Broadcast Revenues Spiral Ever Higher

Aug 30, 2004  •  Post A Comment

By Robert Wold

Special to TelevisionWeek

The Olympics, staged every two years, are collectively the world’s most colossal television special events. The International Olympic Committee has estimated that the 2004 Athens Olympiad, which concluded Sunday, reached a total of 3.9 billion viewers.

NBC Sports, the USA rights holder, produced and transmitted 1,210 hours of remote programming, three times its coverage of the Sydney Games in 2000.

The Games have also become a worldwide attraction. China Central TV produced 24 hours of programming each day for transmission to China, where the next Summer Games are scheduled. Canada’s CBC and TSN showed 440 hours; Germany’s ZDF and ARD, 1,400 hours; South Africa’s Supersport, 1,760 live hours; and the United Kingdom’s BBC1 and BBC2 programmed a total of 250 hours of live action.

Television has had a transforming impact on the Olympics in the years since World War II. Executives at the IOC have said that television, above all else, has enabled the Olympics to grow to its present gigantic scale.

The IOC’s broadcasting revenues from 1960 through 2004, shared with local Olympics organizing committees, athletic federations and other groups, totaled $7.6 billion from 24 Olympiads.

Big Business

For the 2004 Athens Olympics, NBCU paid $743 million for USA rights, and other world broadcasters paid $683.9 million to the IOC. The future rights costs for NBCU will be: 2006, $614 million; 2008, $894 million; 2010, $820 million; and 2012, $1.181 billion.

According to an NBCU spokesperson, the current production costs for each NBCU Olympics package are at least $120 million. NBCU’s advertising revenues from the Olympics in 2004 will reach $1 billion.

NBCU has acquired the exclusive USA TV rights to all Games through 2012. This includes the 2006 Winter Games in Turin, Italy; 2008 Summer Games in Beijing; 2010 Winter Games in Vancouver, Canada; and the 2012 Summer Games in either Paris, New York, Moscow, London or Madrid. The site for the 2012 Games is to be determined by the IOC in July 2005.

The Games didn’t start out as a gold mine for TV. The first Olympics experience with television occurred in 1936 in Berlin. Reich Broadcasting sent out a closed-circuit broadcast using the PAL-TV system, which involved three electronic cameras. The test was approved by none other than German Chancellor Adolf Hitler. It was seen in Berlin, Hamburg and Leipzig, Germany.

Due to World War II, the Olympic Games were canceled in 1940 and 1944. At the 1948 Games in London, the BBC used nine cameras to produce TV programming that could be seen in 80,000 homes.

The 1956 Games in Melbourne, Australia, were the last without any live television coverage. The satellite and other technology to broadcast across great distances wasn’t yet available. The major networks, in conjunction with the newsreel companies, refused to pay for the rights. They claimed it was news and not “entertainment.”

At the same time Avery Brundage, the longtime IOC president, believed heavy TV coverage was undesirable because it would negatively infect the Olympics movement with commercialism. It was the still the era of the true amateur, before pro stars were allowed to participate.

Supported by Mr. Brundage, Australians wanted to film the events and license use of their film to CBS, NBC and BBC. The major American networks, after long negotiations, declined and boycotted the IOC.

Soon after the 1956 Games, however, CBS and NBC independently decided to restructure their news departments. They moved sports coverage into CBS Sports and NBC Sports.

The Winter Olympics of 1960 were planned for Squaw Valley in Northern California, near Nevada. America’s ABC TV Network sought TV rights from the Squaw Valley organizers but dropped out when it couldn’t find sufficient advertiser support. CBS stepped in and offered $50,000 for the TV rights. It was the first-ever licensing of any Olympics coverage for American television.

CBS produced 31 hours of coverage, which was seen coast to coast and included the U.S. hockey team’s defeat of first Russia and then Czechoslovakia for the Olympics championship, a predecessor to the famous “Miracle on Ice” at Lake Placid, N.Y., 20 years later.

Coverage Expands

In Rome in the summer of 1960 CBS paid $800,000 for U.S. TV rights, and Japan’s NHK paid the first rights fees for that country. Using new technology, Italy’s RAI public broadcaster provided 2-inch videotapes for flights by Alitalia to New York and Tokyo. RAI also fed coverage via the new Eurovision network to 14 countries and the equally new Intervision network reaching four Eastern European countries.

TV productions of the 1960 Games were blessed with numerous technology advances, beginning with the first color pictures of the Games. Videotape was new, slo-mo was developing and equipment was much smaller. The new technical inventions and improvements would continue at every Games.

To beam home some of the 1960 Olympics, NBC coordinated with NASA, the U.S. Defense Department, Comsat, Japan’s NHK and Hughes Aircraft. Their efforts enabled Syncom III, the first geostationary satellite. It initiated transcontinental audio and video signal traffic from Tokyo to California, serving NBC, Canada’s CBC and Europe’s Eutelsat. Hughes’ Syncom was the model for Early Bird, the first commercial satellite, which was launched in the spring of 1965. NBC broadcast the opening ceremonies live from Tokyo via satellite for the first time.

ABC, just coming into its own as a full-service network after years of struggle, grabbed the 1964 Winter Olympics at Innsbruck, Austria, and in short order changed the whole approach to coverage. Under the late Roone Arledge, ABC introduced not only technological advances-such as the first satellite news feeds from any Olympics, via the experimental, low-altitude Relay I bird-but also the production values. There was much more use of graphics, music and special themed reports, including profiles of leading athletes.

Of 10 Olympiads televised to date by ABC, six have been Winter events, including a return visit to Innsbruck in 1976. ABC’s second and third Olympics were the 1968 Winter Games in Grenoble, France (the first Winter Games in color), and the 1968 Summer Games in Mexico City.

CBS has had Olympics broadcasting rights five times, four of which have been Winter Games (Squaw Valley in 1960; Albertville, France, in 1992; Lillehammer, Norway, in 1994; and Nagano, Japan, in 1998). CBS wanted to become “America’s Winter Olympic Network,” but lost out on the 2002 Salt Lake City Games.

NBC has now had the Games six times and has contracted for at least three more. It ran into some bad luck in 1980 when the United States led a boycott of the Games in Moscow. NBC had to write off an expense of $87 million.

Olympics broadcasting rights values have skyrocketed, especially since the early 1980s. The steady rises have been especially hard on American broadcasters, where competition among the three major networks (ABC, CBS, NBC) has now been joined by Rupert Murdoch’s Fox Broadcasting and DirecTV. In Europe, traditionally there has been a single buyer, Eutelsat, eliminating competition.

Rapid Inflation

In 1972 ABC owned the U.S. TV rights in Munich, Germany, for $7.5 million. The IOC also collected $10.3 million from other broadcasters. Only 12 years later at the 1984 Los Angeles Olympics, the U.S. TV rights holder (ABC) had to pay $225 million and foreign rights added $62 million. Thus, the cost in 1984 was 16 times higher than in 1972. The USA TV rights at Salt Lake City in 2002 cost NBC $545 million, compared with $15.5 million in 1980 for ABC at Lake Placid-35 times more.

The pinnacle event for Olympics rights negotiations occurred Dec. 12, 1995. The seller for the IOC, Dick Pound, agreed to sell USA rights to NBC, represented by Dick Ebersol, in a combination: the 2000 Summer Games at Sydney plus the 2002 Winter Games in Salt Lake City, for a total USA broadcast fee of $1.25 billion. Subsequently, the pair added Athens ($793 million), Turin ($613 million) and Beijing ($894 million), totaling $2
.3 billion.

Robert Wold, now retired, was a pioneer in the use of satellites to distribute television signals. He can be reached at robertnwold @cox.net.