Net to air Games through 2020
Now that NBCUniversal has acquired the next four available Olympics at a cost of $4.4 billion, how does it make a profit on its hefty investment?At a press conference in Lausanne, Switzerland, soon after the Intl. Olympic Committee awarded the U.S. television rights to the Peacock, Comcast chairman-CEO Brian Roberts said the Olympics “will be a profitable relationship for NBCUniversal.” When all was said and done, NBCU’s bid for the Games was far higher than offers from Fox and Disney/ESPN. The pact extends NBCU’s long tradition as the U.S. media home of the international sporting event, but it is a gamble for the Peacock’s new owners. NBCU absorbed a loss of approximately $230 million on the 2010 Vancouver Olympics, for which it paid $820 million. For the upcoming 2012 London Olympics, NBCU paid $1.2 billion. Roberts and his executive team, including newly promoted NBC Sports Group chairman Mark Lazarus and NBCU chief exec Steve Burke, will employ all of the conglom’s resources in an attempt to make the 2014-20 Games a moneymaking venture. “This deal encompasses every platform known today — TV, tablet, mobile, broadband — now known or to be conceived,” Lazarus said. “It’s all encompassing. We will bring the Games to more people in more platforms than any other (company) doing business now.” Analysts said the explosion of new-media platforms should help NBCU develop more revenue-generating opportunities around the Olympics. “The rapid evolution of media to include platforms that have not been refined or perfected as yet will provide them greater upside than ever before,” said David Carter, principal of Sports Media Group. NBCU has plenty of cable assets to help televise the Games, including USA Network, MSNBC, CNBC and Telemundo. One big difference, though, between previous Olympics and the upcoming London Games — as well as the four just-acquired Olympiads — is that NBCU will now have Comcast’s sports cabler Versus at its disposal. Versus’ most prominent sport rights holding at present is the National Hockey League. NBCU will clearly use the Olympics to raise the profile of the cabler in an effort to command higher carriage fees from cable, satellite and telco TV providers. NBCU has been shelling out plenty of coin lately on several fronts. Several months ago the Peacock ponied up $2 billion for a 10-year deal to retain the NHL, and it is expected to close a deal shortly in which it will pay just over $1 billion to buy out Blackstone Group’s 50% stake in the Universal Orlando theme park complex. As part of its post-NBCU merger streamlining, Comcast is also in the process of selling its NBA franchise, the Philadelphia 76ers. Forbes values the team at about $330 million. The 2014 Winter Olympics in Sochi, Russia, will be the least expensive for NBCU with a pricetag of $775 million. The 2016 Rio de Janeiro Summer Olympics will cost $1.2 billion. The 2018 Winter Games, for which NBC paid $963 million, will be held in either Munich; Annecy, France; or Pyeongchang, South Korea. An announcement of a host city is set for July. A decision for the locale of the 2020 Olympics will be announced in September 2013. Those Games fetched the highest price: $1.4 billion. Traditionally, the summer Olympiads are more of a ratings draw and, therefore, generate a higher asking price from the IOC. Fox made two bids: one for the 2014-16 Games for $1.5 billion and another for the four Olympics through 2020. The latter bid was $3.4 billion, approximately $1 billion less than the NBC offer. The ABC/ESPN bid, presented by Disney chairman-CEO Bob Iger, was for the 2014-16 Games only. The Mouse House offer was about $1.4 billion. The company issued a statement after learning that NBC had won the sweepstakes: “We made a disciplined bid that would have brought tremendous value to the Olympics and would have been profitable for our company. To go any further would not have made good business sense for us. We wish to congratulate the IOC on a fair and transparent process, and we offer our best wishes to Comcast/NBC.” At the conclusion of the 2020 Games, NBC will have been the exclusive network of the Olympics for 32 years. The network has taken some hits in recent Olympics about tape-delaying various events for primetime. With NBCU’s multiple delivery systems at its disposal, Lazarus was quick to assert that all events will be viewable live for the “super sports fan.” However, the strategy of delaying top events for primetime, to be viewed as a “shared experience,” will continue. Wall Street didn’t seem too concerned about NBC’s outlay of cash Tuesday. Comcast’s stock price rose 11¢ to close at $24.03 a share. “The Olympics have to be viewed as a loss leader,” said Sanford Bernstein analyst Craig Moffett. “Comcast paid a high price, and in the short run, the price paid may weigh on their earnings. But building a bigger sports presence was a key part of why they bought NBCU, and the Olympics are a linchpin of that strategy. If they can pull it off, they can make this number work.” (Tom Lowry contributed to this report.)
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