NBC Olympics chairman Dick Ebersol says higher rights fees will lead to losses for the network in Vancouver. (NBC/Universal)(ATR) The pronouncement by NBC Olympics chief Dick Ebersol that NBC Universal will lose money on the Vancouver Games could be seen as a trial balloon in the negotiations for rights to the 2014 and 2016 Olympics.
"It looks like the bidding has begun informally here in the press," former network executive Neal Pilson tells Around the Rings.
"It looks like the parties are looking to set a level of expectation for the upcoming bid process, or at least NBC is trying to set a level of expectation."
Ebersol told reporters Sunday that advertising sales, which were slow in the spring and early summer because of the economy, "have suddenly taken off, and we are well on our way to do the same number we did in Torino (in 2006) and Salt Lake City (in 2002)."
But Ebersol said that won’t be enough to keep NBC out of the red in Vancouver.
"Sadly we will for the first time in all our years I've been with the Games lose money on the Olympics, but it won't be because the sales didn't come around."
Ebersol said stiff rights fees contributed to the projected loss, but did not elaborate.
NBC paid a record $2.2 billion for the U.S. rights to telecast the Vancouver and London Games, a 46 percent increase from the 2006/2008 Games.
Jeffrey Immelt, the head of NBC's parent company General Electric, told investors recently that NBC would lose "a couple hundred million bucks" on the Games.
Pilson says it was not clear if Immelt was talking about losing money on the entire spectrum of NBC companies, including NBC-owned stations or if it took into account the value of the promotion platform the Olympics provide NBC to tout the network's other shows, or the money NBC is saving by not ordering and buying programming for the two weeks of the Olympics.
He also says Immelt's comment came after an IOC representative said he hoped the bidding would generate an increased rights fee.
"Having said all that, I take Jeff and Dick ad their word, that NBC, given the very soft market, may be experiencing a loss in covering the Vancouver Games, but it's very hard to tell what the extent of that loss is," Pilson says.
Pilson, an ex-CBS sports chief, is now president of the sports consulting firm Pilson Communications and consulted with the IOC during rights negotiations for the 2010 and 2012 Olympics.
CBS has acknowledged that its Super Bowl sales are not going to reach last year's level.
Disney, which owns ESPN and ABC, and Fox are considered potential rivals to NBC for the Olympics.
Harvey Schiller, former president "The negotiations have begun,” says Olympic TV rights expert Neal Pilson. (ATR) of Turner Sports, tells ATR that Ebersol is "probably telling everyone what they expected to hear" given the depressed economy.
"These kinds of things are said before going into almost every negotiation for the past 20 years, the impression has always been that it's a weak market and we need to do things differently," Schiller says. "He was just being honest."
But Schiller says the acknowledgement could have another effect. "It may even open the door for potential advertisers to think they may be able to get discounting on buying time, which is a good message to put out if you have things available."
Pilson says ratings projections for Vancouver and London "probably are pretty strong," but if the "sales marketplace is weaker than expected, you can't necessarily monetize those ratings."
The IOC has said that formal bidding will take place later this year.
Nevertheless, Pilson says, "The negotiations have begun."
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Written by Karen Rosen
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