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OLYMPIC MEGADEAL: NBC SCORES RIGHTS THROUGH 2008
Published December 13, 1995
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).