NBCUniversal CEO: Rio Olympics Profit Exceeded $250M
At an investor conference, Steve Burke touts Telemundo for recently beating Univision in primetime and says "OTT is happening ... but I think it's a pretty challenged business model."
Comcast's NBCUniversal made $250 million-plus on the Rio Summer Olympics despite lower ratings, NBCU CEO Steve Burke told an investor conference on Wednesday.
“We made over $250 million in Rio,” he said during a session at the Bank of America Merrill Lynch 2016 Media, Communications and Entertainment Conference in Beverly Hills, which was webcast. In comparison, the company, before being owned by Comcast, had lost as much as $200 million on past Games, Burke said. Advertising sales were up over 20 percent from London 2012, he said, also citing a "very good" long-term rights deal.
The company had previously said it expected to generate record profits from coverage of the Rio Olympics despite lower U.S. ratings than for the London Games four years ago. NBCUniversal had said it would top the $120 million profit from the London Olympics. A week into the Rio Games, it reported it had added $30 million to the massive $1.2 billion advertising revenue haul booked prior to the Olympics.
Burke confirmed that the company had make-goods for marketers during the Olympics, both for underperforming Summer Games guarantees and other previous ratings guarantees. That means overall the company came out of Rio with lower make-good liabilities, he said.
Asked how he views the lower audience trends since NBCUniversal paid $7.75 billion for Olympics rights from 2022 through 2032, Burke cited strong digital viewing trends and said the Rio audience was down by less than 10 percent when factoring in cable and streaming. Overall, he acknowledged that London marked the "high-water point" in primetime Olympics viewing, but added that he was optimistic about future Olympics, mentioning that advertisers were looking forward to returning. “We are not in any way concerned," Burke concluded.
He also told the conference on Wednesday that Telemundo has a "huge opportunity" as it was “essentially making no money" when Comcast bought NBCU, while Univision made about $1 billion a year. With Telemundo beating Univision in the adults 18-49 demo in primetime for the past seven weeks, Burke said there was “a “big monetization opportunity.” Univision also gets much higher retransmission fees, he said, meaning Telemundo also has more upside here. He concluded that over one to three years, "Telemundo should be a lot more profitable" if it keeps up the ratings momentum.
Burke also discussed his take on OTT services and NBCUniversal's interest in having its channels on them. “OTT sounds like a better business than in reality it is," he said. He added that the company wants to make at least the same amount in OTT deals as in traditional pay TV deals. "I think OTT is happening. ... But I think it's a pretty challenged business model, and I'd be surprised if it flies out of the gate with a big number," asserted Burke.
He argued that only few people who have a pay TV package with 200 channels would want to pay about $45 or more for just 25 channels.
The company just struck a long-term new agreement with AT&T, unveiled on Tuesday, that will keep the NBCUniversal portfolio of networks across all AT&T DirecTV services, including the upcoming streaming services DirecTV Now and DirecTV Preview, which are expected to be launched in the fourth quarter.
Burke also lauded the company's film business and said this year's operating cash flow for film will be down from the record 2015, but 2014-2016 should end up being the studio's three most profitable years ever so far. How well will the film unit do in 2017? The exec cited Fast & Furious and Fifty Shades sequels and various other films, saying that while the film business is always hit-driven and unpredictable, he was expecting a “very big 2017.”
Once again highlighting his team's focus on film franchises, Burke said when Comcast bought NBCU, the studio had one franchise, but that has grown to eight. "All of our franchises are still on the upswing," he added.
Burke on Wednesday also discussed the recently closed $3.8 billion acquisition of DreamWorks Animation, saying the company was bullish on animation, calling it "the best of the best."
“We think it’s a perfect deal for us,” he explained. “We paid a premium, but there are tremendous synergies.” Burke cited the benefit of doubling the company's number of annual animated releases to four after the deal, boosting the company's consumer products business, which has already been a focus, and plans to bring all of DreamWorks Animation characters to Universal theme parks.
The deal also is a “sign that we are increasingly bullish on our film business,” Burke said, lauding the company's film management team.