NEW KING OF THE HILL

CBS outbid NBC—by a lot—to win the broadcast rights to the 1992 Winter Olympics
June 05, 1988

The TV networks may be lean and mean nowadays, but at least one of them still is willing to say to the Olympics, "Take me, Darling, I'm yours." With a bid that made a mockery of frugality but also made sense for the third-rated network, CBS outbid NBC to secure the U.S. broadcast rights to the 1992 Winter Olympics at Albertville, France, for a stunning $243 million.

The two networks submitted their bids in sealed envelopes to the International Olympic Committee last week in New York City. The IOC contingent, which included famed skier Jean-Claude Killy, had expected the Games to command several million dollars less, particularly after ABC shocked the IOC and the broadcast community with an eleventh-hour decision not to participate in the bidding. Because the networks aren't the money trees they once were, this was only the third-richest round of bidding in Olympic history. ABC paid $309 million for this year's Calgary Games, and September's Seoul Games cost NBC $300 million.

NBC, which bid $175 million for the Albertville Games, sweetened its tender by offering the IOC and the Albertville Organizing Committee 50% of all ad revenues in excess of $325 million, which, according to some estimates, could have raised the value of its bid to $220 million. Nonetheless, by the time CBS and the IOC were celebrating their agreement with a magnum of champagne, NBC Sports president Arthur Watson was needling his CBS counterpart, Neal Pilson, for overspending.

"ABC had its Calgary; this one could be CBS's Calgary," said Watson, referring to ABC's reported loss of $65 million on the Winter Games. "Pilson speaks with forked tongue. He preaches one thing [austerity] and then doesn't practice it. This shocks me. How the hell could they leave that much money on the table?"

Said Pilson, "Art Watson can manage his business and we'll manage ours. This bid reflected the value of the Games to CBS. The winner can always look back and say we could've bid less, and the loser can look back and say we should've bid more. In the end we will have the Olympics four years from now and the other guys won't."

"We're a very strong company financially," said CBS president and CEO Laurence Tisch. "We can afford to take the risk of a $10 million or $15 million loss on an event the magnitude of an Olympics."

Still, CBS is taking a chance by spending so lavishly to land the Games. No one knows in which direction the soft sports marketplace is headed. The six-to nine-hour time difference between Albertville and the U.S. poses another risk: Because of it, prime-time coverage will be taped and the results of events will generally be known. To recover its costs, CBS projects carrying more than 100 hours, some 10 more than ABC aired from Calgary.

But the deal can't be considered a mistake when one takes into account how desperately CBS needed to make a statement to its affiliates, employees, advertisers and potential investors. So serious are CBS's ratings and public relations problems that it could hardly afford not to get the Games. Keep in mind that for all the difficulties the Calgary Games caused ABC, they pushed the network into second place in prime time last season.

If CBS delighted the IOC, ABC disappointed and angered the committee with its decision not to participate in the bidding. ABC still resents IOC TV chairman Dick Pound and agent Barry Frank, who represents the organizing committee in TV negotiations, for allegedly trapping the network into overpaying for the rights to the Calgary Games. Was this ABC's way of getting back?

"I was upset that ABC would choose to make an announcement at a time when it would not help," said Pound. Frank believes the announcement was "timed to discredit [the rights] to some degree. I felt there was a little bit of dog in the manger in this."

ABC's vague withdrawal announcement said that it feared being dragged into a "multiround auction" and that it had problems with certain sponsorship and "procedural" changes in the proposed TV contract. ABC Sports president Dennis Swanson declined to elaborate. "They [the IOC] did what they had to do," he said. "We opted not to participate and said so. Life goes on."

The withdrawal was all the more surprising because ABC tried to obtain both the Albertville Games and the 1992 Summer Olympics at Barcelona as a package. In a move that would have deep-sixed CBS and NBC, ABC proposed to the IOC in early May that the network be awarded the rights to both Olympics for $500 million. Pound and IOC president Juan Antonio Samaranch were intrigued by the idea, because the two Games might have produced more revenue sold as a package than separately. But the deal fell through when Albertville and Barcelona couldn't agree on how the proceeds would be divided.

Since Calgary, ABC had argued that the IOC should give it "most favored network" status for bidding on both 1992 Games because of its Olympic contributions over the years (ABC has telecast 10 of the previous 13 Olympics). Until last week ABC's best pal in the IOC was Samaranch. In a May 18 letter to Samaranch, Swanson informed him of ABC's intention to withdraw and then tried to call in a favor.

"It would be our hope," he wrote, "that you could convince the organizing committees of the wisdom of accepting our joint financial proposal prior to next week's meeting...." Swanson finished by thanking Samaranch for his "gift of the Olympic torso by Berrocal, [which] adorns my office and serves as a visual reminder to me of our friendship."

In a return letter to Swanson two days later, Samaranch made no reference to ABC's package-deal proposal and noted "how disappointed I am with the contents of your letter."

Says Pound, "Basically ABC has passed on the last two Olympic bids. Any claim it may have thought it had to a favored status has now fully exploded. There is no basis for ABC to bid [for future Games] on any footing except equal with the other two networks."

In the meantime, CBS can crow. Just before he aimed the cork at the cameras last week, Pilson jokingly said, "Is there an ABC crew here?" Then he finished his glass of champagne faster than Killy could schuss down a hill.

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ILLUSTRATIONROBERT GROSSMANAfter Tisch and CBS iced the Albertville deal, NBC insisted that they had paid too much.

HOW MUCH EVERYONE PAID IN '88

U.S. $309 million
Western Europe $5.7 million
Japan $3.9 million
Canada $3.65 million
E. Eur. & U.S.S.R. $1.2 million
Australia $1 million
Asia $278,000
Mexico $275,000
Puerto Rico $40,000
Venezuela $10,000

PERCENTAGE OF WORLDWIDE TV RIGHTS PAID BY U.S.

1960

Squaw Valley 100% (CBS)

1964

Innsbruck 63.8% (ABC)

1968

Grenoble 76.5% (ABC)

1972

Sapporo 75.5% (NBC)

1976

Innsbruck 86% (ABC)

1980

Lake Placid 74.8% (ABC)

1984

Sarajevo 89.1% (ABC)

1988

Calgary 95.1% (ABC)

COST OF A 30-SECOND PRIME-TIME COMMERCIAL

1976

Innsbruck $34,500

1980

Lake Placid $87,500

1984

Sarajevo $225,000

1988

Calgary $285,000

1992

Albertville $345,000*

*Estimate

THE BURGEONING COVERAGE

Prime-Time Hours

Total Hours

1960

Squaw Valley

2

15

1964

Innsbruck

8

17.5

1968

Grenoble

8.5

27

1972

Sapporo

11

37

1976

Innsbruck

26.5

43.5

1980

Lake Placid

35

51.5

1984

Sarajevo

42

63.5

1988

Calgary

53

94.5

1992

Albertville

53*

105*

*Estimate

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)