Razor Olympics

Posted on March 4, 2010 by Ben Connard

According to reports, NBC lost about $200 million broadcasting the Olympic Games.  However, despite the loss, NBC will use the Olympics to profit elsewhere—its post-Olympic primetime lineup; this strategy is similar to a company giving away the razor to profit off the razorblades.

NBC received strong ratings for its Olympic primetime coverage, even beating “American Idol.”  It’s obviously generating revenue through ad sales, but also forgoing some ad slots to promote its own network in hopes for generating a boost post Olympics.  NBC heavily promoted two of its new shows, “Parenthood” and “The Marriage Ref,” throughout the Olympics.

The lost ad sales result in short-term losses, but based on the quality of the new shows, should result in higher long-term profits.  It’s a smart move.  After NBC’s “Jay Leno Show” debacle put it in 4th place by a landslide, NBC needs a boost.  I watch some NBC shows on Thursday’s (particularly “30 Rock”) but “Law & Order” is the only other NBC show I can name.  In fact, I assume NBC airs “Law & Order” for 3 hours every night beside Thursday.

The Olympics demonstrate two interesting points.  The first is how important having one hit can be to a network.  The one hit becomes appointment viewing, driving viewers and increasing interest in the rest of the network’s shows.  The second point is the value of sports or special programming.  While the rights fees for an event like the Olympics are high and can result in a loss on the specific event, by exposing viewers to a network that they would otherwise not watch, fortunes can be turned. 

The show “Parenthood” looks interesting.  I may check it out.  That’s a credit to the Olympics, because I would have otherwise never heard of the show.  In a few years, if NBC is back at the top, the Olympics should get some credit.