The lasting legacy of these recent London Olympics wasn't Ryan Lochte's epic bro-ness or McKayla Maroney's perpetual disinterest in everything, but rather it was #NBCfail, the hashtag that, over the course of 17 days, came to signify the complete ineptness of a media conglomerate to please its wider audience, from the cherry-picked editing of live performances to the farcical primetime tape delays to the unreliable web streaming. It was a debacle of far-reaching proportions, except when it came to domestic TV ratings, which is all that NBC ultimately cared about. Now, it appears that despite the outcry, NBC has no reason to change anything for the benefit of consumers in 2016. If anything, it's going to get even worse.
Speaking at the Bloomberg Sports Business Summit on Thursday, NBC Sports Media Group Mark Lazarus made the company's first official comments regarding the Olympics and profitability. The verdict? NBC just about broke even.
From a financial point of view the Games, on a discrete basis, were a break-even proposition for us," Lazarus said, adding that the result was "far healthier…than we had planned on going in."
NBC approached the 17-day extravaganza anticipating a $200 million net loss.
Once NBC freed up the inventory it had salted away for make-goods, fears of ending up in the red evaporated. All told, the network booked north of $1 billion in ad inventory, atop which it sprinkled nearly $300 million in affiliate and digital revenue. Rights fees and production costs ate up approximately $1.28 billion.
Lazarus suggested that it may be too soon to assess the long-term impact of the Summer Games, which drew 219.4 million total viewers, making it the most-watched event in U.S. television history.
"In terms of the enterprise value to NBCUniversal, that discrete break-even does not take into account the halo effect and what it did for the ratings (short-term and ongoing) for our news division, for our late night group, for our discussions with MVPDs [read: operators] and for our affiliate groups," Lazarus said. "On the whole the Olympics is a very good business for us."
The Olympics is a very good business for us. That doesn't mean Comcast/NBC is going to make the streaming process any easier by, say, feeding it free to YouTube for anyone to watch, the way people in 64 countries between Asia and Africa got to experience the Olympics. You'll likely still have to be a cable subscriber and who's to say that NBC won't start charging extra in four years time? Maybe $10 or $15 for an Olympics Online Pass. People spend that much on a digital album or smartphone app without blinking. And if that's the only way many people will be able to watch the Olympics online, they will pay it.
No, only if NBC had lost big on the London games—like, $200 million big, which is what they were expecting—would the Peacock be motivated to try something radical and fan friendly next time around, something to get people talking about how NBC was trying a new tactic, one that caters to fans at home instead the Comcast shareholders and TV wonks who worship at NBC's Nielsen average, down to each decimal point.
Digital (and affiliate) revenue came in at about $300 million and saved the day, financially speaking, for NBC. It's that digital revenue area where it'll look to grow big-time in 2016. NBC executives might consider this the last "free" Olympics we've ever seen. Lazarus has already said NBC should've tape-delayed more programming during London, so there's nothing to stop him from enacting such a pay system, since they know people are going to watch on TV, regardless of anything else they throw at consumers. And any extra dough they can squeeze out of online viewers? They'd snap that up faster than Bolt in the 100.
Maybe the fact that Rio is only one hour away ahead of the East Coast will lead to even higher projected TV ratings, which could lead to many more live events on network TV, which could lead to NBC resisting the urge to institute extra fees to boost digital revenue. That, of course, would require management that puts viewers' concerns before its stock price. Who knows if NBC, the network behind Animal Practice, is even capable of such reasoning.