NBC’s Tape-Delay Strategy Boosting Ratings, Revenue
NBC expects to be “right around” the point of making money on its London Olympics coverage after tape-delayed broadcasts during prime time drew higher ratings than during the previous Summer Games.
The ratings for the games are up 9 percent so far from the Olympics in Beijing, much better than what the network was predicting, Steve Burke, chief executive officer of Comcast Corp. (CMCSA)’s NBCUniversal, said today on a conference call. The broadcaster had projected a $200 million loss for the games.
The results suggest that NBC’s strategy of tape-delaying the Olympics for its U.S. television audience is paying off. The network has been criticized for the approach, which forced Americans to watch the opening ceremonies and key events well after they occurred. NBC also has tried to drum up excitement for Olympics broadcasts on Facebook and other social networks.
“Everything is going NBC’s way,” said David Bank, an analyst at RBC Capital Markets in New York. “The ratings take the pressure off NBC for tape-delaying events. It could be a marketing issue or luck or a lack of other interesting things going on. But sometimes it’s better to be lucky than smart.”
NBC, which paid $1.18 billion for the rights to the London games, had projected a ratings decline of 20 percent versus the Beijing games, when more of the prime-time coverage was live. Instead, viewership is “way up,” Burke said on the call today.
NBC had lost $223 million on the last Olympics. David Joyce, an analyst at Miller Tabak & Co. in New York, estimates that NBC’s production costs added $100 million in expenses for this year’s games, beyond what it paid for the rights. That means the company would have to take in a total of about $1.3 billion to break even.
Comcast, the cable-TV provider based in Philadelphia, acquired control of NBCUniversal for $13.8 billion in January 2011. The business, which includes TV, film and theme-park units, contributed about 36 percent of Comcast’s sales in the second quarter.
Social networking has been a double-edged sword for NBC during the Olympics. While online buzz has helped promote events, critics have taken to Twitter and Facebook to deride the network’s tape-delay strategy.
Guy Adams, a British journalist based in Los Angeles, was temporarily suspended from Twitter Inc.’s site after he posted the e-mail address of NBC Olympics President Gary Zenkel while urging users to complain. The social-networking company restored Adams’s account after an outcry over the incident.
Twitter, which has a partnership with NBC to provide Olympics coverage, apologized yesterday for the “mess up” surrounding the suspension of Adams, a writer for the U.K.’s Independent newspaper. Critics said that by initially blocking his account, Twitter put the relationship with NBC ahead of its goal of disseminating information.
Adams had lashed out at NBC in a number of Twitter posts for delaying the major Olympic events on its broadcast network. The company is showing live events to cable subscribers online.
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