Comcast (CMCSA) caught the Olympics spirit in 2011, when it agreed to pay $4.38 billion to broadcast four games from 2014 to 2020 but investors are probably feeling less enthusiastic.
The Olympic games, which begin again this week, have given surprisingly poor returns for the Philadelphia-based company. Take 2012’s London games. Comcast barely broke even on those games, despite compelling story lines such as superstar swimmer Michael Phelps’ quest for Olympic glory. Comcast was lucky it didn’t lose money.
“We now have more confidence than ever the Olympics can be profitable,” Chief Executive Brian Roberts said at the time.
Comcast Spending Big Bucks on 2014 Olympics
And make no mistake, Comcast’s bet on the 2014 Olympics is huge. Its 2011 deal was more than $1 billion higher than a rival offer from Rupert Murdoch’s News Corp, now 21st Century Fox (FOXA).
The Comcast deal grants television rights to subsidiary NBC Universal. It included a $775 million fee for the 2014 Olympics, $1.2 billion for the 2016 summer games in Rio de Janeiro, another $863 million for the winter games in 2018 and a whopping $1.4 billion for the games in 2020.
Speaking at a dinner for advertisers in November, NBC Sports Group Chairman Mark Lazarus confidently predicted, “We will be profitable comfortably.”
Lazarus, of course, didn’t provide specifics. One reason for his optimism is that the Sochi rights are far cheaper than the $820 million NBC spent on 2010’s Vancouver games (where it lost $233 million). Advertiser interest also appears to be stronger for Sochi than it was for Vancouver, according to Sports Business Daily.
But there are still many reasons to be skeptical that NBC will break the cycle of middling financial performance.
First, there is there is problems of time zones. Sochi, which is shaping up to the most expensive Olympics in history at more than $50 billion, is nine hours ahead of the U.S. East Coast and 12 hours ahead of the West Coast. That may make it difficult for NBC Universal to attract live viewers, especially when U.S. fans can instantly find out the results from the previous night’s competition at the click of a mouse.
Sochi also is making headlines for all the wrong reasons — terrorism, persecution of gays, and a general lack of competence. Stories about exterminators shooting and poisoning stray dogs are bound to turn off viewers even further.
But can the athletes attract viewers?