Industry split on whether NBC overpaid for Olympics

NBC locked up its exclusive coverage of the Olympic Games through 2032 with its preemptive $7.7 billion bid, underscoring the company's long-term strategic plans. But there are some differences of opinion within industry circles as to whether the company paid too much for the Games or whether it got them for a bargain.

The recent Sochi Olympics contributed $846 million to the broadcast unit's top line, according to the Hollywood Reporter, which exceeded first-quarter expectations with revenue up 72 percent, to $2.6 billion. And that's in spite of lagging ratings (compared with Vancouver in 2010, when the U.S. team performed much better and the locale meant many marquee events were televised live).

The price tag may seem hig,h but it's really less than a 3 percent increase per games from NBCU's $4.4 billion, four-Games renewal in 2011, in which it outbid its closest rival by $1 billion. The Games also come with the promise of higher digital profits: the pact covers all media platforms--including free-to-air and subscription TV, Internet and mobile. The latter two have become increasingly significant to NBC's Olympics strategy.

Overall engagement during Sochi notched a record 242.3 million media exposures thanks to lifts from digital, says NBC. And carrying the world's biggest sporting event for two-plus weeks every two years also is a boon to the company's growing NBC Sports Network, which executives hope can someday rival ESPN.

The move is reminiscent of a gambit by former NBC Sports boss Dick Ebersol, when he acquired the 2004, 2006 and 2008 Games for $2.3 billion. NBCU's latest accord was reached some six weeks ago at IOC headquarters in Lausanne, Switzerland.   Fox and ESPN have been engaged in Olympic bidding in the past, but have never exhibited the financial fervor that NBCU and its predecessor NBC have expressed in terms of rights fees.

For more:
- Hollywood Reporter has this story
- Multichannel News has this story
- Philadelphia Business Journal has this story

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