An Olympic-Sized Bargain? : Analysis: NBC’s $2.3 billion for Games appears to be money well spent.

After spending $2.3 billion of NBC’s money in rights fees for the three Olympic Games between 2004 and 2008, the network’s sports president, Dick Ebersol, allowed himself a sentimental moment at Tuesday’s news conference to announce the deal with the International Olympic Committee.

Recalling that he dropped out of college at 19 to become an ABC researcher for the 1972 Summer Olympics at Munich, he said, “It’s a nice closure to know the last thing I will do for NBC will be an Olympics.”

But while there is no question about Ebersol’s affection for the Olympic movement, he did not persuade his bosses at NBC or their bosses at parent company General Electric to approve the richest contract ever in television sports so that he could give himself a most elaborate retirement party.

With the agreement, NBC established itself as the leader in sports broadcasting entering the next century, locked out opposing networks that might have bid for the Olympics to reinforce their own credentials in that area, ensured affiliate loyalty and virtually guaranteed access to the airwaves for its cable holdings.

All that considered, one of the lesser issues on the day after was whether the deal might also result in a tangible profit for NBC. The consensus within the sports and television industries Wednesday was that the network took a giant step in that direction by acquiring the package at bargain rates.

Although $2.3 billion total is an attention grabber, the $793 million and $894 million paid for the Summer Games of 2004 and 2008, respectively, and the $613 million for the Winter Games of 2006 represent only a 3% increase over the amount paid by NBC for the previous Summer and Winter Games.

The IOC was ecstatic with the guaranteed income for the next 12 years, but media analysts said the committee might have received more money if it had waited until closer to the Games and auctioned the rights. Broadcast fees increased by 45% for the Winter Games between 1998 and 2002 and by 55% for the Summer Games between 1996 and 2000.

The IOC protected itself by entering into a profit-sharing deal with NBC, and Ebersol predicted Wednesday there will be profits to share. In a similar deal for the 1996 Summer Olympics, NBC already has moved into the black and begun paying the IOC and Atlanta’s organizing committee. But even if future Olympics lose money for NBC, as the 1992 Summer Games at Barcelona did to the tune of $90 million, Ebersol said the residual effects of serving as the exclusive U.S. network make the venture worthwhile.

John Mansell, a senior analyst for Paul Kagan and Associates of Carmel, agreed, estimating that a network would have to televise “seven or eight Super Bowls to equal the value of one Olympics.”

But Ebersol said the Olympics cannot be compared to other sports properties. For a U.S. network in today’s marketplace, he said the Olympics are “the single most important television event in the world.”

That is not only because 200 million people watch the Games over a 16- or 17-day period, but because of the demographics of those viewers.

“It is the only thing in all of television guaranteed to put the whole family in front of the TV set,” Ebersol said. “In two- or three-television set homes, Mom watches “ER” on NBC, while Dad watches a game on TNT and the kid is in the basement watching MTV. The Olympics put as many women in front of the television set as men, and the kids watch with their parents.”

As a result, sponsors that might not be interested in other sporting events because they appeal primarily to men between the ages of 18 and 49 are eager to advertise during the Olympics. That builds rapport between the network and sponsors.

“Of the top 20 companies in the United States, 90% want to be involved in the Olympics,” Ebersol said. “From those negotiations, it’s easier to get them to listen to other projects. When you’re discussing $60-million and $50-million deals, you form intimate relationships.”

Such was the case in 1992 when NBC footed the bill for 3,000 of the nation’s top marketing and advertising executives to attend the Summer Olympics, housing them on a luxury ship in the Barcelona harbor.

“During a time like that, a lot gets transacted,” Ebersol said.

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Big Deals

Television rights fees under current contracts:

OLYMPICS

* NBC--1996, 2000, ‘02, ‘04, ‘06, ‘08: $4.026 billion

* CBS--1998: $375 million

NFL

* FOX--4 years ($1.58 billion)

* ABC--4 years ($925 million)

* NBC--4 years ($868 million)

* ESPN--4 years ($510 million)

* TNT--4 years ($490 million)

BASEBALL

* FOX--5 years ($575 million)

* NBC--5 years ($400 million)

* ESPN--5 years ($440 million)

NBA

* NBC--4 years ($750 million)

* TNT--4 years ($352 million)

NHL

* FOX--5 years ($155 million)

* ESPN--5 years ($80 million)