast and cable rights
to the 2004, 2006 and 2008 Olympic Games (NBC Sports).  For the
second time in less than five months, NBC "launched a preemptive
strike on Olympic coverage" in purchasing the rights for the
Summer Games in 2004 and 2008 and the Winter Games in 2006.  The
$2.3B deal comes "long before the sites of those Games have been
selected or official bidding among the networks was begun"
(Leonard Shapiro, WASHINGTON POST, 12/13).  The deal is the
richest in TV history and follows NBC's $1.25B purchase of the
rights to the 2000 Summer Games in Sydney and the 2002 Winter
Games in Salt Lake City.  Excluding the '98 Games in Nagano,
handled by CBS, NBC will have all the Olympics for the next 12
years (Richard Sandomir, N.Y. TIMES, 12/13).  CNN's Lou Dobbs
said NBC "capped off a stunningly aggressive spending spree"
before other networks "even had a prayer" ("Moneyline," CNN,
12/12).  NBC's Tom Brokaw called the deal "historical," noting
that NBC is the first network to broadcast five Olympics in a row
("Nightly News," 12/12).  The Olympics, "once the domain of ABC,
now reside almost totally at NBC" (Cherner & Lloyd, USA TODAY,
12/13).
     WHY NOW?  NBC President/CEO Bob Wright:  "Having the
Olympics through 2008 forms the cornerstone of our vision for NBC
going into the next millennium" (Randy Harvey, L.A. TIMES,
12/13).  IOC VP/Chief Negotiator Dick Pound said the deal
"demonstrates the value of the Olympic brand."  Pound noted the
"potential loss of revenues from not auctioning the Games was
more than offset by the certainty of revenues."  NBC will pay
$793M for 2004, $613M for 2006, and $894M for 2008.  The figures
represent a 3% annual inflation increase on the $705M that NBC
agreed to pay for 2000 and the $545M for 2002.  The IOC and NBC
will split evenly any profits after the rights fees and
production costs have been covered, as they are doing in Atlanta.
NBC Sports President Dick Ebersol said they are "already making a
profit" on Atlanta (Jack Craig, BOSTON GLOBE, 12/13).  Pound also
said the early deal "allows us to plan ahead more effectively"
and "allows for certain financial certainties for cities bidding
for the games -- they know how much money they will get in
advance" (Michael Starr, N.Y. POST, 12/13).  Winning cities each
will get 49% of their respective rights payment, while the IOC
will retain 51%.  Pound:  "We were willing to trade revenue for
revenue sharing" (N.Y. TIMES, 12/13).
     COVERAGE OUTLOOK:  Ebersol said the bulk of coverage will be
on free TV, with "at least" two cable channels, likely America's
Talking and CNBC, involved.  Those channels are projected to in
close to 95 million homes by 2000.  Ebersol:  "There are enormous
possibilities. It could be interactive, it could be multimedia,
it could be DBS satellite ... we just don't know" (WASHINGTON
POST, 12/13).
     NETWORK SNOOZE?  Reportedly, no other network made any
inquiry about future Games.  Pound said they "may have been doing
some planning, but they weren't talking to us."   Fox Sports
President David Hill called the deal "an absolute masterstroke"
for Juan Antonio Samaranch and the IOC.   Neither CBS nor ABC
Sports had any comment (Steve Zipay, NEWSDAY, 12/13).  Former CBS
President Neal Pilson said part of the IOC's strategy was "to
head off Fox involvement."  Pilson:  "The IOC may be concerned
about Rupert Murdoch, that he would try to acquire worldwide
rights outside the U.S.  It's possible they feared a preemptive
bid from Murdoch that would be so big they couldn't turn it down"
(Phil Kloer, ATLANTA CONSTITUTION, 12/13).  Fox's Hill:  "By
pulling us out of the equation, it lets us strengthen our
relationships with the NFL, NHL and Major League Baseball"
(Richard Sandomir, N.Y. TIMES, 12/13).
     SAY, WHILE WE'RE ON THE SUBJECT:  NBC's Ebersol said the two
sides first "broached the possibility" of another package in a
call to IOC President Samaranch just "hours" after the August
announcement of NBC's first Olympic deal.  Negotiations began in
September and finalized over the next few months.  Ebersol heard
last Wednesday the deal had been endorsed by the IOC Exec Board
at a meeting in Japan (Melissa Turner, ATLANTA CONSTITUTION,
12/13).
     LOOSE ENDS: Ebersol rejected the notion that the "huge"
commitment will affect NBC's ability to retain current sports
contracts.  "Interestingly," NBA Commissioner David Stern was
present at yesterday's news conference (Carlton Thompson, HOUSTON
CHRONICLE, 12/13).  At one point, Stern said, "Save some money."
To which, Ebersol replied, "There is still some money in the
till" (Steve Zipay, NEWSDAY, 12/13)...In Atlanta, Prentis Rogers
writes the deal will make it easier for NBC to retain top
announcers and could give them "a substantial leg up" in talks
with top athletes interested in the broadcast booth, including
Boomer Esiason and Charles Barkley (ATLANTA CONSTITUTION, 12/13).
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