Making a bold bet that the Olympics will continue to increase in value, NBCUniversal agreed to pay a record $7.65-billion to stitch up U.S. broadcast rights to the games through 2032.
The International Olympic Committee on Wednesday awarded the contract after holding stealth meetings with NBCUniversal and its parent company, Comcast Corp., for the last six months. The media giant already had the rights to the Olympics through 2020 under a $4.4-billion agreement signed in 2011. That deal covered four Olympics through the 2020 Summer Games in Tokyo.
The extension means that NBCUniversal, which has had a lock on every Olympic competition since 2000, will be paying nearly $1.3 billion on average for each games from 2022 through 2032.
"There is no greater global, athletic and cultural event than the Olympics — and we are so proud of this unprecedented extension," Comcast Chief Executive Brian Roberts told reporters on a conference call. "It would be hard to overstate what an exciting day this is for me personally, and for all of NBCUniversal."
Roberts and his team flew to Lausanne, Switzerland, this week to put the finishing touches on the deal with IOC.
The IOC negotiated exclusively with Roberts and NBCUniversal without entertaining proposals from competitors such as ESPN, Fox Sports and CBS. The organization was comfortable with NBCUniversal and its long track record broadcasting the games, according to IOC President Thomas Bach.
The group, Bach said, wasn't worried that it would leave money on the table by talking only to its longtime partner.
"The deal is not only about money," Bach said during the conference call. "Maybe in a deal you can make one or two dollars more and end up having your product destroyed. We are thinking long term.... We want to leave a good legacy to our successors."
For Comcast, the deal represents a gamble that viewers and advertisers will not lose interest in Olympics. The company also is banking that it will continue to control not only the TV networks, including NBC and USA Network, that provide coverage of the sports but also the distribution systems that feed the content to consumers. Comcast already is the nation's largest pay-TV operator and the largest provider of residential high-speed Internet service.
If Comcast's proposed $45-billion acquisition of Time Warner Cable is approved, the Philadelphia cable company will control 40% of the U.S. broadband market. Comcast believes that it will successfully navigate rapid changes in technology in the coming decades to remain an important player.
"Who knows what the media landscape is going to be like in 2032 — or how viewers will consume the games," said David Carter, executive director of USC's Marshall Sports Business Institute. "This is a long bet by NBCUniversal that we will be living in a more global marketplace, and sponsors around the world will continue to want to use the Olympics as a tool to market their products."
Roberts acknowledged as much to reporters: "Although no one can be quite sure what the world will look like in 2032, … the one thing our company is very sure of … is that the Olympics will continue to be compelling television."
The new deal includes U.S. broadcast rights across all media platforms, including over-the-air television, subscription television, Internet and mobile devices.
Comcast made the deal without any guarantee that a U.S. city would be selected as a venue for an upcoming Olympics.
The U.S. Olympics Committee has been meeting with cities, including Los Angeles, in an effort to narrow the list of prospects. The group plans to decide, by year's end, whether the U.S. will make a bid for the 2024 Games, said Larry Probst, chairman of the U.S. Olympics Committee.
Recent bids by Chicago and New York have fallen short.
"Our success with the Games has never been contingent on the location of the games," said Mark Lazarus, NBC Sports Group chairman.
NBCUniversal declined to break out the rights fees that will be paid for individual contests. However, summer Olympics typically command a higher rights fee than do the winter events because the TV ratings are larger for summer sports, including basketball, gymnastics and track and field.
The media company, which paid $775 million for the U.S. media rights to the Sochi Games, collected $1.1 billion in revenue, enabling it to turn a profit.
"We have been fortunate to be profitable since we've gotten involved in the Olympics," Roberts said, without elaborating on NBCUniversal's $223-million loss on the Vancouver Games in 2010. At that time, the media company was controlled by General Electric.
Comcast wanted to lengthen the deal, Roberts said, so the company would have greater comfort making long-range plans for its coverage.
"This allows you to invest and innovate knowing that you are going to be there for a long time," Roberts said.
As part of the new deal, NBCUniversal also agreed to spend an additional $100 million to promote the games and Olympics values from 2015 through 2020.
The IOC's Bach said the talks with NBCUniversal started informally in November, when he was in New York to attend a United Nations General Assembly meeting. Bach had dinner with executives to discuss whether Comcast would look favorable on an extension to their partnership.
Then, in February, Bach met with Roberts over dinner during the Winter Olympics in Sochi. Negotiations accelerated this week, when Roberts, Lazarus and others flew to Lausanne to put the finishing touches on the deal.Copyright © 2015, CT Now