NBC and their Olympic Rights
June 10, 2011 Leave a comment
NBC made another major investment in the Olympics on Tuesday, as it extended its Olympic rights until 2020. Comcast, the parent company of NBC, agreed to acquire the rights to the 2014 Winter Games in Sochi, Russia; the 2016 Summer Games in Rio de Janeiro; and the next two Olympics, in unspecified cities. NBC bid $4.38 billion for United States broadcast rights for the four Olympics.
With exclusive broadcast rights, NBC Sports retains a marquee event in its war chest, and can now boast longevity and familiarity with the Olympics. They have exclusively broadcast every Summer Olympics from 1988, every Winter Games from 2002, and will continue that tradition for another eight years. More importantly, Comcast confirmed the network’s commitment to the Olympics, which was in doubt after the shocking retirement of Dick Ebersol less than two weeks ago.
Adding to the fact that NBC offered the most money for the rights, there were some other factors that had to play into the decision. The major factor that the IOC must have taken a hard look at was the impact of an increasingly voracious 24/7 news cycle on live events. The internet and the explosion of media news in general make it nearly impossible to keep the public in the dark between the time that tape-delay programs are recorded, and when they air. The IOC clearly prefers the tape delay strategy, as NBC was the only bidder proposing to save the biggest programs for primetime audiences. Both Fox and ESPN planned to run the events live, as they believe the constant 24 hour news cycle is too demanding to even attempt putting events on tape delay. For ESPN specifically, they have precedent with their World Cup soccer coverage that live coverage is a viable option, and must have pointed to that as it made its pitch.
The outcome of the bid also tipped the priorities of each network’s sports department right now. According to the Associated Press, ESPN only bid on the two Olympic games in 2014 and 2016, and offered $1.4 billion. Perhaps this shows that they are already comfortably invested in their current global reach. This global reach mainly comes from soccer, where ESPN has rights to Euro 2012 and Euro 2016, along with World Cup 2014 in Brazil. ESPN is also aligned with an increasingly global NBA, and has recently enjoyed success with ESPN Deportes. Fox, on the other hand, put in two separate bids—one for the 2014/2016 games worth $1.5 billion, and one for the Olympics through 2020 for $3.4 billion. Judging by the relative positions of NBC and ESPN in the marketplace right now, it would seem about right that Fox would fall somewhere between these two bids.
For NBC, there is certainly risk involved with acquiring these rights. After reportedly losing $223 million in Vancouver 2010, and projections that they could lose at least that much for the 2012 Summer Games, the IOC certainly feels like a winner for acquiring a record $4.38 billion. The deal shows that Comcast is planning on making the Olympics a major player in the re-shaping of NBC Sports, and are focused on becoming a global brand. Perhaps the most intriguing part of the deal lies in the two future Olympic cities for 2018 and 2020. The 2018 games are particularly enticing, with Pyeongchang, China making a major push after narrowly losing the 2010 and 2014 games. The Chinese bid is currently up against Munich, Germany (already hosted Summer ‘72), and Annency, France (bid’s CEO recently resigned), so NBC certainly sees opportunity there. In addition, the new 10 year, $2 billion deal with the NHL and the current $3.6 billion deal with the NFL are showing that NBC is looking to make a big push in the sports market.
The issue now is how Comcast will do things differently to avoid the previous Olympic losses. The presumption is that the family of Comcast/NBC networks will consolidate in order to assist in live coverage, and partnerships with various telecom and social media platforms will take care of the tape delay concern. How NBC leverages these rights is crucial, as a Summer Olympics can equal multiple Super Bowls over the course of two weeks. Although many of the broadcast technicalities have already been set in motion for the London 2012 Games, we should see fairly quickly if the Olympics are worth another round of investment from NBC.