Stage set for high-stakes US TV rights bidding

June 5, 2011 - 2:15 PM
Olympics IOC US TV Rights

FILE - In this April 19, 2011 file photo, NBC Sports Group Chairman Dick Ebersol is seen at the offices of the National Hockey League, in New York. With Dick Ebersol out of the picture, NBC's multi-billion-dollar hold on the most valuable property in sports faces a serious challenge this week when U.S. networks bid on the next set of Olympic television rights. (AP Photo/Richard Drew)

LAUSANNE, Switzerland (AP) — With Dick Ebersol out of the picture, NBC's multi-billion-dollar grip on the most valuable property in sports faces a serious challenge this week when U.S. networks bid on the next set of Olympic television rights.

NBC, the Olympic network in the United States for much of the past two decades, goes up against ESPN/ABC and Fox in a high-stakes auction that could potentially command fees of more than $2 billion for two games and more than $4 billion for four.

Network executives will make closed-door presentations and sealed bids to the International Olympic Committee on Monday and Tuesday, the first U.S. broadcast rights contest in eight years.

The implications are huge for both sides: The networks and their giant parent companies are weighing massive long-term investments in an uncertain economic climate, and the IOC is hoping for a bumper deal to keep the money flowing from one of its biggest sources of revenue.

Up for grabs are the exclusive rights to the 2014 Winter Games in Sochi, Russia, and 2016 Olympics in Rio de Janeiro, Brazil. In a new twist, the networks are also free to bid on a four-games package including the 2018 and 2020 Games, whose sites have not yet been selected.

"We've got a full house and I'm hoping for the best," Richard Carrion, who heads the IOC's TV rights negotiations, told The Associated Press on Sunday.

The bidding comes less than three weeks after the sudden resignation of Ebersol, the longtime NBC sports chief who dominated the Olympic television scene for the past 20 years and turned the Peacock network into the home of the five-ring festival.

NBC has broadcast every Summer Olympics since 1988 and every Winter Games since 2002. It holds the rights through next year's London Olympics.

Ebersol was a close partner of the IOC, negotiating several multi-games deals that kept the committee's coffers bulging and ensured the stability of the games in the Olympics' most important financial market. NBC outbid ESPN and Fox in a $2.2 billion deal in 2003 for the 2010 and 2012 Olympics.

"The big question mark is what the disappearance of Dick Ebersol means to an NBC Comcast bid," Dick Pound, the IOC's former longtime U.S. TV rights negotiator, told the AP. "That's got to be troubling for them if they are as serious as they say they are about trying to renew.

"I suppose if you're a conspiracy theorist, you say it's an opportunity for network 'X' to get the games instead of NBC and all of a sudden they'll hire Dick Ebersol."

Ebersol told the AP when he resigned he would not help another network with its bid in fairness to NBC.

Ebersol's departure followed what was described as a contract dispute with Comcast, the cable giant which took control of NBC in January. ESPN is controlled by Disney, and Fox by Rupert Murdoch's News Corp.

Although NBC and Comcast say they remain fully committed to the games and the bidding, Ebersol's absence clearly changes the dynamics of the contest and would seem to give ESPN and Fox greater hope of securing their first Olympics.

Carrion, head of the IOC finance commission, said he met with Comcast and NBC executives after Ebersol's resignation and is convinced they remain determined to retain the rights.

"They reiterated that they are extremely interested, and judging from the team they've brought here, I take them at their word," Carrion said. "It's just way too important for them. I expect them to play to win."

All three contenders have brought their heavy hitters to Lausanne. NBC's team includes CEO Steve Burke and Comcast chief executive Brian Roberts, ESPN has chief executive George Bodenheimer and Disney CEO Robert Iger, and sports chairman David Hill heads the Fox contingent.

Fox leads off the presentations Monday afternoon, followed by ESPN on Tuesday morning and NBC on Tuesday afternoon. Each network has two hours to make its pitch.

After opening the bid envelopes, the IOC could announce the winner by Tuesday evening. Carrion said the IOC could also ask for another round of bids if the offers are close.

The IOC hopes to have a deal in place before its general assembly in Durban, South Africa, starting July 4.

Carrion said the big uncertainty is whether the networks will bid for two or four games. He said each network had asked for the bid forms for both options, meaning the IOC could have to decide between one network bidding on two Olympics and another on four.

"It makes the decision a little more complex," he said. "We may have to make a judgment whether we want to go long term."

Comcast executives have made clear they're not interested in a repeat of the 2010 Vancouver Games, when NBC lost more than $200 million in a rough economy. NBC also stands to take a similar hit from the London Olympics.

The IOC repeatedly postponed the U.S. negotiations at the height of the economic downturn but believes the time is now right to do the deal.

Carrion has made it clear he hopes to surpass the previous $2.2 billion deal.

"We obviously expect a higher figure, and that's it," he said Sunday, stressing that the IOC does not give the networks an opening bidding figure.

In an earlier interview, he said the IOC does want the networks to lose any money on the Olympics.

"On the other hand, we want to make sure we get full value here," he said. "We think it's a fantastic event, much more than a product. It's something the whole world looks forward to. It's a unique event. We want to make sure we maximize the value of the rights, which we think are considerable."

Some industry experts have questioned whether the IOC can top or even match the previous fee at a time of continued economic troubles and high production costs. In addition, the value of the Sochi Olympics in Russia could pull down the fee because of the unfavorable time zone for U.S. viewers.

If the networks opt for a four-games package, they will do so without knowing where the last two will be held. The IOC will select the 2018 host city on July 6 in Durban. The candidates are Annecy, France; Munich; and Pyeongchang, South Korea. The host of the 2020 Olympics will be chosen in 2013, and Rome is the only official contender so far.

Pound, who negotiated most of the TV deals from the mid-1980s through the 2008 Beijing Games but is no longer involved in the process, is skeptical of any big increase. He claimed NBC was "suckered into bidding far too much last time.'"

"The incumbent is the only one that knows the value of the rights," he said.

Fox offers a younger audience and the platform of one of the big four broadcast networks. The network would break from NBC's model of showing some events on delay, planning to televise sports live during the day, then packaging coverage for prime time.

So would ESPN/ABC, which showed games live from South Africa last summer in its successful World Cup coverage.

"We've long had the confidence in our ability to do a global event first rate, but that sent a loud message to others of how successful we can be," spokesman Mike Soltys said of the World Cup.

Soltys said "we feel nobody else comes close to ESPN in our ability across multiple platforms to present and promote the Olympics."

ESPN also brings the powerful Disney brand to the table, which raises the prospect of a possible tie-in with the games. NBC's former parent company, General Electric, threw in a $200 million global sponsorship as part of NBC's winning bid for the 2010 and 2012 Olympics.

Also present at the bidding will be U.S. Olympic Committee chairman Larry Probst and CEO Scott Blackmun.

"Broadcast revenue represents approximately 40 percent of our total revenue," Blackmun said. "It's our single most important revenue stream."

The USOC currently gets a 12.75 percent share of U.S. TV rights deals and 20 percent of global sponsorship revenues, figures many international officials consider too high. Both sides are negotiating a new revenue-sharing deal to take effect in 2020.

The USOC and IOC will renew those talks Wednesday, and say they also hope to have an agreement in place by early July.

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AP Sports Writer Rachel Cohen in New York contributed to this report.