Will we see the Olympics on our TV screens?
Date: April 10, 2013 / Posted by Glenn Mitchell
Each of the three major free-to-air television networks in Australia – Seven, Nine and Ten – has decided it is not interested in bidding for the latest Olympic rights package.
Up for grabs at present are the broadcast rights for the 2014 Winter Games in Sochi and 2016 Summer Games in Rio.
The Seven Network was the last of the three to ditch the idea after it was told by the IOC that the bid it submitted was not acceptable.
The network was told that it had to at least stump up the same as the Nine/Foxtel consortium did for the London rights with respect to the 2016 Summer Games in Rio de Janeiro.
Seven decided that that was not worth the risk.
The IOC sold the Australian TV rights for the London Games for $120m, with Nine’s split costing it $72m while Foxtel forked out the remaining $48m.
Let’s not forget also that there are a lot of further costs that networks have to pay in order to bring the Games to your lounge room.
Whilst the rights are certainly the biggest consideration, there is also the cost of actually staging the coverage.
Floor area in the International Broadcast Centre has to be leased for the provision of the network’s studios which are built by the IOC’s broadcast arm but have to be fitted out by the network themselves.
That requires transporting millions of dollars’ worth of equipment to the host city along with a gaggle of engineers and technicians to put it all together.
Millions is spent on the necessary satellite time required to beam the pictures back home.
Then of course, you need to fly, accommodate and remunerate all the staff who work on the coverage with some, like the technical gurus, based in the host city for around two months.
Industry reports suggest that Nine made a $25m loss on its investment in London 2012.
Not surprisingly, the Australian free-to-air networks are currently very nervous about purchasing the rights for Sochi and Rio, which are being sold as a bundle.
In the grand scheme of things what the IOC makes out of broadcast rights in Australia is relatively small fry.
The IOC’s total worldwide television revenue for the London Games last year was US$3.91bn, significantly up on the US$2.57bn that it garnered from the sale of the Beijing rights.
The United States market is easily the most lucrative for the IOC with NBC parting with US$1.18bn to secure the London broadcast rights having paid US$814bn for Beijing.
In 2011, NBC bid for an unprecedented four-Games package and won it at a cost of US$4.38bn – 2014 Sochi US$775m, 2016 Rio US$1.23bn, 2018 Pyongyang US$963m and the 2020 Summer Games US$1.42bn.
The venue for the 2020 Summer Olympics will be announced by the IOC later this year with Madrid, Tokyo and Istanbul the three remaining bid cities.
Australia’s rights fee pales into near insignificance when stacked up against numbers like that.
So, what is the prospect that there will be no coverage in Australia of the next two Games, especially the Rio extravaganza which will hold far greater appeal for the audience?
According to the IOC Charter (chapter 5, clause 59.1), “It should be an objective of the Olympic Movement that the media coverage of the Olympic Games, by its content and spread promote the principals of Olympism”.
The key word is ‘spread’.
The charter does not mention revenue but the perceived audience that it should be trying to attract.
But, as everyone knows, the IOC is a money hungry beast and it is not going to give anything away in the spirit of upholding Baron Pierre de Courbetin’s ideals when he forged the spirit of the Modern Olympics.
It may well be that the three major commercial networks have decided that the economic climate and their advertising revenue projections over the next three years cannot justify an expenditure commensurate at the very least with what Nine and Foxtel paid for the past two Games.
It would appear that they have said, ‘enough is enough’.
So what happens if one of them doesn’t raise the ante?
On face value it would appear that the IOC would need to go with the highest bidder, which was the Seven Network before it withdrew from negotiations, and be prepared to lower its revenue expectations in favour of its stated charter considerations.
But will the IOC want to set a precedent?
The Government’s TV Anti-Siphoning Legislation has the Olympics as a protected event, meaning that it cannot be shown on pay-TV exclusively unless the free-to-air networks have forfeited the rights.
That will be the case if the ‘Big Three’ stand their ground.
Unfortunately, there is no way that Foxtel could go it alone and buy the rights outright.
For the Games to air in Australia, there will have to be a joint bid put forward by a free-to-air network (or possibly two) in concert with Foxtel.
Last year’s Olympics clearly showed the advantages to the audience that can be afforded by having a subscription TV operator in on the deal with Foxtel opening up eight dedicated Olympic Channels, something that the free-to-air networks cannot match.
The response to Foxtel’s coverage of the London Games will no doubt have them keen to take part again but they cannot go it alone.
There is no doubt that the AOC’s heavy hitters, including IOC board members Kevan Gosper and John Coates, will be working the phones and leaning on favours from their counterparts to show some leniency with regard to Australia from a revenue perspective.
As the days tick by – and deals like this need to be signed a long way out to facilitate all the pre-planning and organization required to mount an Olympic coverage – without a signature on the dotted line from an Australian TV consortium you can guarantee it will become a hot topic in Federal Parliament.
But, in essence, short of writing out a massive taxpayers’ cheque and handing it to the national broadcaster – and that ain’t gonna happen – there is little the pollies can do other than blow hot air.
Given Australia’s history of participation at the Modern Olympics – it is one of only five nations to have contested each of the 27 Summer Games – it is almost incomprehensible that the 2016 edition would be absent from our TV screens.
So much has been said and written about the cash grab that exists in modern-day sport.
The current impasse between the IOC and Australia’s major TV networks is a case in point.
One thing that looms on the horizon as a cash cow for the IOC with regard to broadcast rights revenue is the ever growing Chinese market.
Every week the population of Chinese cities is swelling with the continued migration from the rural areas.
With its citizens rapidly increasing financial prosperity and the country’s sporting success – it topped the medal tally in Beijing and finished second in London – it means that the number of potential viewers in the world’s most populous nation for the Olympics is likely to grow exponentially.
It will be fascinating to see what that means with regard to TV revenue that the IOC will be chasing from China in the future for at present, despite the steady upward trend in the nation’s prosperity, it has not really translated greatly to the rights fees that the Olympic Movement has asked it to stump up.
China Central Television (CCTV) paid US$100m to cover both the Vancouver and London Olympics.
Last year, it forked out US$160m for Sochi and Rio.
That in itself seems a remarkably small amount given what the IOC is demanding from Australia given there are far more television sets in China than there are here.
Perhaps if the IOC was to use China as its regional benchmark when setting rights fees it could afford to cut Australia a bit of slack.
First published on The Roar – theroar.com.au – on 9 April 2013