SOCHI OLYMPICS LIKELY TO BREAK EVEN FOR NBC, SAY ANALYSTS

This is the period prior to an Olympic Games when analysts attempt to deduce whether they will be profitable for the network that has paid hundreds of millions of dollars to carry them. In the case of this year’s Winter Olympics, being televised from Sochi, Russia by NBC, there appears to be little doubt that the games will at least break even. Despite the fact that it paid $775 million for the rights to this year’s event, NBC could come away with about $1.05 billion from ad sales, according to a report by Kantar Media. (That figure would eclipse the previous record of $851 million set by the Winter Olympics in Turin, Italy in 2006.) Virtually all of that amount will be derived from television — from the NBC broadcast network as well as cable networks owned by NBCUniversal, which include USA Network, MSNBC, CNBC and Oxygen. Although revenue from sales on the Internet are growing, Kantar observed, “external estimates still place it at less than 10 percent of total ad revenue for the Olympics.” However, NBC reportedly expects to spend about $250 million on production. It is withholding a certain number of spots to be used as “make goods” if the Games do not produce the kind of ratings that have been guaranteed to advertisers. If they do, however, they’ll be able to sell them off at the last minute, probably at a significant premium, and thereby see a sizable profit. According to Advertising Age, NBC is guaranteeing advertisers a 12.6 household rating. The 2010 Vancouver games averaged a 13.9.