Eurosport €1.3bn deal to control Olympic coverage in Europe reboots IOC commercial model for the digital era

On a conference call following yesterday’s (29 June) announcement, Discovery Communications stressed their multi-channel ambition and also the depth of their pan-European coverage. The statement of intent will likely excite marketers looking for more interactivity and engagement but more importantly the structure of the deal suggests Olympic bosses believe the media cake can be sliced and diced more than it is currently. Multi-platform means multi-sell and that can only mean more value.

Given its rights don’t kick in until 2018, Discovery Communications’ declined to share any detail on how it would distribute the content except that the Eurosport video player and site would be key. However it’s open to talking to both commercial and public broadcasters about how it can create what chief executive David Zaslav said are strategies to “reach as many of the 700 million people in Europe as possible on as many platforms so that they can get more engaged with the sports”.

He assured the motive is to get as much coverage of Olympic Games on free-to-air channels as there has been in the past, while also promising to make content available on other platforms. Despite the commitment, Discovery Communications made no secret of its aim to use the rights to reverberate the EuroSport brand throughout Europe. The focus on Eurosport could see broadcasters like the BBC left with a less than stellar lineup should they have to sub-license the rights from Discovery Communications.

“Now we’re able to super serve viewers with seamless coverage of the same athletes through national championships, World Cup qualifiers and now culminating with the Olympic Games,” said Zaslav. “Our ability to develop and follow the same characters and athletes combined with access to the Olympic archives makes it possible for the first time to have a programming strategy that can burn the Olympic flame with stories and content 365 days a year.”

Coverage between the Games is a cornerstone of IOC president Thomas Bach's plan to swell the organisation's commercial coffers as well as get the Olympic brand in front of younger audiences more often. On the same call, he said “agreements like [the one with Discovery Communications]” helped it to ensure that it could give $3.5m a day to athletes all over the world. Bach also hinted that the organisation could consider longer commercial deals in the past in order to get the security needed to build a more formidable commercial offering.

“On the other hand, longer term deals also give our partners better return on investment so that they can benefit from these deals over about four editions of the Olympic Games,” he added.

The agreement highlights an alternative way for Olympic chiefs to maximise revenues from the Games at a time when media consumption habits are becoming ever more fragmented. The pan-European package will suit the largest sponsors who treat their Olympics partnership as a multinational platform, while offering the economies of scales for rights holder, broadcaster and sponsor.

Steve Martin, chief executive at M&C Saatchi Sport and Entertainment, said the Olympic chiefs’ decision to break with tradition and unite the European broadcast rights was “astute”.

“This is probably the first step from the IOC to open up the broadcast rights to make it a more commercial proposition than it was before,” he continued. “The broadcast medium is to going to change so much over the next ten years that [the model] will give them more flexibility. One pan-European deal will allow them to build more consistency around the coverage but also make it more locally relevant. It’s the [Olympic chiefs] saying that they’re going to move with the times and help ensure the optimum way for the audience to watch the Games.”

Eurosport’s pan-European offering is strong but weaker in local markets. Zaslev hopes to leverage the reach of the Olympic brand to change this and grow the Eurosport channel. The balance between terrestrial and pay-per-view coverage has not been nailed yet, according to industry experts but Discovery Communications could pioneer if it can come up with expansive distribution strategies baked in new media.

Any discussions Discovery Communications has with potential partners will be mindful of how quick media consumption habits are changing. Indeed, Peter Hutton, chief executive of Eurosport said as much when he was asked about the broadcaster’s plan to abide by the coverage limitations imposed by the Olympic charter and rules like the Listed events registration in the UK.

“Our commitment is to make the maximum amount of content available on all platforms” continued Hutton. How we do it and what goes free-to-air in markets is a one that’s literally just beginning today and we’re very open to working with existing partners and new partners as we look to maximise the exposure and value of the Games.

Kelly Williams, managing director of media business Sports Revolution, said Discovery Communications pan-European “definitely made sense” but warned more brand-friendly programming could spark the ire of Olympic sponsors that have paid millions to secure exclusive ownership of the brand.

She added: “The top tier Olympic sponsors won’t welcome any new opportunities for rival brands in the TV ad breaks. They are fiercely protective of their investment and would have viewed the ad-free zone of BBC coverage as a premium and pure media environment.

“They won’t like it, especially if they have to spend more in the ad breaks to protect their investment. However, it’s unlikely to reduce the overall value that IOC can command. They know that official partners can still build a formidable wall of brand value through a vast range of marketing activity, far transcending the opening of new TV spots in the broadcast coverage.”

Broadcasting revenues are set to top $4.5bn for the Sochi 2014 Winter Olympics and Rio Games – this is in comparison to the $3.85bn generated from the 2010 Vancouver and London 2012 cycle.