Olympics postponement puts $1.25 billion in ad sales on hold at NBC

Olympics postponement puts $1.25 billion in ad sales on hold at NBC

The delay of the 2020 Olympic Games in Tokyo until 2021 due to the spread of the coronavirus scuttles one the biggest live TV events of the year and delivers a major blow to NBC.

“In the present circumstances and based on the information provided by the WHO today, the IOC President and the Prime Minister of Japan have concluded that the Games of the XXXII Olympiad in Tokyo must be rescheduled to a date beyond 2020 but not later than summer 2021, to safeguard the health of the athletes, everybody involved in the Olympic Games and the international community,” the IOC and the Japanese government said in a joint statement Tuesday.

The decision will cause a significant financial hit for the Olympics TV rights holder NBCUniversal, which earlier this month said it sold 90% of its commercials for the games scheduled to run from July 22 to August 9. The $1.25 billion the company collected so far was a new record, surpassing the total for 2016 Games in Rio.

“This is a big deal for advertising,” said Fred Chasse, senior vice president at the consulting firm, Analytic Partners. “It’s going to be impossible for advertisers to take that Olympics money and spend it, last minute, to have anywhere near the kind of reach, brand and sales impact that the Olympics buy would deliver for them, especially in an election year.”

NBCUniversal has $12 billion committed to the rights for the Olympics through 2032. The delay of the 2020 Summer Games is not expected to alter the schedule of future events.

Every two years, NBCUniversal has used its 17 days of Olympics coverage to forge relationships with key advertisers, millions of viewers and squash its TV competitors in the ratings. The media company, which had advance teams in place in Japan, has been making contingency plans in recent days as it has become exceedingly clear that holding the Games in July would be untenable because of the virus pandemic that forced the cancellation of numerous sporting events, concerts and film and TV productions.

“Given the unprecedented obligation we all face to contain COVID-19 globally, we fully understand the decision made by the IOC, Japanese government, and the health organizations they are working with to postpone the Tokyo Olympics and Paralympics until 2021,” NBC said in a statement. “We have no doubt that the IOC and Tokyo Organizing Committee will put on an exceptional Games next year, and that the Olympic flame will once again unite the world and provide a light at the end of this tunnel.”

The Games are so important to NBCUniversal that it agreed six years ago to extend its partnership with the International Olympics Committee through 2032. This year, NBC paid $1.1 billion to broadcast the Games but that fee will step up to $1.3 billion in 2022.

Last month, Brian Roberts, the chairman and CEO of NBCUniversal’s parent company, Comcast Corp., said during an analyst call that the company was “full steam ahead” in planning for the Olympics, but it had insurance in case the Games would be cancelled.

“There should be no losses should there not be an Olympics,” Roberts said at the Morgan Stanley media conference in San Francisco. But he noted there “just wouldn’t be a profit this year.”

The Olympics have become a more valuable property in recent years. Even in the fragmented TV environment, it still delivers two full weeks of programming with large audiences who watch live. Streaming services have cut into traditional viewing of dramas and sitcoms, which viewers can watch on their own time.

Before the announcement of the delay, Comcast filed a statement with the Securities Exchange Commission, saying the coronavirus pandemic will have an adverse impact on the company’s financial performance.

The filing noted that the company has closed its theme parks, delayed theatrical distribution of films both domestically and internationally, shut down film and TV production and has seen the cancellation of sporting events carried on its networks.

“The interruptions will materially exacerbate what was an already a deteriorating economic environment and advertising market in the UK and Europe in 2019,” the filing said.

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