HRTS: NBC Expects Profit on Winter Olympics, Will Stream Most Events Live
After losing money in Vancouver four years ago and facing criticism for not airing the games in real time, execs expect better results this time around.
NBC expects to make a profit from its broadcast of the Winter Olympics in Sochi, Russia, in February – unlike the Olympic Games in Vancouver four years ago on which it suffered a loss -- and doesn’t expect the kind of criticism it got the during the last Games from viewers who demanded everything be presented as it happened.
“There were a group of people who criticized us, called us names and threatened our families,” said NBC Sports Group chairman Mark Lazarus during an HRTS panel on TV sports Tuesday in Beverly Hills, “but that comes with the territory.”
Lazarus pointed out that during the 2012 London Games, about 30 million people a night tuned in during primetime even though most already knew the outcome of the contests. “Those are the folks that really count,” said Lazarus, “because you don’t aggregate that many people unless they want to be watching.”
For Sochi, Lazarus said, NBC will stream almost everything live on one of their platforms – the network, cable channels or online – to satisfy the “pure sports fan.”
Many viewers watch, he suggested, not just for the sport. “The Olympics aren’t really sports,” said Lazarus. “They are nationalism. They are pop culture. They are cheering for your country … and getting involved in things you don’t necessarily do other than once every four years.”
He said NBC caters to that audience by serving up stories about the athletes that are “packaged and curated stories that make you care about athletes you have never heard of. It's about making you cry when you see that piece so you’re cheering for that person, caring about someone you don’t know and may never hear from again.”
Lazarus has been chairman of NBC Sports only since May 2011, but he acknowledged that the Vancouver Games lost money for NBC. “It was not as successful as hoped,” said Lazarus. “So why [air the Sochi games]? The deal we struck is a good deal for us, and our ability to monetize it through the pay TV world and advertising is going to make it successful.
“We don’t know how it will turn out, but our expectation is that it will be better than the models we made,” added Lazarus. “We are a disciplined company. We wouldn’t have made the bid if we didn’t think it was going to be good for our shareholders.”
Lazarus appeared on a panel looking into “Sports on TV: The Drive for Live,” along with Mandalay Entertainment chairman Peter Guber (who is also a sports team owner), Time Warner Cable president, sports, news & local programming David Rone and Fox Sports president Eric Shanks. The panel was moderated by Sage Steele, an ESPN commentator and co-host of Sports Center.
Rone was asked about the $8.5 billion 25-year deal that Time Warner Cable has made with the Los Angeles Dodgers to create another new regional sports network. Guber was pulled into the conversation as a part owner of the Dodgers, who were bought for a record $2 billion by Guggenheim Partners (which also owns The Hollywood Reporter).
“They saw an opportunity not only to purchase a professional baseball team,” said Rone. “They saw a huge media opportunity at its core. From that they decided they were going to start their own network. Then they decided to talk to those of us in the industry who might be a good facilitator in making that happen.”
Rone said TWC had only recently created a sports network around the Los Angeles Lakers and other teams, so they had the experience, infrastructure and team in place to handle the new Dodger regional sports networks sales and consult on the programming and other aspects.
“We’re doing a lot of things around the Dodgers and hoping the passion around the Dodgers, the Dodgers brand, is going to carry that home and make people demand they need the Dodgers.”
That kind of passion is expected to be necessary to convince other cable and satellite distributors to carry the new network, which may cost subscribers as much as $5 in additional monthly fees.
Lazarus pointed out that that is the risk. “If it's not indispensable to their customers,” he said, “then the math doesn’t pay out for them in a way that is good for the bottom line and then there are going to be different discussions.”
Guber, who is also a co-owner of the Golden State Warriors and an owner of minor league baseball teams, said the rising sports rights costs and interest is fueled by the focus on live TV – the one thing people watch as it happens, including the commercials.
“That is a vital element out in the world,” said Guber, adding that “live events … have a unique aspect.”
“It’s the risk we all take as programmers,” said Rone. “We understand in today’s marketplace, live sports programming is some of the most popular and most watched and must be watched live. It is the last vestige of must-see programing.”
Shanks said they looked at the Dodger deal but in the end had to pass it up. “A lot of times spreadsheets can only get us so far,” said Shanks. “Then you have to make the bet if you believe in the content.”
Shanks said diversifying is the key so that your company and network are not held hostage to any one team or show. “As much as we wanted to have the Dodgers,” said Shanks, “as much as we loved having the Dodgers, we have a diversified portfolio and we didn’t feel at that particular point our business couldn’t go on without that one particular thing.”
Guber agreed that timing is crucial in these decisions. He recalled what happened when he first became an owner of the NBA team in the Bay Area.
Guber said in 2010 when they made the deal with Comcast to license broadcast rights, at first “we were so thrilled with the price. It was fantastic. But if we had waited a year and a half later, we would have done eminently better, much, much better. … That’s the key. It’s not like it stays static.”