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The Tokyo Olympics, set to begin July 23, are six months away. But with COVID-19 cases surging in Japan and around the world and vaccine supplies falling short, the Olympic torch is in danger of going unlit.
While the Games haven’t been canceled, reports suggest the Japanese government and public are uncomfortable with where things stand. The torch relay is slated to start in northern Japan on March 25, and a decision should come before that date.
That uncertainty gives heartburn to media executives who had banked on the Games — which have already been delayed a year — marking a return to normal for the sports TV business. Cancellation would mean billions of dollars flushed away, as the spend from Tokyo organizers, Olympic committees, and TV and media partners would be for naught.
For Comcast’s NBCUniversal, it would also mean a major missed opportunity. The conglomerate was looking to the Olympics to turbocharge its Peacock streaming service. Last year’s pause forced the company to circle back to its advertising partners for revised terms, a source at a competing network notes. (An NBC Olympics rep says, “Our preparations continue toward presenting the Tokyo Olympics to the American audience this summer.”)
NBCU said in March that it had booked more than $1.25 billion in national advertising commitments. While NBC is said to have been able to rework many of its deals, other networks with live sports were aggressive in poaching high-profile advertisers that had planned to debut campaigns during the Olympics.
“We anticipate these kinds of things … so that we’re protected there, and we also have insurance for any expenses we make,” Comcast CEO Brian Roberts told a Morgan Stanley conference in March, saying there “should be no losses,” but adding that “there wouldn’t be a profit” either.
Indeed, both Comcast and Discovery Inc. — which has European rights and planned to use the Games to promote its Discovery+ streaming service in some Euro markets — say they are fully insured against their Olympics expenses. “There is protection, fortunately, unlike in the NFL and some other places where you pay hell or high water,” says Moody’s senior vp Neil Begley.
The issue for both companies is what could have been: billions of dollars in advertising and unmatched promotion for two streaming services desperately seeking user growth. Though “Discovery will be relatively fine — with insurance and the fact that they lose money on the summer games — they will be hurt by the lack of promotion for Discovery+ in certain European markets,” says MoffettNathanson analyst Michael Nathanson. “For Comcast, they lose that promotional clout, too, and presold advertising that could return to other non-NBC networks.”
NBCUniversal has been active in seeking out other options for Peacock. On Jan. 25, it unveiled a $1 billion-plus deal to bring all of the WWE’s live pay-per-view events, including WrestleMania, to Peacock’s paid tiers. And the company plans to shut down its NBCSN cable channel and shift some of its live sports, which include the NHL, NASCAR and Premier League soccer, to Peacock.
“The financial savings for them is not immaterial,” Begley says of the money Comcast would save by not airing the Games. “But you are not going to find something that will replace the Olympics on Peacock, particularly as people are disengaging from traditional TV.”
In Japan, medical experts and opposition party political leaders have been hammering Prime Minister Yoshihide Suga with the argument that a deadly pandemic is not the time to welcome into the country thousands of athletes from all corners of the globe.
More moderate critics have argued that the only way forward would be to hold the Games in an effective bubble without crowds, much like the NBA and NHL did to complete their 2019-20 seasons (albeit a vastly larger bubble). A bubble Olympics would protect television rights for broadcasters like NBC and Discovery, but it would be devastating for Japan.
According to a recent study by Japan’s Kansai University, holding the Tokyo Olympics and Paralympics without spectators would cost the country an economic loss of $23 billion in forgone consumer and business spending and other economic stimulus effects.
Haruo Ozaki, chairman of Tokyo Medical Association, told local media Jan. 22, “They must give up the idea of having the festivity of the century by inviting people from various countries.”
This story appeared in the Jan. 27 issue of The Hollywood Reporter magazine. Click here to subscribe.
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