NBC Universal-Comcast prep Olympic bid
Conglomerate mounting sports strategy to challenge ESPN
Rest assured the combination of Comcast and NBC Universal will shake the playing field in the multibillion-dollar world of televised sports rights. But what remains to be seen is what's the game plan and who's the coach as Olympic negotiations are set to begin and the conglomerate mounts a strategy to challenge ESPN.
NBC Universal Sports & Olympics chairman Dick Ebersol seems well-positioned to take control of a considerable arsenal of assets, showing no signs of lowering his profile during the weekend at the U.S. Olympics Assembly in Colorado Springs. But while CEO Brian Roberts already has praised Ebersol, Jeff Zucker also saw some predeal flattery, and that didn't exactly ensure his long-term job security.
With Ebersol likely in the driver's seat, it's certain Comcast will look for NBC Uni to extend its Olympics rights into 2014 and 2016. But ESPN-led Disney and other conglomerates will attempt to put an end to that streak before the year is out. In an effort to grow its sports holdings, Comcast surely will try to wrest TV rights to at least one major sports league, with Major League Baseball and the NFL looking ripe for a bidding war in 2013.
International Olympic Committee president Jacques Rogge indicated Friday that negotiations for U.S. TV rights to the 2014 Winter Games in Sochi, Russia, and the 2016 Summer Games in Rio de Janeiro could begin as early as this year. NBC Uni already ponied up $2.2 billion for the Olympics in Vancouver and London, but with a weak U.S. economy and a geographically undesirable Sochi in the mix, don't expect the next two Games to fetch a higher sum even as Disney, News Corp. and a combination of Turner and CBS look to bid.
"I don't think you'll see any big companies bidding hoping the economy is going to strengthen substantially," said Neal Pilson, a sports TV consultant and former CBS Sports president.
The Hollywood Reporter has learned that the new conglomerate sees a unique opportunity to compete head to head with ESPN for sports programming, the TV business' most consistent draw for ratings and blue-chip advertisers.
Derek Baine, a cable industry analyst at SNL Kagan, believes Comcast would love to position its struggling channel Versus as an ESPN alternative.
"They really want to take Versus and do something dramatic with it," he said. "They've lost a lot of money on that channel. They've invested heavily in programming that hasn't gotten a lot of ratings."
It wasn't that long ago that Comcast nearly owned ESPN, considering its aborted acquisition of Disney in 2004. The second best thing to owning it: establishing a competitor to weaken it. And that has less to do with boosting Versus than it does controlling one of its biggest expenditures as a cable distributor. With its eye-popping $4 subscription fee, ESPN, along with its branded entities, is said to cost Comcast as much as $6 billion a year, according to SNL Kagan. Together with Fox Sports, ESPN amounts to more than one-quarter of Comcast's programming costs.
"If they could weaken ESPN's ratings by buying rights packages away from them, that could put ESPN into a weaker position when they come in for renewal," Baine said.
Even before Comcast decides what it wants to do to expand its sports business, the mere commingling of the two companies' assets will establish a new power player. NBC Uni brings with it rights to the 2012 Summer Games in London, to which Ebersol pledged last week to increase programming hours on NBC by 25% compared with the 2008 Beijing Olympics; a robust roster of cable channels to help shoulder that load; the $3.6 billion, six-year broadcast rights to the Sunday night NFL package; and a sprinkling of marquee events ranging from Wimbledon to golf's U.S. Open.
Comcast is no slouch, either, and there's plenty of complementary assets. Two fully distributed cable networks, Golf Channel and Versus, could share in the Olympics coverage (golf again becomes an Olympic sport in 2016); NBC and Versus will bring the entirety of NHL rights under one company; and Comcast's most underestimated sports asset -- its 11 regional sports networks -- will be a handy bargaining chip for reeling in the lowest-hanging fruit in sports rights: college football conferences.
But don't expect Roberts or incoming NBC Universal CEO Steve Burke to suddenly turn into Rupert Murdoch, who rocked the sports world in 1993 by peeling away the NFL's NFC package from CBS for a then-unheard-of $1.58 billion.
"If Comcast's history is any indicator, they don't toss money around lightly," Pilson said. "I don't think you'll see them get into bidding situations where the winner is going to be a loser in terms of profitability, and the Olympics will be a good example."
If NBC Uni fails to secure the next two Olympics, look for the focus to switch to year-round sports, where NBC has lagged for a long time. Even the Olympics presents such an opportunity; this year, NBC Uni and Comcast found themselves on opposing ends of a proposed U.S. Olympic Committee-backed channel that would cover Olympic sports all year (NBC Uni tried to build its own small cable network, Universal Sports, into such a venture). That aborted venture easily could be folded into Universal Sports.
But that's small-fry thinking compared with the big-game hunting that would have to happen at an Olympics-less Comcast. Although rights to the NBA (out until 2016) and NCAA basketball (ditto until 2024) are out of reach in the short term, the company is sitting on enough cash -- even if NBC Uni holds onto the Olympics -- to make a run at the likes of baseball or the NFL, both of which are divvied among a handful of networks until 2013 or 2014.
Ever the savvy executive, Ebersol -- who has run NBC Sports for more than 20 years -- has been angling to keep the Olympics at NBC Uni for as low a price as possible, which might explain why GE went public with the disclosure that NBC Uni actually lost $250 million on this year's Vancouver Games. More recently, he moved to patch up a rocky relationship with the USOC at the Olympics Assembly, praising the leadership he disparaged a year ago after Chicago failed to land the 2016 Games.
Ebersol's standing with Olympics poobahs is leverage alone to take over the sports portfolio of a Comcast-NBC union, though Pilson believes the Comcast RSNs might be broken out separately because they are such a different business. However, Ebersol, who turns 63 in July, will see his contract up for renewal in 2012, which could lead Comcast to hand-pick its own No. 2 to demonstrate a clear succession should he not be deemed the man for the future.
Unless Ebersol truly wows Comcast in London, there are two in-house execs who could inherit quite a kingdom: Page Thompson, the well-regarded president of Golf Channel who Comcast mysteriously plucked from his position this month without explaining what he'll do next, and Jeff Shell, the president of Comcast Programming Group who has sports experience from his days at Fox's cable division.
A source close to Shell, however, said he likely will be elevated elsewhere in the company.
While the Olympics and ESPN are prime targets, Comcast likely has its eye on smaller-scale, more realistic wins. With 26 golf tournaments already at NBC, the broadcast network will be an ideal promotional platform for Golf Channel, which might even be able to secure one of golf's major tournaments. The RSNs will provide new cross-platform ad-sales opportunities by establishing links to everything from owned-and-operated NBC stations to local-oriented sports news websites.
Pilson thinks Comcast would be foolish to try to topple ESPN.
"That's a quick method for losing a lot of money," he said. "It's more likely they'll target individual properties than the institution that is ESPN."
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