Comcast-nbc Merger Threatens Olympic Rights Deal
US cable giant Comcast Corporation is closing in on a $30bn merger with long-time Olympic broadcaster NBC Universal – a deal that could have significant ramifications for the International Olympic Committee’s commercial revenue, half of which has traditionally been derived from the sale of TV rights in the US.
Following the decision to award the 2016 Olympics to Rio de Janiero as opposed to the more TV-friendly time schedules of rival bid Chicago, the IOC has been at odds with the US TV market over the next media rights contract which would cover the 2016 Games.
In July, the US Olympic Committee announced it was partnering with Comcast to start an Olympic network, essentially emerging as a rival bidder for Olympic TV rights to NBC and cable partner Universal Sports – the networks that have traditionally carried almost all of the US’ Olympic-sports programming.
A month after its announcement, the USOC placed the project on hold after complaints from IOC members who were worried how the new network would impact relationships with NBC.
NBC, which is majority-owned by General Electric, has televised the last five Olympics and has a $2.2bn contract to air the 2010 and 2012 Games, which accounts for the biggest single source of IOC revenue.
The planned merger would throw NBC and Comcast together which might in turn see the re-emergence of the USOC project.
Bidding for the 2014-2016 Olympics TV rights package in the US is likely to begin after next February’s Vancouver Olympics.
However with the two main rival bidders potentially merged and consequently competition in the market less fierce – assuming that the newly merged entity puts as much value on winning the Olympic TV rights as NBC had previously -, the cost of the rights package is likely to decline leaving a significant hole in the IOC’s revenues.
With details of Comcast’s potential merger with NBC Universal expected to take at least a year to complete, especially considering it is a move that has still to be ratified by the US regulators, it’s hard to speculate on how the bidding process for the US Olympic TV rights will be affected.
The merger talks moved forward a step when General Electric agreed to acquire the portion of NBC Universal it doesn’t own from French conglomerate Vivendi for a speculated fee of $5.8bn. Following that agreement, General Electric is in a position to arrange a wholesale merger with Comcast.
Under the terms of the merger, Comcast is expected to pay about $6bn in cash for a 51% stake in NBC Universal. GE would retain a 49% stake, and Comcast would contribute its cable assets to the joint venture.
Comcast would control the venture’s day-to-day operations and have the right to buy the rest of NBC Universal within seven years according to reports.
