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Billion-dollar Olympic postponement presents short-term headaches for NBC

Comcast chairman Brian Roberts, before the postponement, said the company could still break even without the Olympics this year.

Image: PA Wire

THE POSTPONEMENT OF the 2020 Olympics delivers a short-term blow to American broadcasting giant NBC but the network is unlikely to suffer lasting damage from the bombshell decision, analysts say.

The global coronavirus pandemic forced the International Olympic Committee and Japanese government to call off the 24 July – 9 August Games on Tuesday, the first peacetime postponement in the Olympics’ 124-year history.

While the decision was welcomed by increasingly anxious athletes and sports federations who had lobbied for a postponement, it handed a giant headache to the IOC’s long-term broadcast partners NBC.

NBC, which has aired the Olympics since 1988, paid the IOC a gargantuan $7.75 (€7.04) billion for broadcast rights to the Olympics in 2014, a deal which runs through to the conclusion of the 2032 Summer Games.

The Summer and Winter Olympics coverage are cornerstones of NBC’s sports content strategy, delivering a money-spinning, blockbuster event for the network every two years.

Patrick Crakes, a media consultant and former Fox Sports executive, says retooling preparations to cover the Tokyo Olympics in a year’s time are difficult but not insurmountable.

“I can’t think of a bigger organisational mess,” Crakes told AFP. “But on the upside I think they’ll figure it out.

“It’s just such a massive undertaking. The Olympics are a strategic investment for Comcast/NBC Universal. The entire organisation is oriented every two years towards producing, promoting and executing an audiovisual telecast for the Olympics. Now you’ve got to redo everything.

“All that infrastructure stuff — the support, the crews, the teams both onsite and in the United States — you’ve got to redo all that. Usually you get a couple of years to do all that. Now you’ve got to redo it in 12 months.

“So they’re going to incur costs with that. Not everything’s going to be available like it was, there will be some kind of new problem, so they’ll have to juggle things.”

Brian Roberts, the chairman and chief executive of NBC Universal’s parent company Comcast, said before the postponement the company would be able to cope if the Olympics did not take place in 2020.

“There should be no losses should there not be an Olympics. It just wouldn’t be a profit this year,” Roberts told a conference in San Francisco on March 3.

NBC Universal banked $250 (€227) million in profit from its Rio Olympics coverage after generating $1.2 (€1.09) billion in advertising sales. The company had already sold $1.25 (€1.13) billion worth of commercials for the 2020 Games.

The company was also banking on the Olympics to drive enthusiasm for its new streaming service, Peacock, due to be launched in the United States on 15 July.

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“NBC is losing that promotional window for Peacock and also for its new fall season programming,” Jon Swallen, chief research officer for Kantar Media, told the Los Angeles Times.

“It’s a blow in the short term because that July-through-August period is typically soft for advertising. Every four years when the Summer Olympics come around, it’s a huge windfall for NBCU.”

Crakes, though, believes any losses will be recovered in the long term.

“The distributors, NBC, the Olympics — they are all married together in a three-way value chain that is long term,” he said.

“While everyone’s got to look out for themselves they have a real serious incentive to cooperate and try and figure out how to do the best and make everybody whole in the short term.

“Because they’re going to redo the Olympics next year. They’re still going to be there…so they’re going to get hurt by this, but I think they’ll find a way to claw back a lot of this somehow. Not all of it. But they’ll claw it back.”

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