London 2012: CBC wins rights to broadcast next two Olympics in Canada
After a two-Games’ absence the public broadcaster has won back the rights to televise the 2014 and 2016 Olympics, after the telecommunications’ giants balked at costs they could no longer stomach.
But the CBC, threatened by the prospect of losing Hockey Night in Canada in two years time and desperate to take back the Olympic rights they held before Bell and Rogers teamed up to wrest them away, managed to get a deal done.
“When you’re a Bell or a Rogers you have … a lot of cost considerations that we don’t necessarily have when we go alone,” said Kirstine Stewart, head of CBC English services. “We’re just in a different position. Our bid is structured completely differently than the private broadcasters’ would be.”
Terms of the CBC’s deal with the International Olympic Committee — which negotiates broadcasting rights with each country — were not disclosed, as per IOC rules.
But according to one source, the deal was worth between $75 million to $80 million — or $5 million to $10 million more than a joint bid made by CBC and Bell earlier this year.
Last September CBC and Bell announced a partnership to bid on the next two Olympics. They made two bids, both rejected by the IOC, reportedly worth $70 million.
Bell and Rogers executives said then they were no longer interested in broadcasting the event.
The rival telecommunications companies — and owners of television properties CTV, TSN and Sportsnet — partnered in 2007 to form the Canadian Olympic Broadcast Media Consortium in order to outbid the CBC for the broadcasting rights to the 2010 Vancouver and 2012 London Games.
But after losing an estimated $20 million to $80 million on the Vancouver Games alone, neither company was willing to make a bid that satisfied the IOC, especially without any guarantee that NHL players would be participating.
That thorny issue, which could dramatically alter potential revenues at the 2014 Games, is part of the ongoing discussions in the NHL’s collective bargaining.
Stewart said the CBC believes Canadians will watch Olympic hockey whether or not NHL players are involved.
“We’re not predicting either way,” she said. “That’s (the NHL and the IIHF’s) call in the end. We do know that games like the world juniors and other hockey events like that have huge viewership and following. People love hockey in Canada, so I think regardless we’re going to have a good time with hockey at Sochi.”
The reported dollar figure of the rejected Bell-CBC joint bid — $70 million — represents less than half of the more than $150 million the Bell-Rogers consortium is believed to have paid the IOC for the rights to the Vancouver and London Olympics.
So it appears as if Rogers and Bell bowed out of the latest bidding because they could not find a way to make broadcasting the Games a profitable endeavour.
But one sports marketing expert thinks it’s possible the CBC was able to lowball the IOC once Rogers and Bell pulled out.
“I believe the IOC did overplay its hand because they have gone from Olympics to Olympics getting more and more money,” said Ian Lee, a professor at Carleton University in Ottawa.
Lee, who has made a study of Olympic business practices, says networks around the world are now calculating bids based on the knowledge that they can no longer control the flow of programming from the Games — that their advertising revenues suffer from Internet and social networking leakage.
But the IOC, which had gotten rich off of the ever more profitable media bidding wars, has yet to catch up to this reality.
“The IOC’s mindset is in the Olympics of 2008 and (Bell’s) mindset is pricing the Olympics for 2014, 2016,” he said.
With the potential of there being no Canadian bidder, the CBC may have got a discount, Lee said. “There is only one thing worse than getting a lowball bid and that’s getting no bid at all.”
Stewart refused to discuss financial details, so it’s unclear whether the CBC made a higher or lower bid than their joint offer with Bell.
She said the CBC is inherently different than a group of private corporations, namely in their profit motive. She is not expecting the CBC to make money off the Olympics, but she’s confident they will break even, as they did in their previous 10-year deal with the IOC prior to the 2010 Games.
The announcement also comes while the CBC has slashed programming and operational costs as a result of federal budget cuts.
But Stewart said their Olympic bid is unrelated to ongoing cuts.
“This isn’t robbing Peter to pay Paul,” she said, adding that producing the Games is projected to be “cost neutral.”
The announcement of the successful Olympic bid also raises questions about how it might impact the CBC’s contract with the NHL, which is set to expire in 2014. TSN and Sportsnet — respectively owned by Bell and Rogers — are expected to battle hard for the CBC’s exclusive rights to broadcast NHL games involving Canadian teams.
So by conceding the Olympics, they may be granting the CBC a battle, while fortifying themselves for the war.
But David Soberman, a marketing professor at the Rotman School of Management, thinks the CBC’s successful solo bid is actually an indication that the public broadcaster is holding up well against the competition.
“People may be thinking that the CBC is on the way out, but they’re sending a message now, they’re saying: We’re here, don’t forget about us.”