Broadcast giant quits NBC: what next for Olympics?

June 6 and 7 could be among the biggest days on the sports business calendar in 2011. They'll definitely be among the most important for the beancounters at the International Olympic Committee.

That's when American networks will be in Lausanne, Switzerland to make their bids for the rights to broadcast Sochi 2014 and Rio 2016. They may even look for a bulk discount by tendering bids on Winter 2018 and Summer 2020.

Munich, Germany, PyeongChang, South Korea and Annecy, France are bidding for 2018. The 2020 race has yet to begin.

NBC, which paid $2.2 billion for Vancouver 2010 and London 2012, is the incumbent. The former GE-owned broadcasting giant has held rights to all Summer Games since Calgary 1988 and Winter Games since Salt Lake 2002. But it will be without Dick Ebersol.

Ebersol dropped a broadcasting bombshell May 19 when his resignation from NBC was announced. NBC is now owned by Comcast and the official word is they couldn't agree on a new contract. The news broke exactly a month after Ebersol announced NBC and Versus's 10-year, $2 billion National Hockey League broadcast deal at a news conference with NHL commissioner Gary Bettman.

Ebersol's Olympic journey began in 1967 when he joined ABC as a researcher. Ebersol and Canadian Lorne Michaels collaborated to create Saturday Night Live for NBC in 1975. During Olympic Games, Ebersol would actually camp in custom-made quarters in NBC's facilities at the International Broadcast Centre instead of stay in a hotel room. Ebersol spoke at length about his storied career during the Denver 2009 SportAccord convention.

Ebersol enjoyed his Vancouver experience so much (and the fact that the British Columbia government became an important advertiser) that he appeared in a video honouring outgoing Premier Gordon Campbell at a Vancouver Board of Trade event on Feb. 4, 2011. NBC lost $223 million on Vancouver 2010 after being hit by the Great Recession's advertising slump.

Whether NBC's London 2012 coverage will suffer without Ebersol at the helm remains to be seen. He has many proteges who will now run the operation. NBC, sans Ebersol, said it still plans to go to Lausanne and bid for the Olympics broadcast rights, but it will be a hotly contested race with Disney-owned ABC-ESPN, Fox and CBS.

A source told me Ebersol has been bearish on a bid for Sochi 2014 for quite some time. The unfriendly time zone -- eight hours ahead of New York -- was the biggest worry. Live sports are best shown live, but not at 3 a.m. when viewers would rather be sleeping. During a meeting, Ebersol was asked what he thought Sochi would be worth. He paused for a moment and scribbled on a note pad. He turned around and showed those in the meeting. It was a big "0".

Sochi 2014 could well be a commercial bust for the IOC and whichever company wins the U.S. rights if National Hockey League players aren't playing the hockey tournament. The Russian resort is building everything from scratch and, from what I saw last June, is on-track to be ready for February 2014. But volunteers, venue operations, transportation and security remain big unknowns for Sochi, which passed the 1,000-day countdown on May 14.

Record numbers forecast for Vancouver, but not record profits

The International Olympic Committee’s marketing director estimated 3.5 billion viewers would experience some of Vancouver’s 2010 Winter Olympics.

Timo Lumme said more than 300 broadcasters in 200 territories delivered the first all high-definition Winter Games to TV viewers. He said the total amount of content delivered was 50,000 hours, which is more than Salt Lake 2002 and Turin 2006 combined.

“In four short years from Torino to Vancouver we’ve had a continuing digital explosion,” Lumme said. “We now have the same amount of hours globally covered on digital media, Internet and mobile, as we have on the old media, broadcast.”
In Canada, a record 22 million people were watching when Sidney Crosby scored the gold medal-winning overtime goal in the hockey final. CTV reported average prime time viewership of 5.8 million.

The ratings were in record territories, but the recessionary Games won’t translate to record profits because of the advertising slump. NBC parent General Electric already announced in December that it would lose $200 million because of Vancouver 2010 and is being coy about its post-London 2012 plans. NBC Olympics chief Dick Ebersol is bearish about Sochi 2014, mainly because it's eight hours ahead of New York. Fox and ESPN have mulled bids.

Also in December, CTV Olympics president Keith Pelley said the aim was to break-even. CTV bid US$153 million five years ago for 2010 and 2012 rights, more than double the CBC contract for US$73 million for 2006 and 2008.

"We've said what we're going to say about the economics leading into the Games. Now we're totally focusing on the actual Games and we'll address the consolidated numbers shortly thereafter,” Pelley said during the Games.

The IOC promised VANOC a roster of 11 global sponsors, but it stalled at nine and no new deals were announced in Vancouver. Last summer, the IOC pledged to help VANOC with losses up to $22 million unless the gap could be narrowed through other means.

The B.C. government is the ultimate guarantor and launched a $38 million tourism ad campaign before the Games. The You Gotta Be Here out-of-home ads took up substantial space in the Olympic city and at transit stations, filling space that would have been used by private sponsors had the recession not happened.