IOC Won't Sell U.S. TV Rights in Bad Economy
From the Associated Press:
The International Olympic Committee is prepared to postpone the bidding on lucrative U.S. broadcast rights until after next year's selection of the 2016 host city due to the economic downturn, the IOC's top TV negotiator said Wednesday.
"In this economic climate, I don't see us moving forward quickly because all the prognostications we are seeing are that advertising will be down," IOC finance commission chairman Richard Carrion said. "I doubt very much this is a good time to begin talking. ... I don't see us being very active on this right now."
Carrion said it's quite possible the IOC will hold off until after the Oct. 2, 2009, vote in Copenhagen, Denmark, on the host city for the 2016 Summer Games. The four candidates are Chicago, Madrid, Rio de Janeiro, and Tokyo.
"In that sense, it removes some of the uncertainty which may work to our advantage or not," Carrion, a banker from Puerto Rico, said during a break at IOC executive board meetings.
The IOC will be selling the broadcast rights in a package for both the 2014 Winter Games in Sochi, Russia, and the 2016 Olympics.
Traditionally, the IOC has negotiated the rights before the host city is known, but the recession has changed the approach this time. The networks would also rather wait to know if the Olympics will be on home soil in Chicago.
"They always prefer to wait," Carrion said.. "It's a matter of eliminating uncertainty. It's much easier to formulate a bid if you know exactly where the two places are going to be."
The Summer Olympics haven't been held in the United States since Atlanta in 1996. If Chicago gets the games, the IOC could expect much higher bids from the U.S. networks.
Carrion said he has spoken only informally with U.S. networks, including NBC, ABC-ESPN and Fox, about the next round of bidding.
"Right now I think the whole mood is very negative on the economy and the advertising market is scheduled to go down," he said.
Due to the nine-hour time difference with the U.S. East Coast, the Sochi Winter Games are not particularly attractive to the American networks. Among the 2016 finalists, Tokyo and Madrid would pose big time differences, while Rio would be just one hour ahead.
The previous U.S. rights negotiations took place in June 2003 before Vancouver had been awarded the 2010 Winter Games and London had secured the 2012 Summer Olympics. NBC beat out Fox and ESPN/ABC in a $2.2 billion deal.
In 1995, NBC obtained the rights to five Olympics from 2000 to 2008 in a pair of deals worth a total of $3.5 billion.
Carrion believes the same networks, and possibly others, will bid for the next round.
"We certainly expect to see NBC back. They've indicated that they'd like to be back," he said. "Other people have publicly said they would be interested."
European rights for 2014 and 2016 are also still in play. Last week, the IOC rejected a bid from the European Broadcasting Union, an umbrella body of public broadcasters that had held Olympic rights for more than 50 years. The IOC is looking to raise more money through deals with individual and private networks.
Carrion, meanwhile, said the IOC's own finances were relatively sound.
"If you look at our sources of revenues, they are pretty much set in place for the next few years," he said, noting that most TV rights and sponsorship contracts are done through 2012.
In a sign of the times, however, Johnson & Johnson announced last month that it was not renewing as a global Olympic sponsor, the fourth to go after earlier departures by Kodak, Lenovo and Manulife.
The IOC has still secured $900 million in revenues so far from nine global sponsors for Vancouver and London, with hopes of signing up a 10th to top the $1 billion mark.
"The financial situation is solid right now," Carrion said. "In that sense, that gives us some ability to wait things out."
Carrion said the IOC has financial reserves of more than $400 million -- a fund designed to keep the Olympics afloat in the event of the games being canceled. But he said the reserves have dropped about 14 percent in recent months due to the fall in stock prices and the strengthening of the U.S. dollar against the IOC's non-dollar investments.
Carrion said the IOC's budget for 2009 -- a non-Olympic year -- would be lean.
"Austerity is the right word," he said, ruling out any staff cuts.
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