NBC's Big Investment On Vancouver Games Called Into Question
NBC Universal "successfully has battled network rivals, time differences and controversy during two decades of Olympics," but the network for its coverage of the Vancouver Games "might bow to an intractable foe: economics," according to Paul Gough of the HOLLYWOOD REPORTER. NBCU claims that it may lose up to $250M on the 17-day event, and the "troubles surprise many observers, who have gotten used to NBC and its impresario, Dick Ebersol, meeting often-Olympian challenges." NBC in '03 bid $2B for rights to the Vancouver Games and the '12 London Games, while Fox Sports bid $1.3M. Fox Sports Chair David Hill: "NBC thought it was worth a heck of a lot more than we did. I said at the time, 'It'll be interesting to see who time decided was more accurate in their bid.'" Ad sales for the Vancouver Games are "now on track" and there is a "buzz about Team USA." The location in Vancouver "couldn't be better unless the skating competition took place at the Rockefeller Plaza ice rink." Gough notes NBC "believed ad sales would keep pace," and its "long Olympics history helped: It has cut costs with technology, uses essentially the same set and equipment since Sydney in 2000 and sends significantly fewer staffers to the Olympics than ever before." But the "economy and rights fee hurt." The Games will "lift the network's" ratings to a "stratus they haven't seen for a long time." And while NBC's ad sales "likely will reach the level" of the '02 and '06 Games, that "won't be enough to cover the increased rights fee." But if the U.S. team "rakes in the gold and NBC gets a premium for unsold inventory during the Games, the revenue picture could improve." There also are "other benefits to NBC" of carrying the Games following the split with Conan O'Brien. Carat USA analyst Shari Anne Brill: "They have 16 days to bury the late-night drama a little better and hope it fades" (HOLLYWOOD REPORTER, 1/29).
COMMON PRACTICE: IOC President Jacques Rogge said of NBC's expected losses from the Vancouver Games, "I never heard a broadcaster and a rights-holder being optimistic before the Games. They always complain there will be a deficit and, at the end of the day, after negotiations, they join again. The negotiations for 2014 and 2016 will depend on the economic climate in the United States. We expect the economy to improve, but we are not in a hurry. We do not need to negotiate tomorrow. We will wait for our partners to be in a better financial situation" (LATIMES.com, 1/28).
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