The Olympics TripleCast promises much.
The pay-per-view service of NBC and Cablevision promises complete uninterrupted coverage of the Summer Games for 1,080 hours.
It promises no commercials nor any of those ”up-close and personal”
features.
It even promises to make the viewer feel as if he`s in Barcelona. Sweat, of course, is optional.
What the TripleCast doesn`t promise is a profit. And that`s the Achilles heel in NBC`s plans to make these Games pay their own way.
Unlike CBS, which laid off some of its Winter Olympics costs on part of Ted Turner`s cable empire, NBC has opted to do it alone. But the TripleCast, originally planned to offset at least one-fourth of the network`s $401 million rights, now appears to be adding to the financial bath. NBC officials had estimated signing up 2 million subscribers paying anywhere from $95 to $170 for a slice of Barcelona.
It appears they`ll be lucky to get half that number paying from $29.95 a day to $125 for 15 days. Real lucky. Just a month ago, reports had only 5,000 subscribers for the TripleCast. Nationwide. That number leaped last week to 100,000.
If leap is the word.
”We have about 100 orders,” said an official with Prime Cable, which services about half the city. ”We`re doing pretty good. This is a very targeted sports event. We`re not expecting as much (a buy rate) as for a big fight. Large fights have buy rates of 6 to 8 percent. But the last couple of days have picked up.”
A buy rate of 6 percent, which was what TripleCast officials were hoping for, would net 2.4 million customers, based on the 40 million sets wired for cable in this country.
Prime, however, has an advantage over, say, Chicago Cable, in that it`s 100 percent addressable, meaning all a customer has to do is call the cable operator and be plugged in immediately. At Chicago Cable, the subscriber needs to pick up a converter box.
Apparently, though, that hasn`t stopped subscribers from making Chicago Cable the top local cable operator in sales. According to Richard Coats, marketing director for the Great Lakes division of TCI, Chicago Cable leads the nation in sales with 1,000. Chicago Cable serves 325,000 subscribers and just started offering pay-per-view telecasts last fall.
”Actually, it`s doing better than I thought it would,” said Coats of TCI`s 3 percent buy rate. ”We`re adding 20 to 30 (subscribers) a day. The projection is the closer to an event we get, the better the numbers.”
Cablevision in Oak Park won`t reveal any numbers, but an official said:
”We`re doing better than Prime but not as well as TCI. (But) we`re happy with the numbers. We`re on track.”
At U.S. Cable in the more affluent northern suburbs, however, they`re totally off the track. ”We`re not carrying that,” is the reply to potential TripleCast buyers, pointing to a technological problem. And the operator reportedly has received two-count `em, two-complaints.
How did this fiasco come about?
”The pay-per-view (cablecast) exists because of the rights fees,”
explains Dick Ebersol, who inherited the Olympics package when he took over as NBC Sports president in 1989. ”It cost $401 million for NBC to cover the Barcelona Games exclusively. The rights have become far more than the broadcast side`s advertising can possibly support.
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”The figuring (on the Olympics) was they couldn`t find any more advertisers for the Barcelona Games than they had for Seoul (in 1988). And that`s enough to cover $300 million worth of rights and $100 million of production. That left $101 million of rights to cover.
”There were two ways to cover those rights. One way was to accept a check for $75 million from Ted Turner, which would have put the Games on TNT during the mornings and afternoons. But we would have put our local affiliates at risk because they would have been selling locally against the local cable operators.
”So the decision was made to follow an idea that was developed by the NBC Cable people, which was, we could pay-per-view these Olympics for several reasons. The most important of these is that the Olympic charter calls for the coverage to be exhibited to the widest possible audience, which in this case in the United States is prime time. So the opportunity existed to broadcast these Games live on pay-per-view earlier in the day.”
Thus was born the Olympics TripleCast.
”The sports fans who wanted to follow a specific sport could do so in its entirety,” says Ebersol. ”And yet at night, we`ll have the traditional coverage that has won Emmy after Emmy for whatever network has had the Summer Olympics.”
Sounds pretty reasonable. Until you start crunching the numbers. In addition to the rights fee, NBC also is pouring a reported $55 million in supplementary costs (production, satellite, distribution) into the TripleCast, not to mention $40 million for marketing and $5 million for contingencies.
Part of that contingency fund may be eaten up in legal fees. Just Thursday, the New York City Department of Consumer Affairs served notices of violations on NBC Sports and Cablevision Systems for deceptive advertising of the Triplecast because they don`t disclose that all events will be shown tape- delayed after 4 p.m. Chicago time, when most people are home from work.
In a statement, NBC said it had ”repeatedly said in news conferences, interviews and in its promotional material” live telecasts would take place from 4 a.m.-4 p.m.
NBC and Cablevision have until Monday to respond to the notices or face possible fines of up to $500 for each ad. Just what the network, already facing a $100 million shortfall, needs. For even if 500,000 sign up for the $125 package, that`s $62.5 million, still far short of the $75 million offered by Turner.
”There`s no question there`s no way NBC wanted to put its affiliates at risk in terms of their sales potential for the Games,” says Ebersol. ”That`s what would have happened had we said yes to Turner and taken the Turner money. ”This pay-per-view idea was developed to get NBC into the pay-TV business on the very ground floor. These Olympics would not be available for free over-the-air television if it wasn`t for the pay-per-view component helping to pay the freight.”
Ebersol also sees the TripleCast as a way to answer the questions: How many sports nuts are really out there? How many people will want to pay to see something live when they can get it for free-albeit a few hours later on tape- on the network?
”Many writers have said for years there are people out there who want to see all of one sport,” says Ebersol. The TripleCast offers ”seven or eight sports that are going to be given 100 percent saturation coverage. There are another six or seven that are going to get either 50 or 60 percent” shown.
”What we`re going to find out in July and August from the number of people who do and don`t sign on is whether there are as many sports addicts out there who want to follow (the Olympics) in great detail.”
NBC optimistically expected 2 million subscribers, which would have translated into $250 million, split among the network, Cablevision and the various cable operators. But the greatest pay-per-view sports event-the Evander Holyfield vs. George Foreman heavyweight title bout in 1991-did only 1.65 million subscribers.
”When you talk about the Olympics, you`re talking about different sports and different fans,” says Ellen Cooper, TripleCast vice president. ”It`s so broad and the audience is so broad. There`s no one reason why people would buy the TripleCast.”
Despite dire projections, ”we`re very encouraged,” adds Cooper. ”Our feedback from the operators every day is there`s an incremental change from the day before. Our projections are holding fast.”
But projections don`t translate into dollars. And this year`s Summer Olympics may be the Games of Promises Kept-and Dollars Lost.