Why NBC Will Charge Dearly for Beijing Olympics Ads

Network to Air Big Events Live in Prime Time, Stream 1,000 Hours Online

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NEW YORK (AdAge.com) -- For the Beijing Olympics in 2008, you can travel 6,000 miles to see the games live, or you can just turn to NBC. NBC Universal -- about to begin a new round of negotiations
Photo: AP

A technician works on a sign in Beijing's Olympics construction zone.

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with advertisers for the 2008 Summer Games -- will offer the first real-time coverage of the games, streaming up to 1,000 hours online.

Live prime time
In addition, NBC learned last week that after five years of talks, it has persuaded the International Olympics Committee to schedule two of the most popular sports -- gymnastics and swimming -- at a time that will allow the network to broadcast them live in prime time in the U.S. Events that begin at 10 a.m. in Beijing can be covered at 10 p.m. in prime time.

Dick Ebersol, NBC Universal Sports & Olympics chairman, revealed news about its digital plans exclusively to Advertising Age, saying: "We're not prepared to make the hard announcement, but we'll be in a position to live-stream between 800 and 1,000 hours of coverage in addition to 800 hours on cable and 200 hours on the network."

Streaming logistics
NBC Universal has not decided which distribution streams to use; NBCOlympics.com is where the network typically locates its online Olympic highlights packages. NBC Universal might work with "others outside the family," potentially a rival media company, to stream certain events, Mr. Ebersol said. No decision has been made about whether the streams would be largely ad-supported or subscription-based.

NBC is banking on a ratings uptick of 20% during live prime-time coverage of the games vs. nights when taped programming is aired. The last Summer Olympics that aired live was the 1996 games in Atlanta, which drew a 14.5 rating and 34 share. The 2004 games in Athens, by comparison, drew a 7 rating and a 20 share.

Many inside and out of the broadcast network were disappointed with the Winter Games in Turin earlier this year. Viewers eschewed taped coverage of hyped athletes after they learned results via the web. Fox counterscheduled its megahit "American Idol," which also bit into NBC's ratings.

NBC eye bigger premiums
NBC hopes advertisers will pony up bigger premiums if it airs certain events live -- swimming and gymnastics make up 70% of its coverage. Live sports have rapidly become the most sought-after properties around, since many see them as DVR-proof. Live sports also are more likely to keep people in their seats during ad breaks and attract engaged audiences.

The Beijing Olympics has already attracted major interest from international sponsors eager to capitalize on the first games to be held in China, viewing them as a gateway to a new consumer market. Blue-chip Olympic sponsorship packages cost between $80 million and $100 million, but some advertisers are waiting to see how NBC prices the smaller packages and what exclusivities big guys such as Coca-Cola, General Motors and Visa get. Some are hoping for smaller packages at around $5 million to $10 million.

NBC, which paid $3.5 billion for Olympic coverage rights until 2012, will also be able to count on live coverage in 2010 when Vancouver, British Columbia, hosts the Winter Games.

Slowing the ratings slide
Chris Allen, VP-associate director of national broadcast with GSD&M, who counts AT&T among his clients, said there is likely to be a premium paid for NBC's live prime-time coverage, but said further ratings erosion will be hard to avoid. "I do think they'll have a hard time slowing the ratings slide because of the overall time delay and the fragmentation of audiences to the other platforms that are out there."

But he is interested in how NBC Universal has planned for platforms other than the web and for coverage outside of the games. " I would hope they continue to focus on the human element and show Americans what China is all about."
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