NBC pays up for Olympics

NBC will be the home of the Olympics for the foreseeable future. The network plans to pay almost $8 billion for the media rights for the next six Olympic games.

The New York Times had these details in a story by Richard Sandomir:

NBC Universal said Wednesday that it would pay $7.75 billion for the media rights to the six Olympic Games from 2022 to 2032, holding on to what has become a cherished property that attracts millions of people to its television and digital properties.

“This is one of the most important days in the history of NBC Universal,” Steve Burke, the company’s chief executive, said in a statement.

NBC Universal’s financial commitment to the International Olympic Committee underscored the value media companies place on live event programming, an appraisal based on the belief that viewers of live events are more likely to sit through the commercials that finance massive rights fees. ESPN has followed a similar spending strategy to dominate college and professional sports in the United States: $15.2 billion for “Monday Night Football,” $5.6 billion for Major League Baseball, and $7.3 billion for a 12-year deal to broadcast the new college football playoff system.

But the Olympics have been an NBC dominion for decades, and it moved aggressively to protect its hold on them. In doing so, NBC had a willing partner in the I.O.C., which agreed to renew its partnership with NBC Universal without competitive bidding from other media companies.

Tom Van Riper wrote for Forbes that the size of the deal wasn’t unexpected given the ratings boost the games provide:

Surprised at the size of the latest deal? Don’t be. A big-brand, live event spectacle like the Olympics drives not only ratings, but online subscription fees from cable carriers and online streaming. The network, which historically shared Olympic coverage until taking over completely in the 2000s, has earned profits from the games in recent years thanks largely to its modern-day ability to spread out the events across its flagship network, multiple cable outlets and the web.

“You can create thousands of hours of content, to slice up any way you want to” says Lee Berke, a New York-based sports media consultant. The more popular events, such as figure skating, no longer need to be embargoed for tape delay to be shown in prime time in the United State. Fans can see an event live on a small screen in the afternoon, and then tune in again during prime time to see story-driven features that surround the event in that time slot.

USA Today’s Nancy Armour said some are calling for the Olympic Committee to do more for the U.S. given NBC’s sizable investment:

NBC’s deal is easily the largest of any of the IOC’s broadcast partners, and that money helps keep the Olympic movement afloat. Some of the money will be used to help pay for future games, Bach said, as well as providing funds to national organizing committees and international sports federations.

Given NBC’s largesse and that of other big U.S. sponsors like Coca-Cola, Visa and McDonald’s, critics have said it’s time the IOC does something for the United States. Not only has there not been an Olympics in the U.S. since Salt Lake City in 2002, but New York and Chicago were humiliated in their bids for the 2012 and 2016 Games.

The Reuters story by Liana B. Baker said that NBC locked up the deal before anyone else had the opportunity to bid on the games:

NBC sealed the exclusive deal to broadcast three winter games and three summer games from 2022 to 2032 before any other media companies could even bid. The IOC did not approach ESPN, a network spokesman said, and neither were Fox nor CBS.

NBC and rival networks have been stocking up on live sports content, which are popular with advertisers because large audiences watch in real-time and do not skip the TV commercials.

“It was a smart preemptive move to get control of the situation early,” said Steve Ridge, media strategy group president at the consulting firm Frank N. Magid Associates, who added that advertising demand for the Olympics remains strong.

IOC president Thomas Bach said the organization wanted to build a long-term partnership with NBC, which also made the financial commitment. The IOC “did not see any reason to take any risk” by talking to other networks, Bach said.

NBC got a good deal according to most of these media reports. It will have the prestige of airing the games as well as all the ratings boost and social media hits. What will be interesting is to see if it decides to do anything different with the coverage. Since it has been the network of choice for so many years, viewers might clamor for something different or novel. But really, it won’t matter as NBC locked up the next six games. Here’s hoping that can keep the goodwill as well.