NBC Sports prepares in London for the 2012 Olympics. NBC and its sister channels… (Carl Court, AFP/Getty Images )
No one likes losing money. But to NBC, the $100 million of red ink it may spill on the Summer Olympics is more like an investment — and a lesson in TV Economics 101.
Just about everyone agrees that the $1.3 billion NBC is shelling out for the Summer Olympics won't be recouped by ad revenue. But the Summer Games will pay dividends to NBC that won't show up directly on a balance sheet.
Among other things, the network will have a large captive audience — and it will take full advantage of that, rolling out two new sitcoms during the Olympics and using commercial breaks to inundate viewers with promos for its fall prime-time lineup. While the Games are on, it will have valuable exclusive content for its critical and still highly profitable"Today"franchise.
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The Games also provide a chance to groom two of its newest personalities, Savannah Guthrie and Ryan Seacrest. Last but not least: It helps NBC build its sports division, including its newly renamed NBC Sports Network, a little-watched cable channel formerly called Versus that NBCUniversal's owners hope to build into a viable competitor to ESPN.
"NBC's problem has been the lack of viewers coming to the network day in and day out," said Sam Armando, director of strategic intelligence for the Chicago-based advertising firm Starcom MediaVest Group Exchange, a part of Starcom MediaVest Group. "And here comes the Olympics, which gives them the opportunity to showcase the network over two weeks."
And what a showcase. NBC expects the London Games to rank among the top-rated television events of all time, with nearly 200 million Americans watching at least part of the telecasts over 17 days.
The network paid $1.18 billion for the television rights, and is spending about $100 million more for production costs, staffing and the building of a 70,500-square-foot broadcast facility inside Olympic Park.
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NBCUniversal will have roughly 2,700 full-time workers in London devoted to its coverage and 700 more in New York. Several hundred staffers have been on the ground in London, working for the last few months to prepare for the event. There will be 300 camera positions.
"It is so much bigger than a sporting event and draws viewers who are not traditional sports fans," said Alan Wurtzel, NBCUniversal's president of research and media development.
He reeled off research on how most of the millions who tuned in to the Beijing Olympics in 2008 never even watched a single NFL game that season. That ability to entice the non-fans is one attribute that makes the Olympics unique among major sports telecasts.
NBC, a unit of Comcast Corp., needs whatever help it can get. The network has been stymied in fourth place in the ratings for years. Last season, its prime-time lineup — the first overseen by former Showtime whiz Bob Greenblatt — failed to catch fire. New dramas such as"Prime Suspect" and"The Playboy Club" quickly disappeared.
2012 London Olympics on TV
Even worse, key franchises such as "Today" and "The Tonight Show With Jay Leno" are now under enormous pressure. "Today" has seen its once-formidable lead over archrival ABC's "Good Morning America" shrink over the last year, leading to the recent ouster of co-anchor Ann Curry. Leno has suffered a sharp ratings slide since a bungled move to bring him back to "Tonight" following a failed prime-time show. Each show has delivered tens of millions of dollars annually to NBC's bottom line in recent years.
NBC is also subject to the same external pressures facing other broadcasters. The Olympics can bring in guaranteed viewership at a time when the TV audience is increasingly forgoing live viewing in favor of DVRs, Netflix, Hulu and other platforms.
NBC is planning a record 5,535 hours of event coverage on nine channels, including the NBC broadcast network, cable channels MSNBC, CNBC, Bravo, NBC Sports Network, Spanish-language network Telemundo and online platforms. That represents 2,000 more hours than NBC provided during the 2008 Summer Olympics in Beijing.
Gary Zenkel, president of NBC Olympics, recently noted that the broadcaster provided 171 hours of events on one channel — NBC — during the 1996 Summer Olympics in Atlanta.
NBC also plans to use the Games to promote new and returning prime-time shows, including"Grimm,""Go On"and"Animal Practice."
The Olympics are so vital to NBC's fall plans that the network has moved up most of its fall premieres to earlier dates in a bid to take advantage of the Games. It's also taking the unusual and risky strategy of rolling out two new sitcoms, "Go On" and "Animal Practice," during the Games.
"Go On" will air after prime-time Olympics coverage wraps up Aug. 8, and "Animal Practice" will premiere after closing ceremonies Aug. 12. In another step aimed at hooking viewers, both will air without commercials.