Seoul pins its hopes on NBC

TV rights to the 1988 Games went to the winner of a lowball auction
October 13, 1985

At 4:59 p.m. last Thursday, precisely 60 seconds before NBC's bid for the TV rights to the 1988 Summer Olympics would expire, Arthur Watson's phone rang. It was the end of a drawn-out day of waiting, and Watson, the president of NBC Sports, was wearing a long face, fearful the call was to tell him that CBS or ABC had edged out NBC in the Olympic bidding. At the other end of the line was Richard Pound, the Canadian who is chairman of the IOC's TV rights negotiating committee. Playing on Watson's anxiety, Pound feigned disappointment. "Well, Arthur," he said, pausing for effect. "I have to say [another pause] we are really looking forward to working with you on these Games in 1988."

So it was that NBC became the network of the Seoul Olympics at fire-sale prices—$300 million guaranteed and a share of advertising revenue that will not exceed $200 million. Only hours after the phone call Watson sounded as if his plans had never been in doubt. The network will carry 180 hours, he said, with 80% of the Games broadcast live. At 7 a.m. E.S.T., for example, the Today show will cover swimming finals as they happen at 9 p.m. in Seoul.

It might surprise even Watson to learn how close NBC came to losing the Games. In one of the strangest sequences in the annals of sports TV, the Seoul negotiators tried to seal and deliver the Games to CBS the very afternoon Watson was waiting for Pound's call.

Throughout the Olympic talks, which covered two days in Switzerland last month and two days in New York last week, the IOC and Seoul negotiators had grown exasperated with Watson. They felt he was bullheaded on the small points. The Koreans also considered it tacky that Watson wore designer jeans in the hotel between formal negotiating sessions on Sept. 13. They preferred the diplomatic style of the CBS execs, who wore pinstriped suits. The problem was that CBS had offered a measly $300 million, with no revenue sharing.

On Thursday afternoon, Barry Frank, who represented the Koreans in the TV negotiations, suddenly rang up CBS. Frank told executive vice-president Neal Pilson that he could deliver the Games for a guarantee of $310 million, plus a profit-sharing deal similar to the one proposed by NBC. CBS, which considered itself out of the running for the Olympics, was stunned by the 11th-hour pitch. Pilson and two other high execs, James Rosenfield and Gene Jankowski, discussed the offer and decided against it. They argued in part that profit sharing on the Olympics might set a terrible precedent for future negotiations.

Pilson told Frank that the deal wouldn't work. Minutes later, Frank called back with yet another offer. He intimated that CBS might be able to land the Games by guaranteeing about $325 million, with an open-ended, revenue-sharing scheme to be determined later. It was now 4:50, 10 minutes before the deadline that NBC had set for its $300 million bid, so CBS had to act fast or pass up the Games. Pilson pleaded for an extension until noon the next day; the new figure demanded further discussions, and at that moment CBS chairman Thomas Wyman was on a plane to Boston. Though CBS insists it wouldn't have acted differently if it had been given the extra time, the fact is that Wyman's unavailability made the issue academic. With the clock ticking, the Koreans chose NBC.

If network coverage of the Olympics can turn on a pair of jeans, some other lessons can also be learned.

For one thing, NBC's $200 million in revenue sharing is primarily intended to allow the Koreans to save face. They can now beat the drums back home about how they got their $500 million "bottom-line" sum. But the revenue-sharing portion of that is payable only after NBC recovers its total costs, which almost certainly will exceed $550 million.

Make no mistake, NBC will be lucky to break even on Seoul, much less turn a profit. Watson may be stubborn but he's not dumb. Indeed, NBC lowered its guarantee from $325 million to $300 million in the weeks after Switzerland. And NBC may find itself in a rate-slashing war with ABC, which currently figures to lose some $50 million to $75 million on the $309 million 1988 Winter Games at Calgary. For Seoul, ABC reportedly submitted a cheapo bid of $250 million, plus a supplement from ESPN cable payments.

On Thursday night, Lee Yong Ho, the titular head of the Seoul committee, stuck an Olympic pin on Watson's lapel. "That means you're engaged, Arthur," Pound quipped. "I'm more than engaged," Watson replied. For better, he might have added, or worse.

PHOTOUPI/BETTMANN NEWSPHOTOSTo seal the deal, Lee (right) affixed an official Olympic emblem to Watson's lapel.

HOLE YARDS PAR R1 R2 R3 R4
OUT
HOLE YARDS PAR R1 R2 R3 R4
IN
Eagle (-2)
Birdie (-1)
Bogey (+1)
Double Bogey (+2)