For weeks, the Big 4 broadcast networks and their conglomerate bosses have held top-secret meetings involving an array of sports, programming and finance executives to crunch numbers, prepare projections and determine the value of synergistic assets and broadcast platforms. It’s all part of an attempt to arrive at competitive yet prudent bids for the Olympic Games of winter 2010 and summer 2012.
For each, the equation includes some significant unknowns. The locations of those Games have not been determined by the International Olympic Committee yet. The state of the economy that far in the future, not to mention the level of international tensions or terrorism or the presence of a SARS-style health threat that could chill international travel, also is impossible to predict.
There have been reports that the bids are likely to range around $2 billion, but neither network executives nor Olympic officials would comment except to say there is no minimum threshold as far as the IOC is concerned.
“It’s a very complex model,” said Dick Glover, who runs the Walt Disney Internet Group and spent several years in executive positions at ESPN, and who is heading up the ABC-ESPN negotiations. “It is very sophisticated.”
While representatives of Fox, NBC and CBS declined to comment, Mr. Glover agreed to speak in general terms about the process leading up to the simultaneous submission of sealed bids by all four networks this Friday afternoon at International Olympic Committee headquarters overlooking Lake Geneva in Lausanne, Switzerland.
The equation he described is part history, part current climate, part projection, part valuation of assorted assets that could be leveraged and part value from a consumer product perspective. “There are so many moving parts,” Mr. Glover said.
Is one of those moving parts an executive who at some point goes out in the hallway and rolls dice? “I’ve always preferred the dartboard,” Mr. Glover said.
This much is known: Each network has received a form telling it what fundamentals it must address. The networks have agreed to submit the outlines of their packages-what they can deliver over the air (the relative weakness of The WB led AOL Time Warner’s Turner Sports to drop out of the contest), via cable and electronic outlets including the Internet, wireless and other platforms-on a standard form.
The only constraint on what they pitch in Lausanne, or how, is the two-hour limit.
The U.S. television contingents are expected to include each network’s top sports executive-ESPN-ABC Sports President George Bodenheimer, CBS Sports President Sean McManus, Fox Sports Chairman David Hill and NBC Olympics and Sports Chairman Dick Ebersol. But their makeup is otherwise being closely held for fear that the advance knowledge of the presence of this or that high-level executive might tip the hand on unexpected aspects of their proposed packages.
When they arrive in Lausanne, they will be met at the airport and ferried to the hotel they have chosen from a list of inns “suggested” by the IOC, which will allow each network two hours to make its pitch (one pitch per morning and afternoon on Thursday and Friday). In the room at each of the sessions will be an IOC contingent led by President Jacques Rogge, a team of U.S. Olympic Committee representatives that includes IMG sports agent Barry Frank, and Neal Pilson, who negotiated broadcast rights for nine Olympic Games and landed three (Albertville, Lillehammer and Nagano) during his term as president of CBS Sports. He is now head of Pilson Communications and the IOC’s consultant on U.S. television.
Extraordinary care has been taken to keep the playing field level for all the bidders, so as to prevent a recurrence of the stunning stealth tactic with which NBC locked up five Games through 2008 with a pre-emptive $4 billion bid-the size of the IOC’s annual budget .
Mr. Pilson views himself as somewhat of a “guarantor” that the bidding procedure will be as transparent and even-handed as the IOC has pledged. Since Pilson Communications works with all the networks, if any of them felt snookered, he said, “It would be bad for my business.”
Sealed bids will be submitted simultaneously mid-Friday afternoon by the networks, who then will be guests at a cocktail reception hosted by the IOC. “Everything will be fully organized by the IOC,” said Giselle Davies, IOC director of communications. “They [the delegations from the States) will be looked after.”
After the cocktail reception Olympic officials, including a contingent from the U.S. Olympic Committee, will deliberate on the bids while the U.S. bidders wait. No one knows how long that will take. The IOC could decide quickly that one bid is clearly better, or ask for a quick follow-up round designed to sharpen very close bids. Or it could determine that none of the bids pass muster and schedule another round of bidding within weeks or months.
Some close observers feel it is conceivable that the bidding might be delayed enough that the city hosting the 2010 Winter Games will have been chosen. That announcement is expected to come the first week in July. But the IOC prefers to award the TV rights first because that represents the largest chunk of revenues to support the Games. It is also crucial information for competing cities and for the IOC as it chooses a host city.
People familiar with the preparations for Lausanne speculate that NBC might have some edge because of the IOC’s familiarity with Mr. Ebersol, who has carried all Summer Games since 1996 and who has already announced enough of his plans for the Athens Games in 2004 to show NBC Sports has the platforms, including Telemundo, to keep Olympics on TV 24 hours a day for two weeks. NBC Sports certainly needs the Olympics, since the only long-running major sport to which it still has rights is NASCAR, which it shares with Fox.
Likewise, the strength of the ESPN brand worldwide, not to mention its own Olympic legacy-ABC, under the late Roone Arledge, “invented Olympic coverage,” Mr. Glover said-might also have an edge.
But CBS and Viacom are a strong broadcast and cable contender that also could throw Olympic theme promotions at major theme parks into the mix, as could ABC/Disney.
Fox tried its own pre-emptive bid in 1995 for the 2000 Summer Olympics in News Corp. Chairman Rupert Murdoch’s old stomping grounds of Sydney, Australia. Lore has it that one of Mr. Murdoch’s top executives, Chase Carey, slipped his bid of $701 million to then IOC member Dick Pound on a piece of paper. At the time not even Mr. Murdoch knew the size of the bid, because he so loves to leak information.
(Three days later, Mr. Ebersol had locked up Sydney and Salt Lake City for $705 million. To this day, he denies that inside information was passed to him by anyone involved with the Olympics.)
One source familiar with Fox’s plans this time said Mr. Murdoch does know how much Fox plans to put on the table. Mr. Murdoch said in remarks at a UJA-Federation dinner in New York last week he won’t overpay for the 2010-2012 Games. “I have a conservative view of it,” he said.
Despite rumors that Disney Chairman Michael Eisner mandated that ABC land the Games-a rumor branded as untrue by Disney spokeswoman Zenia Mucha-Mr. Glover said, “We are going to be prudent and responsible.”
In the long run, image-enhancing exposure, not cash, might be the deal clincher for the IOC, whose image has been tarnished by several years of scandals and revelations of corruption. To a large degree that boils down to who can pack the most people into its broadcast television house in prime time.
Mr. Pilson, for one, said, “I don’t want anyone to be imprudent. I want them to be enthusiastic.”