NBCUniversal Wins Rights to 2014-2020 Olympics
The company beat out fellow suitors ESPN/ABC and Fox Sports with a $4.38 billion bid.
NEW YORK -- NBCUniversal/Comcast on Tuesday won the U.S. broadcast rights for the 2014 Sochi Winter Olympics and 2016 Rio de Janeiro Summer Games and the following two Olympics, beating out ESPN/ABC and News Corp.'s Fox, which had also bid for the rights package in presentations in Lausanne, Switzerland.
The price tag for the package was $4.38 billion, NBCUniversal said.
The IOC had opened the bidding for the 2014 and 2016 Olympics, but also allowed suitors to include the following two Olympics in their offers. Experts had predicted that a deal for four Games would carry a price tag of above $4 billion.
The outcome of the bidding process means that the Olympics will stay with NBC, which has aired the Games since the 1988 Summer Games.
"People at NBC must be very happy," said Wunderlich Securities analyst Matthew Harrigan. "This shows that Comcast is committed to realizing value from the NBC network and stations long-term." Comcast finalized a controlling stake in NBCUniversal in late January.
The Olympics deal came as a surprise to some observers after NBCUniversal and Comcast executives had repeatedly said they would bid carefully for sports packages, including the Olympics. "It seemed like News Corp. wanted to be a serious dark horse contender, and Disney/ESPN would have liked it, too, for a change," said Miller Tabak analyst David Joyce.
The deal is a victory for the team led by Comcast chairman and CEO Brian Roberts and NBCUniversal CEO Steve Burke who have a reputation for being shrewd negotiators who prefer to stay out of the limelight. "Every two years the Olympic Games provides iconic content for us to deliver on all platforms," Roberts said after winning the deal in signaling his team's commitment to offering Olympics content across various TV networks and online.
NBCUniversal's financial success with the sports deal will, of course, depend on whether it can make the price tag for the Olympics work.
The company lost $223 million on the most recent Winter Games in Vancouver, which marked the first time that the U.S. network airing the Olympics didn't make money. “The 2012 London Summer games have a price tag of about $1.2 billion and could show the same loss,” said Marci Ryvicker, analyst at Wells Fargo. “At this point, we continue to see the Olympics as less of a financial decision and more of a strategic and branding initiative.”
While some experts had predicted a four-Games deal would cost around $4.2 billion, Harrigan suggested that the slightly higher price can still allow people to view the deal as "about in line to a slightly good deal.".
Experts have said that $1.5 billion-$1.7 billion in advertising revenue will be generated by the 2014 and 2016 Games, with broadcast network retransmission consent and cable network carriage fee increases and other revenue streams necessary to turn a profit.
Joyce said there are likely financial benefits for NBCUniversal beyond advertising from a deal, even though it is hard to quantify them at this stage. "They can get positive aura effects on increased carriage rates for the networks that will eventually carry the Olympics," plus the deal could make sports network Versus a more powerful player, he said.
“Versus now goes from zero to 60 as a viable sports focused channel with retaining the NHL rights, picking up NBC programming like Notre Dame football and the Olympics,” echoed Greg Busch, executive vp, GMR Marketing.
The International Olympic Committee and U.S. Olympic Committee had more than a dozen representatives on hand to hear pitches in Lausanne, including IOC president Jacques Rogge who said Tuesday that all three bids were "excellent." He added: "In the end, we were most impressed with NBC, which not only has a track record for broadcasting the Games that speaks for itself, but also has a clear and innovative vision of where it wants to take the broadcast of the Games between now and 2020."
IOC members later told a conference call that an emotional pitch from Olympics veteran Bob Costas added to the conviction that the NBCUniversal team was deeply committed to the Games.
After a Monday presentation by Fox, the delegations of Walt Disney's ESPN, including its three presenters -- ESPN/ABC Sports boss George Bodenheimer; Disney CEO Robert Iger; and John Skipper, ESPN’s executive vp content -- and NBCUniversal/Comcast made their presentations Tuesday.
The 90-minute ESPN/ABC presentation and Q&A focused on what Disney, ESPN and ABC could collectively bring to the table, stressed the company’s plethora of platforms and highlighted its desire to provide live coverage, according to a source. When the delegation left, it came across the NBCUniversal/Comcast group that was gathering in the hotel, according to sources.
After everybody had their turn, suitors Tuesday submitted sealed bids, which the IOC then opened to make a decision.