Olympic Gold: Summer Games Pay Off For NBC
NBC Universal CEO Jeff Zucker continued the company's buoyancy regarding the Olympics this week, reaffirming in an interview that the Games will yield a notable profit. NBCU so far has announced ad sales worth $1.25 billion.
Rights fees were $894 million--leaving a gap of $131 million on the plus side. The level of production costs would seem to determine how far south of that figure profitability will be.
On CNBC Monday, Zucker said: "The bottom line is we will make a profit," although he said it would be less than a 14.6% margin. He added that the Games continue as "a great investment for the company--something we're incredibly proud of--a signature event for the company, and it is profitable."
The company initially lost some $70 million two years ago on the Winter Games in Italy (although affiliate contributions may have lessened or even slightly eliminated that in the end). But ratings were considerably lower in 2006 as Fox aired "American Idol" and other networks went with first-run programming against skating and skiing. Also, Michael Phelps wasn't swimming, and live events in prime time were null.
Even if the Summer Games lose money, there is a theory that they can play a sort of "loss leader" role, propelling multi-platform ad deals or serving as a promotional platform for upcoming new-season programming. Zucker, however, threw some cold water on such ideas.
"Hopefully, this has provided a platform for us to promote our new shows, historically ... there hasn't been a huge correlation between using that platform and what happens in the fall," he said. "But hopefully it's better than not having it, and ... hopefully [we can] enjoy that success on the entertainment side as well."
NBCU has the rights to the next two Olympics Games: the 2010 Winter event in Vancouver, which should be a success with a slew of live events, and the Summer Games in 2012 in London. Zucker declined to say how aggressive NBCU/parent General Electric would be in bidding for the 2014 and 2016 Games; if Chicago is awarded the 2016 event, the price tag could be considerable.
"Obviously, it's something we will be interested in, but just as we have done up until 2012, we'll make a business decision that makes sense for us," he said. "If it makes sense at the right time, we'll continue."
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