Laughing All the Way to the Bank: Rio Olympics Make NBC $250 Million Richer
While the ratings for the 2016 Summer Olympics didn't quite measure up to NBC's early projections, the Peacock still managed to strut away from Rio with a tidy profit of over a quarter-billion dollars.
Speaking Wednesday at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference, NBC Universal CEO Steve Burke characterized the Olympics as a "tremendous success," adding that the company "made over $250 million in Rio," thanks to a 20% increase in ad sales volume compared to what it took in during the London Games.
The Rio cash surplus more than doubled the $120 million NBC pocketed four years ago in London. Mr. Burke noted that the profit marked a stark contrast versus the NBC-produced Olympics of yesteryear, when the network would lose as much as $200 million on the 17-day event.
The NBC chief acknowledged that the network had to make advertisers whole over the course of the Rio Games -- when streaming and cable were blended with NBC's linear primetime deliveries, the Olympics averaged 26 million viewers and a 14.9 household rating, down 15% compared to London and 17% shy of its guaranteed 18.0 rating -- before adding that clients he's spoken to say they "can't wait to come back in Korea and Japan for the next two Olympics."
"If you're an advertiser who has a big brand or who wants to change consumer perception, those 17 days of the Olympics are almost invaluable," Mr. Burke said. "You almost can't put a price tag on them." (Of course, NBC's ad sales team did put a price on its Olympics inventory; according to buyers, the going rate for a 30-second unit in primetime averaged out at around $1 million a pop, although some clients paid more or less depending on their overall commitment.)
Mr. Burke and his colleagues at NBC parent company Comcast are likely to provide further information about NBC's profitable Olympics run on Tuesday, Oct. 25, when the cable operator reports its third quarter earnings. NBC in May 2014 paid $7.65 billion to secure the U.S. media rights to the Olympics through 2032.
Circling back to the make-goods issue, Mr. Burke reiterated that all advertisers cashed in on ADUs -- audience deficiency units -- within the Games themselves. NBC had sufficient excess inventory to do away with outstanding liabilities hanging over from the 2015-16 broadcast season, he added.
Mr. Burke said that demand for time in programs such as "The Tonight Show with Jimmy Fallon," "Sunday Night Football" and NBC's new five-game "Thursday Night Football" package helped the network secure 13% increases in the cost per thousand impressions during this summer's 2016-17 upfront bazaar. He also noted that the robust TV market has in part been galvanized by advertisers who have stopped budgeting digital at the expense of TV.
"I think 12 months or 24 months ago, people were saying, 'Let's mandate that we take a percentage of our advertising budget and spend it on digital,'" he said. "I think the pendulum swing back a little bit this year. … People are now getting more thoughtful as to what they spend to reach a mass audience, and what they spend to reach a targeted audience."
NBC's fall season unofficially began last Thursday night with its eleventh annual presentation of the NFL Kickoff game. The 35-week campaign starts in earnest on Monday, Sept. 19, when the network begins the eleventh cycle of "The Voice" followed by back-to-back preview episodes of the new Ted Danson-Kristen Bell comedy "The Good Place." (The show moves into its regular Thursday 8:30 p.m. time slot on Sept. 22, where it will lead out of the sophomore comedy "Superstore.")
Having reserved the majority of its new content for midseason, NBC this fall will premiere just three freshman series. In addition to the aforementioned "The Good Place," the network will take the wraps off the sweeping family drama "This Is Us" on Tuesday, Sept. 20, where it will hold down the 10 p.m. slot for three weeks before moving back an hour to make way for "Chicago Fire." The last of NBC's new fall series arrives Oct. 3, when the time-travel strip "Timeless" moves into the plum Monday 10 p.m. slot, leading out of "The Voice."