London Olympics: NBC sets bar high for broadcast offer
Share with others:
LOS ANGELES -- NBC lost more than $200 million the last time it showed the Winter Olympics, and it is bracing for similar losses in London next year.
So, plenty of people scoffed when the network bid $4.4 billion -- nearly a billion more than runner-up Fox -- for the U.S. rights to carry the four games through 2020. Yet the price may prove right.
The growth of Internet video and opportunities under NBC's new owner, Comcast Corp., should help cut losses significantly and perhaps make the Olympics profitable after the London Games. There's also an intangible promotional benefit to NBC.
Consider this: Even at a loss, the Olympics generate huge audiences. About 185 million people saw some of the Olympics in Vancouver last year. The struggling broadcaster can promote new shows to those viewers as it tries to dig out of fourth place.
NBC didn't pay all that much for the Olympics, considering that TV rights fees for other major programming, such as Pac-12 college basketball, have been doubling or tripling.
For the '14 and '16 games, it is paying about the same as it has been.
For the final two games in the deal, NBC is paying just 19 percent more. Morgan Stanley analyst Benjamin Swinburne called NBC's deal an "Olympic win at the right price."
He said NBC should be able to cut its Olympic losses in half after London, as long as viewership doesn't change and advertising rates keep improving.
Beyond that, NBC can create more ad opportunities by tapping sports channels added to the NBCUniversal family when Comcast took control in January. One is the Golf Channel -- convenient for Comcast as golf joins the Olympics in '16.
Another is Versus, which Comcast is positioning as a competitor to ESPN, another Olympic bidder.
NBCUniversal will have about 20 channels and more than 40 websites to cover the games.
By contrast, it used five channels and one website in '10, when it was controlled by General Electric Co.
The Olympics coverage can also help Comcast get higher fees from other cable TV companies such as Time Warner Cable Inc. to carry those channels in their lineups.
One unknown is how fast Comcast can increase revenue from online viewing.
For the '08 Summer Games in Beijing, NBC ran an unprecedented 2,200 hours of coverage over the Internet.
For some fans it still wasn't enough.
The network was pilloried, for instance, for waiting more than half a day to televise the men's 100-meter final so it could show Usain Bolt's record-breaking run in prime time.
Starting with the '14 games in Sochi, Russia, NBC plans to carry every event live in some format or another. It will repackage the best events for U.S. television audiences when evening arrives.
Mark Lazarus, chairman of NBC Sports Group, told reporters last week that technology is changing so rapidly that the deal gives NBC plenty of mobility, such as the ability to exploit the games on every platform "now known or to be known or still to be conceived."
First Published June 13, 2011 12:00 am
