A Broad Jump Into the Future of TV

Jun 16, 2003  •  Post A Comment

NBC’s landmark deal for the 2010 and 2012 Olympic Games should be an eye-opener for the industry as a whole, not because of the unprecedented $2.2 billion price tag but because of the network’s innovative plan to bring a wide range of nontraditional media into play.
NBC’s plans include offering 24-hour-a-day bilingual multiplatform coverage on TV by combining the resources of the NBC Network, MSNBC, CNBC and Telemundo. That feat alone makes this Olympics package unlike anything in the past. But that is only the beginning. For the first time the contract covers broadband, Internet properties, video-on-demand and pay-per-view, along with any new forms of digital media that develop between now and 2012.
We don’t know whether the deal will ultimately be profitable for NBC. It is, after all, an extraordinarily high price to pay, with many unknowns about everything from the economy to terrorism. It is also far more money than competitors were willing to bid. However, we do know that the message in this deal is that media players can no longer afford to think narrowly or focus exclusively on broadcast rights when it comes to coverage of the biggest events.
It is particularly interesting to see NBC’s parent company, General Electric, play such a key role. By becoming a major Olympic sponsor, GE was able to bolster NBC’s bid with additional financial resources. It appears to be smart business for GE, which will be able to use the Olympics for promotion, to open doors around the globe and as a way to ensure that it is involved in building the Games’ infrastructure-wherever the Games are held-which is always a great technological showcase.
We understand the reluctance of others to bid as high. There are so many unknowns. Fox Sports Chairman David Hill summed up his network’s surprisingly conservative approach: “Other areas of potential revenue, such as PPV, VOD, Internet streaming, etc., are all exciting future prospects, but unfortunately those revenue streams are way too theoretical at present to be figured into any solid fiscal model.”
As the ratings leader in recent years and one of the few consistently profitable networks, NBC was in a better position than most to roll the dice. The new business model for television extends well beyond traditional boundaries. To do business in a digital world one must be prepared to incorporate the full range of media options into the model to include everything with the potential to generate revenue.
It’s no accident that NBC landed the Olympics. The network has shown a willingness to take risks in recent years and has used innovative thinking to separate itself from its more traditional-minded rivals. The Olympics deal is an indication that NBC is continuing down that path. The rest of the industry would do well to pay attention.