Olympics Bill of Particulars

Jul 7, 2003  •  Post A Comment

When NBC purchased the U.S. rights to the 2010 Winter and 2012 Summer Olympic Games for a record $2.001 billion, the network did not even know where the competitions would be held.
The price encompassed add-ons that include parent company General Electric’s agreement to spend $160 million to $200 million to become a top sponsor and $12 million for the rights to winter and summer U.S. Olympics trials that will take the price tag to $2.2 billion.
Last Wednesday The International Olympic Committee named Vancouver, British Columbia, the 2010 host city. With only a three hours time difference between the Canadian city and Eastern Standard time, on which prime-time schedules are based, NBC is expected to have an easy time arranging for live coverage of the big-draw events in prime on the broadcast network. Prime time is the daypart that accounts for more than 70 percent of Olympics-driven revenue, according to people familiar with the economics of Olympics on TV.
The host city for the 2012 Games will be announced in July 2005. There still are many other unknowns related to the new deal that will mean NBC will have broadcast every Olympics Game from 2000 through 2012. TelevisionWeek, in an attempt to reduce the question mark quotient, herewith presents four things that people not intimately familiar with the NBC deal don’t know.
* NBC will not share with the IOC any revenue it takes from the 2010 and 2012 Games.
This is not unprecedented. NBC did not share revenue with the IOC under its $1.25 billion deal for Salt Lake City (2002) and Sydney (2000), but there is a revenue-sharing component in place for Athens (2004), Turin (2006) and Beijing (2008), Games for which NBC paid a total of $2.301billion.
* In addition to being granted the rights to carry, promote and brand the Olympics on an all-encompassing list of previously enumerated media platforms-from broadband, Internet and high definition to Spanish-language (NBC-owned Telemundo and mun2), radio, theatrical and DVD-the IOC granted NBC similar rights on any distribution platform that might emerge in the intervening years.
This is regarded as a key example of how unencumbered NBC will be in exploiting the smorgasbord of rights it has purchased.
NBC executives are described as “in love” with video-on-demand and broadband as opportunities for growth. They are said to have ascribed more value to those platforms than did Fox, which bid $1.3 billion for the 2010 and 2012 Games, and ABC-ESPN, which had proposed a deal based entirely on revenue sharing.
“Broadband allows you to do niche programming to a degree of personalization that has value,” said Michael Goodman, a senior analyst at the Yankee Group in Boston.
Mr. Goodman also sees prospects for upside in subscription-based access to content and Web-based advertising. “The bulk of their advertising would be covered by traditional advertising on television,” Mr. Goodman said, “but this could be the icing on the cake.”
NBC also could, for example, give consumers the option of paying to receive Olympics information via cellphone, paying to see some events live instead of waiting for NBC’s broadcast or paying to see some Olympics events via closed circuit in theaters.
The bottom line is that the network will be limited mostly by its imagination-and the boundaries of its rights territory-in ways of monetizing the Games in addition to what it brings in through traditional ad sales.
* NBC will not have to consult with or obtain permission of the IOC before enacting any strategy to exploit its Olympics rights on any of the platforms.
The IOC wants the best and the bulk of Olympics programming served up via universally accessible broadcast platforms, but NBC is otherwise free to try anything that might monetize or promote the Games within its rights territory and with almost any partner who does not conflict with Olympic sponsors.
NBC could, for example, offer HDTV feeds on the network’s upscale Bravo cable channel or on another special channel, if it felt such a plan added value.
* NBC plans to offer video on demand in five languages, including Korean and Chinese. The network believes the option will appeal to cable operators in ethnically diverse communities.
Jay Sherman contributed to this report.