Over the last several months, officials of the International Olympic Committee (IOC) and Comcast Corp. secretly negotiated an unprecedented $7.75 billion contract extension to keep the Olympic Games on NBC-TV and NBC-affiliated cable networks through 2032.
The new Olympics deal skipped a bidding process that, experts said, could have brought significantly higher TV rights fees for the six additional Olympic Games. But the deal also guarantees the Olympics organization billions of dollars - even if the global economy tanks, or the red-hot market for TV sports rights in the United States cools.
Neal Pilson, a former president of CBS Sports who has consulted on Olympics TV rights bids, said the deal appeared to be an "insurance policy" for an Olympics organization that might fear an economic downturn, as well as a preemptive strike by Comcast to extend the Olympics franchise on Comcast-owned NBC.
The IOC initiated the negotiations, officials said, which spared Comcast from having to bid for the rights against other broadcasters. The $7.75 billion price includes a $100,000 "signing bonus" to the IOC from Comcast.
Comcast already controlled the Olympic TV rights through 2020 after bidding $4.4 billion at the IOC headquarters in Lausanne, Switzerland, in mid-2011, beating out Fox Sports and ESPN. With the earlier bid and the deal announced on Wednesday, Comcast has now agreed to spend $12.1 billion on Olympics TV rights through 2032.
Beyond the next three Olympics in Rio de Janeiro; Pyeongchang, South Korea; and Tokyo, the Olympics organization has yet to name host cities. The U.S. Olympics organization is considering whether it should attempt to bring the competition to the United States for 2024.
Brian Roberts, Comcast's chief executive officer, said on a conference call from Lausanne that it was "hard to overstate what an exciting day this is for me."
He added, "No one can be sure what the world will look like in 2032," but he was confident that the Olympics will remain a stellar event.
Thomas Bach, president of the IOC, said he broached the topic with Comcast and NBC of extending the TV-rights contract in November, when he came to New York for a United Nations meeting. He then met with Roberts at the Winter Olympics in Sochi, Russia, in February to discuss it again, and finalized the deal on Wednesday.
"A happy day for the whole Olympics movement," Bach said. He added that the Olympics are "in good hands with a partner we have full confidence in."
Sensitive to concerns he might have undersold the rights, Bach said he believed the $7.75 billion was a "fair balance between knowing your property is in good hands and the financial commitment."
Comcast acquired entertainment conglomerate NBCUniversal in 2011. Now, with two Olympics under its belt, the 2012 London Summer Games and this year's Sochi Winter Games, Comcast seems confident that it can earn a profit on the Olympics and leverage the games to boost ratings across its broadcast-TV and cable channels.
The Sochi Olympics, which generated more than $1 billion in revenue, were only modestly profitable, according to Comcast's financial statements for the first quarter of 2014.
Comcast had promised the IOC in 2011 that it would make the games widely available for older viewers, who watch the competitions on TV, and younger viewers, who watch them on smart phones and tablets. NBC streamed every hour of every competition for the London and the Sochi Olympics. NBC says more than 200 million people watched the London competitions.
Pilson, the sports consultant, said the Olympics organization typically auctioned the U.S. TV rights, though former NBC sports executive Dick Ebersole privately negotiated an Olympics TV rights extension more than a decade ago.
"I would suggest that the [IOC] left money on the table," Pilson said of the deal. "But that would be something they knew. They must have had a reason."