Olympic TV Rights Revenue Profit
Variety

With the summer Olympics kicking off next month, Comcast is ramping up promotional activity around everything from coverage on the various NBCUniversal properties to the unique experience cable customers will get via its X1 set-top boxes.

U.S. TV rights have become more expensive with each successive Summer Olympics. NBCU paid $1.226 billion for rights to the Rio Games, slightly more than the $1.18 billion it paid for rights to London four years ago, and well above the $900 million it paid for Beijing. That creates pressure for NBCU to deliver more revenue in order to see stable or, ideally, increasing profits from its investment.

https://www.theatlas.com/javascripts/atlas.js

Just as cities often lose money when hosting the Olympics, NBCU has a checkered past in terms of profits from broadcasting them. The company lost money on the 2006, 2008, and 2010 Games; however, it profited from the last two Olympics (though likely minimally for the Sochi Games).

Every edition of the Games comes with risks and uncertainties, from the participation and performance of certain high-profile athletes to the presence or absence of compelling narratives that emerge throughout the event. But this year’s Olympics are particularly fraught, given doubts about the readiness of infrastructure, polluted waterways, the Zika virus, and economic instability.

Should these or other issues derail events or prevent athletes from participating, viewership and ad revenue will face serious damage. Given the massive investment Comcast has made not only in rights but in production, promotion, and the X1 platform, any underperformance will hit hard. Margins have been pretty slim in the past, so it wouldn’t take much of a revenue drop to put the whole effort into the red.

https://www.theatlas.com/javascripts/atlas.js

On the other hand, NBCU’s Rio effort has potential for upside. The cost of rights didn’t rise nearly as much from London to Rio as it did from Beijing to London, so even modest revenue growth should drive margins. The benefits of the Rio time zone (just one hour ahead U.S. Eastern Time) should help to avoid the pitfalls of delayed broadcasts and put more big events live in primetime, driving viewership. And NBCU and Buzzfeed’s content deal with Snapchat is another possible source of ad revenue beyond traditional broadcast and cable.

Overall, NBCU’s big investment in the Olympics continues to be fraught with risk, this year perhaps more than ever before. On the other hand, if the Games go well, this could be the first time in recent memory that NBCU makes a sizable profit on the event.

Filed Under:

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0