Competition to broadcast the Olympic Games in Canada is about to become an event of its own, with Yahoo Inc. considering a bid to steal the Games from the country's television powerhouses and push the coverage onto the Internet.
Broadcast rights to the 2014 Winter Games in Sochi, Russia and the 2016 Summer Games in Brazil are up for grabs after the International Olympic Committee rejected two "lowball" bids by a Canadian Broadcasting Corp. and BCE Inc. partnership.
Their most recent bid was quietly rejected in late February, The Globe and Mail has learned. That has opened the door for Yahoo, which is now weighing using the Canadian broadcast rights as an opportunity to enhance its reputation as a content producer and revitalize its fortunes after losing ground to rivals such as Google Inc.
The Sunnyvale, Calif., company's involvement could spark a bidding war for the rights, and also change the way Canadians watch one of the world's most high-profile sporting events. Canadians have embraced online services such as those offered by Netflix , and by 2014 could be even more comfortable bypassing traditional broadcasters to watch the Olympic Games.
The broadcast partners have been unwilling to ante up enough money to secure a deal with the IOC, because they don't yet know whether National Hockey League players will participate. That's key to any deal, especially because the nine-hour time difference between Russia and Central Canada is likely to decrease the number of sports fans watching the 2014 Sochi Games.
The Canadian group is expected to come back with another offer in the summer, after the NHL and its union decide whether its players will participate.
"CBC and CTV have had two lowball bids rejected now," said Peter Sisam, a consultant who works with the IOC on its broadcasting deals. "There are other options out there, Yahoo is just one more."
None of the bidders would comment on the record, citing the ongoing negotiations. Sources said the Canadian group has been bidding in the $70-million range for rights to both events, or about half of what was paid for rights to the 2010 Vancouver Olympics.
Yahoo hasn't put together a formal bid package, sources said, and is only starting to consider its options.
While television deals were once key to the Olympic experience, the IOC's Emmanuel Moreau said it has "reached agreements with non-traditional television entities in the past."
Recent deals in other countries provide a window into how Yahoo could use the Games if it did outbid BCE and CBC. In Europe, a sports marketing company is sub-licensing them to television broadcasters. In Taiwan, an Internet service provider has complete control of both online and television rights.
Still, sources inside the BCE-CBC partnership expressed skepticism that Yahoo would be able to top a joint bid from the two Canadian companies.
Yahoo has been turning its attention to event-based coverage on its network of sites, most recently airing a concert for the Clinton Foundation – featuring artists such as U2, Usher and Lady Gaga – that attracted 64,365 live viewers.
The company has a particular interest in Canada, where it is increasing both its audience and advertising revenues faster than it is in the United States. Yahoo sites draw some 700 million viewers worldwide, and 60 per cent of all Internet-using Canadians report using its sites monthly.
The company's greatest traffic coup also had a Canadian feel – its networks of websites attracted more than 40 million unique users looking for content from the Vancouver Olympic Games. Those events were broadcast on television by CTV and Rogers Communications Inc. , who partnered in a $153-million deal that will also see them broadcast the London Games this summer.
Rogers said it won't bid on the Sochi or Rio de Janeiro Games, citing time-zone-related scheduling difficulties among its main reasons. The broadcasters are also expected to lose money on the London Games. Production costs surpassed $100-million for the Vancouver Games broadcasts.
Despite Yahoo's reach, the company has struggled to maintain its early dominance in a world that is increasingly dependent on Google for its search needs.
"[New Yahoo CEO]Scott Thompson will likely close down units that are not strategic and enter into new, disruptive businesses to give Yahoo the technology edge it was lacking," CLSA Asia-Pacific Markets analyst James Lee wrote in a note to clients last week.