Despite increasing demand from advertisers, NBC expects to lose a quarter of a billion dollars with its presentation of the 2010 Winter Olympics.
General Electric vice chairman and chief financial officer Keith Sherin on Friday told investors that NBC anticipates "a loss of somewhere around $250 million on the Olympics," revising the $200 million hit GE chairman and CEO Jeffrey Immelt predicted in mid-December.
Ad dollars have begun pouring in over the last few weeks, Sherin said. "We are seeing pretty good demand for the Olympics. The advertising market is picking up," he said. While a late flurry of activity has NBC anticipating national ad sales will add up to between $650 million and $700 million, Sherin cautioned that the recent boost in sponsor commitments would not be enough to offset the $820 million rights fee and the costs associated with producing the two-week event.
While NBC acknowledged that it would take a loss on the games, the network believes that ratings will have nothing to do with the shortfall. Media buyers said the network has set a 14.0 prime-time ratings guarantee for the Vancouver Games, which kick off on Friday, Feb. 12. The Peacock averaged a 12.2 rating during the 2006 Torino Games, per Nielsen.
In the fourth quarter of 2009, GE's NBC Universal unit posted a profit of $602 million, down 30 percent from the year-ago period ($865 million). Revenue slipped 3.7 percent to $4.27 billion.
Sherin said the declines could be attributed to the higher rights fees NBC paid for its Sunday Night Football package, as well as disappointing DVD sales at Universal Pictures.
NBCU's cable TV portfolio continued to shine in Q4 2009, as the unit boosted revenue by 8 percent to $1.3 billion, thanks to a strong showing by general-entertainment nets USA Network, Syfy, Bravo and Oxygen. The latter three channels individually lifted profit 20 percent in the quarter, per Sherin.
Ratings momentum and a stronger scatter market helped drive the cable nets. Sherin said Q4 CPMs were "up over 30 percent [from upfront pricing]," adding that the networks continue to command similar premiums in the current quarter.
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