NEW YORK — NBC has signed a deal with DirecTV that extends the license term of CNBC and MSNBC through the year 2008 and commits DirecTV to carrying exclusive cable coverage of all of the five Olympic Games for the next decade.
NBC could pocket $23 million a year from DirecTV in license fees, or $207 million over the 10-year life of the contract.
David Zaslav, the president of cable distribution for NBC, has pushed hard over the last few months to induce cable operators to agree to the long-term deals. But so far NBC has announced only AT&T as firmly on board, despite the fact that NBC Cable stapled an Aug. 1 deadline on contract agreements. Cable operators that missed the deadline will theoretically have to pay more than 50% extra in license fees to get the Olympics and the CNBC and MSNBC extensions.
“We’ll soon be announcing over 100 additional deals,” covering various cable operators, satellite distributors and wireless cable distribs, Zaslav said.
But one major cable operator, who requested anonymity, said NBC is asking far too much money for the nine-year package, prompting him to seriously contemplate walking away from the Olympics programming on cable, which will run morning and afternoon on weekdays, when the NBC broadcast network is not scheduling the Olympics.
The DirecTV deal could provide leverage for NBC in getting cable systems to sign on, because DirecTV is expert at hyping any advantage it has over local cablers.
If a system has refused to sign for the Olympics in a given market, DirecTV will try to make all of the system’s subscribers know what they’re missing, so they’ll think about canceling cable and buying a satellite dish. NBC’s Zaslav said that if any operator declines the exclusive Olympics package on cable, NBC will transmit repeat non-Olympics programming on CNBC and MSNBC at the time of the Olympics feed.
But Zaslav defends NBC’s demands for aggressive increases in license fees, saying, “The Olympics includes some of the most powerful programming on the air, and CNBC and MSNBC have changed and improved over the years, offering compelling value to a cable subscriber.”
He added that NBC gives the cable operators three minutes an hour for local commercials instead of the industry average of two minutes.