Cable Operators

Roberts: $4.4 Billion Olympic Rights Deal Will Be Profitable

6/07/2011 3:54 PM Eastern

Comcast's NBCUniversal expects to make a profit on the $4.4 billion it will expend for the U.S. media rights for the 2014 through 2020 Olympic Games.
Maintaining NBC's legacy as "America's Olympic Network," the company won the International Olympic Committee's auction for the rights, topping presentations and offers from Disney's ESPN/ABC and News Corp.'s Fox Sports made in Lausanne, Switzerland over the past two days.
"We are excited to get started and continue the great legacy and work that has been the relationship between NBC and the Olympics. We couldn't be more proud," Roberts said during a press conference announcing the decision by the IOC.

According to the Associated Press, citing an executive with direct knowledge of the auction, Fox bid $3.4 billion for four games and $1.5 billion for two, while ESPN offered $1.4 billion for two.

Roberts said the play for the four Olympics -- the Winter Games in 2014 in Socchia, Russia, the 2016 Summer Games in Rio de Janeiro and the 2018 and 2020 quadrennials, the host cities for which have not yet been determined -- reflected Comcast's approach to the Games.
"We've been clear from the beginning that we want to be disciplined and responsible," Roberts said. "We think this will be a profitable relationship for NBC Universal. Having eight more years, we will have an opportunity to build up a lot of the assets at NBC Universal....It was unanimous among our team that having [the Games] for the longer term will help us achieve that goal."

Comcast's Games' get follows the $2 billion, 10-year deal that NBC and national cable network Versus inked with the National Hockey League in April. Roberts billed both rights acquisitions as what amount to "essentially renewals. I don't think this will change the financial profile of the company." But he conceded that "on a human basis, I wanted to win for the team. . . we poured our heart and soul into it."

It was not immediately known whether Comcast would seek an Olympic surcharge as NBCUniversal had for Olympics past and present, under General Electric's ownership. Sources indicate that NBCU has already obtained surcharges from a number of MSOs for some of the Games under the new deal. NBCU is also said to be receving contributions from broadcast network affilait to support the Games' bid.

Roberts and new NBC Sports Group chairman Mark Lazarus spoke to the NBCUniversal's array of assets, platforms and promotional capabilities as key components for its Games' gambit.
Lazarus, the successor to Olympic advocate Dick Ebersol, who resigned the position on May 19, said the rights deal encompasses "TV, tablets, mobile broadband," before adding that it covers all platforms "now known, to be known and those still to be conceived."
With those vehicles in place he said there would be more Olympics coverage on more platforms than ever before. "It's all encompassing. That's part of the value of our new company... one of the great joys of this deal."

Lazarus also said that under the new deal starting in 2014,NBCU would make every event over one platform or another live. He noted that with live streaming and broadband amelioration that the "one to one and the one to few experiences" for super sports fans continues to improve dramatically. At the same time, that doesn't mean NBCUniversal has "necessarily changed its philosophy" about sharing events with families and large audiences.
"We think that with today's technological advances" NBC can create a quality experience "that is good for the super sports fan but doesn't change our strategy for building that shared experience," he said. "We have a smart plan that will allow the super fan to watch live and not detract from the primetime audience" on broadcast.
It was unclear what that might mean for London, the broadcast plans for which are already in place, according to Lazarus. However, he did say there would be more live streaming in real-time from next summer's competition.
NBC has been criticized for holding marquee events back and not televising them until primetime.
Both Fox and ESPN had said that if they had won the Olympic bid, they would have presented all of the action live, before repackaging events for primetime.
Evidently, ESPN's bid was only for the 2014 and 2016 Games. During the call, IOC executive committee member Richard Carrion, who led the negotiations, said the bidding for those Games was "very much in the [same] ballpark," but that one of the parties had only offered for two Olympics and that the "four Games put it over the line." Fox Sports chairman David Hill said after the company's June 6 presentation that it made more fiscal sense to amortize Olympic investments over a longer period of time.
A scorecard shows that the IOC, despite NBC's $223 million loss on the Vancouver Games in 2010 and projections for a $250 million shortfall for London next summer, was still able to extract an overall increase in average rights fees. Carrion pegged the rights fees at $775 million for Sochi and $1.23 billion for Rio. That compares with $820 million for the 2010 Games and $1.18 billion for London.
As for the Winter Games in 2018, the IOC commanded $963 million, while the 2020 Games garnered nearly $1.42 billion.

Those figures, according to Carrion, pertain only to the rights and do not include a TOP sponsorship renewal with General Electric, which had paid some $200 million. Carrion said that was separate negotiation. 

Both Fox and ESPN issued statement, extending congratulations to the victor.

Said Fox Sports Media Group Chairman David Hill: "We congratulate NBC/Comcast and would like to thank President Rogge, Richard Carrion and the IOC Executive Committee for giving us the opportunity to participate in the process, demonstrating how FOX Sports would produce the Olympic Games, provide wide distribution, the largest marketing platform ever and an economic package we believed to be good for the IOC and News Corp."

 Noted ESPN: "We made a disciplined bid that would have brought tremendous value to the Olympics and would have been profitable for our company. To go any further would not have made good business sense for us. We wish to congratulate the IOC on a fair and transparent process, and we offer our best wishes to Comcast/NBC. We put our best foot forward with a compelling offer that included the enthusiastic participation of all of The Walt Disney Company's considerable assets."