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NBC gets 2010, 2012 Olympics for $2.2 billion

Saturday, June 07, 2003

By Stephen Wilson, The Associated Press

LAUSANNE, Switzerland -- NBC won the U.S. TV rights to the 2010 and 2012 Olympics yesterday for $2,201,000,000, extending the network's run of televising every games since 2000.

NBC, owned by General Electric, beat bids from ABC and Fox.

The decision was announced after nearly seven hours of deliberations by an IOC panel headed by president Jacques Rogge.

The deal extends the IOC's long-term relationship with NBC, which already held the rights to five Olympics from 2000 to 2008.

"The business of big-time American sports has gotten out of hand. That is not true of the Olympics," NBC Sports chairman Dick Ebersol said. "It's not just a sporting event. It's a family event, and it makes itself extremely attractive to advertisers, to affiliates, to our own stations."

The previous contract, worth $3.5 billion, was reached in two secret deals in 1995. This time, the IOC made it a competitive bidding process.

The value of the ABC and Fox bids were not immediately announced.

Under the package, NBC will pay $2,001,000,000 in direct rights for the two Olympics: $820 million for the 2010 Winter Games and $1,181,000,000 for the 2012 Summer Olympics.

The rights were awarded before the selection of the two host cities. The 2010 games will be awarded July 2, and the 2012 summer host will be picked in 2005.

As part of the deal, General Electric also will pay from $160 million to $200 million to be part of the IOC's global TOP sponsorship program for the two games period.

Under other terms, NBC will pay $12 million in fees for the U.S. Olympic trials and $10 million for development of a digital TV library and archiving system. The network also made a commitment to promote the Olympics between and during the games.

The total price tag represents a 32.6 percent increase over the $1.5 billion NBC paid for the 2006 Winter Games and 2008 Summer Olympics.

The IOC said it was looking for the network that offered the best overall package, not necessarily the most money. The rights package includes broadcast, cable, Internet, video-on-demand, pay-per-view and other services.

CBS pulled out of the bidding Monday, saying it wasn't ready to commit so much money to an event so far in advance. AOL Time Warner withdrew last month, saying it didn't meet IOC requirements.

TV rights fees provide the bulk of the IOC's revenue, with the U.S. share accounting for about 60 percent of the total. About half the money goes to host cities, with the rest split among the IOC, international federations and national Olympic committees.

The U.S. Olympic Committee gets a 12.75 percent cut of the rights fees.

The Olympics are considered the top prize in sports television, with networks virtually guaranteed 17 consecutive days of top ratings and huge advertising revenues.

The networks expected the 2010 or 2012 games to be staged in North America, offering the best time zone for live, prime time coverage.

Vancouver is competing against Salzburg, Austria, and Pyeonchang, South Korea, for the 2010 Winter Games. New York is among the candidates for 2012, along with London, Paris, Madrid and other cities.

If Vancouver wins, Europe will be favored to land the 2012 games. If Vancouver loses, New York and Toronto will be strong North American contenders.

The networks count on making a profit from the Olympics. NBC made $75 million from the 2002 Salt Lake Games.

Despite the slump in the world economy, the networks pushed the IOC to go forward with the bids now, citing a strong ad sales market.

After completing presentations to the IOC, the three media companies submitted their financial bids in sealed envelopes into a ballot box engraved with the Olympic rings.

Rogge and a small group of experts then began examining the offers. More than seven hours later, the decision was announced.

NBC was the last of the three networks to present its bid to the IOC panel. Fox, the only major U.S. network that has never broadcast the Olympics, made its case earlier yesterday, emphasizing its different approach from NBC and ABC.

ABC was first up Thursday, stressing its legacy of Olympic coverage in the 1970s and 1980s and the broad reach of its ESPN cable channels.

NBC was considered a favorite because of its status as incumbent and long-term partner of the IOC.

"The Olympics are in the blood of everybody who works at NBC Sports or NBC Olympics," Ebersol said.

He cited NBC's plans for telecast of the 2004 Athens Olympics, including 134 hours of coverage on the Spanish-language network Telemundo.

"We're the only ones here who have the capacity to reach 100 percent of all the Hispanic households in the United States," he said. "By the time of the Winter Games in 2010, this will represent 45 million TV households."

Ebersol pointed out that NBC has won a Sports Emmy for best event coverage at its past five Olympics, including a total of 17 awards for the 2002 Winter Games.

Ebersol presented the IOC with NBC's Emmy for best live event coverage from Salt Lake. Rogge said he would display it in the Olympic museum in Lausanne.

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