NBC had a number of factors working in its favor Friday when the net clinched the rights to air the 2010 and 2012 Olympics — not the least of which was its whopping $2.2 billion bid.
The Peacock easily blew away competitors ABC and Fox thanks to an assist by parent General Electric, which pledged as much as $200 million toward the Intl. Olympic Committee’s The Olympic Partner (TOP) marketing programs.
GE joins longstanding TOP companies such as Coca-Cola and McDonalds. According to NBC Sports topper Dick Ebersol, GE was able to offer the IOC an array of goods and services, anything from lighting and power systems to appliances and medical equipment.
“We felt that GE was unique among all the other American companies that were coming to bid for these rights,” Ebersol said. “We’re such a large company with so many different roles and infrastructure support, which is a key component of any organizing committee’s existence.
“The main thing behind this plan was to put more value on the table for the IOC, and yet at the same time put something on the table that would… pay for itself,” he said.
NBC chairman-CEO Bob Wright said the GE sponsorship will begin with the 2006 Winter Games.
Wright, who also serves as vice chairman of GE, said the TOP bid was “a reflection of the breadth of products and services that we bring to the party.”
IOC’s quick pick
It didn’t take long for the IOC, led by president Jacques Rogge, to make its decision. Meeting at IOC headquarters in Lausanne, Switzerland, the org’s toppers announced their pick just seven hours after all three networks submitted bids Friday.
“General Electric and NBC have put together a very comprehensive proposal that not only guarantees the widest coverage of the Olympic Games throughout the American territory but also ensures the promotion of Olympic sports on an ongoing basis,” Rogge said.
Itemized, NBC will pay $820 million for rights to run the 2010 Winter Games (up from $614 million for the 2006 Games in Torino, Italy) and $1.181 billion for the 2012 Summer Games (up from $894 million for the 2008 Games in Beijing). That’s a 34% bump for the Winter Games and a 32% increase for the Summer Games.
The NBC/IOC deal also includes $12 million in rights to air the U.S. Olympic trials, as well as an estimated $10 million to develop a digital TV library/archiving system. NBC also highlighted a multimillion-dollar Olympics marketing package in its pitch.
When all is said and done, NBC will have telecast 13 Olympics, starting with the Tokyo Games in 1964.
The 2012 Olympics represent the first Games broadcast rights whose cost surpasses the $1 billion mark. What’s more astonishing, the IOC has not yet decided where either the 2010 or 2012 Olympics will be held.
Ebersol pointed out that the Peacock didn’t know where the 2004, 2006 and 2008 Olympics would be held when it acquired broadcasting rights to those Games.
The IOC will pick the 2010 host city on July 2, while the 2012 site won’t be chosen until 2005. The location makes a major difference in whether viewers will embrace an Olympics contest.
NBC, of course, will be rooting for hosts as close to North America as possible. The 2000 Sydney Games, for example, performed poorly due to the number of tape-delayed presentations.
But NBC still squeezed a profit out of the Sydney Games and believes it can do the same going forward.
“The Atlanta games were profitable,” Ebersol said. “The Sydney games were profitable. The Salt Lake games were profitable. And every indication we have today, a little bit more than a year out from Athens, with our sales being at the level that they’re at, they’re going to be profitable, as well.
“American advertisers embrace the Olympics like nothing else because it is the one big family event left in American television,” he said.
Pundits, however, questioned pledging so much money for Games that are still almost a decade away –particularly given the unstable world we now live in and rapidly changing technologies. (CBS cited that reason, as well as an already rights-heavy sports lineup, when it dropped out of the running last week.)
It’s also unclear whether the $2 billion package will still look pricey or in hindsight look like a steal when 2010 and 2012 roll around.
In particular, the 2008 Games, held in Beijing, will likely garner smaller Sydney-style ratings, given the far-away time zone. And those ratings will be the benchmark NBC uses to sell the 2012 Summer Games.
But the Peacock no longer carries any other big-bucks sports contracts, having lost the rights to the NFL and the NBA over the last five years. The network needed the Olympics to remain a major sports player — and without any major sports deals, it had the money to make sure it kept the Games.
“We’re out of all of those sports because none of those sports were what we thought to be successful business opportunities going forward,” Ebersol said. “The business of big-time American sports has gotten out of hand. That is not true of the Olympics.”
And just in case TV viewership has dramatically altered by the time the 2010 and 2012 Games commence, NBC for the first time has locked up every potential broadcast platform –including video-on-demand, wireless, broadband and theatrical rights.
“The new technologies represent a new revenue stream for us,” said NBC Television Network prexy Randy Falco. “It also represents an awful lot of flexibility going forward in terms of guaranteeing that revenue stream. So if audience levels aren’t what they are or viewing patterns change in the year 2010 or ’12, we have the flexibility of going to an alternative revenue stream.”
Recently acquired NBC broadcast and cable siblings, including Bravo, Telemundo and Mun2, are also a part of the deal.
The IOC took pains this time around to make sure that all networks felt they were on equal footing when it came time to bid. Org upset NBC’s rivals in 1995, when it accepted a surprise bid by the Peacock to lock up five Olympic Games through 2008 for $3.5 billion.
Rogge called the bidding process this time around “open and transparent.”
“I hope it is a sign of a return to a healthy market for Olympic sports broadcast rights,” Rogge said.