NBC’s decision to tape-delay the broadcast of the Olympics has been met with considerable derision. In the world of the Internet and social media, it’s hard to not know the results of events before they’re broadcast during primetime. Fans have asked, “Why they can’t treat the Olympics the way ESPN treats any international event?” There are multiple reasons for this, and they all relate to money.
A primer on rights fees.
Broadcasters pay sport properties for the right to broadcast the events, and there is competition among broadcasters for the opportunity to do so. For the Olympics, NBC competes against bidders like ESPN/ABC (Disney) and Fox (NewsCorp). Each entity has its own attractive offerings for the IOC (e.g., tie-ins with Disney theme parks). NBC paid about $1.18 billion for the rights to broadcast the 2012 London Games.
Broadcasters are willing to pay that much because they feel they can make up that money through their own revenue generating channels. But this is where it gets interesting.
- NBC is free-to-air, and thus makes its revenue primarily through advertising on its programs.
- ESPN is a cable channel, and thus makes revenue through advertising and through payments from cable providers like Time Warner, Comcast, etc. ESPN charges a carriage fee of about $4.69 per subscriber per month, over four times higher than any other basic cable channel. That is a lot of extra revenue to supplement advertising dollars. That added revenue option gives ESPN a big advantage in terms of the amount that it can bid for sport programming.
There are more viewers at primetime than during the day. People are home from work, kids are in bed, and they have a little time to relax with TV. Advertisers will pay more to reach more viewers, and thus will pay more to NBC for programming on at night. Despite results known ahead of time, early results from London show great ratings (up 17% from Beijing).
Even with more eyeballs, NBC still expects to lose money. Don’t worry, they plan to make it up in the long run through promoting their own shows (OMG, did you know The Voice is on NBC!?! If not, you will. Ugg.), building the NBC Sports brand, etc.
People want to watch the Olympics, and the time when they’re able to watch TV is in the evenings – why not give viewers what they want? Advertisers are happy, viewers are happy-ish. (And for all their whining, viewers can watch events live online if they really want to see the events as they unfold)
Things are changing a bit now that NBC is owned by Comcast (a provider). Events are shown on the NBC Sports Network (née Versus), CNBC, etc., each of which have their own carriage fees, albeit paltry in comparison to ESPN. Given this, and the increase in access to results, we could see more live programming in the future.
For Rio 2016, where there isn’t a large time discrepancy with the USA, I wouldn’t be surprised if the best events aired live during the day and then were tape delayed at night. That is, the events are shown twice. The day-cast will appeal to a certain audience segment, but the primetime broadcast will capture more viewers and can incorporate the schmaltz production and personal interest stories that people love (see Will Leitch’s argument of Olympics as reality television).