SBJ/October 22 - 28, 2007/This Weeks News

NBC shops digital rights for Olympics

NBC Universal has started pitching cable and satellite operators as well as ad buyers on an Olympic package of digital rights around the Beijing Games that includes broadband, video-on-demand and mobile programming.

Though negotiations are described as being in the early stages, the move is significant because NBC is trying to get the operators to pay a license fee for the digital package. There is no word on how much NBC is seeking for the package.

“We want to be able to provide operators the ability to offer their subscribers enhanced coverage of the Olympics,” said Gary Zenkel, president of NBC Olympics. “Our discussions with cable operators are active, ongoing and positive.”

The broadband piece is slated to be the biggest part of the digital package. NBC plans to roll it out in the spring of 2008, with athlete profiles, highlights and possibly coverage from the Olympic trials.

NBC plans to make 2,200 hours of live streaming broadband video available via NBCOlympics.com. The broadband site will offer additional coverage from 25 of 32 Olympic Sports. Parts of the site would be password-protected, allowing access only to the subscribers of operators that cut the deals, according to operator executives who have heard NBC’s pitch.

NBC plans to make the content ad-supported and free to consumers. The network has approached several ad buyers about advertising on the digital package. The network is packaging video-on-demand content with the broadband content, so cable and satellite operators have to take both and pay a hefty amount for them.

The effort is risky, since operators have been reticent about paying license fees to broadband sites. So far, ESPN360 is the only sports broadband site that has followed this model, and it has not yet cut deals with any of the three biggest cable operators. It is currently available in about 15 million homes through deals with Charter, Mediacom, Verizon, AT&T and a handful of small cable operators. It’s not known how much ESPN charges operators for its 360 service.

Making NBC’s effort a harder sell is that cable and satellite operators said they were not interested in paying for niche content that attracts small — but loyal — audiences. While NBCOlympics.com won’t stream NBC’s prime-time coverage, it still plans to feature most of the popular sports, like basketball. Cable and satellite operators declined to speak on the record because negotiations are ongoing.

The digital package also includes a mobile component that is being negotiated. It’s possible that NBC will make its mobile Olympic content available exclusively to one provider, Zenkel said.

The VOD part of the package would look similar to other offerings, and is expected to include highlights, athlete vignettes and replays of that day’s Olympic action. NBC plans to roll out its VOD product months before the games, using it as a promotional tool as it did prior to the 2006 Torino Games.

NBC found VOD take rates from Torino were high, and Zenkel said operators asked for more this year.

“We have sought for years to find ways to put more control in the hands of the viewer,” Zenkel said. “This would allow people to rewatch or watch if they missed programming from the Olympics.”

NBC believes offering additional broadband or VOD will boost — not hurt — ratings for the broadcast network. When the network expanded its offerings from NBC to seven cable channels for Athens 2004, Zenkel said metrics showed more people moved from cable to the network to watch prime-time programming.

“The Olympics will forever be an experience that’s shared,” Zenkel said. “People will continue to gather in front of their television to watch the games in prime time.”

NBC is looking to monetize its broadband and VOD rights, since they were a key part of its $3.5 billion deal with the IOC that it signed in 1995 to acquire rights to all Olympic Games from 2000 to 2008, and its approach to covering them has evolved each year.

In 1992, the network offered a $125 pay package called the Triplecast that offered uninterrupted live coverage on three channels. By 2004, NBC had expanded its offerings to seven platforms: CNBC, NBC, MSNBC, USA, Bravo, Telemundo and NBC HDTV. But when NBC took a similar approach to the 2006 Games in Turin, viewership hit a 20-year low, pulling an average of 20 million prime-time viewers. One of the factors contributing to that was the Internet, which allowed viewers to learn results before NBC’s prime-time broadcasts. Its NBCOlympics.com site received a record number of page views during that time.

In an effort to build on that this year, the network rolled out its broadband plan, which is more comprehensive than even Zenkel anticipated.

“I’m thrilled,” Zenkel said. “I believe the user and Olympic fan will eat it up.”

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