A number of media outlets are reporting that NBC will lose about $200 million dollars on the 2010 Vancouver Olympic Games broadcast. The network paid $2.2 billion of the US broadcast rights to the 2008 and 2010 games, and a reported $820 million of that was for the Winter Games. However, this loss is based on a comparison of the amount paid for the broadcast rights fees compared to the advertising revenues for the Games. The calculation does not take into account any spillover benefits that NBC gains from broadcasting the Games. For example, if more people watch non-Olympic related programming on NBC, and the network is able to charge higher ad fees for those programs, then broadcasting the Games produces additional revenues for months or years after the Games end.
Similar claims have been made in the past about networks losing money on broadcast rights for other sporting events, like the NCAA Men’s Basketball Tournament and the National Football League. When interpreting claims of large losses by networks on sports broadcast rights deals, it is important to keep in mind that broadcasting sports events like the Olympic Games adds more than the revenues from advertising during the Games to the bottom line of networks.
Hat tip to Nick at the IJSF Blog.