The Thrill Of Victory, The Agony Of Paying For Itby
Laurence A. Tisch was not about to admit it. But the CBS chairman sure looked relieved at a Jan. 19 news conference. His network was announcing that it had won the rights to televise the 1998 Winter Olympics in Nagano, Japan, for $375 million. Coming just a month after CBS lost pro football to Fox Broadcasting Co., the news was a sorely needed tonic for his depleted network. Says Tisch: "This is one game we wanted to be in." Now, though, media watchers wonder if, in his thirst for the games, Tisch has paid too much.
CBS could ill afford to come up a loser. In addition to the NFL's National Football Conference, it watched Major League Baseball migrate to ABC and NBC last year. At this point, it is relying on the 1994 winter games, which begin Feb. 12 in Lillehammer, Norway, to keep it in the TV sports game. If CBS Sports had let this franchise go, too, it might as well have changed its old ad slogan from "dream season" to "lean season."
SAVING FACE. By nabbing the Nagano games, Tisch also evened the score somewhat with Fox's Rupert Murdoch, whose $1.5 billion bid for the NFC banished CBS from pro football for the first time in 38 years. Murdoch had expressed similarly keen interest in the games, and rival executives expected another showdown between CBS and Fox. But after several weeks of talks, Murdoch and the International Olympic Committee agreed that Fox had probably bitten off as much as it could chew with football.
For all its poetic justice, Tisch's deal carries big risks. CBS has never done better than break even on the Olympics. Tisch may grudgingly accept the escalating fees (table). But when the IOC named its price to other networks, ABC and NBC demurred. Says NBC Sports President Dick Ebersol: "There was a good chance that we would be stepping off into the great unknown."
Among the dangers, Ebersol notes that broadcasting from Japan will inflate production costs. CBS has been able to keep down costs in Lillehammer because it had already ramped up for Albertville and much of its technical equipment has been stored in European warehouses. In Japan, though, CBS could face production costs of $300 million to $350 million, says PaineWebber Inc. analyst Christopher Dixon. That means the network would have to sell $675 million worth of ads just to break even.
CBS executives point to Lillehammer as evidence that Olympics ad sales are on an upswing. Indeed, media buyers report that the network has sold about 97% of its commercial time and is getting a 15% to 20% increase in average ad rates over Albertville. CBS has been helped by everything from a better economy to the assault on figure skater Nancy Kerrigan, which has some people expecting high drama if Kerrigan competes with rival Tonya Harding.
But CBS has other advantages this year that it won't have in Japan four years from now. The network has offered Lillehammer and Albertville as a package to advertisers. CBS executives say 40% of this year's sponsors also bought time in 1992, which makes selling out the event much easier. Trouble is, this short interval between games is a one-time quirk that occurred when the IOC shifted the winter games to alternate with the Summer Olympics.
BOWL SHOPPING. Come 1998, the network may lack another key selling point. Olympic advertisers usually promote their sponsorships by buying commercials in major sports events before the games. On CBS, that has always meant appearing in football. Unless Tisch wins back the NFC after 1997, he can't offer this showcase. To compensate, sponsors expect the network to promote other sports, such as college football. "CBS will look at the bowl business more seriously," says David F. D'Alessandro, marketing chief at Olympic sponsor John Hancock Mutual Life Insurance Co.
One obstacle CBS can do little about is the 14-hour time difference between Japan and the U.S. East Coast. The network concedes that most prime-time coverage will be taped from the day before. Media buyers say this could annoy viewers who are used to getting real-time scores. CBS insists events such as figure skating will do just fine on tape: "Our audience watches for the quality of the event, much more so than who the particular winner is," says CBS Sports President Neal H. Pilson.
After the Kerrigan episode, that's arguable. But with CBS' sports fortunes now tied so closely to this quadrennial winter-fest, Tisch will probably take his viewers any way he can get them.