Bloomberg News

NBC Said Poised for Sochi Profit With Twitter-Infused Olympics

February 06, 2014

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Growth at NBCUniversal is important because Comcast last year bought the remainder of the entertainment unit, which paid $4.38 billion for U.S. rights to the games from 2014 to 2020. Photographer: Andrew Harrer/Bloomberg

Comcast Corp. (CMCSA:US)’s NBCUniversal expects turn a profit on the Winter Olympics, employing a strategy that uses video clips on Twitter and Facebook to draw viewers to their TV sets, people with knowledge of the situation said.

In London two years ago, NBC found that sharing on Twitter and Facebook Inc. (FB:US) generated interest in broadcasts that aired hours later in prime time. At this winter’s games, the network increased the hours being live-streamed by 42 percent, and struck a deal with Twitter Inc. (TWTR:US) that that lets smartphone users record events like ski jumping to watch when they get home.

“The more screens people watch on, the more they consume on TV,” Alan Wurtzel, president of research at NBCUniversal, said in an interview.

More coverage of the 2014 Winter Olympic Games in Sochi

The effort this time means NBC Universal will make a profit on its $875 million investment in Sochi, after breaking even in 2012, said the people, who asked not to be named because they weren’t authorized to speak publicly. Growth at NBCUniversal is important because Comcast last year bought the remainder of the entertainment unit, which paid $4.38 billion for U.S. rights to the games from 2014 to 2020.

The nine-hour time difference between New York and Sochi underscores the importance of the social-media sharing. By the time U.S. viewers settle in to their couches to watch prime-time coverage of slalom, figure skating or bobsledding, the results will have been known for hours.

More Hours

In London, where the time difference was five hours, people who watched the games on multiple devices also tended to watch more. They averaged 8 hours and 29 minutes of viewing a day, compared with 4 hours and 19 minutes for TV-only viewers, Wurtzel said. About half of that additional viewing took place on conventional TVs. The audience exceeded expectations, and Comcast’s entertainment unit broke even on the production.

“Streaming added TV viewers, and that was the most important finding,” Wurtzel said. “It was a pleasant surprise.”

For the Sochi Games, NBCUniversal has sold more than $800 million in advertising, while paying $775 million for TV rights and spending about $100 million to produce the coverage, the people said.

Christopher McCloskey, a spokesman for the network, declined to comment on the financials.

To score viewers, NBC will have to get around injuries to two U.S. stars. Lindsey Vonn, the four-time World Cup overall champion, will instead cover the games for the network. Snowboarder Shaun White this week withdrew from the slopestyle event after twisting his wrist in practice. He said he’ll still compete in the halfpipe on Feb. 11.

‘Fingers Crossed’

One hurdle facing NBC in Sochi is political controversy of a Russian anti-gay law, which has attracted worldwide condemnation. Human Rights Watch is pressuring Olympics sponsors, including Coca-Cola Co., McDonald’s Corp. (MCD:US) and Procter & Gamble (PG:US), to protest the measure. AT&T Inc., which isn’t a sponsor, this week took a stand against the law. Many of the sponsors have said they’ve raised the issue with the International Olympic Committee.

As with any major international event, there is also the risk that the games get overtaken by political events. Air carriers flying to Russia were warned this week to watch for toothpaste tubes containing materials that could be turned into a bomb in flight.

“Although obviously we have our fingers crossed that nothing happens, if anything, the prospect of a terrorist event, the controversy over the anti-gay laws, those things in an odd way have increased awareness and interest in these games,” Bob Costas, the NBC anchor, told reporters in January. “I think people will be curious about that.”

Boosting TV

NBC will stream 1,000 hours of events live from Sochi, up from 700 in London and more than the total for the Vancouver and Turin Winter Games combined, said Sam Schwartz, chief business development officer at Philadelphia-based Comcast, which bought the remaining 49 percent of NBCUniversal last year. To access most of it, viewers need to be pay-TV customers.

The Web clips will run alongside 500 hours of broadcast and cable coverage, and 200 hours of video-on-demand on pay TV.

The Sochi Games are part of a multiyear commitment by NBCUniversal, which has broadcast every Olympics in the U.S. since 2000. NBC uses the games to launch new shows, like this year’s late-night transition to Jimmy Fallon. The network also measures the effect of technology like Twitter and Facebook on viewing habits, and applies what it learns to subsequent games.

More Viewing

NBC Universal and Comcast spent several months studying audience metrics from London. One key finding: Of the 217 million U.S. viewers of the London Games, 53 million watched on a device other than a TV, Schwartz said. Events carried on the NBC Sports Live Extra application, available only to pay-TV customers, had higher audiences when rerun later on NBC’s TV networks in prime time, he said, suggesting the app built audiences for conventional viewing.

NBC begins its prime-time coverage of Sochi events, including snowboard slopestyle and team figure skating, on Feb. 6, one night before the network’s coverage of the Feb. 7 opening ceremonies. While the sports events will be webcast, NBC has said it won’t put the opening ceremony online.

NBCUniversal also expanded its relationship with Twitter. The San Francisco-based microblogging service, with more than 241 million worldwide users, will incorporate NBC content into message streams during the games. This week, for example, it distributed a video segment, narrated by Ryan Seacrest, featuring South Korean figure skater Yuna Kim.

DVR Button

NBC is also taking advantage of the ability to share videos more easily than in past games. Twitter users will be able to access clips in posts using a feature called “SEEiT.” By clicking a button, they can watch on a mobile device or online, or they can instruct their cable set-top box to record the event. The feature works for cable customers of Comcast, Time Warner Cable Inc. (TWC:US) and Charter Communications Inc. (CHTR:US)

Comcast is also using Sochi to promote subscriptions to its cable service, the largest in the U.S. Most of the 1,000 hours of Sochi clips available for the NBC Sports Live Extra app can be accessed only by pay-TV customers, of Comcast or other providers.

“Because we’re part of the same company we’re really trying to build new models of content and distribution working together,” Schwartz said. “If we experiment more and show models to the rest of the industry that work, the whole industry benefits.”

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Edmund Lee in New York at elee310@bloomberg.net; Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Nick Turner at nturner7@bloomberg.net


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