Lazarus: NBC Broke Even on Olympics

Having tallied up all the advertising dollars that poured into its coffers during the 2012 London Summer Olympics, NBC on Thursday announced it broke even on the Games. Speaking at the Bloomberg Sports Business Summit in New York, Mark Lazarus, chairman of NBC Sports Group, said the Olympic credits and debits all balanced out rather nicely. “From a financial point of view the Games, on a discrete basis, were a break-even proposition for us,” Lazarus said, adding that the result was “far healthier…than we had planned on going in.” NBC approached the 17-day extravaganza anticipating a $200 million net loss. Once NBC freed up the inventory it had salted away for make-goods, fears of ending up in the red evaporated. All told, the network booked north of $1 billion in ad inventory, atop which it sprinkled nearly $300 million in affiliate and digital revenue. Rights fees and production costs ate up approximately $1.28 billion. Lazarus suggested that it may be too soon to assess the long-term impact of the Summer Games, which drew 219.4 million total viewers, making it the most-watched event in U.S. television history. “In terms of the enterprise value to NBCUniversal, that discrete break-even does not take into account the halo effect and what it did for the ratings (short-term and ongoing) for our news division, for our late night group, for our discussions with MVPDs [read: operators] and for our affiliate groups,” Lazarus said. “On the whole the Olympics is a very good business for us.” NBC used the Olympics as a platform to preview two fall comedies, and as expected, the broadcasts earned a good deal of sampling. The commercial-free launch of the Matthew Perry vehicle Go On delivered 16.1 million viewers and a 5.6 rating in the 18-to-49 demo on August 8, while the Animal Practice pilot scared up 12.8 million viewers and a 4.1 in the demo. As NBC gets set to premiere four new comedies and the dramas Revolution and Chicago Fire, the network already got a taste of some fall GRPs. Despite competition from Bill Clinton and the Democratic National Convention, last night’s NFL Kickoff game delivered 23.9 million total viewers and a 9.7 in the demo, making it the third most-watched season opener since NBC began airing prime time football. Sunday Night Football is now the highest-rated program on TV. Last season, NBC’s prime time package averaged 20.7 million viewers and an 8.0 in the dollar demo. That sort of reach doesn’t come cheap. Per SQAD data, a 30-second spot during the 2011 edition of SNF cost a cool $470,000. (Buyers said the unit cost was as high as $500,000 a pop depending on placement.) Shortly after Lazarus made his remarks, NFL commissioner Roger Goodell took the stage to speak on a number of issues, including the impasse between the league and the referees union and the status of the Time Warner Cable-NFL Network freeze-out. “We have significant differences, both from a philosophical as well as an economic standpoint,” Goodell said, referring to the labor dispute between the NFL and its officiating crews. “The average official is making around $150,000 under the old agreement. We offered an increase to $200,000 on average, [which] we think is a very fair offer.” Goodell added that both parties are “probably $50 million to $70 million [apart] on the terms of a new five- to seven-year deal.” The commissioner said he believes the replacement officials “did a more than adequate job last night,” adding that the NFL has proven it can train subs and get them up to league standards within three months. “These officials will only get better as time goes on,” he said. “The game is not going to stop.” As for NFL Network’s inability to negotiate a carriage deal with Time Warner Cable, Goodell allowed that he is “a little frustrated by it.” Noting that the channel is distributed by every other major cable and satellite operator, Goodell said the NFL will not undercut its established market rate—95 cents per subscriber per month, per SNL Kagan estimates. “We’ve made it clear to Time Warner that we’ll do a market-rate deal and we’ll be as patient as we need to be,” he said. “We think it’s in the best interest of their customers [to carry NFL Network], but that’s their decision, ultimately.” Goodell wrapped his Q&A session with Bloomberg’s Scott Soshnick by addressing the eternal Los Angeles question. Expansion is not on the front burner, but should that change any time soon, a return to the No. 2 DMA hinges on a bold and shiny new stadium. “It’s going to have to be able to provide the kind of experience that our fans and partners will want to be a part of and provide the kind of revenues that will make that team successful,” Goodell said. “The last thing we want to do is come back to Los Angeles and fail.”

Convergent TV

Lazarus: NBC Broke Even on Olympics

Long-term impact of London Games yet to be determined

Anthony Crupi

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Anthony Crupi