Ebersol's departure heightens uncertainty over next week's Olympic TV rights bids
The Olympic flame burns atop the stadium in Beijing for the opening ceremony of the 2008 Summer Games.
Dick Ebersol’s abrupt resignation from NBC has upended all assumptions about the future of the Olympics on TV.
Still, the longtime NBC executive’s legacy is expected to hover over proceedings next week in Switzerland as NBC, ESPN, Fox and possibly a combined CBS/Turner bid compete for Olympic media rights.
Under Ebersol’s leadership, NBC was widely considered the front-runner to continue its 20-year run as the nation’s Olympic network. Given Ebersol’s abrupt May 19 resignation, however, Olympic and media experts now confess it’s impossible to guess which party the International Olympic Committee will choose as its future broadcast partner or how much the winning bidder will pay.
The IOC, which is selling the rights to the 2014 and 2016 Olympics next week in Switzerland, forged strong ties with Ebersol over the last two decades. His absence from the bidding process leaves the IOC without one of its biggest champions and the man who led the previous winning bid of $2 billion for the 2010 and 2012 Olympics.
“Ebersol’s withdrawal casts a different light on this,” said Barry Frank, IMG Media’s executive vice president. “Other bidders believe, as I do, that this is a signal that Comcast wasn’t going to pay what it would take to land this with any certainty. It’s different kind of money now, and it’s in play for everyone.”
Dick Ebersol's departure has left Olympic TV rights bidding more wide open.
The repercussions of Ebersol’s resignation became apparent last week, when sources told SportsBusiness Journal that CBS and Turner started kicking around the idea of making a joint bid. CBS and Turner’s decision to take another look at Olympic rights marked a reversal from weeks earlier, when executives believed the price tag was too high. Network executives believe they have a better shot at winning with Ebersol out of the picture. Executives at ESPN and Fox expressed similar confidence.
There are a number of reasons for the networks’ optimism. The IOC sees its broadcast partner as a steward for its brand and wants to partner with a network that plans to showcase the Olympic values, which include peace, sportsmanship and environmentalism. In the past, they could count on Ebersol to do that. In fact, the IOC had become so comfortable with his approach that Olympic observers say if Ebersol were at the table, the IOC would opt for an NBC bid over a comparable offer from another network.
“You have to be sure the partner you’re entrusting your brand with will care for it how you want it cared for,” said Michael Payne, an independent consultant and the former director of TV and marketing at the IOC. “Ebersol was a known entity. Now what is the differential when it comes to similar bids?”
NBC’s bid will be based on the idea that it will carry through on Ebersol’s vision better than other networks since most of Ebersol’s acolytes still are in important jobs at the network. Gary Zenkel, the network’s Olympics president, is expected to be part of the bid, along with Comcast’s Brian Roberts and NBC Sports’ new top executive, Mark Lazarus. Most of the producers and sales executives who have worked with the IOC for years remain.
But while its new parent company, Comcast, has said it plans to make a strong bid, it hasn’t signaled the same unwavering commitment to the Olympics as Ebersol. During an earnings call in February, NBC Universal CEO Steve Burke said the company didn’t plan to lose $220 million on future Olympics the way it did on the Vancouver Games, adding that the network would be “disciplined” in its bid.
“Comcast would be more comfortable winning by a dollar than by $200 million,” said Neal Pilson, a television rights consultant who worked on the IOC’s last TV rights sale in 2003. “That’s not as easy as it might appear.”
That could open the door for ESPN. The network is in strong financial position, courtesy of guaranteed cash flow from subscription fees, and it proved it has the capability of covering big events with its broadcast of the 2010 World Cup.
Fox’s bid is expected to highlight its broadcast presence, which is important to the IOC. In addition, it has a plethora of cable channels it could utilize. But Fox’s bid the last time was for just $1.3 billion, $700 million less than what NBC offered.
“They were so clearly out of the box, you had to wonder if they were trying,” Pound said.
The IOC will be hoping that all of the networks make significant bids this time. U.S. television money accounts for more than half of the $3.8 billion in TV revenue the IOC receives. For the 2005-08 quadrennium, it made up 34 percent of the organization’s total revenue, which includes global TV rights, sponsorship, licensing and ticketing.
The IOC has said it expects the rights to the 2014 and 2016 Olympics to fetch at least $2 billion. But after NBC’s $220 million loss in Vancouver, media experts question if networks will step forward to pay such a handsome fee. It doesn’t help that one of the two Olympics up for bid is in Sochi, a relatively unknown Russian city that doesn’t carry the same hospitality cachet as previous Winter Games did for advertisers.
“Is that $2 billion within range for anyone? NBC has had two good locations in Vancouver and London,” said Mike Trager, a longtime media consultant. “If they plan to announce $500 million in losses, there will be fiscal restraints put on everyone to make this thing come closer to a financial reality.”
Last time, Pilson said, the IOC opened the networks’ sealed bids, and there was a clear winner. He’s unsure that will happen again.
“All of the networks are going to be looking at the bidding and saying, ‘Look, those [NBC] losses are unsustainable,’” Pilson said. “That will determine what they’re willing to invest, which would lead you to the conclusion the numbers will be lower.”
While the IOC is selling only the 2014 and 2016 Olympics, its leaders have said they are open to bids to buy all four Olympics between 2014 and 2020. The ability to amortize the costs over a longer period might compel a network to pay something close to the $4 billion the IOC would want for four Olympics, said Harvey Schiller, the former head of Turner Sports and former president of the U.S. Olympic Committee.
“I think that will be the differentiator,” Schiller said. “Because of the financial demands of the IOC and the federations, they have to have the largest revenues they can have.”