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Olympic Bidding: Yikes, Fox The Favorite?

In a luxury hotel in Switzerland, the future of the Olympic television rights are being hotly contested and it’s quite an intriguing story. For the media pundits who are covering this relentlessly, you probably should get your fix of breaking news elsewhere. This is more of a summary of what’s unfolding and what to keep an eye on as it looks like we’ll know the fate of the next two and possibly four Olympics in the coming days. 

In town are representatives from Fox/FX, ESPN/ABC, and NBC/Comcast. CBS and Turner considered making a joint bid similar to their March Madness tag team action, but opted to stay on the sidelines. Television rights for the Olympics have not been up for bid for over 8 years, when NBC renewed their partnership with the IOC.

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Back then, Dick Ebersol, the recently departed head of NBC Sports pushed all in with a bid of $2.2 billion. He wanted to keep the Olympics badly and thought that was the magic number to get the job done. Unfortunately, it ended up being a horrible deal for NBC.

The bid was $900 million over Fox’s bid of $1.3 billion and ESPN didn’t even offer up a guarantee, but instead a revenue share — viewed somewhat as a half assed offer, but probably respectable for a cable network still building their media empire. The move ended up costing NBC hundreds of millions of dollars.  

“He overbid dramatically, with the backing of NBC’s parent at the time, General Electric, and the recession hurt advertising. The 2010 Vancouver Winter Games lost $223 million, astonishing for a 17-day event. Next year’s London Summer Games, which cost a record Olympic rights fee of $1.18 billion, are expected to lose at least as much, and Comcast, NBC Universal’s new owner, will have to absorb it.

Ebersol will not get a chance to redeem himself or lead NBC back to Lausanne on June 6 to the negotiation for the 2014 and ’16 Olympics. He resigned on Thursday, losing a power play with Stephen B. Burke, his boss since earlier this year when Comcast took control of NBC Universal.”

Many believed Ebersol would come back strong and win the rights again, but this time at a deal that would be beneficial for NBC/Comcast and see him step away after the 2012 Olympics, passing the torch to someone else while ensuring the strong legacy and relationship between NBC and the Olympics.

Comcast, the new majority owner of NBC and known as a much more profit driven company, was vocal that they wouldn’t overbid this time. It seemed to some that NBC might lose their staple property. Then Ebersol abruptly resigned and his number one lieutenant followed suit. 

Ebersol built a strong relationship with the IOC and was consistent in showcasing the Olympics in a positive manner. Many of the Olympic-focused personnel at NBC were reported to be crying the day of Ebersol’s announcement, a potential clue into their insight as to what would unfold with the Olympic bidding. 

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Ever since Ebersol’s departure, it’s been quite the topic among media analysts and sports fans as it’s hard to really peg anyone as a favorite for the Olympic rights. You can even bet on who will win the bidding on bodog where Comcast/NBC has recently been moved to the underdog position. 

Some have suggested that, with the upcoming Olympics being in not as sexy of locations and NBC having lost money on them, that the winning bid might come in lower than they did eight years ago. At the same time, sports television rights have been exploding in the last year and the growing dual revenue streams of all three companies could lead to a really large bid.

Then there are reports that although the bidding is for the next 2 Olympics, that the bidders or at least Fox, would prefer to make a bid for the Olympics through 2020. By having a guaranteed 4 Olympics instead of 2, they think they’ll be better positioned to absorb set costs over time and have a better chance to make a profit. On the flip side Fox has a pretty weak stable of broadcast talent and it’s hard for me to envision the Olympics entrusting 4 Olympics to unproven/lower quality broadcasting partnes like FX and other Fox cable channels. 

Fox presented today and some believe are the favorite as they have the ability to increase carriage fees for channels like FX.  ESPN and, to a lesser degree, Versus already get solid revenue from cable operators.

Others are keen on ESPN taking the rights. Disney is sweetening the offer by making overtures to be a corporate sponsor of the Olympics (just as GE does for NBC). ESPN also did an excellent job with the World Cup. They have the most lethal combo of ABC, ESPN, ESPN2 in addition to ESPN News to really cover and promote the games. Frankly speaking, I think I’d enjoy Bob Ley, Mike Tirico, and Chris Fowler covering the games and believe ESPN could really get ratings to all-time highs. All around ESPN has the potent arsenal to win the bid, but will they have the financial backing to roll the dice?

Then there is another camp of analysts who believe that NBC/Comcast don’t want to start off their sports marriage with high profile news of losing the Olympics. NBC did an okay job with the last Olympics and would be much aided by having Versus and the various Comcast regional networks helping the cause. Still, though, I think many Americans were pissed that most of the events were taped and inexplicably the first USA vs. Canada game was on MSNBC, a channel many don’t get and/or was not in High Definition.

With Versus now attached to NBC, the network now has a sports channel dying for programming and looking for higher carriage revenue and distribution. The Olympics may actually serve as the impetus for making Versus a more mainstream entity as they were unable to procure Pac-12 rights after retaining NHL rights.  Unfortunately, nothing else that sexy comes up for bid for awhile so the idea that Comcast/NBC/Versus is ready to compete with ESPN may have to wait awhile especially if they lose to ESPN here. It’s believed that all three networks would move to live coverage now that their cable business could support that type of coverage model financially. 

What makes the bidding even more intriguing is the actual process. Each network gets 2 hours to present their vision of the games. They then give an envelope with their number to the IOC.  Fox led off today, ESPN in the middle, and NBC/Comcast tomorrow. It’s this type of secretive process that led to NBC blowing their load last time.

Going into tomorrow, the number of Olympics being bid on, who will win, and at what cost are still hotly debated. There really hasn’t been a bidding process like this ever before.  

My thought is that anyone but Fox would make me happy. My only beef with NBC was the lack of live coverage. Versus and the Comcast sports regional channels would really add programming and live events. It would certainly boost Versus as well which helps their cause to compete with ESPN. Costas and Al Michaels are is good as it gets and absolutely thrive when doing the Olympics.

ESPN though would be a new experience and one that I could trust plus I think would grow the Olympics the most.

Jay Glazer, Bradshaw, Joe Buck, Michael Strahan doing the Olympics? Yuck. The network just got pummeled for their UEFA Championship coverage. Panned by everyone. Fox butchered the BCS and has halved the audience of the World Series since they got those rights in the 90’s. They may come in with the biggest bid, but I’d leave money on the table to avoid the prospects of having them diminish the audience while providing second class coverage.

We’ll see what unfolds. Who are you pulling for and why?

Ben Koo

About Ben Koo

Copying and pasting my Twitter bio. I'm also refusing (for now) to write this in the third person. This is me - CEO of @Bloguin, GM at @AwfulAnnouncing, world's greatest chinese jew, proud Buckeye, funny dude, and sports and digital media zealot.

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