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NBC Universal says it will drop $250 million on the Vancouver Games, but suitors for the next round of Olympic rights are already lining up
As NBC gears up for the Vancouver Winter Olympics, the network is banking on the power of sport to transfix audiences and transform the conversation from corporate missteps to athletic prowess. NBC Universal chairman Jeff Gaspin has said that Vancouver will be a "cleansing moment" for the network, which has endured a highly scrutinized primetime failure coupled with a highly public late-night talent maelstrom, all as the new owners wait to swoop in once Washington signs off.
In other words, Shaun White cannot get on that halfpipe soon enough.
But no matter how many times The Star-Spangled Banner echoes over medal ceremonies in the regal mountains of British Columbia, NBC says it will lose a quarter of a billion dollars on the Vancouver Games. And if the network fails to deliver its ratings guarantees, the news could get worse.
Yet despite the bleak financial outlook, NBC Universal and others including Disney, News Corp., Time Warner and CBS (the latter two reportedly jointly) are considering lining up for a shot at the next round of Olympics rights. And, not for the first time, many industry insiders are wondering if the Games are worth the price tag.
The Olympics and other major sports franchises such as the NFL and Major League Baseball have traditionally been loss leaders for broadcast networks. But conventional wisdom held that the exorbitant license fees were worth it for the halo effect a Michael Phelps and his seven gold medals has on the rest of the network. The Olympics gives companies a massive platform from which to promote their non-broadcast businesses, from Disney's theme parks to Comcast's Versus network and VOD offerings.
But lately, the worth of such an endeavor is increasingly uncertain. Besides escalating rights fees, costs include production, hospitality and marketing outlays, and in the case of General Electric, a $200 million Olympic sponsorship.
But it all begins with the rights fees. Irwin Gotlieb, the chief executive of GroupM, which does about $80 billion annually in billings, has pronounced sports rights fees "totally out of control." Jon Swallen, senior VP of research at TNS Media Intelligence,...