NBC nearing deals for Olympics through 2008
NEW YORK — NBC is nearing deals for unprecedented eight-year sponsorship pacts for five consecutive Olympics through 2008.
NBC Sports prexy Dick Ebersol told analysts late last week that the network’s first long-term Olympics ad deal will be completed in the next few weeks, with four or five advertisers expected to sign on by September. Negotiations are said to be furthest along with longtime worldwide Olympic sponsor Coca-Cola Co., and other global tie-in partners, including Visa, Kodak, IBM and McDonald’s are key prospects.
NBC didn’t identify potential sponsors, and Coke officials were mum on their plans.
“We’ve had a relationship with NBC, and we’d certainly be willing to listen to any proposal they brought to the table,” a Coca-Cola spokeswoman said, declining comment on the status of any talks.
It’s unclear what the final pricetag would be for a long-term deal, and ad packages will vary based on product category and exclusivity. But in 1996, advertisers paid NBC as much as $50 million apiece, so a deal covering five Olympics, with inflation built in, could fetch upward of $300 million.
NBC first broached the idea of extended ad deals in 1995, when it secured the five consecutive Olympics in two separate pacts worth a combined $3.6 billion.
At the time, several advertisers were skeptical of locking into such extended commitments. But the 1996 Atlanta Olympics, also on NBC, proved wildly successful, generating a record $685 million in ad revenue for the Peacock network, causing many to rethink the value of the preeminent sports package.
An NBC source said the pricing being negotiated for the new ad deals, on a cost-per-thousand-viewer basis, is “in excess of what we initially expected,” in part because those early expectations came before Atlanta.
For advertisers already locked into long-term overall Olympics sponsorships, the appeal of securing TV spots for the long run is obvious. Long-term marketing strategies can be developed around the guaranteed media exposure, and sponsors can protect against escalating ad rates.
“Generally speaking, the guys that get in early get better deals to begin with,” one top sports-media buyer said. “The potential reward justifies the risk” of any downturn in the ad market.
But the network also benefits from early ad pacts, and NBC’s pitch to analysts suggests a desire to justify the $3.6 billion it paid for rights to the five consecutive winter and summer Olympics, beginning with the 2000 games in Sydney.
In separate deals, NBC paid $1.3 billion for rights to the 2000 and 2002 games in August 1995, and four months later agreed to pay $2.3 billion more for the 2004, 2006 and 2008 Olympics. CBS will carry February’s Winter Olympics in Nagano, Japan, and expects to sell $550 million in ad time.