The Olympics Will Boost NBC’s Sports And Streaming Businesses
The recently concluded summer Olympics were a historic landmark for Comcast (NASDAQ:CMCSA) and its entertainment arm NBCUniversal. The company made a massive bid of $1.18 billion for broadcast rights of Olympics and in addition, expected to incur operating costs of about $100 million. [1] With this effort, NBC expected to earn close to $1.2 billion in revenues as a result of sales on broadcast, cable and digital networks. [1] This implies that it could have lost somewhere around $100 million in this endeavor. However, the real win comes from the visibility that NBC received, strengthening its position in lucrative sports programming market. In addition given the high demand in streaming footage, this could boosts NBC’s streaming business as well.
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The viewership statistics show a massive success of NBC’s effort despite some glitches. NBC’s coverage of Olympics attracted close to 219 million viewers making it the biggest watched TV event ever in the U.S. [2] The kind of marketing, visibility and brand strengthening that NBC’s sports network will get through this effort is likely to pave way for several future sports broadcasting deals. Nevertheless, the company will need to be flawless if it has to compete against Disney’s (NYSE:DIS) ESPN which reigns supreme in sports broadcasting arena. There were issues with NBC’s coverage such as delaying the opening ceremony telecast and problems related to streaming. However, in light of the viewership success and magnitude of the effort, these issues are likely to get diluted.
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NBCUniversal constitutes close to 15% to Comcast’s value and most of it comes from cable networks. Sports could become big for NBC given its demand and high fee that viewers are willing to pay.
Our price estimate for Comcast stands at $37, implying a premium of little under 10% to the market price.
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Notes:- Comcast’s NBC Approaches $1.2 Billion in Olympics Revenue, Bloomberg, Jul 28 2012 [↩] [↩]
- NBC’s Olympics coverage was most-watched TV event in US history, The Guardian, Aug 14 2012 [↩]