NBC’s Gazzillion Dollar Olympic Investment: Is the Sky Falling or Is the Sky the Limit?

NBC Rio logo

The National Broadcasting Company (NBC) aired the 1964 Tokyo Olympics Games in America, the first time events were broadcast live via satellite. With a 13-hour time difference between New York and Tokyo, the opening ceremonies of the Games on October 10 appeared on American televisions in the middle of the night. After that, NBC offered about an hour of highlights after prime time, fearful of eating into the ratings of their lucrative evening programming.

NBC didn’t get high marks for their coverage, and eventually lost the Games to ABC, which became the network of the Olympics over the late 60s and 1970s. Thanks to ABC’s coverage, the Olympics emerged as a premier marketing opportunity for sponsors and broadcasters. In America, the three networks fought furiously for broadcast rights.

NBC currently owns US broadcasting rights through 2032, having bid an incredible $7.65 billion dollars for the Summer and Winter Games through that period. With so much riding on the Games, not only for NBC, but obviously also for Brazil, the IOC and the athletes, it’s no surprise that commentators around the world are casting doom and gloom on the upcoming Rio Olympics. A doctor in Canada has even called for the postponement of the Games until the zika virus threat is deemed less of a risk.

It’s also possible that the entire track and field team from the Soviet Union will be banned from participating in the Rio Olympics due to state-sponsored doping. Michael Colangelo of the blog, The Fields of Green, recently wrote that the lack of Russian competition will strike a great blow on the success of the Rio Olympics, particularly on the viewer ratings of NBC. “The problem is that as doping seems to become more prolific — with Russia essentially running a doping program at a national level — bans and bad news could affect the television ratings this year and beyond.”

Colangelo went on to write, “It’s a balancing act and the only loser right now is NBC. As the Olympics get closer, the IOC and its partners will have to work to make sure that all parties’ investment in the games is worthwhile. That seems close to impossible right now.”

That was actually a concern in 1984. As you may recall, the United States and over 60 other countries boycotted the 1980 Moscow Olympics, primarily due to the Soviet Union’s invasion of Afghanistan. Four years later, 15 nations led by the Soviet Union boycotted the Los Angeles Olympics. Michael Payne, who wrote the fascinating book called “Olympic Turnaround“, said that the American Broadcasting Company paid a then-record $225 million for rights for the Summer Games in Los Angeles and the Winter Games in Sarajevo, and that ABC bean counters started shouting that the sky was falling when the boycott was announced.

Roone Arledge
Roone Arledge

 

And then stepped in ABC Sports President and Olympic broadcasting legend, Roone Arledge. Like Henry V in Shakespeare’s eponymous classic play, Arledge faced down the naysayers, according to Payne, and stated with conviction that the Los Angeles Games would be a moment of triumph.

By early 1984, ABC’s financial leaders were running scared about a potential ratings collapse due to the Soviet-led boycott, and attempted to renegotiate terms. Arledge argued that the Soviets had done them all a favor, as the boycott would only allow Americans to win even more gold medals. “They would not lose viewers, they would gain them.”

Arledge was right, ABC’s coverage of Los Angeles set new ratings records. From Los Angeles in 1984 onwards the Olympic Games began to have a dramatic effect on the US advertising market. More than half of the advertising available for all sports for all networks for the entire yea was spent on the Olympics over two weeks. “We’d not only captured the market, we’d suck it dry,” Roone Arledge observed.