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SBD Global/June 29, 2012/Media

NBC says It Will Lose Money On London Games Even With Increased Ad Sales

NBC expects to lose money on its London Olympics coverage.
NBCUniversal is "expected to lose money on its coverage of the London Olympics," though NBC Sports Group Chair Mark Lazarus "declined to predict how steep the losses could be," according to Meg James of the L.A. TIMES. Lazarus said, "The jury is still out, we don't know where we'll end up." NBCU is paying $1.2B for the TV rights to the Games, and Lazarus said that NBC sales execs "have been busy this year selling advertising time for the company's unprecedented coverage." NBCU is "planning 5,535 hours of coverage on nine channels," 2,000 more hours than the net provided for the 2008 Beijing Games. Lazarus said, "We're not predicting that we will necessarily be profitable." He added that in addition to ad sales, the company "receives financial contributions from TV station affiliates and cable and satellite TV providers, which helps defray its costs." Lazarus: "The deal we made for the four Games will be a profitable deal for us when the final score comes in" (L.A. TIMES, 6/28). In Philadelphia, Bob Fernandez noted NBC Sports execs "dampened expectations that TV viewership for this summer's London games would top that of the 2008 Beijing Games, but said national TV advertising sales are running about $100 million ahead of Beijing." Lazarus said, "I would love to match those scenarios, though it's unlikely. We are not measuring ourselves against Beijing." NBCU President of Research & Media Development Alan Wurtzel projected that the London Games "would fall within the top-five TV events of all time, with total viewership of more than 200 million Americans over 17 days." NBC has sold $950M in advertising for the games, and Lazarus said that "those national ad sales could reach $1 billion." The comparable number for Beijing was $850M. Lazarus said that NBC "would not lose as much money as the entertainment conglomerate had originally projected" (PHILADELPHIA INQUIRER, 6/28).

DIGITAL REVOLUTION: In N.Y., Richard Sandomir wroteNBC's plans in London "represent a break from the past and a continued embrace of it." Every event "will be shown live, online at NBColympics.com." Live events also will "be seen on the NBC Sports Network, CNBC, MSNBC and NBC in the mornings and afternoons." But in "prime time, NBC's broadcasts will be on tape." NBC has been "moving toward a digital Olympics, a bit fitfully, and somewhat fretfully, since '08." But now, it "appears to be a wholehearted shift to the digital present." Lazarus said, "As times have changed there is a sense to satisfy all people with technology. And the ability to provide live streams of every event is one that we now have." NBC's Bob Costas suggested that the Olympic business model former NBC Sports Group Chair Dick Ebersol "championed was not wrong -- and that criticism of it was off base." Sandomir wrote NBC "did what it had to do, with its dependence on prime-time advertising to finance its rights fees, and without billions of dollars of ESPN-like subscriber fees, to pay its Olympic rights fees." But NBC's "adherence to a business model that made sense internally did not mean that fans, and those who are paid to watch, were wrong in registering their dismay at taped sports events and minimal live streaming." Sandomir: "Technology, and corporate ownership, have clearly altered NBC's Olympic course" (N.Y. TIMES, 6/28).
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Media, NBC, United Kingdom

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