By Josh Barro
If you’re on Twitter, your feed for the last few days has probably consisted of nonstop complaint about how NBC is covering the Olympics. Everything is on tape delay! The commentators are terrible! They aren’t showing enough non-U.S. competitors! I can’t get NBC’s Web feed because I don’t pay for cable!
Everybody stop whining now.
As the New York Daily News’s Josh Greenman put it, “NBC paid lots of money to air the Games. They want the viewing public to watch in prime time so advertisers get value. This isn't a scandal.” NBC’s model works because most of the viewing audience is fine with it, and wouldn’t be willing to pay much for an alternative that relies less on payments from advertisers and cable systems.
And of course, if you really want to watch the events live, you can on NBC’s website. Yes, you have to be a cable subscriber. NBC makes lots of money from fees it charges cable and satellite systems to carry its various networks, partly because of its Olympics coverage. If NBC offers Olympics content to people who don’t pay for cable, that reduces their ability to demand higher carriage fees.
Heidi Moore of the Guardian suggests that NBC could have offered a separate, paid online Olympics subscription for people like her who don’t have cable, similar to the one it offers for the Tour de France at a cost of $29. I am skeptical that the numbers would pencil.
NBC hasn’t disclosed how much it pays for the Tour de France, but rights to show the race in France cost $30 million a year. Meanwhile, NBC paid $1.18 billion for the rights to the 2012 Summer Olympics. The huge cost of the Olympics rights, and the significant value they provide NBC in both advertising revenue and leverage in negotiating carriage fees, means you would have to charge a lot to make an alternative Web service work.
NBC already experimented once with high-price subscriptions for live Olympics coverage, with its “Triplecast” program in 1992. NBC found that few people were willing to pay handsomely to watch live, uncut Olympics coverage.
And the market that Moore wants NBC to sell into is small. According to Nielsen, fully 90 percent of households with televisions have cable or satellite service. (Only 3 percent of households have no television at all.) I’m a young professional living in New York, and I personally know a lot of people with televisions, disposable income and no cable. But nationally, this group is small, and NBC does not leave a lot of money on the table by failing to cater to its needs.
The NBC Olympics complaints are basically a rehash of the complaints over HBO GO -- HBO won’t sell you access to web streams of their content if you don’t get HBO through cable. Yes, as someone who doesn’t subscribe to HBO, I find this annoying. But that doesn’t mean HBO is making a mistake by failing to sell exactly the product I want -- they have sound business reasons for choosing the delivery channels they are using.
Read more breaking commentary from Josh Barro and other Bloomberg View columnists and editors at the Ticker.
-0- Jul/31/2012 20:02 GMT