Burke: NBC Will Break Even on London Games

Ad sales, ratings make Olympics a winner

Five days into its stewardship of the 2012 London Summer Olympics, NBC is now confident that it is in no danger of losing its shirt on the pricey event.

Speaking to investors during parent company Comcast’s second-quarter earnings call today, NBCUniversal CEO Steve Burke said the network is off to a “very, very successful start,” adding that it now appears that “London is going to be right around break-even,” given the extra $100 million in Olympic ad sales revenue NBC booked before the Games began.

NBCU approached the 2012 Games anticipating a net loss of as much as $200 million, given the $1.28 billion the company invested in rights fees and production expenses. But with nearly $260 million in affiliate and digital ad revenue sprinkled atop NBC’s $1 billion in national TV inventory, the numbers on opposing sides of the ledger should balance out.

The ratings are also a pleasant surprise. Because NBC interpreted the mega deliveries from the 2008 Beijing Olympics as something of a freak occurrence, the research department tempered its early estimates on London. “We budgeted closer to Athens [2004] than Beijing,” Burke said. “If you take the first five days of London … we projected to be down 20 percent versus Beijing and we’re actually up 9 percent. The reality is, we’re up 26 percent versus Athens and we’re about 30 percent higher than our estimate.”

The latest numbers suggest that viewer enthusiasm for the Olympics is in no danger of waning. Per Nielsen live-plus-same-day data, last night’s broadcast averaged 38.7 million total viewers, making it the most-watched first Tuesday of a non-U.S. Summer Games in history and marking a 14 percent improvement from the comparable night in Beijing (34 million).

While Tuesday night’s tape-delayed package faced stiff comps—four years ago, U.S. swimmer Michael Phelps broke the all-time gold medal record on Day 4—there were still plenty of high-water marks from which to choose. Viewers who managed to avoid spoilers watched Phelps claim his 19th career medal to become the most decorated Olympian in history, before witnessing the Fab Five from the U.S. Women’s Gymnastics squad take gold in the team final.

“We are way ahead of where we thought we would be,” Burke said. “Given the trends, we stand to make money on future Olympics, [although] obviously the economy plays a big role in that.”

NBCUniversal’s Q2 revenue dipped 0.8 percent to $5.5 billion, while operating cash flow came in at $982 million, down 15.4 percent from $1.16 billion in the year-ago period. 

Network television revenue slid 9.1 percent to $1.54 billion, down from $1.7 billion in the year-ago term. Comcast attributed the decline to a tough comp versus the revenue that came in via a Q2 2011 content licensing agreement with Netflix. The company did not break out ad sales figures for the broadcast business, although operating cash flow was up 2.76 percent to $196 million. 

The cable networks unit, which includes USA Network, Bravo, E!, MSNBC and CNBC, saw revenue increase 3.6 percent to $2.25 billion, on a 4.1 percent gain in ad sales revenue. Operating cash flow decreased 6.8 percent to $788 million, as a result of higher NBA and NHL programming and production costs and an expanded investment in original content.

In mid-afternoon trading today, shares of Comcast were up 3.47 percent to $33.70. Year to date, the company’s stock price is up 42.2 percent.

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