London And NBC Going For Gold With 2012 Olympics
By Tim Richardson
With the Games of the XXX Olympiad under way in London, both NBC and the 2012 hosts are hoping to experience returns on their significant investments. The Olympics began in London on July 27 and run for 17 consecutive days, ending Aug. 12.
London was awarded the 2012 Games in 2005. England's capital beat out New York City, Moscow, Madrid and Paris to become the first city officially to host the modern Olympic Games three times. London previously served as the site in 1908 and 1948.
Not everyone in the United Kingdom has been excited about the Olympics coming to London, primarily because of the exorbitant costs associated with hosting the worldwide event. Six decades after it last hosted the games, Britain faces a harsh financial crisis that, according to a July report by the BBC, includes an 8.1 percent unemployment rate.
Nonetheless, the host nation is spending in excess of $15 billion to hold the Olympics. In an end-of-year letter to Conservative members of Parliament, British Prime Minister David Cameron said the Olympics should show the world that the country was "open, strong, confident and moving forward to a better future." Cameron also demonstrated his commitment to showcasing Britain to a global TV audience when he doubled the budget for the opening and closing ceremonies to more than $120 million.
Organizers entrusted English-born director Danny Boyle, winner of the Academy Award for Best Director in 2009 for "Slumdog Millionaire," with overseeing the pageantry that has become an opening ceremony at the Olympics. Filled with celebrity appearances by Daniel Craig as James Bond, J.K. Rowling, David Beckham (who was left off Britain's Olympic soccer team), Paul McCartney and even Queen Elizabeth II, Boyle kicked off the games with a celebration of British history.
Although the event has received mixed reviews, one area not up for debate is the number of U.S. viewers that flocked to NBC to watch the opening ceremony. According to The Nielsen Company, NBC enjoyed the highest numbers ever for a broadcast of the opening ceremony of an Olympics held outside the United States, garnering a 23.0 rating and 40 share for the prime-time telecast. The figures are 28 percent higher than the network produced for the Athens Games in 2004 and 7 percent higher than Beijing in 2008, an opening ceremony many consider one of the most spectacular in Olympic history.
That momentum continued for NBC into the first full day of coverage as the July 28 prime-time broadcast drew an 18.0 overnight, which translates into 18 percent of households in the 56 urban TV markets measured for overnights. USA Today TV columnist Michael Hiestand wrote that number was the highest overnight ever for the first night of competition in a Summer Games held outside the United States. According to Heistand, the 18.0 overnight is up 8 percent from the Beijing Games and is 22 percent higher than comparable coverage of the same night of the 2004 Athens Olympics.
NBC is planning a record 5,535 hours of coverage (2,000 more than it had in Beijing) across its family of networks during the 17 days of the Olympics.
It will be interesting to see whether those records continue as viewers have begun to voice displeasure about NBC's tape-delayed coverage of key events, primarily the men's swimming 400 IM, in which Baltimore's Michael Phelps failed to medal in an Olympic event for the first time since 2000. For ratings reasons, NBC chose to air the race in the lucrative prime-time spot Saturday night, instead of live during the day. But the network provided the results to its viewers several hours earlier via the NBC Nightly News.
In today's world of text alerts, mobile apps, the 24/7 news cycle and social media prominence, it's inevitable that fans of the games will know the results before the action airs on the NBC family of networks. The Daily Mail, the United Kingdom's second-largest-selling daily newspaper, questioned whether the strategy of airing big events during prime time is even still viable. For fans, the answer seems to be a resounding "No," as they have even taken to Twitter to show their displeasure with the coverage, using the hashtag "#NBCfail."
For NBC, the decision to tape delay and air events in prime time is based on economics and return on investment for advertisers. NBC spent $1.18 billion for the rights to the London Games, and industry experts predict the network will spend an additional $100 million on production costs. It sold a record $1 billion in Olympic advertising across the networks and entities that will carry portions of NBC's coverage. Those areas include NBC; MSNBC; CNBC; Bravo; Telemundo; the NBC Sports Network; NBCOlympics.com; apps for mobile and tablet devices; and, for the first time, a 3-D channel.
According to Forbes, advertisers will likely seek some type of compensation from NBC, such as ad spots in future programming, if ratings fail to match what the network guaranteed them when they purchased inventory.
Regardless of how viewers feel about NBC's coverage, they won't have an alternative anytime soon for viewing the games. As reported by AdWeek, NBC agreed in 2011 to a $4.38 billion deal with the IOC to broadcast the 2014, 2016, 2018 and 2020 Olympics. It's the most expensive television rights deal in Olympic history, and one that surprised many industry experts, considering NBC lost more than $220 million on coverage of the Vancouver Winter Olympics in 2010 and will likely lose millions again with London.
As part of the contract, NBC will pay $775 million for the 2014 Winter Games in Sochi, Russia, and another $1.23 billion for the 2016 Summer Games in Rio de Janeiro, Brazil. In addition, NBC will pay $963 million for the 2018 Winter Games and $1.45 billion for the 2020 Summer Games … both of which have yet to be awarded to a bidding host city.
In the end, prime-time ratings are what matter most to NBC and its taped-delay strategy for the 2012 games has worked to its advantage thus far. As for London, the host city is beneficiary of massive exposure as it serves as the epicenter of sports for more than two weeks as the greatest athletes in the world compete.
Posted July 30, 2012