Why Dick Ebersol Resigned from NBC Sports (Analysis)
The resignation of NBC Sports chairman Dick Ebersol after more than two decades at the network is a result of his increasing marginalization within Comcast-owned NBC Universal, whose plans for the sports media business are much different than the approach Ebersol brought to the job.
Ebersol ran NBC Sports with autonomy and an open checkbook, say several current and former network sources. He made lucrative deals with sports leagues that brought millions of viewers to NBC and built his reputation as one of the most powerful men in both the sports and television business.
But at the same time, he cultivated a fiefdom within the media conglomerate.
"There's a sense that he's an impetuous, arrogant guy," says one NBC Sports insider. "But ultimately he is effective."
Sports have traditionally been loss leaders for broadcast networks, but their status as ratings bonanzas and DVR busters in an increasingly fractured TV universe has propelled rights fees into the stratosphere.
While there have been rumblings for several years that Ebersol, 63, would step down, he became increasingly marginalized post-merger, say sources. Last month he presided over a press conference with NHL commissioner Gary Bettman to announce a 10-year, $1.9 billion deal to keep the league on NBC and Versus – one of the Comcast cable networks that were added to Ebersol's portfolio. But while Ebersol initiated negotiations with the NHL, it was NBC Universal CEO Steve Burke who finished the deal, with Comcast chairman and CEO Brian Roberts also involved.
One knowledgeable source says Burke had previously expressed frustration that "Dick is such a broadcast guy," suggesting that Ebersol's notions about presenting the Olympics -- not just the price tag -- did not sit well with the Comcast regime. Ebersol will be replaced by Mark Lazarus, president of the NBC Sports cable group.
Certainly Burke has made it clear that sports packages have to make sense financially for the new NBC Universal.
"We're in business to make money, and our approach is going to be disciplined," he told Wall Street analysts earlier this year. "As it relates to the Olympics or the NFL, we think those are two fantastic properties and would love to have them, but we would like to make money. At the end of the day, we are not going to do anything that doesn't have a business plan that pencils out."
NBC loses $100 million annually on Sunday Night Football, far and away the network's most-watched property outside of the Olympics.
Comcast's takeover of NBC Universal came on the heels of Ebersol's $2.2 billion bid for the 2010-12 Olympic package. That deal put NBC in the red to the tune of $220 million for the 2010 Vancouver Games and will mean an even bigger loss for the 2012 Summer Games in London, which account for $1.2 billion of the total rights package.
Ebersol has acknowledged the flaws of that deal. "To some degree I overbid in 2003, and the marketplace was not quite reset post the economic crisis of late [2008 and 2009]," he told The Hollywood Reporter last month.
One source chalks up Ebersol's exit to "a fundamental disagreement over the approach to the [International Olympic Committee]. And that's Dick's legacy."
Indeed, the Olympics have been Ebersol's prized property and his obsession.
"That was his real love," says an NBC Sports insider.
Ebersol and his Olympic team would start plotting coverage a year in advance, with Ebersol managing every aspect of coverage -- including the music. He'd be in the control room around the clock. During the Games, the Olympic broadcast center -- where television networks from around the world are headquartered -- became Ebersol's home, literally. At least as far back as the Summer Games in Beijing, Ebersol had a bathroom, shower and bed in his international broadcast center office.
"They built a bedroom in his office because he never leaves," adds the insider.
By all accounts, this attention to detail endeared Ebersol to the IOC as well as commissioners across the sports world.
"He has done such a wonderful job of telling the stories of our athletes, particularly the American athletes," U.S. Olympic Committee CEO Scott Blackmun tells the Associated Press.
Ebersol's resignation comes just 18 days before the IOC opens bidding on the U.S. rights for the 2014 Winter Games in Sochi, Russia, and 2016 Summer Games in Rio de Janeiro.
"There is no question that the media industry is about relationship cultivation," says Patrick Rishe, director of sports research firm Sportsimpacts and an economics professor at Webster University.
Ebersol spent decades cultivating relationships with top league commissioners including MLB's Bud Selig, the NBA's David Stern and the NFL's Roger Goodell.
Management, added Rishe, "has a tendency to underestimate the importance of relationships. But sometimes you need fresh blood to take an organization in a new direction in an ever-changing business dynamic."
With Ebersol out of the picture, the drumbeat that ESPN – with its deep pockets lined by rich subscriber fees – will win the next Olympic package gets louder.
But Roberts and Burke also seem to realize the significance of the Olympics to NBC, which has broadcast every Summer Olympics since 1988 and every Winter Olympics since 2002.
IOC president Jacques Rogge tells the AP that Burke and Roberts phoned him Thursday to emphasize that Ebersol's departure would not impact the network's participation in the upcoming bidding process.
"They have reiterated that they were very committed to participating in the full bidding," says Rogge.
The two-game package is expected to go for more than $2 billion and could exceed $4 billion for four games.
Kim Masters contributed to this report.