Although NBC will lose a small fortune on its coverage of the Olympics, the network wants to retain the rights to the games. That’s because airing the Olympics gives the broadcaster a ratings boost and provides marketing opportunities that can generate revenue beyond advertising dollars. It’s all about the eyeballs.
General Electric, NBC’s owner, has long used the Olympics to boost its business in the host countries, as it did in China as a result of the 2008 Summer Games.
So when it’s time to bid on the U.S. rights to televise the 2014 and 2016 Olympics, NBC will have competition. News Corp.’s FOX and Walt Disney’s ESPN plan to bid for the rights, challenging NBC. CBS and Time Warner also are considering a joint bid for the 2014 Winter Games in Sochi, Russia, and the 2016 Olympics in Rio de Janeiro.
The International Olympic Committee (IOC) has delayed bidding for the 2014 and 2016 events in hopes the advertising market improves. NBC has held the rights to the Olympics since 2000.
Offers for the Sochi and Rio games probably won’t exceed the $2 billion NBC paid for this month’s Winter Games and the 2012 Summer Games in London. But, the attraction is clear: ESPN’S bid will involve more than the sports network. Sister company ABC would benefit, as well as the parent, Walt Disney. Disney could use the Olympics to promote its global theme park business.
Likewise, Comcast, the Philadelphia-based cable company acquiring control of NBC Universal through a venture with GE, could use the games to grow its digital distribution platforms. However, the IOC will likely take bids for the games before the NBC-Comcast transaction is either completed or rejected by the government. So, Comcast is unlikely to influence NBC in the next round of bidding.