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Paris or Los Angeles Olympics? Discovery Hedges $1.4 Billion Bet

Los Angeles and Paris are neck and neck in their race to host the 2024 Olympic games, and the holder of Europe’s broadcasting rights is hedging its $1.4 billion bet on which city and time zone will prevail.

Discovery Communications Inc.’s Eurosport is trying to strike a deal with French broadcasters before the final decision is made by September, according to a person familiar with the talks. Should it be Paris, the winning French channel could get the world’s biggest sporting event at a discount on home soil. But if Los Angeles is picked and the games aren’t in European time zones, it means the French channel will have overpaid. 

Eurosport’s rights would be faced with a “huge financial hit” if the games are in Los Angeles because a large proportion of the events would be broadcast in the early morning, said Tim Crow, chief executive officer of Synergy, a firm that advises Olympic sponsors. “You could say it would lose over half its value,” Crow said.

NBC has tied up broadcasting rights for the U.S., the most lucrative market by far, but it’s the first time a single network has owned television rights across Europe. Eurosport is paying the International Olympic Committee for the two winter and two summer games though 2024 — excluding the rights to Tokyo 2020 in France and the U.K. — an agreement made just before Discovery took control of the channel two years ago.

Eurosport has been re-selling rights to local sub-licensees, including the U.K.’s BBC, to guarantee payback on some of its outlay. In countries like Germany where it hasn’t resold rights, Eurosport will broadcast some events for free on its own channel.

While the Olympic rights catapult the broadcaster into the mainstream, the importance of the deals reflect the state of the embattled Olympic movement, which relies on television contracts for about three-quarters of its revenue. The IOC has been left with two bidders after cites like Boston, Rome and Budapest pulled out amid public pressure over the cost of the games.

Last Europeans

The fear at Eurosport is that if Paris isn’t chosen in 2024, there may be a dearth of future European candidate cities, according to the person familiar with the company’s position, who asked not to be identified because the negotiations are private. Eurosport declined to comment, though CEO Peter Hutton said by email the company had already concluded more than half of its agreements to ensure free-to-air broadcasts.

IOC President Thomas Bach has suggested giving the 2028 games to whichever city isn’t selected for 2024. Paris said it has no interest in staging the games four years later and Los Angeles said it’s focused on its current bid.

“Before games are awarded the people at Eurosport and its sub-licence holders would be saying, ‘Wouldn’t it be great if they were in a European time zone’ and NBC would be saying, ‘Wouldn’t it be great if they were in an American time zone,”’ Roger Mosey, a former director of sport at the BBC, who was responsible for its London 2012 coverage.

American Rescue

A Paris victory followed by a U.S. games is likely to suit the beleaguered IOC best. It would mean negotiations for the next set of European television rights could take place before 2024 and ahead of 2028 in the U.S., said Crow, the consultant.

With a television contract that dwarfs all the others, and home to six of the 13 Olympic sponsors, the U.S. market is the engine that drives the movement. Those sponsorship deals are usually long term, and run through 2020. A 2028 games in Los Angeles would likely convince those companies, which include Coca-Cola Co. and McDonald’s Corp., to sign up for another decade.

What’s more, NBC is already paying $7.7 billion to screen the next three winter and summer games in the U.S. through 2032. An NBC Sports spokesperson said by email that the Olympics produce large viewing figures regardless of where they are hosted, though a domestic games would be appealing.

Los Angeles would also be a safe bet for the IOC whether for 2024 or 2028. After games bankrupted Montreal in 1976, very few takers came forward to host the event, before the California city revamped the model and in 1984 made the first Olympic profit in five decades.

“The IOC needs to move forward in rebooting the confidence in hosting because of all the problems it’s had in attracting bidders,” said Michael Payne, the IOC’s former marketing head, and an advocate of the Los Angeles bid. “If Eurosport are anxious to lock this up before the IOC’s decision that presumably means people are thinking the race is still very open.”


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