Olympics up for grabs as CBS drops out

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Jun 3, 2003, 11:35:53 AM6/3/03
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from media life magazine

Olympic puzzler: Where's ABC?
CBS quits rights bidding, edged out by NBC's $s
By Toni Fitzgerald

The issue is $2 billion, give or take, and who's going to pay that
or more for rights to air the 2010 and 2012 Olympics Games.
It's not going to be CBS, the network announced yesterday, and that
leaves NBC, which has the rights until then, and ABC and, in theory at
least, Fox.
Time is tight. Over Thursday and Friday, the remaining interested
parties will make their pitches before the International Olympic
Committee in Lausanne, Switzerland.
The question will be, just how interested is ABC?
It already paid millions for the NBA last year and is suffering
through abysmal NHL playoff ratings this season. Since ABC already
offers weekly NFL coverage, too, does it really need and can it afford
the Olympics?
NBC, which allowed the NBA to move to ABC last year in a
cost-cutting move, is certainly the most focused of the three
remaining networks.
NBC impressed the IOC with its coverage of the past two Olympics,
winning multiple Sports Emmys for last winter’s Salt Lake City Games.
Without the NBA, NHL, NFL or Major League Baseball, the Olympics are
NBC’s only remaining major sports pull.
The network likely will be willing to go as high as it takes to
retain those rights. It has certainly shown a readiness to leap to
whatever cost the IOC demanded in the past.
CBS paid $375 million to broadcast the 1998 Winter Games from
Nagano, Japan. That seemed like a relative bargain compared to the
$1.507 billion NBC bid for the 2006 and 2008 Olympics and $1.338
billion for the 2002 and 2004 Games.
ABC can offer the considerable cable capabilities of ESPN and ESPN2
to help with coverage, similar to what NBC has done with MSNBC, CNBC
and, next summer, Telemundo. But much of ABC's money is tied up in the
NHL, NBA and college football.
Fox is certainly the sleeper among the three remaining networks,
although the upstart has never been reluctant to spend in order to
shake the “fourth network” perception.
Fox seized NFL and MLB rights in recent years, and though it has
never broadcast an Olympics, it does offer cable outlets Fox Sports
and FX, as well as interest in DirecTV, as deal sweeteners.
AOL Time Warner dropped out of the bidding last month.
CBS cited “uncertainties surrounding two events that don’t conclude
for another nine years” when it dropped out of the bidding yesterday.
CBS is probably quite right to worry about what the media landscape
will look like seven years from now, when internet, video on demand
and other technologies could have a huge impact on what has quickly
become a multi-media event.
More significantly, the network was unwilling to pay the $2 billion
or more that some analysts say these Olympics could demand, a record
by nearly half a billion compared to what NBC paid for its 2006 and
2008 rights.
CBS, after all, just asked its local affiliates last week to help
cover costs of its 11-year, $6 billion NCAA men’s basketball
agreement. Committing an additional $2 billion when the location of
these Olympics, which always play a part in network ratings, has not
even been determined proved too great a leap.
The IOC is offering all rights, including broadcast, cable,
internet, video on demand, satellite, wireless technology, etc., even
though it is difficult to determine the worth of those platforms. The
network that offers the widest variety of platforms could be the
winner even if its bid is lower than others. The IOC will not
necessarily accept the highest bid.
“We would welcome the exhibition of the Olympic Games over as broad
a number of platforms as possible,” says Neal Pilson, the former CBS
Sports president who now runs Pilson Communications and is acting as a
consultant to the IOC during this process. “How they value that
opportunity, we're going to find out. We feel if we were to offer
anything less, we would devalue their level of interest. We think to
get the true market value, we have to give them all rights.”
The networks will bid on the Games despite not knowing where they
will be held. The 2010 Winter Olympics site will be announced July 2.
The finalists: Vancouver, British Columbia; Salzburg, Austria; and
South Korea.
New York City is among the competitors for the 2012 Summer Games,
which won’t be announced for a while.
“It just makes for more uncertainty,” says John M. Mansell Jr., an
analyst with Kagan Associates. “You have to build that into your
model. I have to believe they figure that one of those Olympics won't
be that [great] a time difference, maybe the other one will be.
"Going forward, there are going to be increasing opportunities on
the technical front to carry a lot more programming, perhaps at some
point introduce video on demand, interactive TV features, that will
make holding those rights all the more attractive.”
How attractive those Olympics will be for advertisers remains to be
seen. NBC reportedly received about $600,000 for a 30-second
advertisement during the 2002 Winter Olympics. It's possible that with
more platforms and more hours broadcast, there will be a glut of time
available to advertisers.

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