Comcast, USOC Network Zinged By The Rings

Author:
Updated:
Original:

The U.S. Olympic Committee may have hoped to make a clarion call about helping the Olympic movement in this country with its announcement of a joint venture network with Comcast, from which some proceeds would fall to sports' national governing bodies to help support athletes and their training.
That July 8 message has been muted, though, by cries of foul from the International Olympic Committee and NBC, this nation's sole Olympic Games rights-holder since 1996. NBC Universal is also involved with Universal Sports, a joint venture service that presents Olympic-style events.

After the announcement about the formation of the U.S. Olympic Network, which would launch sometime in 2010 after the conclusion of the Winter Games in Vancouver, during a conference call from the Allen & Co. media conference in Sun Sun Valley, 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." IOC executive board member Richard Carrion said the IOC told the USOC on Monday July 6 that there were "serious issues that we have and that we should discuss them before the announcement."
The parties' back and forth continued throughout the week. USOC COO 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 groups "had a chance to consider together all the ramifications." The Wall Street Journal, citing sources, reported the IOC asked the USOC to delay the announcement for up to a month so it could asses plans for the new networks.
NBC Sports & Olympics chairman Dick Ebersol told The New York Times that the USON could have "ramifications on Chicago's bid" for the 2016 Summer Games. An IOC vote on whether Chicago, Rio de Janiero, Tokyo or Madrid city will host those Olympics is scheduled for Oct. 2 in Copenhagen.

Ebersol also said that after a year or more, talks about combining USON with the 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, principle sports media consultancy LHB Sports and Entertainment. "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."
Other observers believe the IOC was supporting NBC, which is its chief revenue supplier, with outlays for the upcoming Games in Vancouver and in London two years later, totaling $2.2 billion.
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.
Bellingham, in an interview Friday July 10, said the USOC, subsequent to the network's midweek announcement, had engaged in discussions with the IOC that he deemed "constructive" and "very positive in tonality."
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 conference call, there was talk of USON serving as a model for other nations to launch their own Olympic services.
Moreover, USON officials said there was room in the agreement for other players to grab equity in the service. Steve Greenberg, managing director of Allen & Co., noting that his firm had helped write the business plan for MLB Network, which includes cable and satellite stakeholders in the service, said "we certainly believe in that business model." MLB Network launched to 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.

Since then, the programmer has leveraged retransmission-consent to negotiate multicast carriage for the network, growing its base from about 2 million to 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).
Universal Sports chairman and CEO Claude Ruibal, who served as chairman and CEO of WCSN, said that since the network bowed in 2003, it has distributed over 16,000 hours of Olympic-style sports online and on television, more than all other Olympics coverage in the U.S. over the years.
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 was a point of contention with the IOC. However, the 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 2016 Summer Games are expected to take place some time after that host city is tabbed this fall.
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, the ratings for the Olympics themselves. Some proceeds from the network, which would gain revenue from both license fees and advertising dollars, would be earmarked to the various national 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..
"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 Berke. "But to have two channel butting heads, especially with Universal Sports already having a lot of the marquee events, is tough."
Ruibal, whose first job out of college was working for Ueberroth during the 1984 Summer Games in Los Angeles, said he discussed WCSN and its business plan many times with his former boss.
He noted that the USOC will encounter costs for televising the various Olympic-style events in the States because there isn't any equivalent to the European Broadcasting Union, which provides the feeds for international sports federation events.
"There is no broadcast entity like that here in the U.S.," Ruibal explained.
But before all is said and done in this competition, doves may yet fly.
"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."
Added Bellingham: "We are always talking to NBC about a variety of matters. If there were a scenario involving NBC, that would be something very positive. Our objective in this is not to be isolated."

Related