Thursday, December 15th, 2016


Olympic Channel Media Conference Call

Thursday, December 15, 2016

Gary Zenkel

Jim Bell

Timo Lumme

Mark Parkman

Scott Blackmun

Lisa Baird

Chris McCloskey

CHRIS McCLOSKEY: We are here today, everybody, with some very exciting news. It was announced this morning about a content and distribution partnership between the IOC, USOC and NBCUniversal, which includes the creation of a U.S. cable television network, the Olympic Channel, home of Team USA. It will launch in the second half of 2017.

Joining us today for our call is Timo Lumme, managing director for IOC television and marketing services; Mark Parkman, general manager of the Olympic Channel; Scott Blackmun, CEO of the USOC; Lisa Baird, CMO of the USOC; Gary Zenkel, president of NBC Olympics; and Jim Bell, executive producer of NBC Olympics.

We will take opening remarks from Gary, Jim, Mark and Scott, then take questions from the press.

We’ll begin with remarks from Gary Zenkel.

GARY ZENKEL: Good morning. Thank you, everybody, for joining us today. It’s an exciting day for NBC and the Olympic movement in the U.S. It’s a continuation and validation of the strength of our long-term partnership and commitment to this incredible franchise that we at NBC are honored to help steward here in the U.S. We’ve done it for decades, and we of course, as many of you know, are signed up into the future.

We look forward to talking to you today about the partnership that we have formed with the IOC and USOC to roll out this platform which we will make available to the American audience a rich bundle of great Olympic sports and Olympic athletes and Olympic stories content around the calendar.

JIM BELL: Good morning, everybody. I’ll be brief. With the Olympic Games already the biggest event on the planet, this is a terrific way to grow what we refer to, as Gary did as well, ‘the movement.’ From a production and programming standpoint, it’s tremendous to have some newfound real estate to be able to spread the gospel outside of two weeks every two years. I think most importantly, this is wonderful news for the athletes, the athletes, the athletes.

MARK PARKMAN: Thank you, everyone, and good morning. We’re very excited about this news. We launched the Olympic Channel at the close of the ceremonies in Rio, and we’ve always said that the Olympic Channel is an evolutionary product. This exciting news is an extension of that platform on TV produced for a U.S. audience.

It was a step that we know was worth pursuing for the growth of the Olympic movement and what we want to attain through the Olympic Channel and this endeavor that we’ve embarked upon.

With our partnership with NBC and the USOC on this, we believe that this will help the Olympic movement substantially in one of our key markets.

SCOTT BLACKMUN: This is fantastic news for our national governing bodies, and as Jim pointed out, for our athletes. It’s a wonderful way to turbocharge one of the fastest growing fan bases that’s out there. It’s a great platform not only for Olympic sports competition but for original programming.

We look forward to launching this soon. For everybody to get a taste for what’s going to be there, by watching the Team USA Winter Champions Series, which is on 2:30 Saturday.

Do you envision more television channels in other countries around the world? How do you measure the success of the Olympic Channel efforts?

MARK PARKMAN: We do envision other television channels around the world creating an Olympic Channel version in partnership with our rights-holding broadcasters. That’s one of the main initiatives that we have going forward into 2017, this being the first one with our rights-holding broadcasting partners.

Many of our rights-holding broadcasters are understanding this is the next evolution of their partnership with the Olympics and the Olympic movement to further enhance the value of their investment in our brand.
I’m hoping you can elaborate a little bit more on the launch plans for this. Is this going to be an existing channel you’re rebranding or something new altogether? Also, what are your realistic targets and goals for carriage fees, total distribution throughout households in the U.S.?

This is an entirely new channel. Our plan is to include this in the distribution conversations (indiscernible) as they come up in the natural cycle for NBCUniversal.

NBCUniversal completed a distribution agreement with DIRECTV/AT&T over the summer which included the Olympic Channel. There is currently a commitment to carry the Olympic Channel. Again, that will launch sometime in the second half of 2017, as the conversations continue.

We are in a cycle in which we are negotiating with distributors; the Olympic Channel will be in that conversation. We are optimistic that distributors will embrace this opportunity and content and the opportunity to bring the content to their audiences as we described earlier.

What are you thinking along the lines of original programming?

MARK PARKMAN: We currently are producing about 250 hours per year of original programming from our headquarters. We’ve already contracted with 50 active companies from 25 different countries to produce some of this programming. I would say it’s a very ambitious plan from a content perspective. We seem to be one of a very few companies in the media business that are doing such global production to tell our story. That programming will be available as part of the offering that NBC does.

I’ll turn it over to Gary or Jim to expand upon that.

GARY ZENKEL: Obviously what was very attractive about pursuing this partnership with the IOC and the USOC was the IOC’s commitment to produce this original content. We began talking to them early, once the Olympic Channel ambition was announced by President Bach and the IOC, and we’re excited about their interest and commitment to create original programming.

We also have a very deep portfolio of sports rights, including world championships and national championships. We believe marrying that up with the original content by the IOC, then content that we’ve always worked with the USOC on that is Team USA-focused, and also contributed to the channel and to the platforms, makes for a very rich offering for fans of the sports and the athletes.

So something that we’re excited about is the opportunity to program all of this content (indiscernible).

I want to review what Gary said to make sure it’s accurate. You said you have AT&T and DIRECTV negotiated as part of that deal. That’s going to be on DIRECTV, is that correct?

That’s correct.

Do you know whether that includes DIRECTV now?

GARY ZENKEL: I do not.

As far as getting other distribution, when will the contract with Comcast come up or do you even have to negotiate that? When would those other major distribution systems negotiate? What is the ownership structure? Is it 50/50 between NBC and IOC or USOC? How will it work in terms of content? This would be global content you would be flowing into this U.S. station or would this be mostly content that’s U.S.-based content that Comcast already owns because I think it negotiated all the rights for the run up competitions, as well as the Olympics itself?

GARY ZENKEL: What I said earlier that probably cut out is that the Olympic Channel is part of the NBCUniversal cable bundle that is currently being negotiated across the industry, as the deals come up.

NBC negotiated an extension with DIRECTV/AT&T that was scheduled for this summer. In that agreement that concluded, I think in the fall, the Olympic Channel was included and a commitment was made to carry the channel when it launches next year.

There are other MVPD discussions that are underway between NBCUniversal and cable operators, and the Olympic Channel again is part of the NBCUniversal bundle and in those discussions.

We have not begun to discuss the distribution of the Olympic Channel with Comcast because those negotiations have not naturally begun. NBC is not currently in negotiations with Comcast for the distribution of the NBCUniversal bundle. When that begins, the Olympic Channel will certainly be part of that discussion.

In terms of ownership structure, each of the parties, this is a multi-platform partnership around this content offering. Each of the parties is making contributions to that partnership. It is a partnership in the true sense of the word. We all have interests in it. We all share various burdens, whether it’s financial contributions, content and otherwise, and the structure of it, ownership interest and shares and whatnot, is not the kind of thing that we disclose here.

Your last question was content and whether it was global. Some of that has been answered. The IOC, as part of the Olympic Channel project that has already been launched globally as a digital platform is producing, I think Mark said, 250 original hours a year. Those hours will be available for distribution on the U.S. channel. As I believe Mark indicated, the content, sports coverage, which is the primary contribution on content that NBC Sports will make, though we will do original content and we will also access some content from our library, are rights that are currently in the NBCU portfolio, we will contribute to those.

What will not be contributed to this partnership, per se, is the Olympic Games rights which is part of a separate contract between NBC and the IOC and the USOC, if that was your question.

Then, of course, the USOC is contributing programming, as well, similar to the IOC.

What are some of the opportunities for advertisers? Are there any sponsor protections in place?

GARY ZENKEL: We, like the IOC that is making this their global Olympic Channel opportunity available to their family of sponsors, the TOP Program.

We in the United States as a partnership will make opportunities to advertise and sponsor on the Olympic Channel platforms available to both the top sponsors, the global IOC sponsors, as well as the USOC Team USA sponsors. That is where we will focus our advertising and sponsorship efforts.

Will there be opportunities for other advertisers to be a part of the channel or is it limited to those sponsors?

It’s more or less limited, though there are opportunities within coverage of specific events that have their own sponsors. So in that case when we acquire a world championship to distribute that across this platform, if there are sponsors that are not IOC or USOC sponsors, they will have the opportunity to participate in that specific program.

Do you have any type of projection on how many households you’re going to have in the next year and a half, some sort of number in terms of distribution here? What type of mark do you expect to hit over the first year? I know negotiations are ongoing, but I’d like some sort of number.

: I wish I could give that to you, but I’m not going to. We are confident that, given the vast interest in the Olympics, in the Olympic movement, the sports, these athletes, and, again, the rich content that is going to be made available, I think it’s somewhat unique in our landscape that the distributors, who all of course embrace the Olympic Games, and the audience that of course embraces the Olympic Games, will embrace this opportunity to distribute this platform, as well as to watch it, in some cases demand that it’s accessible to them.

Is this going to be available to over-the-top platforms?

The linear channel, no.

Not at all? No streaming whatsoever?

No streaming whatsoever? I didn’t say that. The linear channel, which we’re discussing today, would be behind an authentication wall.

If you have TV Everywhere, you’d be able to get it on your device, but you’re not going to make this available as a standalone thing that somebody can subscribe to for Apple TV or Roku or something like that?

No, we won’t. There will be content that is produced by all of these parties that may be related to the content on the linear channel, but not placed there. Some of that content will be accessible whether it’s on NBC Sports’ digital platform, Team USA, or the IOC global channel.

You mentioned you had to deal with AT&T and DIRECTV. Do you know how they plan to distribute it?

The commitment is on a tier of DIRECTV/AT&T. I don’t have that handy.

Is that how you’re approaching this, is to get on a sports tier?

I’m sorry, ‘tier’ is the wrong word. It is distributed to a portion of their subscription base. It is not a tier. I just don’t know which level it’s at. But we will give you that information. No, it is not part of a tier.

Gary, you mentioned the TV programming side of NBCUniversal hasn’t started negotiating the next carriage deal with Comcast. Is carriage of this deal going to have to wait till then? Given Comcast’s overall investment in the Olympics, as we’ve seen, might they be able to do something a little quicker than that? About online streaming of the channel, is that going to be tied directly to the TV distribution, i.e., you can’t watch it online unless you have it on your TV system?

GARY ZENKEL: First question, as I said earlier, we have not begun distribution conversations with Comcast. We, of course, are announcing this deal today, completed our partnership in recent days.

Will this wait if the distribution discussions with Comcast come up beyond the date of the launch of the channel? Of course not. We will approach them sometime in the future. Again, the natural term of the Comcast deal, which I don’t have handy because I’m not part of the distribution team here, but when that term does come up, we will do it. If it’s after the launch of the channel, we will begin the conversations with Comcast in advance of that. But we have not started that yet.

The online streaming part?

The online streaming part of the linear channel is a TV Everywhere offering that would be tied to the footprint as well.

Mark, the global Olympic Channel signed a deal with FIFA. What, if any, of that might end up on this U.S. channel? If you wouldn’t mind elaborating on what that FIFA deal includes given how many things they tend to do with their own rights.

MARK PARKMAN: The agreements that we have done for the Olympic Channel with the international federations have primarily been to amplify their distribution in areas where they may not have distribution. It’s also about content sharing, content promotion, event promotion, and athlete stories.

The deal with FIFA is more on news and archival footage of certain events. So the FIFA agreements that they have throughout the world are not part of our agreement.

The U.S. coverage of FIFA is not affected by what we’re doing. We wouldn’t be allowed to use their live rights as part of our deal.

You mentioned earlier that you’re in discussions with other television providers, rights-holders for the Olympic Channel. Have those been included in recent deals? Are those going to be mandatory in every rights deal going forward for the creation of an Olympic Channel such as what the USOC is doing? And for the American side of this, where is this channel going to be based? How large is the staff going to be? Is this going to be limited to solely NBCUniversal, or if there’s more growth of this are you going to ensure it’s on more cable packages?

Let me try to answer the first question. The first part of your question, yes, the channel components have been included in all our rights deals for the last couple of years, and obviously will be going forward.

I think it’s a little bit strong to call it a mandatory thing. Ultimately the genesis, the rationale behind our Olympic Channel at the end of the day is that it’s, if you like, the Olympic movement and the stakeholders within it who are investing back into creating additional value for our broadcasters.

We believe, and we’ve certainly heard this from broadcasters obviously here with our partners NBC, but elsewhere in the world, that they see value in the concept of the Olympic Channel.

So we see this very much as sort of collaborative discussion. But it’s an additional discussion which is part of the rights negotiations.

GARY ZENKEL: The operation will be based in both Stamford (CT), which is the home base of the NBC Sports Group, as well as we have an operation out in Denver that has about 30-plus people that produce a lot of our sports coverage, a lot of our Olympic sports coverage that we inherited from Universal Sports in our acquisition of that company last year, or earlier this year.

The size of the staff is hard to define because the sports group, which is large. Many folks in the sports group and staff will contribute as they do to the production of the Olympic Games themselves.

You say right now the rights deals are limited only to where NBCUniversal is offered on cable packages. I’m sure NBCUniversal is not offered on every single cable package offered by DIRECTV and AT&T at this moment. Is the growth plan possibly to get more subscribers to expand what kind of cable packages this channel will be involved in?

GARY ZENKEL: I mean, our plan is to achieve the widest possible distribution of this channel and, of course, therefore the content that we distribute on it. There will also be content distributed on NBC and NBCSN. Other components of this partnership is a contribution of NBC and NBCSN to distribute Olympic content, both coverage of sports as well as some of the original content being contributed by the parties.

We believe the combination of those and our confidence in the distribution of the channel should make this content available to a very, very wide audience.

During the Olympic Games, it won’t have Olympic content. That seems like most people will say, If the Olympics are going on, I’m going to tune into the Olympic Channel to watch it. What kind of content will be on the Olympic Channel during the Olympics? Gary, you mentioned NBC airs a lot of the championships, the big qualifying events. I’m guessing those will be happening next fall. Do you see some of those events moving from NBC and NBC Sports Network over to the Olympic Channel to give it more gravitas, or do you see them staying where they are because they also are reaching a bigger audience on those other channels?

GARY ZENKEL: First question, on the Olympic Games itself, we’re still about 14 months out, not that we aren’t spending a lot of time working on our program plans for PyeongChang. But those plans are in development.

What, if anything, will go on the Olympic Channel from PyeongChang? We haven’t made that decision yet. That is a decision that NBC will make. We’ll see how that rolls out. We certainly see different opportunities to include different forms of content on the Olympic Channel, which is something that we will be working on. When it comes time for us to announce our program plans, that will be included.

In terms of pre-games content and other Olympic sports content, I go back to my last answer, which is we see a tremendous opportunity now with the Olympic Channel as a third distribution linear platform for us to extend the distribution of Olympic sports content.

We certainly won’t cut back on what currently is distributed on NBC and the NBC Sports Network, which has for many years, forever, since certainly we’ve owned NBC Sports Network, has had a rich offering of world and national championships and other key Olympic sports events that happen throughout the calendar year.

The Olympic Channel gives us an opportunity to extend that portfolio and that content and put more of it on television in front of an American audience.

What’s the impact on the current Olympic Channel — maybe this is for Mark and Timo — streaming service? Will people need to be authenticated to get access to that content if it’s U.S.-related? Any thoughts on the access to content on the current Olympic Channel as it relates to this deal and U.S. subscribers and viewers?

MARK PARKMAN: What’s currently on the Olympic Channel platforms will for the most part continue to be available in the U.S. And then some of it will be premiered on the linear version in that territory prior to going onto the digital platform.

I think the experience will be just as rich today going forward in the future.

Gary, will there be a VOD component to the channel, given the breadth of the offerings?

GARY ZENKEL: Sure. Again, the amount of content that we will have access to between the events coverage, the original programming that’s being contributed by the three parties will extend beyond the capacity of any of the channels. So, yes, we will make content available on demand on the various platforms of the three partners.

Again, in terms of your lineup now, are there any of the major Olympic sports that you don’t have, world championships, qualifying rights for at the moment? Something coming up in the way of negotiations to round out that portfolio?

GARY ZENKEL: As I said earlier, we, NBC, have a great portfolio that we have renewed through the course of a few decades with some of the federations and national governing bodies here in the U.S. Universal Sports had a great portfolio that we acquired.

Our relationships with the IFs and NGBs is as strong as ever. To the extent there are rights out there that are either coming due or available, we will pursue them.

Right now we are in very good shape and very pleased with the portfolio of events that we have. We always have our eye on the next great Olympic sports competition that’s available for broadcast in the U.S.

Are there any other sponsors that you can identify who have signed up to participate in this beyond Bridgestone and Toyota that launched with the original Olympic Channel back in August? Also, just conceptually here, do you view this channel as something that needs to make a profit in and of itself or is this better seen as part of your overall marketing events for the much broader partnership regarding the Olympics?

TIMO LUMME: I’ll take the first part.

We’re in continuing discussions with some of our TOP partners, and sometimes in the context of standalone channel in the context of the Founder Partner Programme. Also, as we’ve come out of the Rio Games, we’re also beginning our renewal discussions with some of the existing TOPs and we’re fielding interests from new companies.

One way or the other, the conversations regarding the channel on a global level are ongoing.

I guess I would ask that discussion about the domestic side if Lisa is still there.

We are in active discussion with a number of our domestic sponsors. While it’s not a channel sponsorship, you’re going to see USOC sponsors represented very well at our first effort, which is the Team USA Winter Championship Series. You’re already see some advertisers (indiscernible).

GARY ZENKEL: As to your second question about profits, certainly speaking on behalf of NBC, this is really an important strategy for us in connection with the investment, the long-term investment, we’ve made into the Olympic Games and the Olympic movement.

It is not something that has as its primary objective profit. Certainly the Olympic Games does. We see this as a really important part of a strategy to create continuity around Olympic content, whether it’s the sports, the athletes, and some of the great stories that begin to be told during the Olympics but don’t necessarily with the closing ceremonies.

We think the audience is very interested in embracing those stories that Jim and his team are so good at telling. Now the IOC, producers from around the globe, are willing to tell some of these stories as well.

So it’s a strategy first.

SCOTT BLACKMUN: I would say we’re definitely looking at it holistically, too. We’re trying to grow the number of kids that are actively participating in sports. We’re trying to grow our fan base. We’re trying to provide a great platform for our sponsors. Candidly, we’re trying to better connect to our donors and the American public.