Neal Pilson, Founder, Pilson Communications

(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)

NEAL PILSON, FOUNDER, PILSON COMMUNICATIONS, TALKS ABOUT THE OLYMPICS AT BLOOMBERG TV

JUNE 8, 2011

SPEAKERS: ERIK SCHATZKER, BLOOMBERG NEWS ANCHOR

NEAL PILSON, FOUNDER, PILSON COMMUNICATIONS

06:14

ERIK SCHATZKER, BLOOMBERG NEWS ANCHOR: With us this morning, the man who literally wrote the rules for Olympic broadcasting, Neal Pilson. Neal is the former Head of CBS for to later was a Consultant on TV rights for the International Olympic Committee. He's on the phone with us from Lenox, Massachusetts this morning.

Neal, NBC, which won the last round of bidding for the Olympics has projected losses of half a billion dollars for the 2010 and 2012 Olympic games. Why on earth double down on a losing bet?

NEAL PILSON, FOUNDER, PILSON COMMUNICATIONS: Well, the Olympics are very important to NBC. They are one of their franchise sports. They've invested a tremendous amount of money in the games. They do it well. And I think they felt that with the merger with Comcast, this was a validation of that merger.

This was one of the reasons that the merger took place. It was to create these multiple platforms, both on cable, broadcast, internet, mobile. They now have a wide range of channels and distribution outlets.

And I think they just felt from their perspective that retaining the Olympics was a very important part of their corporate psyche. They needed to keep the games.

And the fact is the new Olympic deal is actually a standstill in terms of the rights negotiations, the rights fees that were paid, the next two Olympics following the two won to contractor at the same price. And then the two last games are basically at around a 15 percent increase, which, for sports rights, is quite modest.

SCHATZKER: So help us understand the strategy and the tactics that NBC, which is now controlled by Comcast, might pursue in order to make those next two games and they would hope the two games after that profitable.

PILSON: OK, just one example is Versus, one of their principal channels and one that, what I think will surely get a lot of new and important sports program. Versus right now is in about 75 million homes.

If they're able to grow Versus by 25 million so that it becomes a fully distributed channel, comparable to ESPN at a hundred million homes, that's 25 million additional homes times, let's say, 30 cents a subscriber, you increase the pricing times 12.

It's a full year. That's a revenue stream. That's like forever. You're talking about another $60, $80 million a year just from Versus alone. I think also they plan to incorporate Olympic coverage across the wide range of channels that are controlled by the merged company, both the NBC channels and the Comcast channels.

I think there's an Olympic channel in view. There was question on that at the press conference yesterday from what (ph) was (ph) on (ph) yesterday, and while it will take the combined approval of the IOC, the USOC and the TV carrier, I think that's in the future.

SCHATZKER: So Neal...

PILSON: So there are several - yes, go ahead.

SCHATZKER: I was just going to say, between Versus and the possibility of an Olympic channel, is that enough, in your mind, to distinguish what NBC has to offer and how it can make money, let's say, from what Disney and its ESPN channel, which also made a bid, could offer?

Because as you're probably aware, Disney issued a statement in which it said, we made a disciplined bid that would have brought tremendous value to the Olympics and would have been profitable for our company to go any further, would know how to make good business sense to us in a barricaded (ph) way.

Disney is accusing Comcast of overpaying.

PILSON: Yes, I saw that. The interesting thing from my perspective, and I had this disagreement with CBS 18 years ago, and I argued that we should keep the NFL. And my boss, Laurence Fisch (ph) felt that it was too expensive.

The Olympics are a major sports program that helps Comcast and NBC in other ways. It helps them promote other programming. It gives them very strong ratings in primetime, certainly, during the season, with the winter games.

And there are good corporate reasons to stay with a major sports property, even if it's a borderline profit generator. Comcast...

SCHATZKER: Neal, you are highlighting the key issue for investors. How do you show - how does Brian Roberts prove to Comcast shareholders that what you say is right? Because on a stand-alone basis, they're losing money.

But you say, there are collateral benefits, correct?

PILSON: That's right.

SCHATZKER: Those are very difficult to quantify. That's why investors are nervous about the $4.4 billion that Mr. Roberts is slapping on the table.

PILSON: Well, that's a task that Mr. Roberts and his executive staff have to address. The Olympics can help NBC in primetime. NBC right now is the fourth network in terms of ratings. They need major properties, anchor (ph) properties to promote their other programming.

And I think they felt that the Olympics were very important to them, very important to the growth of some of their other platforms, very important in terms of a franchise that...

SCHATZKER: Neal?

PILSON: ...in effect, validates the merger. Yes, go ahead.

SCHATZKER: Neal, thank you so much for joining us. Neal Pilson of Pilson Communications, the man who wrote the rules literally on Olympic Tv broadcasting rights.

06:20

***END OF TRANSCRIPT***

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