NBC Bullish on Olympics’ Potential for Record-Setting Revenue
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NBCUniversal remains bullish on the upcoming Tokyo Olympics, as the company’s chief executive today predicted that the 17-day event could very well be the biggest money-maker in the history of the Games.
“I think, depending on how ratings are, it could be our most profitable Olympics in the history of the company,” NBCU CEO Jeff Shell said during an appearance at the virtual Credit Suisse Investor Conference. While NBC regularly books more than $1 billion in Olympics ad sales, the right fees and production costs associated with putting on the Games make for some mighty tight margins. For example, the 2016 Summer Games in Rio de Janeiro gave NBC its best-ever Olympics ROI, earning a profit of $250 million on nearly $1.3 billion in TV and digital sales.
NBC’s ratings performance in Brazil ate into some of its pre-Games bookings, as the network’s average household rating over the course of the 2016 event came up short of the guarantees it made to advertisers. After having targeted an 18.0 household rating, NBC averaged a 15.3 in the metric across its TV and digital platforms. In order to fulfill its obligations to its clients, the network was quick to dish out Audience Deficiency Units, effectively erasing primetime dollars in programs that aired in the fall.
While Shell did not offer an update on NBC’s efforts to re-book the $1.25 billion in ad sales commitments it had brokered before the Tokyo Games were postponed in March 2020, he said the Olympics’ exceptional deliveries made it a must-buy. “If you want reach, there’s nothing better than the Olympics. You have 17 days where you dominate every night,” Shell said.
Indeed, even when the Games aren’t firing on all cylinders, they still put up numbers that can’t be matched anywhere else on the dial. When digital impressions are factored in with the vanilla TV data, NBC’s coverage of the Rio Games averaged 26.6 million viewers per night. By comparison, the current roster of summer broadcast shows is averaging just slightly more than one-tenth of that audience (2.75 million viewers).
As much as TV usage is contracting—in the first quarter of 2021, broadcast commercial impressions among the adults 18-49 demo dropped 14% versus the year-ago period—the Olympics can generate a summer crowd unlike any other. (The last time the Big Four nets notched a quarterly increase in the number of demographically-relevant viewers was in Q3 2016, or during the Rio Olympics.) To that end, Shell is confident that the long-delayed Tokyo Games will pay off for NBC’s advertisers.
“What generally drives our ratings is the strength of the U.S. team, and we’re really pretty optimistic about this. Simone Biles is just amazing, and for the first week of the Olympics she’s going to be on every night,” Shell said. “And then our swimming team is really strong, and our track and field team is really strong, so I think we’re pretty optimistic about both the ratings and the economics of the Olympics, and advertisers have embraced it.”
Shell downplayed the suggestion that on-site restrictions on foreign attendees would cast a long shadow over the Tokyo Games. “We’re going to have just domestic spectators at the Olympics, not international spectators, and I think every Olympics has an issue that people worry about coming into the Olympics,” Shell said. “I lived in London [in 2012], and everybody was worried about the traffic, and last time it was Zika, and you know, once the opening ceremony happens, everybody forgets all that and enjoys the 17 days. And I think this is going to be the same thing.”
Looking beyond Tokyo, Shell is enthused about what winter 2022 holds in store for NBC. “If you want to reach [consumers] in the first quarter next year and you’re not on NBC, good luck, because we’re gonna have a Super Bowl in Los Angeles right in the middle of the Winter Olympics,” Shell said. The NBCU chief went on to add that while the company traditionally has sold sports separately from the annual TV upfront bazaar, the sales team has booked units in this fall’s Sunday Night Football schedule and the upcoming Notre Dame football broadcasts.
Shell didn’t offer any specifics as to how NBCU fared on the pricing and dollar-volume front, saying only that the networks effectively had closed out a record sell-off. “It was the strongest upfront probably in the history of NBCUniversal,” Shell said. “I don’t have records [going] all the way back forever, but we saw results in this upfront far beyond what we thought we’d see.”
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