The Biz: Has NBC sports lost the big game?
For NBC Sports, February will be a bit like Mardi Gras-one great big high followed by the downer of Lent. On Feb. 10, NBC showcased an ageless Michael Jordan in his return to the NBA All-Star Game. The Winter Olympics will continue through Feb. 24 and make the network a prime-time destination each night. Coming Feb. 17 is the biggest race of the booming Nascar: the Daytona 500.
And in a rarity for network sports these days, NBC says it will turn a profit-at least on the Olympics where it expects to earn $60 million to $75 million.
But after the Olympic flame goes out, what happens to the 75-year-old network's proud sports division? And whither the long-time face of NBC Sports: Bob Costas, the Olympic prime-time host?
After the NBA leaves in June, the network won't carry any of the three major sports. It will be without a World Series, Super Bowl or NBA Finals to use as a promotional platform for the first time in decades. Highlights left on the docket will be some prestigious golf and tennis events, horse racing's Triple Crown, a half-season of Nascar and Notre Dame football. Except for the Triple Crown, Costas appears regularly on none of those broadcasts.
The network does have the Olympics until 2008, but that comes every two years.
refused to budge
NBC lost the NBA to higher bidders ABC/ESPN and AOL Time Warner when it refused to budge off its proposal of a four-year, $1.3 billion deal, a figure the network deemed would allow it to operate in merely the break-even range. Since NBC remains firmly the top-rated net among the coveted 18-to-49-year-old audience, it saw no reason to take a loss on sports. "We're making smart decisions," says David Neal, who oversees production of the "NBA on NBC" broadcasts.
"I hate to lose major sports franchises like the NBA," says Philip Hurley, general manger of the NBC station in the Beaumont, Texas, market. "We do very well selling them to our local advertisers, but the other side of that coin is those fees are so exorbitant that if the network were to pay that price, the stations would end up having to help pay for it and so I support [NBC's] decision."
Come March, NBC executives will have to begin to map how to fill some 80 hours of programming on weekends that the NBA will leave behind.
"We have several months now to figure out exactly how the sports division will be defined post-NBA," says spokesman Kevin Sullivan.
And whether to find the dollars and opportunities to entice Costas to stay where he has been for more than 20 years. His contract expires shortly after the Olympics and Costas isn't likely to agree to stay at NBC simply to host the Olympics. Both ABC Sports/ESPN and AOL Time Warner, for which he hosts a show on HBO, are interested in hiring him. Costas' agent, Barry Frank of IMG, declined to comment.
Industry observers say single revenue streams of broadcast TV are unable to generate enough dollars to justify the cost of major sports rights fees. ABC/ESPN and AOL Time Warner can sell ads and garner subscriber fees.
"There is a transition from network to cable of sports, and the reality is the dual revenue stream business will ultimately be able to outbid a single revenue business for whatever they want to bid for," says Don Ohlmeyer, an ex-ABC and NBC exec.
NBC lost hundreds of millions on the NBA and Nascar last year. Ohlmeyer says when he ran NBC Sports from 1978-82, the division made some $50 million a year in a pre-cable world. By 1987, the year ESPN acquired part of the NFL package, the division lost $40 million.
"CBS still insists they make money on professional football," Ohlmeyer says. "That's Enron accounting."