Disney-Owned ESPN Analyzes Olympic Rights for 2014, 2016

(ATR) A spokesman for ESPN confirms that rights to the 2014 Olympic Winter Games and 2016 Olympic Games are on the radar of the U.S. sports cable channel.

With future Olympic Games coverage meaning even more bundling of broadcast television, cable television and digital platforms by the U.S. rights holder, it comes as no surprise that ESPN might want in.

“We believe the Olympics are a great property that would work well with our multiple platforms,” ESPN vice president Mike Soltys told Around the Rings in an e-mail reply. “We intend to submit a proposal, but, as always, it will need to make economic sense.”

The New York Times on Wednesday quoted a senior ESPN executive, John Skipper, re-affirming his organization’s interest in the Olympic properties. Soltys said ESPN officials have talked about going after the next round of rights in recent months.

The International Olympic Committee owns the rights to the Games. It has not announced when the 2014 and ’16 bidding will begin.

NBC and its General Electric parent blew away the competition in 2003 bidding for the forthcoming 2010 Vancouver Winter Games and 2012 London Summer Games when it crafted a plan whereby NBC would continue as U.S. rights holder, while GE would also acquire the rights to become a worldwide Olympic sponsor.

GE / NBC paid $2.2 billion for the 2010/2012 rights package despite not knowing the location of the 2012 Games when the bidding occurred.

The bold, record-shattering bid was and remains a financial gamble, but the Beijing Games are proving that it was a smart play. NBC has reported advertising sales of $1.025 billion, including ad sales of $25 million since the start of the Beijing Games.

The network has seen record prime-time audiences flock to its coverage, even though some featured events are delivered via tape delay because of a huge time difference between Beijing and key U.S. markets. NBC is further enjoying unprecedented traffic by internet and mobile users of Olympic content.

NBC paid approximately $894 million for rights to the Beijing Games as part of a package of rights that secured its status as the Network of the Olympics from 2000 to 2008.

Profit projections coming out of Beijing are encouraging. GE’s Peter Foss, general manager of enterprise sales, told ATR in Beijing that the company’s sales have been robust due to the number of infrastructure projects the Games required.

“We we’re quite successful... selling a significant amount of our products and services to infrastructure – you’ll see numbers reported of $700 million,” he said.

NBC generated about $70 million in profit for GE out of the Athens 2004 Games. Likewise, ESPN is a huge profit center for its parent, The Walt Disney Company. ESPN’s third-quarter 2008 profit grew nine percent year over year and contributed to Disney being able to report $1.28 billion in income for the quarter, up from $1.18 billion a year earlier.

Disney's ownership of the over-the-air network ABC would satisfy the IOC's requirement that the Games be available free of charge to a mass audience.

The IOC undoubtedly will seek a substantial rights fee increase for 2010-12, especially given the myriad revenue opportunities now emerging from digital content, on top of over-the-air and cable.

The winning rights fee could increase by as much as 50% compared to 2010/2012 "if some bidding wars get started and Chicago (is awarded) the Summer Games," said Rob Yowell, president of Gemini Sports, a sports marketing consultancy in Phoenix.

“If I was holding the rights to this, this is a great time to be selling them,” Skipper told the Times.

- Written by Steve Woodward