NBC Universal is polevaulting into the cable sports network arena, acquiring a majority interest in the Olympic-sports tinged cable and broadband service World Championship Sports Network.
NBCU officials say it will seek to aggressively increase the five-year old WCSN's 2 million subscriber base over the next year under its new brand Universal Sports Network. The service, which will be co-owned by NBC Sports and private equity fund InterMedia Partners, could potentially be packaged as part of an overall extension of NBC's Olympics deal with operators which expires after the 2008 summer games in China.
As part of the deal expected to be announced this week, NBCU will become a “significant shareholder” in WCSN — which offers more than 2,000 hours of annual original event programming and 200 live events in such sports as track and field, equestrian, gymnastics, ice hockey and skating — and will jointly control WCSN with the company's majority shareholder InterMedia Partners, although financial details were not revealed.
WCSN chairman and CEO Claude Ruibal and president Carlos Silva will continue to manage the company. Ruibal said the deal — which had been in the works since last fall — will provide greater awareness and exposure to both the network and its premium-based Web site, which averages 1.5 million unique users a month.
“It's always been a strategy of ours to have some strategic relationship with a major player on the distribution side or broadcast programming side,” Ruibal said. “It's difficult in this environment to be an independent and I think for WCSN it's a critical deal coming at a critical time just before the Beijing Games and leading up to the Vancouver Games in 2010. NBC couldn't be a better partner for us.”
For NBC Sports, the deal provides a dedicated cable and Web-based outlet for some of its Olympics-based content, although Universal Sports will not distribute any 2008 Olympics events. NBCU has broadcast and cable rights for the Winter and Summer Olympics through 2012.
The newly minted Universal Sports service will this week offer never before seen Olympics trials coverage in gymnastics and diving, according to Gary Zenkel, president of NBC Olympics and executive vice president of strategic partnerships for NBC Cable. NBC said that the Universal Sports could offer some Olympics highlights during the games but will feature a significant amount of Olympics highlights once the games are over.
“WCSN has essentially all the world championship events in virtually all the Olympics sports,” Zenkel said.
National and regional sports network consultant Lee Berke said the deal could foretell a much bigger play for NBC in the television sports arena. “If NBC is planning to make moves in terms of future Olympics, [Universal Sports] is a great backbone to have in terms of programming,” he said. “The other aspect could be that NBC is planning to compete in the general sports arena in cable and satellite and go up against ESPN.”
But NBCU's cable properties have moved away from the sports arena recently. USA Network will end its 25-year run as the cable carrier for the U.S. Open tennis tournament at the conclusion of this year's event after ESPN and the Tennis Channel this past May reached a six-year cable deal to televise the tennis event.
Zenkel said Universal Sports will not carry content from any of NBCU's non-Olympic sports events like the Wimbledon and French Open pro tennis tournaments, or the Kentucky Derby and the Preakness Stakes horse racing events.
He said the service has yet to formalize its distribution strategy. Currently WCSN has limited multicast distribution in such areas as Detroit; Idaho Falls, Idaho; Reno, Nev.; and Buffalo and Albany, N.Y. Zenkel wouldn't say whether the service would seek basic cable distribution or would be content with low penetrated sports tiers.
While the network will attempt to gain carriage in a very crowded and bandwidth-limited cable environment, InterMedia Partners co-partner Peter Kern said the network is unique addition to the national sports network marketplace.
“It's a category unto itself — it's not another carve up of pro or college sports rights or different ways to attack the same model,” he said.
NBC could also gain distribution for the network as leverage against operators as it negotiates cable Olympics deals with operators for the 2010 Winter Games and 2012 Summer Games.
NBC is already talking to operators about extending its Olympics deals, seeking a “premium fee” from distributors for digital and television rights to those Olympics, according to operator sources. NBC has discussed offering an enhanced 2008 Olympics package, which would include additional high-definition, video on demand, broadband and interactive content — to get distributors to extend their carriage deals to 2012.
On the broadband front, Ruibal said he expects the rebranded universalsports.com Web site to eventually migrate from its current $4.95 per month subscription fee for access to all live and archived programming to a free, advertiser supported platform.