Event will lose money but offer benefits

For all the concern over how NBC might rebuild its programming schedule following its aborted “Jay Leno Show” experiment, the 2010 Winter Olympics stand as quite an anomaly.

At a time when the Peacock network is desperately looking for content to fill out its schedule, the Olympics in Vancouver will provide — for two weeks at least — an overflow of prestige content, replete with a promising array of top-tier U.S. athletic stars that are expected to contend for gold medals.

The painful fact, though, is that NBC bid for rights to these Games way back in 2003, when ad sales were robust and the economy was still surging.

So, even as NBC and its cable and online cousins are poised to broadcast an ambitious 835 hours from Vancouver — more than twice as many hours as humans will actually experience between the lighting of the torch Feb. 12 at Vancouver’s BC Place Stadium and its dousing 16 days later — the Peacock will lose approximately $200 million on the 2010 Olympics, a revelation shared in December by Jeff Immelt, CEO of NBC’s exiting parent company GE.

Even though ad sales have staged a last-minute comeback to the levels of recent Games, they haven’t grown enough to meet the record rights fees that NBC committed to the Intl. Olympic Committee back in the halcyon days of 2003.

“General Motors was the top advertiser in the 2006 Games, and automotive was top product category,” says Brad Adgate, senior research veep at Horizon Media (which has NBC as a client). “Clearly that company and that product category have gone through some tough times.”

By all accounts, no other network bid came close to NBC’s $2.2 billion combined outlay for the 2010 and 2012 Olympics ($820 million for the ’10 Games alone), a 33% increase over the rights fees for 2006 and 2008.

In 2006, ad spend for the Torino, Italy broadcast was more than $200 million more than NBC’s rights payments, according to a TNS Media Intelligence report. That won’t be the case this time around.

NBC Universal sports and Olympics chairman Dick Ebersol noted at January’s Television Critics Assn. gathering that the gap between even a resurging ad market and the price paid for rights back in 2003 would be hard to close.

“Sales, which were slow in the spring and in the early summer, as you can imagine, because of the economic recession in this country, suddenly in the last four months have taken off, and we are well on our way now to doing the same kind of number that we did in Torino and Salt Lake City before that,” Ebersol said at TCA. “The rights have gone up considerably in these years, and we will, for the first time in all of my years at NBC, lose money on an Olympics, but it won’t be because the sales did not finally come around.”

If the financial ship has sailed on these Olympics, though, there is still the matter of whether NBC can win back some amount of respect in a winter that has seen the Peacock pummeled for its programming implosion. Hence the net’s commitment to wall-to-wall HD coverage of the Games across all of its channels and website.

“My personal feeling is that the Olympics are an event that pays for themselves, even if they do take a loss,” Adgate says. “There are certain intangibles that are not measurable.”

From a critical standpoint, broadcasting the Olympics — which NBC has had to itself on U.S. airwaves since 1998 — has always been a win-lose proposition. Even though the numbers consistently say that the masses prefer major events delayed until primetime, the outcry from those who want to see them live is deafening. Similarly, a tug-o’-war exists over whether Olympic broadcasts should focus more on American athletes or the best from other lands.

And then there’s always the question of how much time should be devoted to actual competition, including preliminaries, and how much should be spent on set-up features — which help some auds become invested in the competitors but are fingernails on a chalkboard for others.

In regards to finding a middle ground within these intractable issues, NBC has a few things going for it.

For one, the return of the Olympics to North America allows for better scheduling of events live in primetime — though this still will often mean live on the East Coast, not the West. In particular, the expected delayed airing in the Pacific of the women’s figure skating finals (a telecast that wouldn’t air until after results are widely available over the Internet and via other media outlets) will no doubt cause an outcry.

“The landscape has changed so much in eight years (since the last time the Olympics were in North America) in terms of availability of information,” Adgate says. “I would not be surprised if the ratings in the live markets were a little bit better than ratings in tape-delay markets.”

Still, the vast majority of households that have access to not only NBC but also MSNBC, CNBC, USA, Universal HD and NBCOlympics.com will be offered more live programming than they can possibly watch — 100% of it, for the first time in Olympics history, in high definition.

All U.S. men’s and women’s hockey games will be available live on USA or MSNBC, while CNBC will present live coverage of numerous sports, including ones such as curling and biathlon that in a previous generation would barely reach the airwaves.

The NBC Olympics website will, by itself, provide more than 400 hours of live competition and 1,000 hours of on-demand content. NBC programs like “The Today Show” and “The NBC Nightly News” will also offer Olympic flavor to feed Olympic fervor.

It also helps NBC that Americans as a group are achieving unprecedented levels of wintertime success — exemplified by World Cup-leading skier Lindsay Vonn, speed skaters Apolo Ohno and Shani Davis and snowboarder Shaun White — meaning that, increasingly, showing the best athletes and showing U.S. athletes are one and the same.

“We are sending to the Winter Olympics the dominant winter sports team in the world,” Ebersol said. “There are 15 different sports in the Winter Olympics, and we have world champions, reigning world champions, in some part of the discipline of 13 of those 15 sports. That’s just unheard of.

“I can remember the 1964 Winter Olympics, watching them on television. The United States won one medal. And four years later, in Grenoble, my first Olympics, Peggy Fleming won the only American gold medal. So I think there’s going to be a great attachment by the audience to the success of the American athletes.”

Ultimately, NBC is expected to see a bump in audience size from the 2006 Winter Olympics, which cumed 184 million viewers on NBC Universal networks and averaged 20.2 million on the broadcast network in primetime. That was a decline from 2002 (Salt Lake City) but enough to keep NBC from having to issue make-goods on ratings promises to advertisers.

“I would think NBC will do a little bit stronger than it did in 2006 in terms of its audience delivery,” Adgate says. “It would not surprise me if it won every night, which it didn’t do in 2006.”

There is, however, that other competition show featuring American hopefuls — Fox’s “American Idol” — to contend with. The resurgent “Idol” will keep to its usual schedule during the Games.

But even in a head-to-head showdown, NBC may actually be poised to have its Olympic stars outshine the budding stars of “Idol.” That’s because more people in general will watch TV during the Olympics. In 2006, for example, even though they lost in overall viewers to an “American Idol” special, the women’s figure skating finals were the highest-rated night of the Olympics.

“In 2006, it was ‘Idol’s’ fifth season, and that was their peak season,” Adgate says. “Since that time, instead of averaging 30 million viewers it averages 25 million viewers, so it wouldn’t surprise me if NBC beats it head-to-head this year primarily because of two things: one is the location of the Olympics, and the second thing is that ‘American Idol,’ while still a dominant player, isn’t the dominant ratings force (it was) the last time the Winter Olympics were held.”

So NBC should see some fulfillment of its “One Dream” (the title of Sarah McLachlan’s sure-to-be-saturated official 2010 Olympic theme song), even it might be the Peacock’s last to come true for a while.

For TV insiders, the biggest competition during the Olympics will be betting the over-under on how many promos the network airs for Leno’s post-Olympics return to “The Tonight Show,” which re-premieres the first night after Vancouver’s closing ceremonies.

“They’re going to have upwards of 200 million viewers watch the NBC Universal networks over the 17-day span, and I think they’re going to heavily promote ‘The Tonight Show,’” Adgate says. “I think that’s part of the rationale of the timing of the Conan and Jay change. I think they saw this as an opportunity to (promote) whatever program changes they were going to do, to use the Olympics as a platform. So I think we’ll see a lot of promos of NBC’s ‘Tonight Show’ — as well as (10 o’clock shows).”

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