Five years ago, NBC melded a big part of its future with the Olympics, agreeing to pay an unprecedented $3.6 billion for the U.S. TV rights for all five of the biennial games from 2000 to 2008. At the time, it was the richest deal in sports history.
The world will soon learn whether NBC's move was a wise one. The first installation in the mega-series-the Sydney Summer Olympics-begins an 18-day run starting Sept. 15.
With less than three months to go before the opening ceremonies and with preparations in full swing, NBC is optimistic. It expects to sell $1 billion in advertising over 441.5 hours of coverage on the broadcast network and its cable companions, CNBC and MSNBC.
That's 40% more ad revenue than the $700 million that the network sold for its coverage of the Atlanta summer Games in 1996. The $1 billion includes close to $150 million in sales on the NBC-owned stations, compared with $90 million for the O & Os four years ago.
The O & Os are completely sold out, while the networks-which are being sold as a package-are 90% sold at this point.
Major advertisers include General Motors, which has committed $500 million to a package covering all five Olympics that NBC is putting on; AT & T, which has committed $300 million in a similar five-Games package; and Home Depot, which is spending $90 million over a five-Games spread.
Other major advertisers include Coca-Cola, NationsBank, UPS, Anheuser-Busch and Visa. Even John Hancock, the insurance company, has bought a multiyear ad package. That company was the Olympics sponsor that threatened to pull out after the scandal two years ago over the International Olympic Committee's host-city selection process.
The beauty of selling huge packages over multiple Games is that it lays an early advertising base for future Olympics, says Randy Falco, president, NBC Television Network. So with GM, AT & T and others already committed to the Salt Lake City games in 2002, those Games are already 50% sold out. And the Athens Games, set for 2004 are 30% sold, he says.
The average price of a 30-second Olympics prime time spot, advertisers calculate, is in the neighborhood of $600,000. But they caution that that number fluctuates with any given package. GM, which has the largest overall package, is paying significantly less. Dotcom companies, for example, which come in and buy a handful of spots for just the Sydney Games, will pay more.
The Olympics aren't cheap for any advertiser. But, for those that pony up, it's well worth it, says Tim Spengler, head of national broadcast buying for Los Angeles-based Initiative Media. "It's very expensive, but there is unquestioned value in being associated with that type of high-profile programming. What it says is, those advertisers are leaders in their categories." Spengler says that, for a company like Coca-Cola, the Olympics is "one of their two or three leading platforms." For a company like Olympics sponsor UPS, "the ability to put the Olympic rings on all their trucks is very powerful."
Falco predicts the broadcast network will average between an 18 rating and a 19 rating in prime time over the course of the Sydney Games. By comparison, the Atlanta Games averaged a 21.6 rating in prime time. But, with the Sydney games half a world away and 15 hours ahead of East Coast time, it's not unexpected that the viewership will be somewhat less.
Falco says the network will make a profit on Sydney but not a huge one. The Sydney rights fee was 50% higher than the Atlanta rights fee, he notes. But the next three Games going out to 2008 have fee increases of just 3%. "The fees are front- loaded so a major part of the profit will come in the last three Olympics," he says.
Meanwhile, David Neal, NBC's head of Olympic production, who reports to NBC Sports Chairman and Olympics Executive Producer Dick Ebersol, has just completed his 18th trip to Sydney in preparation for the Games.
The NBC Television Network will air 162.5 hours of coverage, while the cable networks are currently scheduled to air 279 hours of coverage. Combined, that's more than double the amount of coverage NBC aired from the Atlanta Games.
"Cable gives us this great opportunity," says Neal. The coverage itself is dramatically increased. And the team- sports events will get much more extensive coverage as a result. In the past, the team sports like soccer and basketball have gotten short shrift because only short windows of coverage were available on the network, he says.
But now, the two cable networks will be used to cover team sports extensively. The women's soccer final, for example, will be shown in its entirety on MSNBC. Many of the basketball contests will also be shown-in full-on the cable networks, although both the men and women's basketball finals will be shown on the broadcast network.
For the most part, however, network prime time will be devoted, as in the past, to the most popular Olympic events. Week one will be dominated by gymnastics and swimming, and week two will be focused on track and field and diving.
Despite the different overall strategies, there will be a uniform look to the coverage on both the cable and broadcast networks, says Neal. "There's one collective set of production people, and there's one collective set of announcers," he says. "So if you see boxing on the network and cable, they will be the same announcers. It's all one big umbrella."
During the week, the network will kick off its schedule at 10 a.m. ET, right after Today, and go to noon. Today will be in Sydney during the Olympics, in road-trip mode, offering the flavor of the Games and Australia but not actually covering the competition. "One of the advantages we have going in is that Americans seem to have this incredible interest in Australia and things Australian," says Neal.
Weekday prime time coverage on NBC will start at 7 p.m. and go to midnight. After a half-hour news break, it will be back on from 12:30 to 2 a.m.
For the first time, the prime time host, Bob Costas, will also handle the late-night anchor chores. "We just felt it lends a little more uniformity, and it really is continuing coverage after that news window," Neal notes. Costas handled prime time hosting duties for the Atlanta Games, as well Barcelona in 1992, but other hosts handled the late-night segment.
On cable, MSNBC will kick off its daily coverage at 10 a.m. and go to 5 p.m. The cable coverage will then switch to CNBC, which will have nightly coverage from 5 to 9 p.m. The plan also calls for MSNBC to rebroadcast its coverage overnight from midnight to 7 a.m. during the week and midnight to 6 a.m. on the weekends.
Weekend coverage is still being finalized. NBC's coverage will vary on the weekends, says Neal, because it has to work around other sports programming that the network is committed to airing. For example, on the first Saturday of coverage, Sept. 16, the network is obligated to cover a Notre Dame football game. Olympics afternoon coverage that day will air for just 90 minutes, from 4:30 to 6 p.m.
CNBC will add at least another hour on the weekends, running from 4 to 9 p.m., and MSNBC will cut back an hour, running from 10 a.m. to 4 p.m. "The weekend coverage will vary day to day," says Neal. "But, on some weekends, total coverage between the three networks will be 25 hours."
Once again, NBC will play up the human-interest angles as possible in covering the Olympians. "American viewers value the Olympics as an event that transcends sports," says Neal. Covering those human-interest stories helps attract the widest available audience possible. Indeed, he says, perhaps more than half the audience is made up of viewers who consider themselves casual sports fans or non-sports fans. Typically, more than half the Olympics audience is made up of women.
"Making that human connection is important," Neal notes.
Because of the time difference, none of the Games will be covered live. "We'll be upfront about that with our viewers," says Neal, who adds that no thought was given to asking Olympic officials to rearrange the timing on some events for live television, as NBC did for the Seoul games in 1988. "We just made a decision early on that it will be on tape, and we'll tell everybody it's on tape."
So the sports nuts, who have to know what happened, can find out the results before NBC actually airs the competition. The network hopes to service their needs through a special Web site, NBCOlympics.com, which is a joint venture of NBC and Quokka Sports. "Rather than try to pretend that the Web doesn't exist," Neal explains, "this is meant to be the state-of-the-art site and the place to go" for results.
