Olympics 2012: Entertainment Companies Feel the Summer Games Effect
Executives from the likes of Time Warner, Discovery and ITV comment on how the London events affect them.
This earnings season, NBCUniversal CEO Steve Burke lauded the strong ratings and advertising performance of the Summer Olympics for his company, saying that "London is going to be right around break-even."
Other industry top executives also mentioned the London 2012 Summer Games on their earnings calls, but typically as a short-term disruptor for their businesses or a factor delayed ad spending.
Here is a look at some of the companies that mentioned an Olympic impact:
Executives from movie theater group Cinemark Holdings were quizzed about box office trends as of early August on their earnings conference call. "Overall, the U.S. industry is, as we know, slightly off for the quarter," CFO Robert Copple said. "Looking at box office reports, [there are] a number of issues there, and [the] Olympics definitely are impacting it."
"Clearly, last year was a record quarter overall in the U.S. and then with the Olympics and everything else impacting us, this quarter clearly is showing the heat a little bit," he said. In international markets, "I also think they'll face similar issues throughout the quarter...Olympics is facing them as well as just overall product, and so I wouldn't necessarily see it being that different," he added.
"The third quarter does present some hurdles with the Olympics and limited premiere hours on Discovery until after Shark Week in August," Discovery Communications CEO David Zaslav mentioned on his company's earnings call. "But with a strong upfront under our belts, a scatter market that remains relatively healthy and a balanced portfolio of existing and emerging brands, we remain confident that we can deliver sustained advertising growth moving forward."
Asked if there was any way to estimate the Olympics impact, he said: "It's hard to tell. The Olympics have come out very strong. We stayed a little bit flexible. At this point, we're holding back a number of our premieres because we just feel that the Olympics right now has a significant amount of cultural momentum."
He added: "When we come back after Shark Week, if our content is a little bit stronger than you'll also see on the ratings side, you'll see some more upside."
Questioned if the Olympics effect was as visible outside the U.S. for Discovery, which has expanded its revenue from abroad, CFO Andrew Warren said: "It really doesn't matter over there as much."
Time Warner CFO John Martin mentioned the Summer Games in his prepared remarks during the Hollywood conglomerate's earnings call.
"In the third quarter, scatter [TV advertising] demand is a little slow right now, and that's due to money being diverted to the Summer Olympics," he said. But on the positive side, "we also expect growth to be stronger in the fourth quarter as we'll benefit from additional NBA games on TNT, the 2012 presidential election, expectations of improved overall ratings at our other networks in general, some easier comparisons, and the expectation of a much stronger scatter market once the Olympics are over."
Questioned about the size of the Olympics impact, he responded in a way similar to Discovery. "It's really hard, if not impossible, to exactly tell what the impact of the Olympics is," he said. "Although based on us being in the market, we will tell you that we have every reason to believe that it's been quite material in the third quarter. And we would anticipate that those dollars would be redirected in the fourth quarter. And right now, our view, which is optimistic but we think realistic, is that fourth quarter scatter could be quite strong."
U.K. commercial broadcaster ITV has been struggling in the ratings since public broadcaster BBC kicked off its Summer Games coverage. Digital network BBC3 on Sunday for the first time ever outperformed ITV1 in terms of all-day viewer share thanks to the Olympics, with ITV1 having its worst-ever single day ratings performance.
In a conference call tied to the company's latest financial report ahead of the Olympics, ITV CEO Adam Crozier said that TV ad revenue in July declined 10 percent, and August was trending down around 11 percent as advertisers focused on spending money around the Olympics.
ITV management said though that ad revenue would be flat across the first nine months of the year and reiterated its prediction that the company would outperform a roughly flat ad market for the full year as long as the post-Olympics trends pick up as hoped.
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