NBC On Olympics: We Don't Care What You Think; We're Happy!

Categories: Internet TV

Written By

August 26th, 2008

I've seen much written in the past several days about missed opportunities on NBC's part, especially with regard to online advertising where NBC reportedly only hauled in $5.75 million.  I've seen the comparisons to CBS who took in a reported $23 million in online advertising revenue for the NCAA College Basketball Tournament ("March Madness").

I've seen the reports that say NBC paid $894 million for the rights to the Beijing Olympic games, had sold nearly a billion in advertising leading up to the games and then, even with better than expected ratings, "only" sold an additional $25 million or so during the games themselves.

The drawback with a lot of the reported dollar figures we see thrown around for advertising is this: rarely are they the actual numbers. Perhaps never, really.   Unfortunately, we just don't get true access to the dollars and cents because they get rolled up into so many things we never see.   I'm sure CBS knows what its total haul for advertising was for "Mach Madness", but am I sure that even CBS really knows exactly how much of that revenue was from sources other than television?  No, I'm not.

Here's what I am sure of.  NBC is happy with its results for the Olympics.  There's no exec at NBC who isn't happy with the results, and I imagine there is no exec at GE who isn't happy with the results.  Did NBC do a great job of optimizing to make as much as it possibly could?  We have no idea really, and not even the reported $5.75 million in online advertising revenue gives us any true insight into that.

What we do know is that NBC paid more for the 2008 Olympics than the 2004 games cost.  All while expecting about a 15% decrease in television viewing that didn't in fact happen and so expectations were well exceeded.   The difference between the reported rights cost and reported advertising revenue is around $131 million.  If all of that were pure profit, it would be about a 15% profit margin on fees paid, but one thing we're sure of is that it's not all pure profit.  We're not sure what production costs were to product the Beijing games, but can be reasonably sure it was more than a few million. NBC chief Jeff Zucker told the Financial Times that the games would earn less than one hundred million in profit, with reported costs for production of around $100 million.

Whatever the profit margin actually is, even if they just barely broke even,  I'm still sure NBC is still delighted. In fact, reading the tea leaves it seems NBC would be fine with just breaking even. Effectively, the Olympics worked out to be a 17 day commercial for NBC Universal.  Promoting shows in the fall, shows on its cable networks, shows now on DVD, etc.  Whatever may be said about NBC and its coverage, it didn't stop millions and millions from tuning in each night. 

Will the Olympics provide a halo effect for NBC's fall season?  I don't doubt there will be some halo effect for premieres of shows, although based on early indications with a show like America's Toughest Jobs, I'm not so sure.  But that always struck me as a show that should be on cable anyway (and it actually did OK among younger 18-34 year old viewers), but the premiere numbers don't make you sit back and think, "Wow, nice Olympic Halo effect!"   Still, I don't think NBC could have asked for a better opportunity than it got with the Beijing games.  Besides, it still has Sunday Night (NFL) Football as well as the broadcast rights to this year's Super Bowl.

In early ratings for the Democratic  convention, NBC is leading there too.  There's not nearly as much interest in this as Michael Phelps, even spread out among the cable networks, but last night between 10pm-11pm NBC drew 4.85 million to ABC's 3.78 million and CBS' (which is used to being last when it comes to broadcast news) 3.52 million.   

And while none of this predicts better than a fourth place finish for the peacocks come the fall, there's still no doubt in my mind that NBC is pleased with its Olympic performance and I'm pretty sure, at least for now, that it's an appropriate reaction. 

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