How the cost of Olympics coverage has soared

It’s not uncommon for BoomerCafé to illustrate the scope of changes in the lifespan of baby boomers. That’s what this story from Evergreen, Colorado’s Greg Dobbs is about. Greg, BoomerCafé’s co-founder and Executive Editor, spent most of his career as a correspondent for ABC News, and it gave him an inside perspective on some of those changes; in this instance, it’s about the cost of doing business!

When I saw a few weeks ago that to win the exclusive broadcast rights for the six Olympic games beginning in the year 2022, NBC will pay the International Olympic Committee almost eight billion dollars — you read that right, it’s not a typo (to be exact, the figure’s just $7.75-Billion but really, at that level, what’s the difference?!) — all I could think of was the story a guy once told me about the day he bid a million bucks to broadcast the games — yes, you read that right too: $1-Million, not a nickel more — and thought it would cost him his job. It’s a tale that illustrates the changes we baby boomers have seen in the transition from the 20th to the 21st Century.

Roone Arledge

Roone Arledge

The guy was Roone Arledge, who was a senior producer in 1966 with ABC Sports and had been sent from New York to Mexico City to try to beat NBC and CBS (his only rivals in those days) in the bidding to broadcast the Mexico City Summer Olympics two years later (sometimes remembered as the Black Power Olympics), which would be the first ever to be telecast live.

The story was, he and his counterparts from the other two U.S. networks started the bidding at $25,000 (and once again, that’s no typo). One kicked it off at $25,000, the next went up to $50,000, the next to $75,000, and for hours the raises never went higher, each network besting the previous bid by $25,000.

The long-remembered black power salute at the 1968 Olympics.

The long-remembered Black Power salute at the 1968 Olympics.

Well, when they got into the ether, rocketing past the $700,000 mark, Roone tired of the tedium and compulsively chucked a colossal sum on the table: One Million Dollars! At that, NBC and CBS, both stunned, folded.

So Roone won. But deep inside, he thought he had lost, big time, not only because the broadcast rights would cost ABC a bundle it would never recover, but also because he figured his bosses would be furious and he would be fired. He told me he got on the plane home the next morning assuming it was his last job for ABC.

olympic_flagThe irony was, he told me the story almost 20 years later in Lausanne, Switzerland, as President of ABC Sports, when I had to interview him (I say “had to” because by that time, he also was the President of ABC News and therefore my boss, and really, who wants to interview his boss?!?) after he bid for but lost the rights to the ’88 Summer Games in South Korea. NBC outbid him — spending the then-unbelievable sum of $100-Million for Seoul.

Now, think again about NBC’s new contract, which comes to more than a billion dollars for each Olympic Games through the year 2032. Then, think about this: it’s still worth it. Why? Because with the technical tools we have nowadays to record the shows we want to watch (later) and zap the ads we don’t want to watch, events that go stale just moments after they happen are moneymakers; they’re “live” TV and we want them in real time.

Greg Dobbs

Greg Dobbs

Think about Sochi a few months ago (for your reference, Crimea back in those good ol’ days was part of a country called Ukraine). NBC paid about three-quarters of a billion dollars for the rights to Sochi, and with its production costs, spent a cool billion. But with more than 90 hours of ads over the course of its coverage, that’s also roughly how much it took in from advertisers.

So you might call it “break-even.” But it’s better than that. NBC’s flagship news shows, Today and Nightly News, broadcast from Russia, parading their profiles. And NBC heavily promoted its entertainment programs (including the then-forthcoming passing of the torch on The Tonight Show), which worked. My wife and I found out about the only two shows we regularly watch from promos during the Olympics.

Still, that’s a double-edged sword. Because we record them, then watch the shows but skip the ads. What’s more, one of those two shows already has been cancelled. So NBC has locked in its Olympic coverage, but along with every other network, it still has to figure out how to lock in its profits. If they don’t, there might not be much left to watch.

3 Comments

  1. Dear BoomerCafe,

    I think the classiest thing you have done here is to create something visually appealing while keeping it accessible and informative. Lovely stuff.

    Patricia B.

  2. Thanks Greg for shining a light on an issue that appears to be coming to a head sooner rather than later. Just how does a broadcasting company pay the bills it incurs, if like you, we tape the shows so we do not have to put up with commercials – many of which are just plain insulting when not boring?

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