Despite Ratings Drop, Olympics Gold for NBCU

No change to forecast for big profit despite makegoods for advertisers
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Michael Phelps, Simone Biles and Usain Bolt are taking home gold, but Comcast and NBCUniversal earned green in Rio. Even with lower TV ratings, NBCU officials maintained their forecast for big profits from the Olympic Games, which had their closing ceremonies Sunday night.

While traditional viewing was down, there was a huge boost in streaming, which to many people is the future of TV. And though there were complaints about commercial clutter on social media, media buyers were happy with audiences bigger than almost any other programming delivers and with NBCU’s work in providing makegoods for under-delivery on Nielsen metrics.

“This will be our most economically successful Games in history, and it’s by far the most viewer friendly TV event of all time,” NBC Sports Group chairman Mark Lazarus said a few days after ratings for the Opening Ceremonies were down 28%.

Before the games started, NBCU said it had sold $1.2 billion worth of advertising, and NBCU CEO Steve Burke said it expected profits to exceed the 2012 London games, which netted $120 million.

Related: TV Ad Buyers Pleased With NBCU's Handling of Olympics Ratings Shortfalls

Media buyers were happy with the games, saying that they were getting a big audience and extra spots because NBC guaranteed viewership similar to London—about a 17.5 rating.

Despite the low ratings, advertisers are happy with NBC’s presentation and the performance of the American Team.

“It’s been a wonderful Olympics,” said Patrick Mauro, U.S. broadcast buying director at ad agency Wieden + Kennedy. “NBC is bending over backwards to accommodate their advertisers. They have been very helpful throughout.”

And even though NBC got off to a rough start with sharply lower ratings during the opening ceremonies, there hasn’t been any stress or screaming because “NBC has been so proactive with their delivery.”

Though it appears that a large amount of viewing has shifted from traditional linear TV to streaming, Mauro says that NBC has not been using streaming to make good on TV ratings shortfalls.

“I think we anticipated [the TV ratings] being not as high as London, just because of the way viewing has changed over the past four years,” said Brian Hughes, senior VP, audience intelligence and strategy at Magna Global, one of the biggest media buyers.

Related: Streaming-Linear Balance Beam in Rio Encapsulates TV Business Transition

Hughes said the Olympics remain a big event that generates viewership that are quite large relative to other things on TV.

"We’ve got to think a little bit differently at TV viewing,” Hughes said. “If you’re looking at the streaming, we’ve already surpassed London in terms of streaming minutes, and I think that’s a trend we’re seeing more and more with big sporting events is that decline in traditional viewing being made up in live streaming,” Hughes said.

NBC sold big advertisers packages that included ads on multiple platforms, enabling them to catch fans wherever they’re watching and regardless of what device they’re using.

“The way we look at it in general is to think holistically about TV and streaming together,” Hughes said.

In terms of how and where NBC was making good on viewer shortfalls, he declined to comment, beyond saying “NBCN is a great partner of ours, so we have every confidence they’ll do right by us.”

Early in the games, Lazarus of NBC insisted that the makegoods the network would need to provide to sponsors was already baked into both NBC’s plans and individual advertisers’ packages. Even after the Opening Ceremonies, NBC sold another $30 million worth of ads, signaling it was worried about having inventory to make sponsors whole before the games ended.

In 2016, broadcast represented by far the largest proportion of ad dollars. But that will be shifting, Lazarus said. “When we get to PyeongChang in 2018 and Tokyo in 2020, we’ll again have this structure for advertisers and media partners that reflects this evolution and consumption,” he said.

NBC’s claim that it was actually showing fewer commercials per hour was backed up by data from Kantar Media, which showed that NBC had scheduled fewer spots but was breaking more frequently to launch shorter pods. During many live matches of team sports, an announcer told viewers that the broadcast was being presented with limited commercial interruptions, in the case of the gold medal men’s basketball game on Sunday, by Toyota.

Related: More Breaks in NBC's Games, Not More Ads

NBC created new measurements to tally up people watching on various devices and platforms and at different times.

It’s Total Audience Delivery, or TAD, was calculated and circulated in press releases each day.

“We’ve converted all the digital usage measurement into a Nielsen-like metric. So by harmonizing the data, we have a measure that offers us an average minute measure of viewership, said Alan Wurtzel, NBC’s president of research. “When we roll these buckets up, we get the most accurate picture of each day’s Olympic consumption.”

Even including the growth in streaming, the Rio games were 10% behind London, with a TAD through Saturday night of 27.5 million viewers in 2016, compared to 30.3 million in 2012.

But NBC noted that while Olympic viewership is down from four years ago, other primetime programming has fallen further. That means that Olympic programming was more dominant, holding a bigger lead over its competition, than ever before. Through Friday night, primetime among adults 18-49 viewership was 347% greater than primetime programming on ABC, CBS and Fox combined.

Streaming boosted the total audience for the Olympics by an average of 7% from 26.5 million on NBC only to 28.3 million.

Not everyone looked at the big streaming numbers and smiled.

Rich Greenfield, analyst at BTIG, who sees signs of the end of traditional TV nearly everywhere, on Sunday tweeted: “Wonder how worried @NBC & @Discovery exec are for major time-shifted #Olympics in 2020 for viewers in U.S. and Europe.”

It’s a big bet. Discovery paid $1.45 billion for the rights in Europe to the Olympics from 2018 through 2024. In 2014, NBC paid $7.65 billion to keep the games from 2021 through 2032.

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