News

Olympics Draws Top Players, Bearing Bids

6/06/2011 12:01 AM Eastern

Bearing green, Brian Roberts, Bob Iger and
David Hill are taking a trip to Switzerland this week in search
of Olympic gold.

These top media executives are leading contingents from
Comcast’s NBCUniversal, Disney’s ESPN/ABC and News
Corp.’s Fox Sports on June 6 and 7 to the home of the International
Olympic Committee in Lausanne.

There, International Olympic Committee president
Jacques Rogge, executive committee member Richard
Carrion, who will serve as lead negotiator, and others will
conduct the auction to the U.S. rights to the 2014 and 2016
Games in Sochi, Russia, and Rio de Janeiro, Brazil.

The price is expected to be steep: The IOC would like to
match if not exceed the $2.2 billion that NBCU, under General
Electric’s watch, paid for the rights to the 2010 Winter Games
in Vancouver ($820 million) and next year’s Summer Olympics
in London ($1.2 billion).

PRUDENCE PROCLAIMED

All of the media conglomerates are proclaiming that their bids
will be steeped in fiscal responsibility, a prudent tack given that
NBCU lost $223 million on its coverage from Vancouver last
year. Projections call for NBCU’s red ink to total $250 million
from across The Pond next summer.

Last time the auction was held in 2003, it was no contest.
NBC’s total bid dwarfed Fox’s $1.3 billion, while ESPN/ABC
played a $1.8 billion revenue-sharing gambit.

The IOC has held off this auction, waiting first for the U.S.
economy to recover and then for upfront presentations to
be over.

“It’s going to be fascinating to watch. Th ere are three motivated
bidders, three sets of strategies,” said Lee Berke, principle
of consultancy LHB Sports, Entertainment & Media. “This
is not just a broadcast-network ego thing,
where you had to have the Olympics and
then figure out a way to make it profitable.
These are integrated media companies
with multiple platforms that have to
show shareholders how this makes financial
sense.”

FOX GOES FIRST

Fox Sports, whose group includes chairman
Hill, co-president Randy Freer and
chief financial officer Larry Jones, will
fire away first on Monday. Espousing live
coverage overall and packaged play in
primetime, the News Corp. unit will tout
its status as the top U.S. network seven
years running among Madison Avenue’s
coveted 18-to-49 set.

It could also bring a rolled-up dual
broadcast audience by including MyNetwork
TV into the mix.

On the cable side, Fox is bolstering the
99 million-home FX with sports, adding college football and
soccer. Fox reaches another 85 million homes via various regional
sports networks, which could provide local flair for athletes
hailing from specific areas around the country. Speed (84
million subscribers), National Geographic Channel (71 million)
and BTN (the erstwhile Big Ten Network, available to 80
million homes) round out the arsenal.

Fox Soccer Channel would be a natural roost for the Rio
Games, a nation fueled by fever of joga bonita.

“The Olympic Games are the ultimate in world sports competition,”
a Fox spokesman said. “Fox plans to present everything
we have to offer in detail and submit what we consider
to be a competitive bid that supports the IOC’s goals and also
works financially for News Corp.”

DISNEY GOES NEXT

ESPN/ABC goes first on Tuesday. With
monthly license fees averaging more
than $4.50 per subscriber, the worldwide
leader has the financial wherewithal
to stuff the sealed envelope the
most. And its success with the 2010
FIFA World Cup in South Africa was a
strong audition for the IOC.

ESPN is committed to airing all of
the Olympic action live. Executive vice
president of content John Skipper, who
along with ESPN/ABC Sports president
George Bodenheimer and vice president
of corporate projects Rob Simmelkjaer
will be joining Disney topper
Iger in Lausanne, has said the network
would then create more dramatic,
taped packages for primetime on ABC.

Like ESPN, ESPN2 is in some 100
million homes, with ESPNews and
ESPNU counting 74 million and 73
million households, respectively.
ESPN Classic has 35 million.

Other assets include ESPN 3D,
HD services, Spanish-language service
ESPN Deportes, radio, print,
ESPN.com, and five regional websites.
Broadband portal ESPN3.com reaches
60 million U.S. homes, and digital assets
encompass mobile, authenticated
services WatchESPN and up to 30 different
apps.

“No one else comes close to ESPN in our
ability across multiple platforms to present
and promote the Olympics and to raise
the profi le of Olympic athletes,” a company
spokeswoman said.

NBCU IS UP LAST

Incumbent NBCUniversal — minus
America’s foremost Olympic advocate,
Dick Ebersol, who resigned as chairman
of NBC Sports Group on May 19 — gets
last licks.

Accompanying Comcast chairman and
CEO Brian Roberts will be NBCU CEO
Steve Burke, new NBC Sports chairman
Mark Lazarus and NBC Olympics president
Gary Zenkel.

NBC Sports declined to comment about
its Olympic strategies or if it was considering
presenting all of the games live.

NBC has held back televising key events
until primetime. Still, NBCU scored the
most-watched event in U.S. TV history as some 215 million
saw its networks’ 3,600 combined hours from Beijing in 2008,
boosted by the phenomenon known as Michael Phelps.

In past games, NBCU has deployed the resources of
Spanish-language broadcast network Telemundo, top cable
channel USA Network, MSNBC, CNBC, Oxygen and Universal
HD as Olympic destinations.

With Comcast now in control of the joint venture, national
cable sports network Versus would also be in play, the
Games presumably a key driver to increase its 28-cents-permonth
license fee and subscriber base from its current total
of 76 million.

Universal Sports, a joint venture with Leo Hindery’s Intermedia
Partners, which currently showcases Olympic-related
sports, and Golf Channel — the game becomes an Olympic
sport in London — also figure to be in the mix.

All told, NBCU wields assets and cross-promotional capabilities
stemming from 20 networks and 40 attendant Web sites.
And NBC has televised more Olympics than any other network
with the total, reaching 13 and seven in a row in London.
Last time around in 2003, the companies made their presentations
and offered a sealed bid. Given NBC and GE’s zeal,
it was games, set and match.

This year’s auction is supposed to follow the same format.
But the parties may be asked to make presentations that would
include the 2018 Winter and 2010 Summer Olympics, the city
sites for which have not yet been determined.

That could up the ante to the $4 billion mark.

HANDICAPPING THE PLAY

However it goes, the white smoke is expected to waft over Lausanne
to America by mid-afternoon Tuesday. Rest assured, the
winner will have extended a lot of green. That most likely will
be the fate for most distributors, as well, in the manner of higher
channel-license and retransmission-consent fees and/or
Olympic surcharges.

In the end, Berke believes Comcast will maintain NBC’s
Olympic heritage, but it might have to do business in a diff erent
way, perhaps with lower production costs and a greater utilization
of the world feed. “Comcast, in the end, will find a way
to make it work,” he said. “However, I wouldn’t be surprised to
see ESPN win the bid.”

Mansell sees it as a toss-up. “You think Comcast has motivation
to keep the games for NBC Sports, and ABC/ESPN
certainly has the resources. But Barry Frank [IMG Media’s
executive vice president], who’s so involved with so many
things, he’s picking Fox. It’s really tough to predict this.
Who wants it most?”

March