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Olympic broadcasting a multi-million dollar game

February 21, 2010

With millions of dollars on the line for TV rights for major sporting events, such as the 2010 Olympics in Vancouver, it’s no surprise the pressure on broadcasters is high. In anticipation of advertising revenues and branding opportunities, networks outbid one another for exclusive access to the Olympics events. This sometimes even leaves traditional Olympics networks out in the cold.

Canada’s CBC, which has broadcast the Winter Olympics for years, lost to a competitor this time. “CBC was outbid by a broadcasting group of Rogers Media and Bell Globemedia, which owns CTV. The group paid $153 million for the rights to become Canada’s Olympic broadcaster for the Vancouver Games and the 2012 Games in London,” reports the New York Times.

For TV networks, investing this amount of money into a single event builds up pressure to perform. Across the border, NBC paid $2 billion for the U.S. broadcasting rights for the 2010 Vancouver and 2012 London Summer Olympics. For NCB, the gamble may not pay off.

“Flat advertising and higher costs for rights led NBC to project its first loss in at least three decades on an Olympics for the games that start Feb. 12 in Vancouver,” reports Bloomberg News.

NBC, who has long been the Olympics broadcaster in the U.S., will lose about $250 million airing the Winter Olympics, a company executive said. The network paid about $200 million more for this year’s Winter Olympics than for the last ones in Torino, Italy, while advertising sales remained about the same.

In light of the difficult advertising market, the IOC is taking ensure high prices for Olympics’ rights. “The International Olympic Committee has delayed bidding for the 2014 and 2016 events until the ad market improves, said executive board member Richard Carrion” via Bloomberg.  In the U.S., Fox and ESPN are reportedly planning to challenge NBC’s grib on the Olympic moments with their own respective bids.

curling

During the Olympics, even curling has an audience. Picture by Popejon2 via Flickr.

These developments show that while events like the Olympics have a broad appeal and even bring audiences to sports like curling, broadcasters walk a fine line in determining whether their expenses will pay off. This is especially true with sporting events, where the performance of a nation’s team strongly impacts TV ratings.

For the 2008 Bejing Olympics, NBC saw a record number of viewers tune in to see Michael Phelps make history. Advertisers followed, flooding an additional $25 million into the network’s coffers. The Vancouver game’s ratings have been promising so far, with viewership up 15 percent compared to the 2006 games, according to NBC (these numbers don’t really compare, though, because the time change between Torino, site of the 2006 games, and the U.S. market dampened ratings for those games. Curling at 2 am doesn’t get anyone out of bed).

The broadcasts also at times follow advertisers’ rules. NBC at times forgoes live coverage of events, for example, in favor of a packaged report during primetime to attract more viewers. That means Web sites may have already reported who won the Men’s Downhill race before you can catch it on TV.

Speaking of Web sites, it’s interesting to see the different approaches to Olympics coverage. The New York Times makes great use of Web tools to provide additional information, with videos and graphics explaining the various events. CNN is boosting a seven-minute video interview with Lindsey Vonn send in by a viewer. Other sites are still struggling to go beyond the who-won-when wire service coverage.

By next week, we will know who won the medal count.

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