SBJ/February 21-27, 2010/Olympics

IOC will consider proposals for U.S. network

The idea of a U.S. Olympic network is still alive.

In negotiating U.S. TV rights for the 2014 and ’16 Games later this year, the International Olympic Committee anticipates some bid proposals will include plans to launch a stand-alone 24-hour cable channel in the U.S. that will be devoted to the Olympics.

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Carrión
“We are looking at this idea around the world,” said Richard Carrión, an IOC executive committee member who is spearheading the U.S. negotiations. “What we do has to be in harmony with a lot of stakeholders — national Olympic committees, broadcasters, sponsors. … That said, we are open to exploring the concept.”

All of the U.S. networks expected to bid on the Games have considered launching a channel as part of their Olympic bids, media sources said.

“Over the past year, all the networks have had conversations with the USOC and IOC about the idea of launching a channel,” said one U.S. media executive.

The question is what such a channel would look like. A traditional cable television network faces several hurdles, including obtaining carriage on cable and satellite systems that are near capacity. No new channel launch over the past several years has approached the 70 million home distribution mark. The most successful launch — MLB Network — still is in 55 million homes, according to Nielsen.

NBC is the only network currently that can claim to have a stake in an Olympic network. It is a minority owner of Universal Sports, which has many of the marquee rights in Olympic sports like swimming, gymnastics and cycling.
Sources said ESPN has spoken to the IOC about the possibility of a broadband channel, patterned after ESPN3.

The IOC sees value in a U.S. Olympic television channel because it would make Olympic values relevant in the market year-round, Carrión said. The Olympics typically receive broadcast exposure in the U.S. only during the 17-day event every two years.

Though Carrión said that the IOC would be open to proposals that include plans for launching an Olympic network, that is not among the IOC’s top priorities in evaluating bids. Carrión said the foremost thing the IOC would be looking for is price. NBC paid $2.1 billion for the 2009-12 quadrennial, which includes the Vancouver and London Games, and Carrión expects an increase on that.

Beyond that, the way the Games are covered is important to the IOC. Carrión said the IOC wants to partner with a network that respects and plans to showcase the Olympic values, which include peace, sportsmanship and environmentalism.

“This is something that has to be handled very carefully,” Carrión said. “We are not a professional sports league. Yes, we do want to maximize the [television] revenues because those are revenues that are going to go to the development of sport, but we’re also at the service of a philosophy of life.”

This is not the first time the idea of an Olympic channel has been broached in the United States. The USOC started trying to put together a channel as early as 2006, eventually signing the biggest American cable operator, Comcast, as a partner in July 2009. That partnership dissolved in the summer of 2009 after the IOC, NBC and others bashed the partnership. The USOC subsequently shelved plans for a network, and some critics allege that the proposed network damaged Chicago’s bid for the 2016 Olympics, which were awarded to Rio that October.

Now, the IOC anticipates the three expected bidders — NBC/Comcast, ABC/ESPN and Fox — to look into the feasibility of launching such a network. Of course, the bidders could decline to include a network.

Such a deal would require USOC approval. It also theoretically would be limited to the terms of the broadcast agreement with the IOC, potentially making it viable for a maximum of eight years.

The IOC doesn’t expect any wild-card bidders at the table when it opens negotiations. Carrión last year mentioned he thought Google or another new media company might be interested in bidding, but he said he doesn’t see that happening anymore. “This requires really a more complete set of assets than just digital assets,” Carrión said.

Fox, ABC/ESPN and NBC/Comcast have all said they plan to bid. CBS and Turner could make a joint bid, but that became less likely when the two committed $10.8 billion over 14 years for the NCAA tournament.

Carrión said the completion of the NBC-Comcast merger was a positive for the negotiations because it adds another network with an established sports channel. Comcast owns Versus, Golf Channel and a network of regional sports networks.

“We want to deal with folks that are committed to sports and that are willing to invest and have a record of investing in sports,” he said.

The IOC doesn’t plan to hire a consultant to assist it with the negotiations, Carrión said. In previous deals, it relied on counsel of IMG and Neal Pilson. It most recently enlisted the help of CAA to give it an overview of the U.S. market.

But Carrión, who is leading the negotiations, said the IOC is comfortable it can make its own contacts and manage the process itself. It will rely on the IOC’s internal legal team, the IOC television and marketing division led by Timo Lumme and the IOC’s outside law firm, O’Melveny & Myers.

“At the end of the day, this is about the people that are writing the check, not about consultants,” Carrión said. “Nobody’s going to give you a guarantee except the person writing the check.”

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