Olympics Play Games With Internet Rights

12/02/2001 7:00 PM Eastern

The 1956 Winter Games in Cortina D'Ampezzo, Italy, offered the first live TV feed of the Olympics.

Clearly unimpressed with the new technology, former International Olympic Committee president Avery Brundage said at the time, "We in IOC have done well without TV for 60 years and will do so certainly for the next 60 years, too."

At the 2000 Summer Olympics in Sydney, Australia, the IOC took a similar tack with respect to another new technology — the Internet. But it looks like the winter will bring a thaw in the cold war between Web-based journalists and the Olympic movement.

In addition to a competitive venue for the world's greatest athletes, the 2002 Winter Olympics in Salt Lake City has developed into a showcase that points out the intrinsic conflicts between traditional media and the Internet.

The IOC is grappling with tricky questions about how to balance online and traditional media coverage without losing millions of dollars in exclusive TV-rights fees. Those issues came to a head in Sydney, Australia, when the IOC banned all online journalists and launched Herculean efforts to squash any non-sanctioned Internet coverage of the games.

In the aftermath of the Games down under, the IOC has backed off from its previous ban on Internet journalists. It's granted a handful of credentials to an odd compendium of Web sports sites.

But it is standing firm with its hands-off approach to the Internet, declaring that there will be no streaming video or audio of the Olympics — delayed or otherwise — for another eight years.

"It's another missed opportunity for the Olympics," said The Carmel Group senior analyst Jim Stroud. "By standing still, they're missing very good revenue and branding opportunities."


For the IOC, the issue is complex. At stake: $5.1 billion in exclusive, long-term TV deals that run through 2008. The largest of these international deals is with NBC, which has paid about $3.5 billion for U.S. TV rights to the Games through 2008.

Some estimates put NBC's take from the Sydney Games at over $50 million, as the network sold $900 million in advertising over the 17-day event. Broadcast rights cost $705 million; production expenses came in around $125 million.

The IOC's extant broadcast deals are structured to align with geographic territories — boundaries that the borderless Internet simply doesn't recognize. And until the IOC figures a way to balance the conflict, Olympics coverage over the Internet will remain limited.

Additionally, uncertainty about the amount of revenue the Internet can generate also plays a key part in the IOC's decision-making.

"Some 3.7 billion people watch television, as opposed to 25 million Internet users," IOC marketing commission chairman Dick Pound said last December, when he cited viewing figures for the Sydney Games. "We don't want to do anything to diminish the value of our main event. You need a robust primetime television deal to support events like the Olympics."

Though officials with sports Web sites expressed keen disappointment over being hampered in their coverage from Salt Lake City, they're confident the IOC will ultimately change its position.

"In eight years, the power of the Internet won't be anything like it is now," said Inc. vice president of programming Joe Ferreira, whose company operates CBS SportsLine (
). "It'll be a huge force in the media environment, one they can't help but pay attention to. And, more importantly, by then it may be a good revenue stream for them."

The IOC's Internet attitude both hampers and protects broadcasters like NBC. Understandably the Peacock Network — which also plans daily TV coverage on cable outlets MSNBC and CNBC — wants to protect its exclusive TV rights to the games (airing from Feb. 9 to Feb. 24). But it plans to complement the telecasts with sweeping Internet coverage.

the network's Olympics Web site — will not be able to stream audio or video of the competition.


But there will be a number of improvements over the Peacock's Web coverage from Sydney, which struggled to handle real-time reporting of events without conflicting with tape-delayed broadcasts.

For the Salt Lake Games, will feature real-time results and synchronous news and features tied to events as they happen. also will stream news features on particular athletes and events. But again — because of the IOC ban on streaming — no streamed video of events or Olympic venues will be available, said NBC Sports vice president of new business development Kevin Monaghan. relaunched on Nov. 19. It's tied in to the Salt Lake City organizing committee's site (

) and the IOC's Web site (

With a more media-rich experience — and unencumbered by tape delays — NBC plans to make full use of to complement its broadcast and cable telecasts. In Sydney, NBC's Web coverage was promoted with some 550 "squeeze-downs," in which the lower-third of the TV screen shrank to reveal a graphic that pitched the Web site.

At least that many pop-up promos will be offered from Salt Lake City. "They are contextual promo pops in nature," said Monaghan, who added that the Web coverage will flesh out each event with coverage of individual athletes, background on the events and "up close and personal" features.


In the meantime NBC and the world's other broadcasters are waiting to see how the IOC handles Internet Olympics rights.

Certainly, the Winter Games point up the conflicts inherent in the Internet learning curve, said The Yankee Group Internet-strategies analyst Lisa Melsted. So-called traditional media companies frequently struggle to learn how to use the Internet to their advantage and overcome fears of cannibalization.

"What used to be call traditional media, like broadcast and print, struggled with the same issues at first," she said. "But now they understand that using the Internet as another medium is integral to the coverage."

Examples of such conflicts abound. Earlier this year The Walt Disney Co.-owned ESPN locked horns with Charter Communications Inc. in a highly-publicized feud over the carriage terms for its 24-hour sports-news service, ESPNews.

Charter — whose chairman is Microsoft Corp. co-founder Paul Allen — wanted language in its carriage contract for ESPNews that would limit ESPN's ability to stream the channels sports news and highlights over the Internet.

ESPN has declined to include such provisions. The company has said it will not jeopardize its relationship with affiliates, but it also won't limit its ability to take advantage of emerging distribution technologies.

Amid much finger-pointing, and conflicting accounts of the dispute, ESPNews went dark in nearly 250,000 Charter households last summer. The two companies are still working to settle the matter.

"We are still in negotiations with ESPN and are hopeful that we will have it resolved soon," said Charter spokesman Andy Morgan.

Charter isn't alone. Many cable operators, reluctant to foster broadband media outlets that compete with their bread-and-butter cable systems, are seeking language that prohibits streaming in their carriage deals.

And ESPN's announcement of plans to launch a new ESPN Broadband service earlier this year became a source of consternation for many cable operators. But ESPN has pointedly said it is open to various business models and may offer the service for free in one market as an "added value," or charge subscribers in another market on a per-use basis in order to find the most effective model.

If ESPN ends up charging a subscription fee for the broadband content — which would be cached locally — it would give the local cable operator a cut of the revenue, as well as ad inventory to sell, the network said.

The IOC also is investigating whether it would make sense in the future to utilize broadband as a way to limit geographic distribution during future Olympics.

In another case, Major League Baseball is currently negotiating deals with News Corp.'s Fox Sports over a service that would stream live game telecasts over broadband networks, starting next spring. The Fox broadcast network controls baseball's national broadcast-TV contract; cable's Fox Sports Net and many Fox owned-and-operated local TV stations hold the rights to many individual MLB teams.

Under the proposal, MLB's streaming service would consist of repurposed local telecasts.

MLB plans to limit the streams to a handful of games and institute local blackouts to avoid angering radio and TV broadcasters. It would mark the first time a major sports league has sought to stream entire telecasts.

Last season, baseball began charging fans for Internet access to local radio broadcasts. In the past, companies like Yahoo! Inc. had been allowed to cut online distribution with local TV and radio stations that owned the broadcast rights to baseball games. Last spring, though, MLB regained control of its Internet broadcast rights and began charging subscriptions for access to live audio feeds on the Internet.

RealNetworks Inc. this year paid $20 million for a three-year deal with the MLB, charging $9.95 to for access to video and audio content through its GoldPass subscription service. That service counts some 400,000 paying subscribers, the company said.

MLB is still weighing how much it will charge broadband users to view games, but analysts say it likely will be under $20 a month.

"Video Webcasting can open the door for new sources of revenue for sports media outlets and for the Olympics," Stroud noted. "People will pay a fee to watch, as long as it is reasonable. I think that $20 a month would be reasonable, but anything above that would be trickier."


In one promising sign, the IOC is bowing to pressure and granting press credentials to 15 Internet sites to cover the Salt Lake City games, as a test to gauge the quality of Internet coverage.

But even that isn't without controversy: Small sites like ( and (
) were selected instead of media heavyweights like CBS SportsLine, ESPN and America Online. All told, only five U.S. sites were green-lighted, including Yahoo! (, The Sports Network (
) and the National Hockey League's Web site (

The IOC said that 28 Internet sports sites applied for credentials and some — like AOL and — were turned down because of ties to other media outlets with credentialed reporters.

Being denied credentials was a blow for SportsLine and other Internet sports sites.

"We obviously would like to have an army of people on site but in lieu of that we are confident we will have extensive, robust coverage," said Ferreira. SportsLine, which is majority-owned by Viacom Inc.'s CBS, regularly features streaming video highlights from National Football League games, Professional Golfers' Association of America matches, and other events covered by CBS Sports.

SportsLine will rely on acquired Olympic news packages, such as one being offered by the Associated Press, and on stringers for its Salt Lake coverage.


Another key player in Web Olympics coverage is Microsoft Corp., which will bring technical hosting, sales support and marketing prowess to through its MSN network of Internet services.

MSN came to the deal late in the game, after a couple of original hosting companies went belly up. Originally Quokka Sports — which had exchanged millions in equity to secure the Olympics rights — was to be a partner, but it filed for bankruptcy in April. And infrastructure provider Logictier, backed out of a secondary deal shortly thereafter.

MSN's role is somewhat hazy. The company, which declined requests for an interview, claims in press releases to be a "content provider," something that NBC refutes, since MSNBC ( is the news-content provider for

What is clear is that that Microsoft will drive traffic to the Olympic sites from various MSN Web sites and, in turn, be allowed to publish official Olympic reports on its sites, giving it added branding firepower.

Microsoft, which is NBC's partner in MSNBC, is receiving the Olympic rights for free. Although Microsoft isn't paying a license fee, it will bear the expenses of hosting and producing the Web sites. Published reports have pegged those costs at about $10 million.

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