NBC Wipes Out on Its Olympics Strategy

It's not exactly news that the world's biggest sporting competition is also big business. But this year, with NBC's Olympics coverage generating a deluge of complaints from fans, many are wondering whether the Peacock has transformed a proud tradition into a money sink with an attractive pedigree. As the network tries to squeeze every last advertising dollar out of its coverage, it may be losing a more valuable prize: loyal viewers.The Olympic Charter is packed with rules and bylaws codifying everything from the rules of sponsorship to the construction of sporting facilities. It also includes a list of idealistic goals, which it calls its key mission, including staunch opposition to "any political or commercial abuse of sport and athletes."

Commercial Abuse, Audience Abuse

The definition of "commercial abuse" is flexible, and the mission doesn't say anything about abusing the audience. But online viewers who have tried to watch the Games may wonder about NBC's decision to drastically limit audience access. The network has slashed its live streaming coverage of the games: in 2008, it streamed 2,200 hours of the Beijing Olympics, nearly 61% of the events; this time around, it's streaming only 400 hours, or 48%.

NBC is also delaying its televised footage, ensuring that even the most rabid Olympic watchers cannot watch competitions until long after the results have appeared online. Some fans have even petitioned The New York Times to stop reporting on the Olympics, as announcing the results is "spoiling" the Games.

The Olympic Charter says nothing about free audience access to the competition, but it does aim to "place sport at the service of humanity." Unfortunately, those segments of humanity that don't have cable may find themselves locked out. The full spate of NBC's online offerings are only available to cable subscribers, and internet coverage is delayed by as much as a day.

NBC Olympics president Gary Zenkel recently explained the network's reasoning: "The lions' share of advertising revenue continues to be generated by our television coverage." Anything that the network can do to steer viewers to its prime-time coverage of the Games directly transforms into advertising money.

$250 Million in Losses

But even with these restrictions, NBC has little hope of recouping its losses on the Olympics. The network paid $820 million for broadcast rights to the Vancouver Games, a 37% jump over the cost of the last Winter Games. (And, as FanHouse wrote recently, NBC paid all that money for the rights and isn't even broadcasting the game in high-definition.) Even apart from the licensing fees, the cost of covering the Olympics is astronomical, requiring an army of reporters, cameramen, and producers. The network expects to lose $250 million.

If the Olympics doesn't make economic sense, why is NBC shelling out so much to broadcast it? Some analysts believe the network benefits from the "halo effect" of millions of viewers who tune in for the Games but stay for the network's other programming. NBC is ranked last of the big four networks, but an Olympic halo could help pull it out of that hole.

Yet NBC's stingy coverage is tarnishing the halo. An estimated 138 million viewers are struggling to watch their favorite events in the face of restrictions and time delays. The network's coverage seems more likely to taint its image than enhance it.
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