News

Comcast Feels Olympic Heat

7/11/2009 2:00 AM Eastern

The U.S. Olympic Committee’s effort to promote the Games in this country by a joint venture network with Comcast has been muted by cries of foul from the International Olympic Committee and NBC, the sole Olympic Games rights holder since 1996.

On a call from the Allen & Co. media conference in Sun Valley, Utah, last week the formation of the U.S. Olympic Network was announced, with a launch expected sometime in 2010 after the conclusion of the Winter Games in Vancouver.

But reports quickly surfaced that the IOC had not given all the clearances the fledgling service wanted relative to programming and naming rights involving the word “Olympic.” The groups continued to clarify their positions much of last week. USOC chief operating officer Norm Bellingham indicated that the IOC was well aware of its network plans, which had officially been in the works since at least October 2005. For its part, the IOC condemned the USOC for “acting unilaterally” before the parties “had a chance to consider together all the ramifications.”

NBC Sports & Olympics chairman Dick Ebersol told The New York Times that the USON could have “ramifications on Chicago’s bid” to host the 2016 Summer Games, a decision for which will be made by the IOC on Oct. 2. He also said that after a year or more, talks about combining USON with NBC Universal’s Universal Sports service broke off. USOC officials have indicated the parties could not find financial common ground.

“I’m shocked that the USOC did not have all of its ducks lined up with the IOC and NBC,” said Lee Berke, principal of sports-media consultancy LHB Sports. “Given the IOC’s reaction, Ebersol taking time out to say this was a mistake, that this could jeopardize the Chicago bid, everything is flashing red here.”

For its part, Comcast has a provision to back out of the deal if the IOC issues are not resolved, according to sources familiar with the deal. It was not immediately clear when the parties would have to come to an accord. Officials at the USOC and Comcast declined to discuss a time frame.

The USON’s game plan calls for it to launch on Comcast’s Digital Classic tier of service, which reaches more than 10 million homes and includes the recently imported NFL Network, as well as NBA TV and MLB Network. As a multiplatform service, USON would also present content via Comcast’s on-demand and broadband platforms.

On the call, USON officials said there was room in the agreement for other equity players in the service. Steve Greenberg, managing director of Allen & Co. — who noted that his firm had helped write the business plan for MLB Network, which includes cable and satellite stakeholders — said, “we certainly believe in that business model.” MLB Network launched into more than 50 million households on Jan. 1, a record for a cable service.

For its part, Universal Sports already passes some 56 million U.S. homes. Originally called World Championship Sports Network, which had been owned by Leo Hindery’s InterMedia Partners, the Olympic-sports service was rebranded as Universal Sports in June 2008, when NBC Universal became a joint-venture partner. Leveraging retransmission-consent to negotiate multicast carriage for the network, NBCU has secured some 33 million subscribers (26 million via cable-connected subs and 7 million through over-the-air digital converter boxes) and is in nine of the top 10 DMAs (excluding Boston).

NBC’s Universal Sports chairman and CEO Claude Ruibal said that since launching in 2003 Universal Sports and its forbear has distributed over 16,000 hours of Olympic-style sports online and on television. “It doesn’t make sound business sense for two networks to be competing in the same space. The USOC does a great job in preparing athletes and teams for the Olympics; look at our record,” Ruibal said. “But they aren’t a media company. They haven’t done an outstanding job with their Web site, or distributing their rights. I want to find a way for everybody to succeed.”

In addition to live events, USON said its programming roster would include educational and coaching shows, original series, genre feature and documentary films, as well as archival Olympics fare. The latter evidently is a point of contention with the IOC. However, USOC has the exclusive rights in this nation to license archival Olympic footage from the IOC for a fee.

Going past the 2012 Games, USON also plans to use the rights to U.S. Olympic trials action, including regional build-ups to the national competitions. NBC has control of the U.S. Olympics trials leading up to the Summer Games in London. Bidding for the 2014 Winter Games in Socchi, Russia, and the yet-to-be-awarded 2016 Summer Games are expected to take place after the host city is announced.

USOC officials, in discussing the network’s launch, said they believe the USON will raise the profile for the varied sports during the years in between the Games, and in turn, ratings for the Olympics themselves. Some proceeds from the network, which would gain revenue from both license fees and advertising dollars, would fall to the various governing bodies for the sports.

While rate cards and contracts have not been finalized, Peter Ueborroth, former chairman of the USOC committee, on the call said there were tentative commitments from USOC sponsors. The USON, officials said, would prove to be an attractive vehicle to advertisers who wanted to activate their sponsorships outside of the Olympic windows.

Ruibal estimates that there is somewhere between $50 million and $70 million worth of Olympic-related advertising available annually between the Games.

Berke said there’s room for a new channel, but not two. “Clearly, these are niche channels that have value. There are revenue opportunities for sponsors of these sports besides the 17 days of the Games, particularly during Olympic years,” said “But to have two channel butting heads, especially with Universal Sports already having a lot of the marquee events, is tough.”