SBD/June 6, 2011/Media

Taking A Look At Some Of The Top Storylines Around The Bidding For The Olympic Rights

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How much will Ebersol's departure affect Comcast's bid for Olympics?
The bidding for the next package of U.S. Olympics rights begins today in Lausenne, Switzerland, with NBC/Comcast, ABC/ESPN and Fox/News Corp. vying to land the coveted agreement. SportsBusiness Journal’s Tripp Mickle and John Ourand recently analyzed what can be expected from the bidding process.

Q: How will Dick Ebersol's departure from NBC impact the network's effort to land the '14 and '16 Games?
Mickle: The network still has the benefit of having NBC Olympics President Gary Zenkel as part of its bid and the relationships it established through years of working with international sports federations and the IOC, but not having Ebersol will hurt. Ebersol had an approach to Olympic bidding that resonated with the IOC. He always bid big, so big that he beat his closest competitors (Fox) by more than $700M last time. With him out of the picture, is Comcast willing to go big? And if it doesn't, will the new faces of Brian Roberts and Steve Burke curry favor with an IOC that favors longstanding relationships and appreciated Ebersol's passion for and stewardship of the Games? It creates a barrier to winning that wasn't part of the picture a month ago.
Ourand: It should have a huge impact. Ebersol was the one executive at NBC who had deep relationships within the IOC and the entire Olympic community. With all bids being equal, NBC would have had a big edge if Ebersol were still around. With him gone, that edge goes away, as well.

Q: ESPN has come out and said they would broadcast the Games live if they win. How will that help them in the bidding process?
Mickle: I don't think it will help or hurt ESPN. In fact, Fox has said the same thing. And with Comcast ownership of Versus and cable interests, I anticipate they will shift to a live broadcast, as well. The era of tape delayed coverage of the Olympics is probably over. Ebersol was committed to tape delayed coverage because he needed to sell primetime advertising on NBC in order to pay the Olympics rights fee. The only way to guarantee the viewership for that advertising was to delay the programming. Now that every one of the bidders can benefit from sub fees and has the possibility of retrans fees for broadcast channels, there's a second revenue stream that takes some of the pressure off the advertising sales that NBC was so reliant on in the past.
Ourand: It shouldn't help at all because all the networks have given hints that they are on board with this idea. Fox has said that it would carry events live. It's believed that NBC will, too.

Q: Fox/News Corp. has been described as a "wild card" in the bidding. What do they bring to the table that differentiates them from NBC and ESPN?
Mickle: Bandwidth and David Hill. By bandwidth, I mean that Fox has the room on its channels -- broadcast and cable -- to add the Olympics. Unlike ESPN, they wouldn't have to fit a Winter Games around NBA games, and they show fewer MLB games that would conflict with a Summer Olympics. Plus, they have the most room for subscription fee increases on channels like FX and Fox Sports Net. David Hill is passionate about the Olympics and he's an engaging salesman who could wow the IOC during Fox's presentation. Bidding will likely be close, and such salesmanship could be the difference maker.
Ourand: With two broadcast channels (Fox and MyNetworkTV), Fox can provide more events on broadcast TV than any other bidder. This is important to the IOC, which still sees broadcast television as much more important than cable television or digital and mobile video.

Q: NBC paid $2.2B for the '10 and '12 Games. What will the price tag be for the winning network this time?
Mickle: I think we're looking at a $4.2B bid for the 2014, 2016, 2018 and 2020 rights. The IOC had to wait out the recent recession before opening today's bidding. My guess is they would prefer to lock up a partner long term, someone they can work with and build a relationship with the same way they did with NBC over the last two decades.
Ourand: There's been no evidence that suggests rights fees for any live sport will drop. I'd be surprised if the IOC doesn't match the $2.1B average. I expect the cost to be amortized though four games, rather than two.

Q
: Are the Olympics still a worthy investment?
Mickle: Yes. They have an intrinsic value that other sports don't enjoy. It's easy for the cynic to laugh off their messages of peace and good sportsmanship, but the Olympics really do provide those and they do it on a world stage. NBC has benefited from the Olympic seal of approval for years by having the five-ring logo alongside its Peacock. That, of course, isn't something you can measure, but it's there. The more tangible upside is that the Olympics draw more female viewers than any other live sporting event. As a result, they're a great way to build ties to advertisers interested in a female demographic and a great way to drive viewership on a network's other female-oriented programming.
Ourand: Absolutely. Olympic programming allows a broadcast network to dominate primetime ratings for two-and-a-half straight weeks. That alone is worth a healthy rights fee. But Olympic programming also helps cable networks to grow their distribution and increase the license fees distributors pay for them. For the right price, the Olympics are must-have programming.

MORE ON THE BIDDING: Mickle and Ourand took time to discuss their thoughts on this week’s bid process in Lausanne. Listen to them debate who will emerge with the rights (their first choices may surprise you), why and who to keep an eye on during this important bid process.
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Related Topics:

Media, IOC, NBC, ESPN, News Corp

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