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SBJ/June 13-19, 2011/OlympicsPrint All
It didn’t quite have the feel of a celebration. But it certainly didn’t feel like a funeral, either.
As ESPN and Fox Sports executives hung out together in the back lobby of the ornate Palace Hotel in Lausanne last Tuesday afternoon — still hours before the International Olympic Committee awarded U.S. media rights to the 2014-2020 Games — both networks figured NBC would be awarded the Games.
Fox executives told SportsBusiness Journal that they suspected their bid would not be big enough before they even traveled to Switzerland. ESPN executives said they viewed their bid as a long shot at best, but thought they might have a chance if NBC, as rumored, submitted a lowball bid.
At best, ESPN and Fox executives thought the IOC might put off making a decision for a few more weeks to try to drive up a bid. But with NBC executives nowhere in sight on Tuesday afternoon — apparently, they were all upstairs in NBC Universal CEO Steve Burke’s suite — ESPN and Fox executives assumed that at least one bid would be big enough.
ESPN and Fox had submitted bids that were well below the $2 billion for two Games that the IOC was expecting. ESPN bid on only two of the Games, offering $1.4 billion. Fox’s bid for two Games was in a similar range: $1.5 billion. Its bid for four Games was $3.4 billion.
The mood in the back lobby of the old-style European hotel, though, hardly felt like defeat. With a persistent rain falling outside, the two groups engaged in lots of drinking and lots of laughing. And they appeared to be having lots of fun. To veteran media observers, the scene was surreal, with two oftentimes bitter rivals hanging out together like old friends: George Bodenheimer and John Skipper alongside David Hill and Randy Freer.
The top executives at both networks really got to know each other at the end of April when they started forming a joint bid for the Pac-10’s media rights. Combined, ESPN and Fox beat out NBC for those rights.
At the Lausanne hotel on Tuesday, when someone joked that it was fitting to see the Pac-10 partners enjoying each other’s company at what should have been such a tense moment, one Fox executive cracked that they were talking about partnering again to win the Olympics.
“Yeah,” said Hill, Fox Sports’ chairman. “We’re taking Sunday, Wednesday, Friday, and they’re taking the rest.”
The mood didn’t change when, at close to 7 p.m., Mike Soltys, ESPN vice president of communications, read an Associated Press alert from his iPhone that NBC was awarded the Games (see related story). Soltys and Lou D’Ermilio, Fox senior vice president of media relations, had been keeping the group abreast of Twitter reports throughout the afternoon. Most had indicated that NBC would win, so the AP alert had come as no surprise.
More than 30 minutes after the group found out that NBC won the Games, Hill’s cell phone rang. It was Richard Carrión, chairman of the IOC Finance Committee, officially telling Hill that Fox would not be getting the Olympic rights. Hill offered his congratulations. The call took about one minute.
Another 20 minutes later, ESPN President Bodenheimer’s cell phone rang. Again, it was Carrión, delivering the same message.
The ESPN/Fox group became more energized once the size of NBC’s bid filtered around the lobby. The $4.38 billion that NBC committed for four Games was nearly $1 billion higher than Fox’s $3.4 billion bid.
If ESPN or Fox couldn’t win the rights, they were hoping that the winning bidder would pay much more. They think such a big payout on the Olympics will make NBC less aggressive when Major League Baseball and NFL rights are available in two years. When they heard NBC’s bid, Fox and ESPN executives smiled, satisfied that the winning bid was so much higher.
After the rights were awarded, IOC officials told ESPN executives that they were expecting a much stronger bid, especially considering that Disney President and CEO Bob Iger traveled to Lausanne for the presentation. ESPN had run the numbers and felt comfortable with a $1.4 billion bid for the 2014 and 2016 Olympics. “We believe we would take a slight loss at those numbers,” one executive said afterward.
To win the Games, ESPN would have needed Disney to commit several hundred million dollars to the bid. In its presentation, ESPN outlined that events would be on Disney channels ABC and ABC Family, in addition to ESPN and ESPN2. But Iger was reluctant to spend that extra money. During ESPN’s presentation on Tuesday morning, Iger raised the possibility of a Disney TOP sponsorship, but never committed to it, sources said.
Iger also advised against bidding for four Games, believing it was too big a risk to commit so much money on the 2018 and 2020 Games, especially when he didn’t know where they would be held.
ESPN finalized its bid two hours before it officially was submitted.
Fox’s bid, meanwhile, was finalized during a late May conference call, which was led by News Corp. President and Chief Operating Officer Chase Carey. Executives on the call were lukewarm about Fox’s ability to monetize the Olympics via its cable channels or broadband site. Fox’s bid was almost completely predicated on advertising revenue.
After running the numbers, Fox sources said they expected to make a slight profit from their bids. But they knew the bids would be a long shot.
As darkness fell on the Palace Hotel, and NBC executives ate dinner with their IOC partners, ESPN and Fox executives went their separate ways, comforted by the fact that their bids were so far below NBC’s that they never really had a chance.
Staff writer Tripp Mickle contributed to this report.
Editor's note: This story is revised from the print edition.
Three days after NBC Sports and Olympics Chairman Dick Ebersol resigned last month, Comcast CEO Brian Roberts and NBCUniversal CEO Steve Burke assembled the 20-person team that had been working on NBC’s Olympic presentation. The group gathered on the 15th floor of 30 Rock. It was the first time many of them had met Roberts, and they still were reeling from Ebersol’s departure.
With Ebersol, no one doubted that NBC would put forward a serious bid for the Olympics. Without him, no one knew what to expect.
Roberts, Burke and NBC Sports Chairman Mark Lazarus sat through the group’s presentation. Then they rolled up their sleeves and dove into the pitch. They spent five hours working with the team to tweak the presentation. Any doubt about Comcast’s willingness to keep the Games was erased.
IOC / JUILLIART
Comcast CEO Brian Roberts ensured that NBC’s 23-year relationship with the Olympic rings continued.
The meeting paved the way to the landmark $4.38 billion, eight-year agreement between NBC and the International Olympic Committee. The deal ensures the financial health of the Olympic movement for the rest of the decade, securing a massive U.S. rights fee for the IOC, which historically has relied on U.S. broadcasters for more than a third of its overall revenue.
The deal also gives NBC and its new leadership team from Comcast rights to one of the most powerful brands in sports, a property that continues to draw massive prime-time viewers and a vehicle that has helped the network expand its nonbroadcast businesses.
Last week’s announcement at the IOC’s Swiss headquarters concluded a three-year process.
ESPN began considering the possibility of bidding in 2008 when some of its top executives attended the Beijing Games. Around that time, NBC executives began talking about what to put in their presentation to the IOC.
A lot changed in the interim. The global economy collapsed, delaying the bidding process nearly two years. Comcast bought a controlling stake in NBC from GE. And Ebersol, the man who shaped how Americans consumed the Olympics for two decades, resigned abruptly just last month.
Still, both parties forged ahead. And Ebersol was never far from anyone’s mind in the final days and eventual celebration of the winning bid.
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Three weeks ago, the IOC thought it had the bidding process wrapped up. During a meeting at Lausanne’s Palace Hotel, IOC Finance Committee Chairman Richard Carrión told IOC President Jacques Rogge to expect three bidders.
The Olympics on TV
YEAR LOCATION NETWORK AVG. PRIME-TIME RATING U.S. RIGHTS FEE 1960 Rome CBS NA $390,000 1960 Squaw Valley, Calif. CBS NA $50,000 1964 Tokyo NBC NA $1.5 million 1964 Innsbruck, Austria ABC NA $600,000 1968 Mexico City ABC 14.3 $4.5 million 1968 Grenoble, France ABC 13.4 $2.5 million 1972 Munich, Germany ABC 25 $7.5 million 1972 Sapporo, Japan NBC 17.2 $6.4 million 1976 Montreal ABC 24.8 $25 million 1976 Innsbruck, Austria ABC 21.7 $10 million 1980 Moscow NBC NA $87 million* 1980 Lake Placid, N.Y. ABC 23.6 $15.5 million 1984 Los Angeles ABC 23 $225 million 1984 Sarajevo, Yugoslavia ABC 18.2 $91.5 million 1988 Seoul, South Korea NBC 17.9 $300 million 1988 Calgary ABC 19.3 $309 million 1992 Barcelona, Spain NBC 17.5 $401 million 1992 Albertville, France CBS 18.7 $243 million 1994 Lillehammer, Norway CBS 27.8 $300 million 1996 Atlanta NBC 21.6 $456 million 1998 Nagano, Japan CBS 16.3 $375 million 2000 Sydney, Australia NBC 13.8 $715 million 2002 Salt Lake City NBC 19.2 $555 million 2004 Athens, Greece NBC 15 $793 million 2006 Turin, Italy NBC 12.2 $613 million 2008 Beijing NBC 16.2 $894 million 2010 Vancouver NBC 13.8 $820 million 2012 London NBC NA $1.18 billion 2014 Sochi, Russia NBC NA $775 million 2016 Rio de Janeiro, Brazil NBC NA $1.226 billion 2018 To be determined NBC NA $950 million 2020 To be determined NBC NA $1.43 billion
NA: Not available; no television ratings system was in place before the 1968 Games.
* The United States boycotted the 1980 Summer Games. NBC's coverage was limited to highlights and two anthology-style specials after the Games were completed, though the network still paid the full rights fee.
Sources: SportsBusiness Journal research, U.S. Olympic Committee, The Nielsen Cos.
Carrión retired to his room at the hotel feeling good about the briefing. As he began to check his email, his phone rang. It was Steve Wilson from The Associated Press. “What do you think about Dick Ebersol’s resignation?” Wilson asked.
Carrión was dumbfounded. He worried that the loss of the Olympics’ biggest U.S. backer would upend the IOC’s plans.
He quickly called Comcast’s Roberts and Burke. They assured Carrión that Ebersol’s resignation had nothing to do with the Olympics. It was a contract dispute, they said.
Carrión took them at their word.
“There was some concern, but they were so insistent this would not change their commitment or their desire,” Carrión said.
The news injected new life into the bidding plans of other networks. Turner and CBS, which to that point had planned to sit out the bidding, reconsidered. Leaders at Fox and ESPN, who had been uncertain about their chances of winning, suddenly felt like they had a legitimate shot (see related story).
Rumors swirled throughout the Olympic movement that the IOC was irritated with Comcast for letting Ebersol go. Media pundits hypothesized that Ebersol left because Comcast wasn’t willing to pay big money for the Olympics.
In the weeks leading up to the bidding, Carrión watched NBC closely. When the network said its delegation would be 19 people, he worried that might be an indication of what working with Comcast would be like. Did they need to cram so many leaders in a room just so they all felt like they were involved?
But the day before Carrión flew to Lausanne for bidding he got a reassuring call. It was Ebersol, wishing him well. The two talked about their shared passion for the Olympics, and Ebersol reminded Carrión that while he wouldn’t be in Lausanne, his team would be.
“The guy’s got class,” Carrión said. “It was a very good thing to call on Friday. He said, ‘You’ll see I left a good team there, and they’ll do a good job.’”
■ ■ ■
U.S. network executives arrived in Lausanne on the first Saturday and Sunday of June. Each network was scheduled to give a two-hour presentation at the IOC’s headquarters. After the final presentation, on Tuesday afternoon, each network would submit a sealed bid, and the IOC would pick a winner.
A six-person delegation from Fox Sports gave the first presentation on Monday afternoon. Led by its chairman, David Hill, the presentation was vintage Fox. It was low on formality, high on bravado and full of NFL and NASCAR highlights. Hill emphasized the amount of broadcast coverage Fox would provide to the Olympics on Fox and MyNetworkTV. He also promised to localize coverage in unique ways through the company’s regional sports networks and Big Ten Network.
Timo Lumme, the IOC’s director of TV and marketing, said afterward that it was Fox at its best. But some Olympic leaders later said privately that it wasn’t as polished as they expected.
The next morning, ESPN showed up early for its presentation. The nine-person delegation, led by ESPN President George Bodenheimer, included Disney President and CEO Bob Iger and CFO Jay Rasulo. The group led a crisp presentation that emphasized its Olympic past with ABC; its present on ESPN, which broadcasts the Games in 12 countries; and the promise of a future with Disney.
Its underlying message, supported with Nielsen data, was that the age of Olympic viewers in the U.S. was skewing older. By partnering with ESPN, Olympic sports would be showcased on “SportsCenter,” the Games would be broadcast on mobile phones and tablets live via its WatchESPN app, and the Olympics would be aligned with Disney.
When the presentation ended, one senior Olympic official said that on a scale of one to 10, ESPN’s presentation was an 11. The question in everyone’s mind in the room was: Would they bid enough to win?
The IOC already had a hint that ESPN’s bid would not be up to snuff. The night before, all three networks had to send “parent guarantees” to the IOC. Fox and NBC sent documents covering four Olympics; ESPN sent documents covering only two. The IOC had encouraged the networks to prepare bids for the next four Games.
Shortly after ESPN finished, a small setup crew arrived for NBC’s presentation. The three- to four-person crew carried large television production boxes and began to prepare the second-floor conference room for the network’s delegation.
Comcast/NBC executives arrived shortly afterward. Nineteen people crammed into the room. Among them were familiar faces to the IOC, like producer Molly Solomon, marketer Brett Goodman, international relations executive Peter Diamond, GE Olympic sponsorship head Peter Foss and longtime Olympic host Bob Costas.
The group launched into a two-hour presentation that emphasized NBC’s Olympic history and showed its passion for the Games. NBC Olympics President Gary Zenkel set the tone early when he said he was sure that the IOC had heard what the other networks could do to expand the Olympics as a sports property. But NBC, Zenkel said, knew that the Olympics were not just a sports property.
More than a dozen of the 19 people in the delegation spoke. The presentation culminated with a video featuring NBC producers, marketers and researchers talking about their first Olympics, their favorite Olympic moment and what the Olympics meant to them.
Carrión said the video was so moving that he kept bringing his water bottle up to his face to be sure he didn’t tear up.
When NBC finished, Fox and ESPN joined them upstairs to submit their bids. IOC President Rogge thanked them all for coming and cracked a rare joke, saying that after seeing all three presentations, he was confident that the IOC would be partnered with the No. 1 network in the U.S. He then asked the networks to submit sealed envelopes.
Network executives left the IOC headquarters and returned to The Palace hotel in Lausanne to await word of who won. NBC executives disappeared into Burke’s suite upstairs, while the Fox and ESPN delegations waited in the hotel lobby and a hotel bar, respectively.
The IOC opened the envelopes at 3:30 p.m., and it wasn’t immediately clear who won, Carrión said. All three networks submitted bids for two Olympics, but both Fox and NBC also bid for four. The IOC put together a chart to make sense of it all.
In reviewing the bids, though, IOC executives saw that NBC included a kicker that bumped its offer up by several hundred million dollars if the IOC accepted its bid for four Games. The kicker pushed the deal to $4.38 billion, not including an expected TOP sponsorship from GE that would be worth another $200 million. Fox came in second, offering $3.4 billion for four Games.
ESPN came in third as the only network to offer a two-Games bid, valued at $1.4 billion.
■ ■ ■
About an hour after opening the bids, the IOC still hadn’t made a decision, but it was leaning heavily toward NBC. Carrión called Zenkel and asked for NBC’s top executives to return to the IOC’s headquarters. Drivers were waiting outside for them. Roberts came downstairs first and calmly walked across the hotel lobby and out the front door. As he exited, Zenkel and Lazarus walked across the lobby and out a side door. Burke had already caught a flight back to the United States.
NBC executives did not know why the IOC wanted to see them again. As they traveled the 15 minutes from the hotel to the IOC offices, Lazarus said he had two thoughts. Either the IOC had some questions about their bid, or they planned to tell NBC that it had been a great partner for 23 years and didn’t want to use the phone to tell them that they lost.
IOC / JUILLIART
IOC President Jacques Rogge (center) with Roberts (left) and IOC Finance Committee Chairman Richard Carrión
“That was key,” Carrión said. “That made the decision a lot easier in the sense that it was a long-range thing that would give stability to the income of the Olympic movement.”
They had a deal. Carrión extended his hand to Roberts. Instead of taking it, the typically reserved Roberts opened his arms and gave Carrión a hug.
“He was genuinely moved and happy,” Carrión said. “He didn’t want to let down those [NBC] guys. … That was a good moment.”
Back at the hotel, the NBC, ESPN and Fox teams did not know what was going on and were monitoring Twitter to get insight into the IOC’s decision. Roberts and Lazarus returned to the hotel and delivered the news to the rest of their team.
Roberts left the suite and walked to the front of the hotel. A reporter asked him to confirm a report that NBC had won. He declined to comment.
“For someone who just won the Olympics, you don’t look too happy, Brian,” the reporter said.
Roberts gave way to a small smile. “Sorry. I have no comment,” he said.
A series of vans pulled up to take the NBC team away moments later. Fox Sports’ Hill came outside as the NBC team began to leave for the IOC headquarters. He extended his congratulations as they piled into the vans.
“We won’t be back here for another eight years,” Hill said. “Yes! Yes! You boys did well. Enjoy dinner and order big. They owe you. Order Drambuie. Order caviar. You paid for it.”
■ ■ ■
In the end, the bidding process — one of the most unusual in TV rights — played out similarly to the previous negotiations in 2003.
Fox put just enough money on the table to suggest that if no one else wanted the Olympics, the network would take it. ESPN again tried to sell the IOC on its ability to expose the Games to young viewers and came up short — both in dollars and years. And NBC showed it knew the IOC better than anyone, plunking down nearly a billion dollars more than Fox to guarantee that the IOC would stick with the network until 2020.
That night, as NBC and IOC executives gathered at the La Table d’Edgard, Carrión got a call just before dinner was served. It was Ebersol. He was calling to congratulate the IOC on its deal and ask about the presentation.
Carrión returned to the table and told Roberts, the IOC’s new partner, that Ebersol had just called. Roberts wasn’t surprised. Ebersol had called him, too. Then the new partners sat down to celebrate.
Staff writer John Ourand contributed to this report.