From Aug. 11 to Aug. 29, NBC will provide over 1,200 hours of Olympic broadcasting from Athens, more coverage than that of the past five Summer Games combined. And in case that's not enough, the network is also streaming live video on its NBC Olympics.com Web site and sending live feeds of Olympics updates to wireless devices. NBC paid $793 million for the broadcasting rights to this year's games, and now the question remains: Will all these extra hours help NBC make its money back?
When BusinessWeek's Katie DeWitt recently met up with NBC Universal Networks Group President Randy Falco, he explained why he's confident that the expanded coverage is a worthwhile investment. Following are edited excerpts from their conversation:
Q: Why did NBC decide to offer such an unprecedented amount of Olympic coverage this year?
A: We have been listening to our viewers for a very long time, and one of the things that comes back to us loud and clear is that there's an appetite among viewers to have more Olympic coverage and to have it on at different times of the day when they're available to watch it.
Also, I really believe we have to start experimenting with different technologies, such as wireless and broadband. We just want to get out there with as much Olympic material as we possibly can and to give our viewers as much choice as they can possibly have in terms of what's most convenient for them.
Q: How did you determine the number of hours of coverage you would offer?
A: I don't think there's any magic to that number. We just went across the different day slots, the different platforms, we looked at what was available from a programming point of view, and we started lining things up.
Q: What are your expectations in terms of viewership with the expanded coverage? Do you think the constant availability of Olympic updates and live feeds will dilute your prime-time audience?
A: Everybody immediately thinks there will be so much coverage out there that it will impact people's willingness to view prime-time. But actually I've found in my past experience that in just about everything I've ever done in television, the more that's out there, the more it improves the ratings. It will just make people more aware.
There will be an excitement to the Games because it will feel like it's ever-present. And to the extent that stories start to evolve and heroes emerge, I think that people will be more excited and more interested.
Q: It has been reported that even with the viewer shortfall at the Sydney games, NBC made about a $50 million profit. Do you expect to make a profit on these Games?
A: We're in the business of making a profit, and we're looking to be about where we were in Sydney. The Games are profitable for us. They have been as long as I've been doing them. Obviously we haven't seen the ratings yet for Athens so it's a little premature, but right now all of our projections are on target. Additionally, our production costs have gone down this year.
Q: How have your production costs gone down, even with so many more hours of coverage?
A: We have become a lot smarter about how we do the Games. In 1996 when we did the Games in Atlanta, we didn't know that we would be doing the Games in 2000, so we had to destroy or leave behind a lot of the equipment. And then you had to sort of do it all over again when you did another, if you're lucky enough to get the bid.
But when you have five Games in a row, now seven Games in a row, you start to reuse equipment, and people don't have to be hired every time because a lot of people stay, and it becomes a core group. Also, we're doing the Games every two years now as opposed to every four years, so there's great efficiency built in to the system, and it actually drives the cost down.
Q: Does all your revenue come from ads sold, or do you have other sources?
A: Part of the reason why I'm so interested in experimenting with new technologies is that I don't think you can just rely on one revenue stream, which has mostly been ad dollars. Wireless is a big focal point for us going forward. Subscription on the Internet and broadband is another place where we're going to get revenue sources that we haven't seen before. But this year it's still mostly ad revenue.
Q: Is this the first time you have ever provided live feed and updates on the Internet? Do you expect that people who watch events on the Internet will still tune in to your TV stations?
A: I think the fact that people are consuming media differently now than they ever have in the past because of new technology will once again contribute to the ubiquity of the Games. I love wireless. I think that in the future people are going to be watching MSNBC on their cell phones in the morning on their trains to work to get the latest news or watching CNBC to get a market update or any other entertainment that they want to watch.
Q: Do you intend to continue this wall-to-wall coverage in upcoming Olympics through 2012?
A: I can't definitively say how much coverage is going to be in the future, but what you're going to see is increased experimentation with all the new technology. And to the extent that the consumer gets to vote -- and that the consumer always gets to decide in the end what technology is going to win -- that's what you're going to see more of.