SBD/May 11, 2011/Media

Disney's Bob Iger Says Olympics Could Help Boost ESPN Affiliate Fees

ESPN hopeful Olympics would persuade TV providers to pay higher fees
Walt Disney Co. President & CEO Bob Iger yesterday said that bidding for the rights to the '14 and '16 Olympics "could present much more than an ad revenue opportunity" for ESPN, "as it could also help drive the network's already industry-leading affiliate fees even higher," according to Mike Farrell of MULTICHANNEL NEWS. SNL Kagan indicated that ESPN has the "highest monthly carriage fees" of any cable network -- about $4.50 per month per subscriber. When asked if ESPN has "maxed out its leverage with affiliates," Iger said that "while major events like the Olympics would definitely be a boost to advertising revenue, there is ample room to grow affiliate fees." Iger: "There are definitely opportunities for ESPN to address its subscription revenue based on the general programming offering that it has which is both a collection of events including the Pac 12 or sports it's already bought and possibly sports that it may buy. I think it would be wrong to assume that the purchase of an Olympics should only be looked at as a possible generator of incremental advertising revenue. It would definitely generate incremental subscription revenue." Iger said that Disney "will consider obtaining the rights for the games, but added that they also won't pay too much for them" (MULTICHANNEL.com, 5/11). Iger said ESPN needs to be "a must-have product." The net "hopes to persuade cable and satellite operators to pay higher fees for Olympic programming." But Iger added that "if that falls short," then ESPN execs "must be 'mindful of their margins'" (DEADLINE.com, 5/10).

NOT CONCERNED ABOUT NFL LOCKOUT: Iger said Disney is "hoping that the league and its players association resolve" the NFL lockout and "we get a season." However, he said if there is no NFL season, the "impact on ESPN will not be significant for a few reasons." Iger: "There's a huge demand for male demographics, and advertisers are going to have to find places to express their advertising needs for male demographics. ESPN has almost 300 college football games, so you're going to see some extremely, extremely improved pricing for ESPN's college football games. CPMs will be up, rates will be up, and they'll probably expand their format so that they'll add more inventory to take advantage of that. We believe the significant increases that we'll see, not just in college football but across ESPN's other programming, will offset -- at least somewhat -- the impact of an NFL strike" ("Closing Bell with Maria Bartiromo," CNBC, 5/10).

DO THEM A SOLID: In Chicago, Philip Hersh wrote the IOC "owes NBC one" in the Olympics rights talks after it "told U.S. networks it wanted" $2B for the rights to the '10 Vancouver and '12 London Games. NBC, "which has become a loyal and valuable broadcast partner to the IOC, took that request at face value and wound up with egg on its face." NBC paid $2.2B for the rights, about $1B more "than had been offered by Fox, the next highest bidder." IOC member Dick Pound: "I think they (NBC) got suckered by the other networks." Hersh wrote, "To help pay the cleaning bill, the IOC should accept NBC's bid next month even it it falls slightly below those from other contenders, likely ESPN and Fox." IOC Finance Commission Chair Richard Carrion said, "We value greatly the relationship we have had with NBC, but that is not an issue here. The issue is wanting a fair process so everyone is bidding under the same conditions. We want to hear about specific plans for coverage and promotion. It's not just about who bids $1 more." Meanwhile, Carrion noted "some have criticized" NBC Sports Group Chair Dick Ebersol's coverage of the Games, but he said the IOC has "no complaints." Carrion: "Dick knows how to tell a story. NBC has the status of knowing how things have worked the past 20 years. Whether that's an advantage or disadvantage, I don't know" (CHICAGOTRIBUNE.com, 5/10).
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