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SBD/June 8, 2011/Media
NBC Keeps The Games: Comcast Confident $4.38B Will Be Profitable
Published June 8, 2011
Comcast Chair & CEO Brian Roberts assured shareholders yesterday that NBC's $4.38B deal to keep U.S. TV rights to the Olympics through '20 would be profitable. The Comcast/NBC bid for the '14-20 Games was nearly $1B higher than the next closest proposal, from Fox, but Roberts said, "It was strategically important for us to have a long-term relationship. To have four more Games, not just two more Olympics, was of great value to us and a big part of our strategy. … We’re very, very comfortable where this ended up." The Games will cost NBC $775M in '14, $1.226B in '16, $963M in '18 and $1.418B in '20 (Mickle & Ourand, SportsBusiness Journal). Roberts said that "spreading costs over four Olympics was critical to the bid." Roberts: "We’ve said all along that we’d take a disciplined approach, where we could take a path to profitability. It was responsible." He added that he "believed his Olympic investment could turn a profit" by combining NBC's "broadcast and cable networks with Comcast’s sports assets," which include Versus, Golf Channel and 11 RSNs. But in N.Y., Richard Sandomir notes Comcast is "paying considerably more than Fox to keep the Olympics in the NBC family than General Electric did for the Vancouver and the London Games." Former CBS Sports President Neal Pilson: "I think Brian felt some pressure to validate the merger, and I think this also establishes that, as everyone felt, the Olympics were more important to NBC than they were to any other network." Sandomir notes ESPN and Fox "bid as if they did not feel they had to win the auction" (N.Y. TIMES, 6/8).
MAKES BUSINESS SENSE: NBC Sports Group Chair Mark Lazarus indicated that there is a "strong business case for carrying the Games." Lazarus: "We feel that our new company, NBC Universal with our parent at Comcast, are in a unique position to know the value of the Games. Not only that, we have new platforms, we have more platforms and more ways to reach consumers” ("Nightly News," NBC, 6/7). Roberts stressed the $4.38B bid has a "path to profitability" and asked, "What sports rights haven't gone up?" In Philadelphia, Bob Fernandez writes it is "hard to overstate how important it was for Comcast to secure the Olympics," the one franchise that "brings consistently high ratings to NBC, and it was important for Comcast to show that it would preserve that programming" (PHILADELPHIA INQUIRER, 6/8). HOLLYWOOD REPORTER's Szalai & Guthrie write the deal is a "victory for the team" led by Roberts and NBCUniversal CEO Steve Burke, who "have a reputation for being shrewd negotiators who prefer to stay out of the limelight" (HOLLYWOOD REPORTER, 6/8). CNBC’s Simon Hobbs said retaining the Olympics “is a major move” by Roberts and other Comcast execs, who are “stamping how they would like NBC to shape up in the future: Versus, NBC Sports, all the sort of things that we’ve been discussing” ("Power Lunch," CNBC, 6/7).
VALIDATES MERGER: Pilson "sees the win as a validator for the Comcast/NBC merger," weeks after the conglomerate secured U.S. TV rights to the NHL as well. Pilson: "The NHL and the Olympics were part of a strategy, and I think one of the reasons the merger took place was to create a multiplatform company that could handle major sports properties, and I'm sure the Olympics was on their discussion list." He added, "The Olympics were still a more important franchise to NBC than they were to ESPN or Fox" (AROUNDTHERINGS.com, 6/7). Pilson added, "They've invested a tremendous amount of money in the Games. They do it well, and I think they felt that with the merger with Comcast this was a validation of that merger" ("Inside Track," Bloomberg TV, 6/8).
SURPRISE, SURPRISE? CABLEFAX DAILY writes Comcast/NBC's victory "doesn't shock the way the Miracle on Ice did some 30 years ago, but it does qualify as a suprise." Comcast has been "preaching fiscal prudence and discipline since gaining control of NBCU," which lost a reported $223M on the '10 Vancouver Games (CABLEFAX DAILY, 6/8). The AP's David Bauder reported in the days after Dick Ebersol resigned as NBC Sports Chair last month, Lazarus "met privately with many people in NBC Sports' Olympics apparatus, driving home the point [to] his corporate bosses that they were still serious about winning the Olympic rights" (AP, 6/8). In Milwaukee, Bob Wolfley noted after Ebersol's departure, there "was some skepticism about Comcast's commitment to the Games." But Wolfley added, "Clearly, Comcast remained as urgent about securing those rights as NBC was with Ebersol" (JSONLINE.com, 6/7). On Long Island, Neil Best writes NBC winning the rights "was a mild upset, given strong interest from ESPN and Fox" and last month's resignation of Ebersol, "who has long and deep ties to the IOC" (NEWSDAY, 6/8). ADWEEK's Anthony Crupi wrote under the subhead, "No Ebersol, no problem" (ADWEEK.com, 6/7).
GOING ABOVE & BEYOND: USA TODAY's Michael Hiestand writes, "NBC used its tried-and-true formula to land four more Olympics on Tuesday: Figure what to pay to more or less break even on the Games. ... And then pay more." The IOC "must be relieved it still has a sugar daddy." Still, it "obviously helps NBC, mired in last place among major networks, to keep such signature programming." It is a "big splash for Comcast," and the Olympics give Versus a "way to get into more TV households" (USA TODAY, 6/8). The FINANCIAL TIMES' Garrahan & Blitz write the bid was a "test of Comcast's commitment to sport" (FINANCIAL TIMES, 6/8). Meanwhile, MULTICHANNEL NEWS' Mike Reynolds noted it was "not immediately known whether Comcast would seek an Olympic surcharge as NBCUniversal had for Olympics past and present, under General Electric's ownership." Sources indicated that NBCU "has already obtained surcharges from a number of MSOs for some of the Games under the new deal." NBCU also is "said to be receiving contributions from broadcast network [affiliates] to support the Games' bid" (MULTICHANNEL.com, 6/7).
HAVE A QUESTION? Have a question about how the new Olympic rights deal was done? E-mail it to email@example.com, and SportsBusiness Journal staff writers John Ourand and Tripp Mickle will answer it in our Olympic Mailbag.