Comcast Q4 Reaction: NBCU’s Olympics Silence Is Deafening

Comcast Q4 Reaction: NBCU’s Olympics Silence
Cheyne Gateley/VIP+

With just about one week from the Beijing Winter Olympics, Comcast management remained hush-hush about the event on the company’s Q4 earnings call Thursday morning. 

Not that management has any obligation to express exaggerated Olympics excitement, but the company’s earnings call was rather muted, with basically no substantive mention of the upcoming Games.  

Should we be worried? 

There has been quite some controversy surrounding the Beijing Olympics, and NBCUniversal will likely feel the heat. First, health concerns are still rampant, with COVID variants spreading around the world. The pandemic has already disrupted the Olympic calendar, with the Winter Games coming just seven months after the Summer Tokyo Olympics in 2021. Second, the Chinese government has been wrapped up in geopolitical tension (the Biden administration announced a diplomatic boycott of the Beijing Olympics last month), which has caused many major advertisers to remain on the sidelines.  

All this drama is only going to hurt the official U.S. broadcaster of the Olympics games: NBCU. Just a few days ago, it was reported that NBCUniversal slashed its TV ratings expectations by about half.  

The Olympics was supposed to be a great investment for NBCU. In a 2014 contract extension with the International Olympics Committee (IOC), Comcast agreed to shell out a whopping $7.75 billion for U.S. media rights to the Olympics through 2023.  

But NBCU paid a lot of money for rights to broadcast the Games in the U.S., with the understanding it would bring in significant ratings and ad dollars. 

The Olympics hasn’t quite provided sky-high ROI like it used to. NBCU paid over $1 billion for the Tokyo Summer Olympics; the company brought in $1.8 billion in revenue from the Games in its Q3 results

Though management predicted the Tokyo Olympics would be profitable, it was never confirmed and it is unclear how much actual profit the Games logged. The 2016 Rio Olympics brought in $250 million in profit. NBCU does not break out Olympics profit in its earnings reports, and figures are from management’s public comments. 

The Summer Games drew the smallest audience since the network began broadcasting the event in 1988. Average primetime nightly viewership across online, cable and network totaled 15.5 million for the Tokyo Olympics compared with 26.7 million for the Rio Summer Olympics.  

Cord-cutting continues to worsen, and after sharing some Tokyo Olympics coverage on its streaming service Peacock, this time around, Comcast announced that it would be streaming all 2,800+ hours of the Beijing Olympics on Peacock.  

It’s worth remembering that the launch of Peacock in July 2020 was timed to align with the original air date for the Tokyo Olympics, before COVID-19 postponed the event by a year.  

On the company’s earnings call, CEO Brian Roberts mentioned that the streaming service now had 9 million paid subscribers. This was the first time that a concrete paid subscriber number was mentioned since the service launched 1.5 years ago. Peacock also has 24.5 million monthly active accounts in the U.S.  

The hope for Comcast is that the Beijing Olympics provides another much-needed boost to Peacock subscriptions. However, cyclical events like the Olympics don’t necessarily provide stickiness that would result in steady recurring subscriptions.  

Mobile app tracking service Apptopia provided exclusive data to VIP in September, which showed the Tokyo Olympics boosted downloads for Peacock’s mobile app but only temporarily.  

Even though Comcast management mentioned “record low churn” for Peacock on Thursday’s call, the company does not specify that data in its earnings report. 

With all the negative publicity surrounding the Beijing Olympics, it’s hard to imagine a scenario in which NBCUniversal is going to be happy with how the Games perform this year. The only glimmer of hope will come from any positive impact Peacock potentially sees in its subscriber figures following the event, and investors will be paying close attention in Q1.