Spain ’92 / A Medal Year : The Art of the $635-Million World TV Deal

In orchestrating television coverage of the Olympics, the International Olympic Committee has two main--and often conflicting--goals: It seeks the largest possible worldwide audience for the Games while also trying to squeeze as much money as it can from broadcasters vying for TV rights.

But maximizing viewership comes first.

“If this were ‘Star Trek,’ that would be our prime directive,” says Dick Pound, a Montreal-based lawyer who has been the IOC’s chief TV negotiator since 1984.

The IOC estimates that Olympic broadcasts reach 3.5 billion people, the vast majority of whom live in countries that pay nothing or next to nothing for TV rights. China and sub-Saharan Africa, for example, are virtually free riders, while NBC paid $401 million--more than $4 per U.S. household--to carry the Barcelona Games. The total price tag worldwide is about $635 million.

To negotiate the rights fees, a two- or three-member IOC team is joined by a larger team from the organizing committee of the country hosting the Games. Sometimes, outside consultants are involved. Barry Frank of International Management Group, the sports mega-agency, has advised several organizing groups, including the Atlanta Committee for the Olympic Games.

Typically, the Olympic negotiators target a particular country or region for an early signing to help set the tone for subsequent negotiations. For the 1996 Atlanta Games, the target was Europe--specifically the European Broadcasting Union, the 39-member group that has held Olympic TV rights across Europe and the southern Mediterranean for more than 30 years.

“Europe traditionally has paid much less than its share,” Pound says. The EBU has tended to argue that most of its members are nonprofit, public broadcasters who can’t afford rights fees on the scale of what U.S. broadcasters pay.

Besides, the EBU used to say, we’re the only game in town. But with private commercial broadcasting growing explosively across Europe, that is no longer true.

So last fall, according to Pound, the IOC and Atlanta organizers told the EBU: “The time has come for you to step up to a bigger number because there are private broadcasters prepared to pay more.” The EBU “whined and grumbled and complained--and signed,” Pound says.

The deal was for $250 million, nearly triple the rights fees for Barcelona.

When there aren’t competing broadcasters to play off against one another, the Olympic negotiators’ job is tougher.

Everybody knows that the IOC is not going to black out a country, but it does have one powerful bargaining weapon: time. Broadcasters need to plan long in advance to produce and sell advertising for a major event like the Olympics. Sometimes the Olympic negotiators will just shrug their shoulders until they get the offer they want.

“There’s always a moment when somebody blinks,” Pound says.

For the Seoul Olympics of 1988, for example, a group of Australian broadcasters collectively made what Pound terms “a low-ball offer” of around $1 million. The Olympic negotiators simply walked away.

Eventually, the Australian coalition crumbled in mutual suspicion and one of the broadcasters came back alone with a $7-million offer.

“Japan is always culturally more successful in holding the line,” Pound says.

The private commercial networks have often promised the IOC that they would break out of the pool led by the public network, NHK, but seldom does a competing bid ever surface, Pound says.

“It’s like a club,” he adds.