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Plan for Olympics channel generates controversy

The International Olympic Committee scolds U.S. organizers for moving forward with the venture.

July 10, 2009|Meg James

The Olympics are supposed to promote peace and goodwill among people and countries. But only one day after the U.S. Olympic Committee announced plans to launch a new cable channel dedicated to coverage of Olympic sports, an international controversy has erupted, threatening to scuttle the channel and Chicago's bid to be the host city for the 2016 Summer Games.

The International Olympic Committee, the governing body that organizes the Games, on Thursday scolded the U.S. Olympic Committee for moving forward with plans to launch its own cable channel next year in partnership with cable TV giant Comcast Corp.

The IOC made clear that it was lashing out, in part, to protect dealings with its powerful broadcast partner, NBC Universal. NBC's parent, General Electric Co., is a major sponsor of the Games, and the network has agreed to pay $2.2 billion for the rights to broadcast the Olympics next year and in 2012.

NBC Universal separately owns a minority interest in another cable channel, Universal Sports, which showcases Olympic events.

"The proposed channel raises complex legal and contractual issues and could have a negative impact [on] our relationships with other Olympic broadcasters and sponsors, including our U.S. TV partner, NBC," the IOC said.

The IOC knew that the U.S. Olympic Committee, which coordinates the U.S. teams that compete in the biannual events, had been working on plans for several years to launch its own channel.

"But we had assumed that we would have an opportunity to discuss unresolved questions together before the project moved forward," the IOC said, adding that it was "disappointed that USOC acted unilaterally and, in our view, in haste by announcing their plans before we had had a chance to consider together the ramifications."

The timing of the announcement -- intended to make a splash at the Allen & Co. media conference in Sun Valley, Idaho -- could come back to bite the U.S. Olympic Committee. This fall, the IOC is expected to decide whether Chicago, Madrid, Rio de Janeiro or Tokyo will be the host city in 2016.

Sports analysts said the U.S. group's ambitions to build its own television empire could unintentionally stoke anti-American sentiments among some IOC voting members. The U.S. and IOC have already been feuding over a revenue-sharing plan that the IOC believes favors the U.S. organization.

"People are concerned, and rightly so, that this could be one of those incidents that could play a role in what is already a highly political bidding process," said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon.

In addition, the IOC plans later this year to begin negotiations on new TV rights agreements, multibillion-dollar contracts that supply a large percentage of the organization's funding. The addition of a competing channel could siphon off advertising dollars that otherwise would go to the networks already carrying the Games.

Most of the networks -- including NBC, Walt Disney Co.'s ESPN and News Corp.'s Fox Sports -- are expected to bid for the TV rights. But an upstart channel grabbing a share of ad revenue potentially reduces the value of the contracts for the IOC.

The U.S. Olympic Committee's deal with Comcast hinges on the organization winning consent from the IOC before the cable company introduces the channel into nearly 11 million homes, which is tentatively scheduled for next year.

Invoking the kind of careful language used by diplomats, the U.S. Olympic Committee defended its interest in starting a new channel and said it would labor "to reach a positive solution that works for all the parties involved. . . . We have had and will continue to have numerous conversations with the IOC leadership."

Oregon's Swangard said the concept of a channel owned by the U.S. Olympic Committee made sense in this "era of dedicated networks," because, during the off years, coverage of Olympic sports has been "so fragmented" that it is difficult for viewers to find. "Right now, Olympic sports are dispersed in all the nooks and crannies of cable television for the better part of three years, and then in the fourth year they all come back to NBC," he said.

Leaders who represent less-prominent Olympic sports said they would like to see the channel become a reality. In other countries, they note, lower-profile sports frequently get more coverage on television. But in the U.S., where commercial considerations drive coverage, many sports and athletes are neglected by the networks.

"For a sport like rowing, there hasn't been much television coverage in the United States," said Glenn Merry, chief executive of USRowing, the sport's governing body. "Everyone is excited for the chance to be in front of the U.S. population more than we have been."

Max Cobb, executive director of the U.S. Biathlon Assn., said he understood why NBC might be opposed to the new channel (a biathlete combines cross-country skiing with target shooting).

"Any time a company spends $2 billion for a sports contract, they are going to be cautious about change," Cobb said. "And this new channel represents a change in how Olympic sports are covered, and there hasn't been a change in the coverage for more than 25 years. I see this as the first step of Olympic sports being properly marketed in the U.S."


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