SBJ/April 18-24, 2011/Olympics

GE-NBC team intact for Games bid

In a move that underscores the power of the Olympic rings to both NBC and its former parent company General Electric, the two companies will be back at the table together during the upcoming television rights negotiations.

Peter Foss, GE’s president of Olympic sponsorship and corporate sales, said GE will negotiate its Olympic sponsorship “the same way it did last time” in 2003.

The move could add more than $100 million in sponsorship fees to NBC’s bid to retain the Olympic TV rights, which are set to be sold this June. It also puts to rest the possibility that GE might look to negotiate independently of NBC, a move that would have allowed GE to exit or maintain its sponsorship regardless of what happens with the TV rights.

During the last Olympic rights bidding process in 2003, GE, then NBC’s parent company, agreed to spend $200 million to become a worldwide sponsor as a member of The Olympic Partner program (TOP) through 2012. The sponsorship deal was added onto the $2 billion that NBC agreed to pay for the rights to broadcast the 2010 and 2012 Olympics, bringing the total value of the deal to $2.2 billion. The proposal, which sweetened NBC’s rights offering, marked the first time a broadcaster’s parent company had ever offered to become a sponsor during a TV rights negotiation and differentiated NBC’s bid from its competitors.

In late 2009, GE sold 51 percent of NBC Universal to Comcast in a deal that valued the media company at $30 billion. The deal closed earlier this year.

The combination of the NBC sale and the fact that GE is already a worldwide Olympic sponsor created the possibility that the company might negotiate its renewal independently of the television rights, but Foss said that won’t be the case.

“We still own 49 percent of the company,” he said. “They’re our partners. We’re sticking with them.”

The IOC is expected to hold bidding this June for the U.S. TV rights to the 2014 and 2016 Olympics. In addition to NBC Sports, which has held the rights for almost two decades, ESPN and Fox have expressed interest in bidding. CBS and Turner also have met with the International Olympic Committee.

GE’s Olympic sponsorship already has benefited the company, which credited its sponsorship of the Beijing Games with generating roughly $700 million in China-related sales. It supplied energy distribution, lighting, water treatment and security equipment and systems to 400 projects around Beijing.

The 2014 and 2016 Games, to be held in Russia and Brazil, respectively, offer similar opportunities for GE’s infrastructure sales divisions. Both Olympics are expected to require billions of dollars in infrastructure development.

“We’re already participating there, but they’re high-growth markets,” Foss said.

IOC leaders hope to name a television partner for the 2014 and 2016 Olympics before the IOC meets in July.

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