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U.S. Against The World

July 27, 2009
July 27, 2009

Table of Contents
July 27, 2009

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U.S. Against The World

A new TV network exacerbates Olympic tensions

By late last summer, Peter Ueberroth had grown impatient. Ueberroth, 72, the mastermind of the wildly successful 1984 Summer Games in Los Angeles and the godfather of the modern corporate Olympics, had been chairman of the U.S. Olympic Committee since 2004, and for much of his tenure he had pushed for the creation of a 24-hour television network—the USOC's answer to the NFL Network. USOC COO Norm Bellingham was discussing the idea with ESPN, the Discovery Channel and Olympic-rights holder NBC, but to the consternation of Ueberroth (and many U.S. Olympic sport federations) there was no deal. More than once, when a wrestling meet, track event or regatta came up in a meeting, Ueberroth would turn to Bellingham and bark, "And what channel is that event on?"

This is an article from the July 27, 2009 issue

Earlier this month, Ueberroth, who was succeeded as chairman by Larry Probst last October but still wields power as the USOC's honorary president, got his wish. The USOC and Comcast announced that they're teaming up to launch the U.S. Olympic Network after the 2010 Winter Games. Programming will include live Olympic-sport events, documentaries and studio shows. "For fans of the Olympics," said USOC CEO Stephanie Streeter, "this new network will be a dream come true."

Maybe. Ueberroth's baby was immediately met with hostility from the International Olympic Committee and its friends at NBC, which is paying the IOC $2.2 billion for the rights to broadcast the 2010 and 2012 Games. Stunned IOC members, many of whom had preached patience when the idea of a U.S. network was floated in the past, questioned the USON's financial prospects and wondered why a deal was struck without NBC and its sister cable network Universal Sports. On July 6, three days after the USOC told the IOC about the deal, IOC director of television and marketing Timo Lumme wrote Bellingham to say that the IOC had "serious concerns about such a network." Lumme also offered a not-so-subtle reminder that the IOC owns archival Olympic footage, a trove that a 24-hour network might want access to.

Worse, there were rumbles that the USOC's disregarding of IOC concerns would make the 107 members who will choose the site of the 2016 Summer Games this October less inclined to vote for Chicago, one of four finalists. "My vote will not be swayed by the actions of the USOC," one voter told SI last week. "But I cannot speak for all of my colleagues. This isn't helping Chicago when the USOC acts with indifference."

Dollar figures and bruised broadcast partners matter, but IOC anger is also driven by the sense that the world's largest Olympic federation has such unstable leadership. (Jim Scherr, who was well-liked and respected in the international community, resigned as CEO last spring and was replaced by Streeter, who is still listed as interim CEO.) The dustup over the USON is just the latest example of IOC-USOC friction. Last year the USOC squawked when the IOC said it wanted to reduce the percentage of revenue from worldwide Olympic TV rights fees that goes to the USOC. The U.S. gets 12.75% of the pie—more than anyone else, an allocation many non-American IOC members want changed.

The USOC argues that it deserves a bigger share because the majority of TV and sponsor revenue comes from the U.S., but it knows it must tread lightly with the IOC. In March, Chicago bid chairman Pat Ryan persuaded Ueberroth, who can be direct, to stay away from a meeting with IOC president Jacques Rogge to discuss the rights-fee distribution, fearing that a giant of the Olympic movement throwing his weight around might alienate Rogge. Ryan urged the more tactful Probst to speak instead, and the parties decided to table the issue until after the 2016 Games are awarded. "It's almost like the USOC and the IOC have been in marriage counseling," says a communications executive with knowledge of the discussions. "They love each other, they need each other, but they're sure good at not getting along."

Ironically, IOC members who vote against Chicago in 2016 may be taking money out of the organization's pockets. By all accounts Chicago's bid is extremely strong, and logistically it's far more attractive to potential American broadcasters than the other 2016 finalists (Madrid, Rio de Janeiro and Tokyo). When the rights go up for auction, U.S. networks are sure to pony up far more if Chicago is the site. "I'm upset that the resumption of [the] USOC-IOC dispute will jeopardize the chances of Chicago 2016, the best American bid I've ever seen," NBC Universal Sports & Olympics chairman Dick Ebersol told SI. "It's so absolutely unnecessary. What was the rush?... The USOC's share of [NBC's $2.2 billion rights fee] will be more than $300 million. [Even] if everything went right for this new [network], they wouldn't make $300 million in a hundred years."

Indeed, the USON's short-term financial viability is questionable. The USOC, which has lost major sponsors The Home Depot and General Motors in the last year, hopes to have the network in 30 million homes when it launches, a small audience. (Universal, which can piggyback onto NBC resources and doesn't face the production costs that the USON might, is distributed to 56 million.) Ueberroth insists that several sponsors are close to signing with the USON, but no deals have been finalized. Privately, some at the USOC worry that athlete funding may suffer if Chicago's bid fails and the fledgling network loses money. "[The USON] will change the face of sports in our country," says Ueberroth, but whether that face will be smiling or not is up for debate.

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Some IOC members say the network pushed by Ueberroth might EXTINGUISH CHICAGO'S 2016 BID.
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