Networks Ponder the Price : High Costs May Give Cable a Shot at Future Olympics
Last summer, NBC President Robert C. Wright, whose network paid $300 million for U.S. broadcast rights to the Summer Olympics, proposed a first--selling rights to some “lesser” Olympic events to cable TV.
He quickly dropped the idea after strong objections from NBC affiliates, who pointed out that they already had sold their local Olympic commercial time on the basis that the Olympics would be exclusively on NBC.
Still, with cable now in 52.8% of American households and network shares of audience declining, there remains speculation that the Olympic Games that open in Seoul, South Korea, today may be the last aired exclusively by network TV simply because costs have risen so much.
“I believe at some point cable will carry some of the Oympics,” says Roger Werner, president of the nation’s largest cable network, ESPN, the 24-hour sports channel that is 80% owned by ABC.
Money is the principal reason. Some in the broadcast industry feel the day is coming when no single American organization will be able to pay the hundreds of millions of dollars involved--and then recoup its investment. ABC said it lost an estimated $65 million on the Winter Olympics it televised last February.
Today’s sky-high prices are a far cry from 1960, when CBS bought rights to the first Olympic package, the Winter Games in Squaw Valley, for $50,000. That would only buy about 4 1/2 seconds on NBC’s prime-time Olympic show this month, where advertisers are paying up to $330,000 for 30 seconds.
CBS, which paid $234 million last May for its second-ever Olympics show, the 1992 Winter Games in Albertville, France--has not made a decision yet on whether to sell some of that action to cable TV to help defray its expenses.
“There’s been no discussion on that. . . We haven’t gotten to that point yet,” says a CBS spokesman, whose network’s purchase was $66 million less than what ABC paid for its money-losing 1988 Winter Olympics.
ESPN and other cable firms, including Ted Turner’s Turner Broadcasting Service, had talked with NBC about carrying some Summer Games events this year before NBC’s affiliates griped and the network decided not to proceed.
But ESPN, which says it currently serves 44.8 million homes and hotel rooms nationally, hasn’t talked with CBS about a piece of the Winter Games, nor has CBS approached it, according to Werner.
Consequently, it still is “a little early to speculate” about what might happen, Werner says. But he adds that, “I think there’s a reasonable possibility that some cable package would be created.”
No such word has reached CBS’ affiliated stations, however. “CBS has not done anything to cause . . . concern at this point,” says Philip Jones, vice president of KCTV in Kansas City, Mo. and former president of the CBS affiliates board.
Bidding has not taken place yet on broadcast rights for the 1992 Summer Games in Barcelona, Spain, and no decision has been made on whether to allow cable companies to bid separately for rights to specific events there, as opposed to continuing the past practice of offering a total package and then letting the winner parcel out pieces if it chooses to do so.
“No doubt that (the terms of the deal) is going to be part of the negotiation process itself,” says Mark Rothenberg, vice president of the Howard Marlboro Group, a New York-based sports marketing company that is involved in sales of rights to the 1992 Summer Games. “But I think you’d be guessing until the final specifications of the package are presented to the networks.”
Jones thinks that CBS will keep its Winter Games exclusive and will do likewise if it wins the rights to the Summer Games.
“I think that would be their desire . . . because I think CBS to date has indicated they don’t want to hand a stick to their competitors, only to have a competitor turn around and beat them over the head with it.”
But is cable inevitable?
“I’d like to think not,” says Ben Tucker, vice president of KMST-TV in Salinas, Calif. and president of the CBS affiliates board. “I like to think that those events, the major events, become more attractive to the networks on a competitive basis because I think we’re in an era of big-event programming.”
He too believes that CBS Sports President Neal Pilson will keep the 1992 Winter Games exclusive to the network.
“It’s going to depend on the number of (Olympics) hours the network thinks it can effectively clear on affiliated stations,” Tucker says. “Maybe if they figure they can’t clear what they want, they’re going to look at some kind of secondary package,” and then see what the affiliates think of it.
The CBS affiliates’ board hasn’t discussed that prospect yet, Tucker says.