« CETV Trades Down Then Gets An Upgrade | Main | Sale of Rogers Completed »

August 26, 2008

NBC's Olympic Sized Ratings

By now everyone knows that NBC's Olympic coverage produced great ratings, the best since TV truly became multichannel as opposed to just a three or four channel nightly option for viewers. Press reports also indicate that ad demand picked up as the games were going enabling NBC produce a profit of as much as $100 million on the telecast.

One would think that profits are the primary motive for purchasing TV rights and televising the Olympics. While this is important, another huge motive is the ability to promote your own network's shows and brand to an enormous audience. The Super Bowl and the Oscars are similarly sized events where the networks also try to launch new shows or relaunch returning shows.

The Olympics are undoubtedly a success for NBC and its family of networks. NBC's parent, General Electric (GE), probably will get enough of an incremental profit boost to be meaningful – that is saying a lot for a company of GE's size! The news on the promotional front might not be as positive, however. And given the possibility for a several hundred million dollar profit swing in prime time for a network going from last place, where NBC currently resides, to first or second place, this will be the real story to watch for the next few months as far as the Olympic TV ratings go....

....Variety is reporting that "awareness" figures for NBC's new shows that were consistently promoted during Olympic coverage are up but not by as much as might be expected. NBC executives acknowledge this fact but respond by noting that much of the promotional time was spent to further build returning emerging hit shows like Heroes, Life, Chuck and Lipstick Jungle.

We won’t really know the answer until later in September when the new TV season starts. The record of using the Olympic to launch new shows is mixed. However, the stakes are greater this time around given the many secular challenges facing network TV. If the huge Olympic ratings can't be translated into effective promotion of new and returning shows, it adds another nail in the very slowly closing coffin of network TV.

It also could have implications for TV rights for future Olympics as a negative offset to the assumption of rising fees due to the success of Beijing. The 2014 Winter Games and the 2016 Summer Games are the next ones that will be bid. NBC owns the rights to Vancouver in 2010 and London in 2012. ESPN has already indicated it will be bidding and CBS and FOX have bid in the past.

One huge impact on the TV rights bidding would be if Chicago gets the 2016 Summer Games. The ability to broadcast everything live and the added interest of having the games on home soil would likely drive the bidding well above the $2 billion that NBC paid for Vancouver and London.

The stakes are high for CBS, Disney/ABC/ESPN, and News Corp/FOX if any bid aggressively vs. GE/NBC. It is nothing for investors to worry about for now but on a light research day in late August it is worth filing away.

Posted by Steve Birenberg at August 26, 2008 02:12 PM in Media