NEW YORK (CNN/Money) - Wednesday General Electric Co. and its NBC unit start to find out if the $2 billion bet they placed earlier this month will pay off.
The company agreed to spend that amount of money for broadcast rights for the 2010 and 2012 Olympics without knowing where those games will be held.
Wednesday the International Olympic Committee will pick the site of the 2010 games. Vancouver, British Columbia, is one of three cities among the finalists, and one of two with a serious shot at winning the games (Pyeongchang, South Korea, is seen as the longest of long shots, while Salzburg, Austria, is seen as the other strong competitor).
The 2010 selection could also have an impact on the choice of a host of the 2012 Summer Olympics, for which New York is bidding. Toronto may bid as well if Vancouver doesn't get the 2010 games, although a common belief is that a win by Vancouver could eliminate a chance of any North American being chosen for 2012 when the IOC decides that issue in two years.
The rights fee is a staggering amount, about a third higher than the combined rights deal for the 2006 and 2008 games in Turin, Italy, and Beijing.
The viewership and advertising demand for the U.S. Olympic broadcasts are so great that it is almost unique in the world of sports broadcasting, where big rights fees means big losses. GE has reported profits on the last two Olympics, and says early indicates are that it will make a profit next year in Athens, Greece, as well.
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"Anybody who knows GE, knows that I would not have been allowed out of the building without a business plan for 2010 and 2012 that showed a profit," said NBC Sports Chairman Dick Ebersol told reporters when NBC won the bid June 6.
But the viewership, and profits, will be badly hurt if the "wrong" side of the world gets both of the next two games to be awarded. The 2000 games in Sydney, Australia, when most of the events were shown tape delayed, were the worst rated games in recent history, and NBC had to give advertisers a lot of extra ad time for free to make up for the viewership short fall.
Some think NBC might be better off with Vancouver losing the 2010 bid Wednesday, letting Salzburg host that game. The thinking is that if North America is going to get one of the two games, better to wait and hope that New York will be the choice for 2012 because that will drive more additional U.S. viewership than a Vancouver Olympics.
But others suggest that if Vancouver loses, it could create a stronger North American competitor for New York for 2012.
"Toronto is the choice that allows the Europeans on the IOC to come to North America without going to the United States, which they're mad at anyhow," said one official who has been involved in the Olympic city bidding process.
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And of course North America and NBC could end up with no North American sites through 2012 if Vancouver loses out. IOC President Jacques Rogge has said he would like to see an African or South American nation get the games -- making it the first time the Olympics would be held on either continent. And Europe, which still dominates the IOC, has a number of strong candidates of its own for 2012. NBC can at least rest assured that it has one North American Olympics for its $2 billion if Vancouver comes away the winner Wednesday.
Neal Pilson, a former CBS Sports president who advised the IOC on this year's rights deals, says that the IOC members will choose what they think is the best city without consideration of what is best for broadcasters.
"The decision is made on the merits, not based on U.S. television interests," said Pilson. "The reason why bidding took place before the selections was to take that factor (U.S. television money) out of the games selection process. If the networks were able to vote, they'd vote to know the cities before they bid."
But of course the uncertainty can also drive up the price, as bidders factor in both best case and worse case scenario into their bid price. When someone makes a $2 billion bet, the house, in this case the IOC, is the one sure winner.
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