Bidding for the Olympics on TV
By Michael Hiestand and Rudy Martzke, USA TODAY
Very quietly, the first competition in the 2010 and 2012 Olympics has begun.
America's media giants, in the first open auction for Olympic TV rights since 1995, are preparing their bids for those Games. They're understandably tight-lipped as they try to predict what television, the economy and even the Internet might look like a decade from now — and how Americans will want to watch the Games. (Related items: Rights fees over the years| Prospective host cities)
But the broad strokes in their game plans seem clear.
As executives at the conglomerates calculate how to recoup costs, they'll consider how all their assets could be deployed. That means potentially bringing new players such as Disney's ESPN or News Corp.'s DirecTV or AOL Time Warner into the Olympic TV mix and raising possibilities that Olympic action will appear online.
And while Olympic TV tonnage is steadily expanding — NBC's outlets plan virtually round-the-clock coverage of next year's Summer Games in Athens — the new deal will likely give viewers even more access to the thousands of hours of competition in an Olympics.
This likely will come at a high cost. The winning total, for the two Games sold together, is expected to top $2 billion — a 33% increase over what NBC paid, in quiet negotiations without open bidding in 1995, for the 2006 and 2008 Games. (NBC bought those two Olympics, along with the 2004 Games, for about $2.3 billion — more than CBS pays for four NCAA men's college basketball tournaments.)
Where will the athletes gather?
But when the networks present their secret bids to the International Olympic Committee in Lausanne, Switzerland, on June 5, they won't even know where the host cities for 2010 and 2012. That's an important mystery, as time zones dictate what Olympic action can air live in U.S. prime time.
In July the IOC will award the 2010 Games, with Vancouver and Salzburg, Austria, considered front-runners. If those Games don't go to a North American city, Toronto or New York would more likely capture the 2012 Games. So the broadcaster buying the two Games likely will get one in a U.S. time zone and avoid the bigger timing problems that come when the Games are in Asia.
"What you care about is having the Olympics in a favorable time zone," says Barry Frank, a TV consultant for the U.S. Olympic Committee. "And it's assumed at least one of the two Games will be in North America."
But when it comes to picking host cities, IOC votes are unpredictable. Olympic officials, says Fox Sports chairman David Hill, "have told us that every Olympics is equal, whether in Baltimore or Botswana. But it's uncomfortable bidding and not knowing."
Says CBS Sports President Sean McManus: "Obviously, we'd prefer to know the host cities. But we'll play the hand we're dealt."
Expanding Olympic horizons
Odds are that viewers will be winners, no matter which network gets these Games.
Historically, networks show just fractions of Olympic action. But with recent Games, networks have greatly expanded coverage as a way to recoup the costs of their TV rights.
For next year's Summer Olympics in Athens, General Electric's NBC and four other GE-owned channels will carry about 807 hours of coverage — nearly quadrupling the total TV hours for the Atlanta Summer Games on NBC seven years ago.
The media landscape seven years from now is likely to be more complicated. But IOC President Jacques Rogge suggests the winning bidder will get some protection from Olympic media rights being "bundled" so the winner will be able to exploit "all aspects of new media."
Neal Pilson, an IOC TV consultant and former president of CBS Sports, suggests that might lead to creativity: "Among the things they might consider would be whether consumers will pay $35 to $49 for, say, a separate channel for gymnastics."
NBC, for last year's Salt Lake Winter Games, showed TV rights can also build Internet traffic. During the Games, it heavily promoted its two Olympic Web sites — and drew more than 1 million visitors each day.
By the 2010 and 2012 Games, those efforts might look prehistoric. Using the Internet to show live action has been out-of-bounds, as the global reach would intrude on broadcasters who have paid for exclusive national TV rights.
But Webcasts of live events, such as major league baseball games, are being directed only to geographic areas where there are no conflicts with existing TV rights — a technique that could make the Web the place to watch the Games.
Asks Mike Trager, a TV consultant who was involved in past Olympic bidding: "Can you charge for boxing on the Web?"
A guessing game
David Carter, a sports business consultant in Los Angeles, says the bidding "is like trying to hit a moving target. You have to lock in financially before you know where you'll be or how media technologies will emerge."
And advances in technology, suggests Jack Myers, who publishes a media industry newsletter, might not be helpful. By 2012, he says, networks will have new avenues in high-definition TV, video-on-demand and interactive TV.
"But you're also going to have people at Olympic events with video cameras that can instantly, and wirelessly, load their images onto the Internet," Myers says. "The IOC won't be able to hold off technology into the next decade."
NBC quietly secured rights to the 2004, 2006 and 2008 Games in late 1995 without going through any formal bidding.
For the 2010 and 2012 Games, the IOC has promised an orderly process. And every network seems interested.
Says George Bodenheimer, president of Disney-owned ESPN and ABC Sports: "Obviously, it's something we'd like to get at the right financial deal."
The Olympics are an obvious draw, because, despite the occasional scandal, the brand is so powerful. Outside the Games, most Olympic sports draw tiny TV ratings in the U.S. But when they air under the famous five Olympic rings, they're blockbusters.
Viewership gets a boost
During the Games, the rights-holder can count on being the top-rated broadcast network for 17 consecutive nights. Ratings will rise on weekend afternoons and in late-night and early-morning slots — boosting not only the network but also its cable channels and its owned-and-operated local stations.
NBC claims it made at least $50 million on the $705 million it paid for the rights to the 2000 Sydney Games. And that was possible even though the rating of 13.8% of TV households it averaged in prime time was the lowest for a Summer Olympics since 1968, when ABC paid $4.5 million for TV rights.
After paying $545 million for the rights to last year's Winter Games in Salt Lake, NBC says it netted about $75 million.
That might be small potatoes to NBC parent GE, which has $131.7 billion in annual revenues. But it's a big deal for executives at the broadcast networks, who urge the purchase of big-time sports to counter the longtime decline in viewership.
And that, says CBS' McManus, makes the Olympics compelling: "It's one of those few events that you can reasonably count on delivering a huge audience. I don't think any of us in the business see that changing."
What might change is how TV networks and their corporate parents will exploit the Games. Disney could create tie-ins to its theme parks. Or News Corp., which owns Fox, might deploy its recently purchased DirecTV — the leader in U.S. satellite TV.
But Dean Bonham, a Denver-based sports business consultant, suggests media companies are changing their attitude towards exploiting all the Games' media possibilities: "This will be the first time in the history of the industry that all the bidders will be bidding as conglomerates, not just individual networks."
The bidding on these Games might not even be limited to the usual suspects. Mark Lazarus, who oversees Turner Sports, which carried cable coverage of past Games, suggests Turner parent AOL Time Warner could be a serious contender for 2010 and 2012 TV rights. The company doesn't own one of the four major networks — NBC, CBS, ABC and Fox.
But, Lazarus suggests, that might not matter with these Games: "What makes anyone think that broadcast television will be meaningful in the world in 2010?"
Rights fees keep climbing
So how much will be too much to pay?
"I think $2 billion is possible," says consultant Trager. "It wouldn't be if only a couple networks were bidding. But with four or five bidders, that ups the ante."
Steve Grubbs, a sports media buyer at the PHD ad agency, agrees that $2 billion is possible. That would be a 33% increase from the last Olympic TV deal, when NBC paid $1.5 billion for rights to the 2006 and 2008 Games in what were 12% increases over previous rights deals.
"I thought that the Olympics were overpriced 10 years ago," Grubbs says. "But they continue to find buyers and go up."
The cost of telecasting the Olympics
Year Games Location Network Hours Rights fees
1960 Winter Squaw Valley, Calif. CBS 15 $50,000
Summer Rome CBS 20 $394,000
1964 Winter Innsbruck, Austria ABC 17 1/4 $597,000
Summer Tokyo NBC 14 $1.5M
1968 Winter Grenoble, France ABC 27 $2.5M
Summer Mexico City ABC 43 3/4 $4.5M
1972 Winter Sapporo, Japan NBC 37 $6.4M
Summer Munich ABC 62 3/4 $7.5M
1976 Winter Innsbruck ABC 43 1/2 $10M
Summer Montreal ABC 76 1/2 $25M
1980 Winter Lake Placid, N.Y. ABC 53 1/4 $15.5M
Summer Moscow NBC 150* $87M
1984 Winter Sarajevo, Yugo. ABC 63 $91.5M
Summer Los Angeles ABC 180 $225M
1988 Winter Calgary ABC 94 1/2 $309M
Summer Seoul NBC 179 1/2 $300M
1992 Winter Albertville, France CBS 116 $243M
Summer Barcelona NBC 161 $401M
1994 Winter Lillehammer, Norway CBS 119 1/2 $300M
1996 Summer Atlanta NBC 171 $456M
1998 Winter Nagano, Japan CBS 123 5/6 $375M
2000 Summer Sydney NBC 441 1/2 $705M
2002 Winter Salt Lake City NBC 375 1/2 $545M
2004 Summer Athens NBC 806 1/2** $793M
2006 Winter Torino, Italy NBC Not set $613M
2008 Summer Beijing NBC Not set $894M
*Planned prior to boycott **Proposed
By Michael Hiestand and Rudy Martzke, USA TODAY
Very quietly, the first competition in the 2010 and 2012 Olympics has begun.
America's media giants, in the first open auction for Olympic TV rights since 1995, are preparing their bids for those Games. They're understandably tight-lipped as they try to predict what television, the economy and even the Internet might look like a decade from now — and how Americans will want to watch the Games. (Related items: Rights fees over the years| Prospective host cities)
But the broad strokes in their game plans seem clear.
As executives at the conglomerates calculate how to recoup costs, they'll consider how all their assets could be deployed. That means potentially bringing new players such as Disney's ESPN or News Corp.'s DirecTV or AOL Time Warner into the Olympic TV mix and raising possibilities that Olympic action will appear online.
And while Olympic TV tonnage is steadily expanding — NBC's outlets plan virtually round-the-clock coverage of next year's Summer Games in Athens — the new deal will likely give viewers even more access to the thousands of hours of competition in an Olympics.
This likely will come at a high cost. The winning total, for the two Games sold together, is expected to top $2 billion — a 33% increase over what NBC paid, in quiet negotiations without open bidding in 1995, for the 2006 and 2008 Games. (NBC bought those two Olympics, along with the 2004 Games, for about $2.3 billion — more than CBS pays for four NCAA men's college basketball tournaments.)
Where will the athletes gather?
But when the networks present their secret bids to the International Olympic Committee in Lausanne, Switzerland, on June 5, they won't even know where the host cities for 2010 and 2012. That's an important mystery, as time zones dictate what Olympic action can air live in U.S. prime time.
In July the IOC will award the 2010 Games, with Vancouver and Salzburg, Austria, considered front-runners. If those Games don't go to a North American city, Toronto or New York would more likely capture the 2012 Games. So the broadcaster buying the two Games likely will get one in a U.S. time zone and avoid the bigger timing problems that come when the Games are in Asia.
"What you care about is having the Olympics in a favorable time zone," says Barry Frank, a TV consultant for the U.S. Olympic Committee. "And it's assumed at least one of the two Games will be in North America."
But when it comes to picking host cities, IOC votes are unpredictable. Olympic officials, says Fox Sports chairman David Hill, "have told us that every Olympics is equal, whether in Baltimore or Botswana. But it's uncomfortable bidding and not knowing."
Says CBS Sports President Sean McManus: "Obviously, we'd prefer to know the host cities. But we'll play the hand we're dealt."
Expanding Olympic horizons
Odds are that viewers will be winners, no matter which network gets these Games.
Historically, networks show just fractions of Olympic action. But with recent Games, networks have greatly expanded coverage as a way to recoup the costs of their TV rights.
For next year's Summer Olympics in Athens, General Electric's NBC and four other GE-owned channels will carry about 807 hours of coverage — nearly quadrupling the total TV hours for the Atlanta Summer Games on NBC seven years ago.
The media landscape seven years from now is likely to be more complicated. But IOC President Jacques Rogge suggests the winning bidder will get some protection from Olympic media rights being "bundled" so the winner will be able to exploit "all aspects of new media."
Neal Pilson, an IOC TV consultant and former president of CBS Sports, suggests that might lead to creativity: "Among the things they might consider would be whether consumers will pay $35 to $49 for, say, a separate channel for gymnastics."
NBC, for last year's Salt Lake Winter Games, showed TV rights can also build Internet traffic. During the Games, it heavily promoted its two Olympic Web sites — and drew more than 1 million visitors each day.
By the 2010 and 2012 Games, those efforts might look prehistoric. Using the Internet to show live action has been out-of-bounds, as the global reach would intrude on broadcasters who have paid for exclusive national TV rights.
But Webcasts of live events, such as major league baseball games, are being directed only to geographic areas where there are no conflicts with existing TV rights — a technique that could make the Web the place to watch the Games.
Asks Mike Trager, a TV consultant who was involved in past Olympic bidding: "Can you charge for boxing on the Web?"
A guessing game
David Carter, a sports business consultant in Los Angeles, says the bidding "is like trying to hit a moving target. You have to lock in financially before you know where you'll be or how media technologies will emerge."
And advances in technology, suggests Jack Myers, who publishes a media industry newsletter, might not be helpful. By 2012, he says, networks will have new avenues in high-definition TV, video-on-demand and interactive TV.
"But you're also going to have people at Olympic events with video cameras that can instantly, and wirelessly, load their images onto the Internet," Myers says. "The IOC won't be able to hold off technology into the next decade."
NBC quietly secured rights to the 2004, 2006 and 2008 Games in late 1995 without going through any formal bidding.
For the 2010 and 2012 Games, the IOC has promised an orderly process. And every network seems interested.
Says George Bodenheimer, president of Disney-owned ESPN and ABC Sports: "Obviously, it's something we'd like to get at the right financial deal."
The Olympics are an obvious draw, because, despite the occasional scandal, the brand is so powerful. Outside the Games, most Olympic sports draw tiny TV ratings in the U.S. But when they air under the famous five Olympic rings, they're blockbusters.
Viewership gets a boost
During the Games, the rights-holder can count on being the top-rated broadcast network for 17 consecutive nights. Ratings will rise on weekend afternoons and in late-night and early-morning slots — boosting not only the network but also its cable channels and its owned-and-operated local stations.
NBC claims it made at least $50 million on the $705 million it paid for the rights to the 2000 Sydney Games. And that was possible even though the rating of 13.8% of TV households it averaged in prime time was the lowest for a Summer Olympics since 1968, when ABC paid $4.5 million for TV rights.
After paying $545 million for the rights to last year's Winter Games in Salt Lake, NBC says it netted about $75 million.
That might be small potatoes to NBC parent GE, which has $131.7 billion in annual revenues. But it's a big deal for executives at the broadcast networks, who urge the purchase of big-time sports to counter the longtime decline in viewership.
And that, says CBS' McManus, makes the Olympics compelling: "It's one of those few events that you can reasonably count on delivering a huge audience. I don't think any of us in the business see that changing."
What might change is how TV networks and their corporate parents will exploit the Games. Disney could create tie-ins to its theme parks. Or News Corp., which owns Fox, might deploy its recently purchased DirecTV — the leader in U.S. satellite TV.
But Dean Bonham, a Denver-based sports business consultant, suggests media companies are changing their attitude towards exploiting all the Games' media possibilities: "This will be the first time in the history of the industry that all the bidders will be bidding as conglomerates, not just individual networks."
The bidding on these Games might not even be limited to the usual suspects. Mark Lazarus, who oversees Turner Sports, which carried cable coverage of past Games, suggests Turner parent AOL Time Warner could be a serious contender for 2010 and 2012 TV rights. The company doesn't own one of the four major networks — NBC, CBS, ABC and Fox.
But, Lazarus suggests, that might not matter with these Games: "What makes anyone think that broadcast television will be meaningful in the world in 2010?"
Rights fees keep climbing
So how much will be too much to pay?
"I think $2 billion is possible," says consultant Trager. "It wouldn't be if only a couple networks were bidding. But with four or five bidders, that ups the ante."
Steve Grubbs, a sports media buyer at the PHD ad agency, agrees that $2 billion is possible. That would be a 33% increase from the last Olympic TV deal, when NBC paid $1.5 billion for rights to the 2006 and 2008 Games in what were 12% increases over previous rights deals.
"I thought that the Olympics were overpriced 10 years ago," Grubbs says. "But they continue to find buyers and go up."
The cost of telecasting the Olympics
Year Games Location Network Hours Rights fees
1960 Winter Squaw Valley, Calif. CBS 15 $50,000
Summer Rome CBS 20 $394,000
1964 Winter Innsbruck, Austria ABC 17 1/4 $597,000
Summer Tokyo NBC 14 $1.5M
1968 Winter Grenoble, France ABC 27 $2.5M
Summer Mexico City ABC 43 3/4 $4.5M
1972 Winter Sapporo, Japan NBC 37 $6.4M
Summer Munich ABC 62 3/4 $7.5M
1976 Winter Innsbruck ABC 43 1/2 $10M
Summer Montreal ABC 76 1/2 $25M
1980 Winter Lake Placid, N.Y. ABC 53 1/4 $15.5M
Summer Moscow NBC 150* $87M
1984 Winter Sarajevo, Yugo. ABC 63 $91.5M
Summer Los Angeles ABC 180 $225M
1988 Winter Calgary ABC 94 1/2 $309M
Summer Seoul NBC 179 1/2 $300M
1992 Winter Albertville, France CBS 116 $243M
Summer Barcelona NBC 161 $401M
1994 Winter Lillehammer, Norway CBS 119 1/2 $300M
1996 Summer Atlanta NBC 171 $456M
1998 Winter Nagano, Japan CBS 123 5/6 $375M
2000 Summer Sydney NBC 441 1/2 $705M
2002 Winter Salt Lake City NBC 375 1/2 $545M
2004 Summer Athens NBC 806 1/2** $793M
2006 Winter Torino, Italy NBC Not set $613M
2008 Summer Beijing NBC Not set $894M
*Planned prior to boycott **Proposed