NBC's Retreat from Moscow

The network gives up its Olympic gold--$70 million worth

Just thinking about the summer of 1980 used to make NBC proud as a peacock. For 17 days beginning July 18, millions of Americans would be glued to their television sets, watching NBC'S coverage of the Moscow Olympics. The figures were dazzling: 1,210 commercial minutes spread over 152% hours of programming, advertising revenues of $170 million. What is more, a promotional blitz during the Games could give the network's fall lineup a rousing sendoff. Surveying his prospects a year ago, NBC President Fred Silverman predicted that the network would be in a "leadership position by Christmas of 1980."

But last week NBC was more sparrow than peacock. Edgar H. Griffiths, chairman of parent company RCA, told stockholders at then-annual meeting that NBC would not be televising the Games "because the U.S. team is not scheduled to participate and because the President of the United States has so desired this to be the stance we take." The decision was expected, but it was sobering nonetheless. All told, the cancellation could cost NBC up to $70 million in lost profits and out-of-pocket expenses.

TV sports junkies are sure to be demoralized. They will have to settle for snippets on regular news programs, although ABC is likely to beef up its Moscow bureau so that it can give additional Olympic coverage. There is only an outside chance that a cable-television company could try to buy the rights if the Soviets formally charge NBC with breaching its contract.

The blow to NBC was softened somewhat by the insurance purchased from Lloyd's of London four years ago against just such an eventuality. The company is covered for 90% of the $87 million it agreed to pay the Soviet Union and the International Olympic Committee for television rights and technical faculties. Since it has ponied up $70 million so far, this means it should recoup $63 million. Uninsured losses include $30 million spent on training of personnel, travel to Moscow and promotion; $1 million paid to a West German middleman, Lothar Bock, for helping NBC win the broadcast rights; and $4 million worth of insurance premiums. Ad profits for the network and its five owned and operated stations will be $20 million to $30 million less than they would have been with the Olympics. NBC expects to recover the $4 million worth of recording gear, video machinery and cameras that it already sent to Moscow.

The Moscow Olympic boycott could not have come at a more inopportune time for NBC. The network has been deep in the ratings cellar for the past five years, and pretax profits have slid from $152.6 million in 1977 to $106 million last year. Silverman, "the man with the golden gut," has been able to raise NBC'S ratings only marginally during his two-year tenure. When he was programming chief at ABC, he promoted his prime-time shows heavily during the 1976 Olympics, and the network grabbed the ratings lead in January 1977. ABC's profits before taxes jumped spectacularly, from $17 million in 1975 to $110 million in 1977. Silverman was hoping for a repeat of that Olympian performance this year. Says Charles Bachrach, senior vice president at the advertising firm of Ogilvy & Mather: "With a bit of decent programming and the expected push from the Olympics, Freddie might have made good on his goal of reaching No. 1 by this Christmas. But the way things look now, he doesn't have a chance."

To plug the gaping hole in its summer schedule, NBC is jerry-building a schedule of reruns, specials and movies. "I would have to think it would be nothing extraordinary," says a network spokesman. "I don't think there will be much original programming." Griffiths traced a silver lining at the annual meeting: "We are very hopeful that we will sell this time at a very good price because the other networks are sold out and it is a convention year, and there is advertising money to be spent that had been earmarked for the Olympics."

Even with its huge losses, NBC is not getting much sympathy in broadcasting circles. The competition for the Moscow TV rights was an unseemly affair marked by double-dealing, broken promises, and the machinations of mysterious intermediaries. NBC finally won out by striking a bargain with the shadowy Bock, who initially was CBS's agent in the negotiations. He had been paid a cool $1.7 million and had the Games virtually locked up for the network. But CBS pulled out at the last minute, saying it was appalled by the Soviets' deviousness during the bargaining. Bock then offered the Olympics to NBC, in return for $1 million up front and production contracts totaling $8 million more.

As for the Soviets, they have happily pocketed NBC'S cash and are pushing ahead with their own television plans. They will not have the benefit of NBC's slow-motion replays and freeze frames, but they say they are going all out with 70 mobile units and satellite transmissions to Cuba, Viet Nam and Mongolia. "They have 250 television cameras reserved for the Olympics," wisecracked an American expert on Soviet communications. "With luck, 50 of them will work."

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