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NBC goes for gold in Sochi, aims for profitable Olympics

Volunteers pose for a photograph in the Olympic Rings ahead of the 2014 Sochi Winter Olympics, February 6, 2014. REUTERS/Issei Kato
Volunteers pose for a photograph in the Olympic Rings ahead of the 2014 Sochi Winter Olympics, February 6, 2014. REUTERS/Issei Kato

By Ronald Grover and Jennifer Saba

(Reuters) - When Olympic athletes line up to compete this week in Sochi, NBC executives will be going for the gold in another sport: turning a profit on the $775 million they paid for TV rights - a prize that has been stubbornly elusive in recent years.

Network executives insist profits are possible this time after NBCUniversal, a unit of Comcast Corp, broke even on its telecast of the 2010 Summer Olympics in London. The unit lost $223 million at the last winter games, in Vancouver, according to General Electric, which owned NBC at the time.

"We're comfortable that we will make a reasonable profit because we made a disciplined bet on the Olympics," Mark Lazarus, chairman of the NBC Sports Group, said in an interview.

It won't be easy. For U.S. viewers on the East Coast, Sochi is nine hours ahead, putting many games in the early hours for NBC's audience. Many viewers will have already gotten news of the results of some events online, and won't tune in unless its compelling TV, said Brad Adgate, senior vice president and research director for media firm Horizon Media.

The Winter Olympics are also typically less popular than the summer games, when more people watch swimming, gymnastics and track and field. This year, NBC is heading into Sochi without the help of one hopeful ratings generator, skiing champion Lindsey Vonn. The 29-year-old American had to pull out of Sochi games because of injuries.

"We're disappointed for her," Lazarus told a January 7 news conference on the same day Vonn announced her decision. "One or two athletes that are injured shouldn't alter the approach."

An average of 25 million people watched the games during prime time in 1998 from Nagano, Japan, which is 14 hours ahead of New York. When the games were held in Salt Lake City four years later, the audience jumped to nearly 32 million, according to Nielsen data.

Wringing a profit out of the Olympics this year will be a bit easier for NBC because it is paying less than $820 million it had to recoup at the 2010 Vancouver games, said Deana Myers, a senior analyst with industry research firm SNL Kagan.

NBC also has roughly 28 percent more TV ads to sell by airing 530 hours of programming, up from 436 in 2010, advertising research firm Kantar Media calculated. NBCUniversal is putting games on the NBC broadcast network and four cable channels, including MSNBC, USA Network and the cable sports channel NBCSN.

"I don't think they'll make tons of money on this, but it should be positive," Myers said. "They also have a much better ad market than they had in 2010."

A month before the games, NBC had already sold more than $800 million in ads, company executives said, an increase from the $750 million the network sold for the Vancouver games.

The TV operator is also selling ads for more than 1,000 hours of nearly wall-to-wall coverage it will stream on its online site NBCOlympics.com, more than double what it offered in Vancouver. Much of those ads are sold as a package to sponsors on NBC's TV properties, Lazarus said, but company executives say they have sold $50 million in ads for its digital properties.

NBCUniversal also believes it can keep the hefty costs of producing the TV shows down by handling some of the coverage through its new broadcasting center in Stamford, Connecticut, Lazarus adds.

The biggest boom for NBC, however, won't likely come from Sochi. The game's large audience will help promote NBC's prime time lineup, whose ratings have surged so far this year. And it should give a boost to Jimmy Fallon, as he takes over the "Tonight Show" from Jay Leno on February 17.

(Editing by Tom Brown)

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