(Reuters) – NBC may not turn a profit this year from the London Olympics but expects to make money on the four future Olympic games it also purchased broadcast rights to, the top executive at NBCUniversal said on Wednesday.
About a year ago, NBCUniversal, a unit of Comcast Corp, spent $4.38 billion for the U.S. broadcasting rights to four upcoming Olympics games until 2020. The new contract is more favorable than a previous $2.2 billion deal for the London and Vancouver games that saw NBC lose more than $200 million.
“We wanted to make sure that we got the games at a price that would not cause this company every two years to lose a lot of money and we believe we’ve done that,” said NBCUniversal Chief Executive Steve Burke at an event in New York.
He added that NBC paid roughly the same price for the games in Sochi, Russia, in 2014, Rio de Janeiro in 2016, and the games in 2018 and 2020, as it spent for the games in the past, which should reap a profit for the network as the value of the Olympic broadcasts increases.
“Over time, as these properties become more and more valuable in a world that is increasingly fragmented, and over time as you get media inflation, we think we are going to make money on these games,” Burke said.
He added the NBC is on track to generate $100 million more in ad revenue than the Beijing Olympics in 2008. But executives said on Wednesday they could not guarantee the network would make money this year from the Olympics and at least one analyst, Miller Tabak’s David Joyce, estimates it could stand to lose between $100 million and $200 million.
NBC is expecting more than 200 million people to tune in to the London Olympics broadcasts, resulting in it being one of the top five most watched events of all time, said NBC’s president of research and development, Alan Wurtzel.
But the London games will not beat Beijing’s ratings because of a few factors, including how the time difference in London does not allow for live prime time events in the U.S., said NBC Sports Chairman Mark Lazarus. About 214 million viewers in 2008 tuned into the Beijing games, according to Nielsen.
“I would love to match those numbers but I think that’s an unlikely scenario,” Lazarus said.
Lazarus said that it was too early to say whether the network would make money televising the Summer Olympics in London next month, but that advertising sales were currently “very strong” for the TV broadcasts.
Online broadcasts of the Beijing events in 2008 were streamed on the Internet more than 53 million times, and NBC is expecting to beat that figure this year, said Wurtzel, the president of research.
“There has to be more (this year) because there’s more content,” he said.
NBC is touting its Olympics coverage as carrying more live broadcasts than ever before–up to 3,500 hours on the Internet with as many as 40 feeds at one time. But for millions of households in the United States that do not pay for a cable subscription, watching a live broadcast of the summer games in London will not be possible.
Only customers with subscriptions to a cable, satellite or a TV service such as Verizon’s FiOs can log on to watch the live Internet broadcasts.
Watching television over the Internet on mobile devices or computers through a cable provider is an industry effort known as “TV Everywhere” that analysts say is intended to stop consumers from cutting the cord in favor of cheaper online services such as Netflix or streaming on Amazon.com.
Just under 60 million people in the United States pay for cable, according to SNL Kagan estimates, while 10.7 million homes in the U.S. watch TV but do not subscribe to cable, according to research firm MagnaGlobal. It’s this group – the people who may watch TV using a rabbit ear antenna or through other means besides cable – who will be shut out from NBC’s live streams.
Consumers without cable subscriptions can still tune in to the taped broadcasts every night on NBC or watch highlights on NBC’s website, the company said. But highlights from the most popular Olympic sports that make up more than 90 percent of NBC’s prime time broadcasts, such as swimming, gymnastics, beach volleyball, diving, and track and field, will only be online after the prime time broadcasts air on the West Coast.
(Reporting By Liana B. Baker- editing by M.D. Golan)