NBC Will Lose $250 Million on Winter Games

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 downward 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,” Sherin said. While a late flurry of activity has NBC anticipating national ad sales to add up to between $650 million and $700 million, Sherin cautioned that the recent boost in sponsor commitments will 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 will 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 Vancouver, which kicks 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 09, 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.

On the broadcast side of the ledger, which includes the NBC flagship network, local television stations and Spanish-language channel Telemundo, Q4 revenue came in at $1.6 billion, down 2 percent from the year-ago period.

As with cable, scatter was a boon to the broadcast business in the last three months of 2009. “Pricing on scatter for the broadcast network was up low double digits in the fourth quarter, and the outlook for the first quarter is up over 20 percent,” Sherin said.

GE has little to say about its deal to sell a controlling stake of NBCU to cable giant Comcast, a transaction that is expected to face intense scrutiny from federal regulators. “We are working jointly on preparing our regulatory filing and our other notices with the Department of Justice and the FDC to get that under way,” Sherin said.

Sherin also glossed over last week’s resolution of the Jay Leno-Conan O’Brien late-night soap opera. “Everyone is aware of our decision to move Leno back to the Tonight Show and to reset the 10 p.m. lineup after the Olympics.” Sherin said. “I am not sure I could report more than has been written on this subject.”

Shares of GE on Monday were up 1 percent to $16.27 in late-morning trading.