There were many reasons to believe that when NBC paid $7.75 billion in 2014 to secure the American media rights to the Olympics through 2032, it made a wise commercial decision.
As the Beijing Winter Olympics came to an end, it’s becoming more difficult to see them.
These Olympics were a disaster for the network; a buzz-free, hermetically-sealed event in an authoritarian country a half-time day’s zone away, where the enduring images will be Russian teenagers’ emotional meltdown after a doping-tainted figure skating competition and a bereft Mikaela Shiffrin sitting on a ski slope wondering what went wrong.
Many American athletes struggled, and the most successful of them all, freestyle skier Eileen Gu, played for China.
Viewers tuned out in startling numbers. Thereby, prompting NBC to wonder if it was just poor luck or if the brand of a once-unifying event for tens of millions of people has irrevocably damaged.
“Given the investment, they’ve got to be disappointed right now,” said Andrew Billings. He is the director of the sports communications program at the University of Alabama.
Executives at the network said they have no intentions to try to change or get out of the rights arrangement. Live sports are gaining in value and represent one of the few ways advertisers can gather large audiences to promote automobiles or beer. Given that, several analysts believe this is improbable as of the situation now. Gary Zenkel, President of NBC Olympics, is upbeat about future events in Paris, Italy, and Los Angeles.
Profit or Loss?
Beijing, like Tokyo last year, took place in an environment where the main goal was to stop COVID-19 from spreading. It meant no spectators or athletes’ families in the stands. There will be no odd stories about the host country and even fewer announcers; the majority of NBC’s team was based in a suburban Connecticut office building.
“Certainly one of the great supporting actors in every Olympics is the host city,” Zenkel said. “It’s the culture, the people, even the sponsor activations. People from all over the world come together and that is not (in Beijing) and there’s no way for us to try to translate something like that.”
On NBC, cable, or the Peacock streaming service, an average of 12.2 million people watched the Olympics in primetime through Tuesday. It is down 42% from the 2018 Winter Olympics in South Korea. According to Nielsen, the average for NBC alone was 10 million viewers, a 47 percent decrease.
Even with the average inflated by showing immediately following the Super Bowl, which drew in 24 million viewers.
NBC Sports chairman Pete Bevacqua said the ratings are in line with what the network informed advertisers when they were selling packages that included both linear and streaming coverage. NBC also has yet to reveal if the Beijing Olympics made a profit or a loss.
“Victim of all victims”
The figure skating competition was on Thursday. Russian Kamila Valieva performed despite a positive drug test and bungled away any hope of a medal. It was agonizing to watch.
On Twitter, one woman said that the Olympics were “over for me. My lasting impression will be fake snow against a backdrop of 87 nuclear reactors in a country with a despicable human rights record during a pandemic. And kids who can look forward to years of therapy.”
NBC’s Mike Tirico was struck by the picture of Valieva standing alone on the rink. She was afraid before her performance. He added on the broadcast, “The adults in the room left her alone. Portrayed by some this week as the villain, by others as the victim. She in fact is the victim of the villains.”
There has always been corruption in the Olympic bidding process. However, the Valieva affair has tainted the real competition, according to Billings.
“That’s even more damaging to the product,” he said.
“This feels like a particularly vulnerable moment for NBC,” said a source connected to the Olympics and television. The source requested anonymity due to ongoing business relationships.
Given how badly Beijing went, the person wouldn’t be surprised if someone at NBC was looking for ways to improve its arrangement with the International Olympic Committee. But said it was “highly unlikely” the network would try to get out of the deal entirely.
Low Water-Mark
The time zones for Paris and Italy in winter 2026 are still not ideal, with no live events in prime time in the United States on the horizon. In the summer of 2028, this will alter for Los Angeles.
Vancouver and Salt Lake City have expressed interest in hosting the 2030 Winter Olympics in North America. Next year, the IOC may name a host city. Last year, Brisbane, Australia, was the host city for Summer 2032.
Bevacqua and NBC recognize that rebuilding an Olympic brand that went down over the last six months would take time.
“I think we in many ways have to work internally with the IOC with the USOPC to rejuvenate the Games coming out of Tokyo and Beijing in preparation for Paris, Italy, and LA. That is going to be a strategic priority of ours,” Bevacqua said.
Even before the pandemic, NBC recognized the Tokyo and Beijing games would be the low point of the rights deal, according to John Ourand, a media writer at the Sports Business Journal.
“Things look particularly bleak now,” Ourand said. “It certainly is a low-water mark. But two of the next three Olympics are going to be blockbusters for NBC.”
Media world is transforming
The media world is transforming how entertainment is used, thanks to cord-cutting and changing watching habits as a result of streaming. One of the few surefire methods to encourage people to turn on their televisions is to show live sports. Rights payments are skyrocketing and viewership is plummeting. But few media organizations regret their investments, according to Neal Pilson. He is a former CBS Sports president who now operates a sports consulting firm.
NBC has secured complete media rights to games in 2028 and 2032 at 2014 rates.
“I don’t think they will look to get out of it,” said Rick Burton. He is a professor of sports management at Syracuse University and one-time chief marketing officer for the U.S. Olympic Committee. “It’s Park Avenue. It’s a showcase property that no one else has. They just have to make it more attractive for people who are moving away from TV.”
It means being able to monetize the various ways in which people consume Olympic content, particularly among the younger generation who are searching for something fascinating on their phones. Expect more attention devoted to Peacock as streaming becomes increasingly crucial; NBC has streamed 3.5 billion minutes from Beijing, compared to 2.2 billion from South Korea.
“We’re at a place now where you can open up an app on your phone or a connected TV and have a place where the Olympics are staring you down in all their glory,” Zenkel said. “There isn’t a piece of content that’s not discoverable.”
European games may not be ideal for prime-time television. But they will be ideal for those who prefer to watch sports on demand, according to NBC. More exclusive content could move to Peacock, which needs a premium subscription, according to the executives. Peacock, on the other hand, is likely to be a one-stop shop for all things Olympic.
“I wouldn’t run to say (the rights deal) is not working for NBC,” Pilson said. “On the contrary, I think it is and it will work better for them.”