Rough few days for NBC, right? First, you have the whole Jay Leno prime-time disaster (which many experts and nonexperts saw coming); now you have yesterday's revelation from Dick Ebersol (chairman of NBC's sports division) that the Winter Olympics from Vancouver will actually lose money for NBC.
Ebersol noted that the cost of the broadcast rights for the games will exceed the company's advertising sales. Advertising sales slumped in the middle of 2009 and, although sales have picked up in the past four months, NBC is going to lose money thanks to the economic slowdown.
Ebersol did tell a television critics conference in Pasadena, Calif., that NBC is "on track to do the same numbers that we did in Torino and Salt Lake City games. ... Rights have gone up and this will be the first time in my doing these Olympics that NBC will lose money, but it's not because of the ad sales."
It's important that Ebersol noted that the games will not lose money because of poor advertising sales. I say this is important because it signals that the Olympics are still a major draw for advertisers. This means that the Olympic Games are still viable from an advertiser's point of view, just not for NBC's asking price. I am willing to accept this little problem for NBC as a one-time happening thanks to the economic slowdown and companies' unwillingness to part with too much cash.
In order to determine whether NBC should continue shelling out large amounts of cash for the Olympics, I feel we will need to wait until the next Summer Games. As long as the economic climate has continued its northward trend (which is no guarantee), I would expect NBC to make money thanks to advertising in 2012. That is, of course, as long as the broadcasting company feels it is in their advantage to keep the games rather than Jay Leno.