SBJ/July 11-17, 2011/Media

How ESPN captured NBC’s turf at Wimbledon

Editor's note: This story is revised from the print edition.

Cracks in Wimbledon’s 43-year relationship with NBC first started appearing in March, when top executives from the All England Lawn Tennis and Croquet Club traveled to New York.

Up to that point, NBC was the clear front-runner to renew its Wimbledon contract, which ended with this year’s tournament. Over four decades, the network had turned the event’s early morning matches and its introduction of “Breakfast at Wimbledon” into a cultural tradition.

But NBC executives say they were blindsided by the message the All England Club delivered in March. NBC was preparing to bid on Wimbledon’s entire TV package, retaining its broadcast package and poaching the cable portion from ESPN.

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All England Club Chief Executive Ian Ritchie laid out the club’s strategy to ESPN execs over dinner at the 21 Club.
NBC Sports’ top executives at the time, Dick Ebersol and Ken Schanzer, were shocked to find out during those meetings with All England Club Chief Executive Ian Ritchie and commercial director Mick Desmond that ESPN’s package ran for two more years. The only package that was expiring was NBC’s broadcast package.

“They felt that we hadn’t told them,” said IMG’s Barry Frank, who advised the All England Club. “We thought they knew.”

NBC immediately felt at a disadvantage and believed the different contract lengths only helped ESPN, which had rights on more platforms than NBC, including the ability to stream matches live. Facing years of criticism for tape-delay, NBC saw the combined broadcast and cable bid as a way to present a new “live” package. But now, without the ability to stream matches until 2014, after ESPN’s deal was done, it meant two more years with no streaming rights beyond their TV window and strict contract language that almost certainly would have led to more taped-delayed matches through 2013.

The news disheartened NBC executives, but they still hoped their 43-year bond with the All England Club would be too strong to break.

It was during those March meetings that ESPN executives first realized they had a good chance to bring the entire championship to cable. ESPN executives had long pitched Wimbledon officials about picking up all the rights, but given NBC’s relationship, ESPN still viewed such a move as having little chance.

Over dinner in a private room at New York’s exclusive 21 Club in March, Ritchie and Desmond laid out their strategy to ESPN executives George Bodenheimer, John Skipper and John Wildhack.

Wimbledon officials didn’t believe that ESPN and NBC worked well together during Wimbledon. They believed each network was too focused on protecting its own rights at the expense of the tournament. That led to situations where ESPN stopped showing some matches while they were still going on, and NBC could not stream matches.

The dinner conversation hammered home the fact that All England Club officials were strongly considering moving its media rights to one company, and ESPN believed it was the best media company for Wimbledon.

ESPN executives became even more optimistic three months later, when they saw the bidding schedule set up for London. Fox Sports would make the first bid presentation on Monday, June 27. NBC would make the second one on Tuesday afternoon, followed by ESPN later that day, all within a conference room on the Wimbledon grounds.

“We knew it meant something that we were last,” Skipper said. “I don’t think it was alphabetical. They wanted us to go last because I think they wanted to see where we were.”

A trio of top executives from Fox Sports — Randy Freer, Eric Shanks and Larry Jones — made the first presentation to a group that included Ritchie, Desmond, Frank and Hillary Mandel, senior vice president of programming and distribution for IMG Media.

Fox emphasized the reach and demos of its broadcast channel. It also said it would put Wimbledon matches on FX. They told the All England Club that they were willing to sign a 10-year deal for around $350 million.

The club was heartened. Fox’s bid of around $35 million per year would be a healthy increase over the $23 million annual average it was getting from NBC ($13 million per year) and ESPN ($10 million).

NBC’s Mark Lazarus and Ken Schanzer were up next. They promised to show all Wimbledon matches live starting in 2014, when it could get all the rights. They also emphasized their broadcast network, promising to make more broadcast hours available. They also planned to utilize Versus once ESPN’s cable deal ended after the 2013 tournament. NBC wanted to convince Wimbledon’s decision-makers that it could do everything ESPN was going to promise.

But NBC did not bid a price, hoping that the All England Club would propose a figure that NBC could accept or reject.

ESPN was last. Skipper and Wildhack did not want live matches on ABC, and knew they had to address why the club should reject NBC and Fox in favor of an all-cable deal. They proposed highlight shows for ABC, but they really emphasized ESPN’s reach compared with Versus. They also highlighted broadband and mobile applications. Monetarily, ESPN offered a similar deal as Fox, around $35 million per year for 10 years.

After the opening bids, ESPN was the front-runner. Despite its 43-year tenure, NBC was now more of a wild card.

The next day, Wednesday, the All England Club contacted all the bidders again. Wimbledon executives called the Fox executives, who left London for Los Angeles on Tuesday. They said Fox would have to make a higher bid if it wanted the rights. Fox said it would not go any higher. Fox was out.

NBC finally put a number to its bid, saying it would sign a deal that would average in the mid-$30 million range. ESPN increased its bid to the high $30 million range and would eventually offer $40 million a year.

ESPN remained the front-runner, and Bodenheimer watched the Friday matches from the Royal Box as a guest of Philip Brook, chairman of the All England Club.

But the club believed NBC would sweeten its bid. Late Saturday afternoon, it did, as Schanzer submitted NBC’s final bid. With Lazarus and Comcast’s Brian Roberts patched in via a conference call, NBC said it would sign a 12-year deal that would average in the high $30 million range.

Ritchie and his team went back to ESPN. The deal would be theirs if they increased their $40 million average annual bid from 10 years to 12 years. ESPN agreed. The All England Club holds an option on the final two years, which will be north of $50 million per year.

The atmosphere in the NBC compound was dour over the weekend. On Saturday night, NBC executives sensed their long relationship with Wimbledon was about to end. Schanzer, who announced his retirement in May, had stayed on through the summer to lead Wimbledon negotiations for NBC. Just six months earlier, it seemed inconceivable that NBC would not renew Wimbledon. But in that short period, so much in NBC Sports’ world has changed. That point was made evident again that Sunday when Lazarus, who had returned to the States earlier in the week to attend his grandmother’s funeral, received a call with the news that for the first time since 1968, NBC would not hold Wimbledon rights.

The mood was much different in ESPN’s production office within the Wimbledon Broadcast Center, which is where Skipper found out that ESPN won the rights. He was with Wildhack, John Papa, Jason Bernstein and Marie Donoghue. The executives started jumping up and down in celebration.

“It was a funny scene,” Skipper said. “We’re high fiving. It was special because it’s one thing to renew. It’s another thing to become the sole partner.”
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