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The Big Three Aren't Sold On Seoul
William Taaffe
September 23, 1985
In marathon bargaining sessions, the major U.S. networks refused to meet the $500 million price for TV rights to the 1988 Summer Games
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September 23, 1985

The Big Three Aren't Sold On Seoul

In marathon bargaining sessions, the major U.S. networks refused to meet the $500 million price for TV rights to the 1988 Summer Games

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The golden goose that is American sports television refused to lay a $500 million egg last week, and the organizers of the 1988 Seoul Olympics were stunned. For years, U.S. television in general (and the ABC network in particular) has subsidized the Olympics by paying ever more astonishing sums for the right to broadcast the quadrennial spectacle. Because of the Olympics' tremendous prestige and ratings potential, ABC paid $91.5 million for the Sarajevo Games in '84, $225 million for the Los Angeles Games in '84 and $309 million for the Calgary Winter Games in '88. Last week in Lausanne, Switzerland the Seoul Olympic Organizing Committee (SLOOC) expected to reap its own fortune. What it came away with, though, was a feeling of embarrassment and indignation. Not one bid from ABC, NBC or CBS even approached $500 million, which, despite their announced demand of $600 million, was the Koreans' irrevocable bottom-line figure.

The negotiations, which took place in a gilded meeting room just off the lobby of the Lausanne Palace Hotel above Lake Geneva, will conclude—possibly next week—when all three networks submit "reevaluated" bids to the IOC and SLOOC. Said Kim Tai Kyung, a South Korean businessman who served as éminence grise for the talks, "Our expectations have to come down and [the networks'] will have to change, too. We have to become more realistic."

But how much higher the networks will go on the next round of bidding is questionable. The days of astronomical bidding wars and open checkbooks are apparently over. After 19 hours of talks Thursday and Friday, and enough lobby intrigue to fill a Sydney Greenstreet movie, financial sanity prevailed. Said Neal Pilson, CBS's executive vice-president for sports and radio, "This is the only time I can remember when all three networks, acting independently with no collusion, have come to the same conclusion: that rather than suffer economic hardship covering an event, as important as that event may be, they all have said, 'We'll pass.' "

Officially, the talks were suspended so the networks could rework their bids. The real reason was to let the Koreans save face. They were stunned and demoralized by the initial offers. According to sources on both sides of the table, ABC, which has won 10 of the last 13 Olympic bidding contests, submitted a shocking lowball offer of some $250 million, plus an extra $7 million for cable coverage of certain events on ESPN. CBS, out of the Olympics since 1960, offered approximately $300 million with no extras. NBC, which took a $34 million bath after paying $87 million for the U.S.-boycotted 1980 Moscow Games, bid $320 million.

A Korean source said that SLOOC was "crushed." Rights to the last three Summer Olympics had gone for 2½ to nearly six times as much as their winter counterparts. South Korea insists it needs at least $500 million from U.S. television and about $150 million in rights fees from the rest of the world to cover bills already falling due on a Games budget of some $3 billion. Until last week American TV had been an easy touch. ABC's payment for the Los Angeles Games came to $1.67 per TV household. The European Broadcasting Union's cost per household was 17 cents. American TV money in 1984 accounted for 45% of the entire operating budget of the L.A. Games.

The Koreans felt insulted, and their faces revealed it. Before Sarajevo, Barry Frank, senior vice-president of Trans World International and the Koreans' TV negotiating agent, had brashly predicted a $700 million payday for Seoul. Some Koreans even boasted that their Games might be worth $1 billion to U.S. television. Said one Korean newsman last week, "I think [Koreans] will have to hang their heads."

In a sense, one could see the big chill coming. On Sept. 6 in Seoul, Lee Yong Ho, South Korea's minister of sport and the titular head of SLOOC, warned two IOC press aides, "We will take a very hard line with the TV networks—$600 million and not less."

But Lee grossly overestimated the health of the U.S. television industry. He was dealing with two networks—ABC and CBS—that are laying off hundreds of employees because of reduced profits. Capital Cities Communications, ABC's new parent company, is renowned for its conservatism and worships at the altar of the bottom line. The TV sports sales market has turned sour, and ABC already is hurting on Calgary. According to industry experts, "The Network of the Olympics" may lose $30 to $70 million on those overpriced Games.

The networks aren't exactly thrilled with Seoul's TV schedule. Korean time is 14 hours ahead of Eastern Standard Time; when it's 4 p.m. in Seoul, it's 2 a.m. in New York. As ABC learned from the Sarajevo Games, events taped for prime-time broadcast bomb out if viewers have had half a day to learn the results. The bulk of programming from Seoul will either be canned or shown live at an hour when a large part of the viewing audience consists of insomniacs.

To keep that time gap at 14 hours, Frank has persuaded the South Korean government to switch to daylight saving time next year for the first time in 20 years. It will run from April through October, at least until 1988. Still, all four days of the men's and women's swimming finals, scheduled to begin at 8 p.m. Seoul time, will be seen live in the Eastern U.S. at 6 a.m. and in the West at 3 a.m. Solely for the benefit of ABC and NBC, which have contractual commitments to baseball's playoffs and World Series, respectively, the Koreans also moved the Games forward by seven days. They will be held from Sept. 17 to Oct. 2.

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