For TV, It No Longer Pays to Bet Big on Sports

By Nicole Allan

A rocky advertising climate might force the International Olympics Committee to delay bidding for media rights to the 2014 and 2016 games. Over the past years, bidding wars have become the norm for broadcasters who want to gain access to the NFL, NCAA, and Olympic markets, and fees have skyrocketed. But now, as traditionally big TV advertisers spend more on the Web and less in general, media companies are reluctant to shell out billions for events that aren't the advertising jackpots they once were.


NBC Chairman Dick Ebersol announced on Sunday that, due to the escalating cost of media rights, his company will lose money broadcasting next month's Winter Olympics. The Wall Street Journal reports that some media executives "saw Mr. Ebersol's comments as a signal to the IOC to lower their expectations in anticipation of bidding for 2014 and 2016," but the IOC is hoping that if it delays the bidding until next year, the market will have recovered enough to support another hike in fees.

The NCAA is facing a similarly unenthusiastic broadcaster landscape in its quest to strike a new long-term deal for March Madness rights. The league can opt out of its 11-year contract with CBS if it receives a better offer for the tournament rights, though its recent request for proposals has not prompted one. CBS does not expect to make much money, if any, over the next four years of the contract and hopes the NCAA would be willing to expand the tournament or bring in another broadcaster to ease the costs. Compromises like these may be the only way for struggling media companies to stay in the game. If TV advertising is on a more permanent downswing, however, athletic organizations may have to find an alternative to the current bidding system.

This article available online at:

http://www.theatlantic.com/business/archive/2010/01/for-tv-it-no-longer-pays-to-bet-big-on-sports/33581/