Discovery Communications has agreed with the International Olympic Committee (IOC) to acquire rights for the four Olympic games from 2018-2022. Discovery, which took full control of Eurosport last year, is paying €1.3 billion ($1.5 billion) for exclusive rights across all platforms - including free-to-air TV, pay TV, mobile and broadband - in 50 countries.
The US cable programmer has committed to broadcasting a minimum of 200 hours of the summer games and 100 hours of the winter games on free-to-air TV and will sub-license some rights in European countries.
Historically, European rights to the Olympic Games have sold to the European Broadcasting Union (EBU), the umbrella body of mainly public service broadcasters in Europe. In recent cycles, the IOC has tried to move away from multi-territory agreements to negotiate more lucrative deals at national level.
France TV has already agreed rights for the 2016 and 2020 summer games in France, while the BBC has rights to the UK in the same years. Russia is also excluded from the Discovery deal. In the 2010-2012 period, the IOC reported revenues of $848 million from European broadcast rights out of a global total of $3.85 billion.
As part of the deal, Discovery will partner with the IOC to develop and launch a new Olympic channel across Europe that will showcase Olympic content from IOC’s archives year round.
Discovery, which has operated in Europe for more than 25 years, is already the US channel group with the largest international presence. In 2014, Discovery’s international operations accounted for 50.4% of total revenue, up from 44.4% in 2013. The US group took full control of Eurosport International from TF1 in May 2014. Eurosport reaches a claimed 700 million people across Europe via its linear TV channels, the Eurosport.com website and the Eurosport Player.
According to IHS TV Channel Intelligence, the Eurosport flagship channel was available in 99.5 million European homes at the end of 2014, with its largest markets being Germany (21.6 million), the UK (12.9 million).and Russia (7.4 million).
Discovery's swoop on rights to the Olympics is a clear statement of the US company's commitment to Eurosport. Discovery made an intial investment of $264 million in December 2012, upping its stake to 51% in May last year with a second tranche of $349 million. Although it was expected that Discovery would continue to pursue Eurosport's cautious policy on sports rights investment, the group was reported to have been interested in bidding for Premier League rights in the UK earlier this year and has recently been linked with a joint takeover of Formula One motor racing.
The long-term commitment to the Olympics - described by the IOC as a 'partnership' - is probably a better fit given that Eurosport has often aired the summer and winter games in the past thanks to its output deal arrangement with the EBU. Its typical output also features Olympic sports like track and field athletics, cycling and winter sports prominently. By agreeing to sublicense rights to free-to-air channels, Discovery will guarantee that the IOC will meet its goal of bringing the event to the widest possible audience. The US group owns free-to-air channels itself in several countries, including the SBS Nordic family, the former Switchover Media channels in Italy and DMAX in Germany and the UK.
The addition of the Olympics will give Discovery more leverage 8in negotiating carriage deals. As demonstrated domestically by the advantages that TNT and TBS give Turner Networks thanks to their affiliations with the NBA and NCAA, it is plausible that the inclusion of Olympic content will have the knock-on effect of driving up carriage fee revenue for Discovery’s suite of channels.
Discovery is making the same move that NBC did in the USA, locking up the Olympics for years to come. The move will generate significant amounts of cash for the company in years to come, as well as provide future disruptions to EBU members like the BBC and France Television which will have to negotiate with Discovery when their current contracts expire.
Another factor might be the output deal with the EBU. Unlike TF1, Discovery is not a member of the EBU and therefore its future access to events acquired by EBU members could have been in doubt.By locking in European rights to the Games many years in advance, Discovery will give itself a strong hand in negotiations with EBU members over continuing its access to this plentiful source of sports coverage.