|NBC has lost a sizable chunk of viewers so far this year but it hopes to generate big ratings (and ad dollars) from the Winter Olympics in February.|
NEW YORK (CNNMoney.com) – NBC will probably win the ratings equivalent of a gold medal in February when it airs the Winter Olympics from Turin, Italy. Who doesn't love to watch lugeing?
But since the Peacock Network is currently mired in a major ratings slump, will advertisers balk at paying gold-medal prices for commercials during the Olympics? Surprisingly, the answer may be no.
NBC, owned by conglomerate General Electric (Research), clearly has a lot riding on the Olympics. The network paid $1.5 billion for the rights to air the 2006 Winter Olympics in Turin and the 2008 Summer Olympics in Beijing.
Typically, the Olympics have been a sound investment for NBC and other networks that have aired the games. So while nobody was expecting NBC to take a bath, its current prime-time ratings woes have some concerned that the Olympics could be less profitable for the network than previously.
That would have meant more bad news for the struggling network. NBC suffered a more than 30 percent decline in commitments during this spring's "upfront" ad buying period.
But according to a source close to the network, NBC has already sold more than 85 percent of the spots for the Winter Olympics, which will air from February 10 through February 26. In addition, the source said that NBC has set a record for ad sales for Winter Games, with $800 million in commitments out of a target of $900 million in total sales. By way of comparison, NBC generated $740 million in ad sales during the 2002 Winter Games in Salt Lake City.
The source added that NBC recently signed two key advertising partners for the Turin Olympics: shipping firm DHL and telecom AT&T.
That's a stunning feat for NBC, considering that during the crucial November sweeps period the network finished way behind rivals CBS and ABC, and saw a sizable drop in viewers from a year ago, particularly among the advertiser-coveted 18-to-49-year-old demographic.
Some television analysts and ad buyers criticized NBC as it headed into the fall TV season, because it did not appear to have many breakout hits on the horizon.
What's more, some were befuddled by the fact that NBC left its Thursday lineup from the 2004-2005 season intact, even though "Friends" spin-off "Joey" did not live up to the hype and older shows such as "Will and Grace," "The Apprentice" and "E.R." were showing their age.
So one would think that a prospective advertiser would have more confidence in getting a good bang for their buck if NBC had better opportunities to promote the Olympics, such as shows with the ratings prowess of, say, CBS's "CSI" or "Survivor" or ABC's "Desperate Housewives" or "Lost."
"NBC and advertisers would ideally like to have maximum momentum moving into the Olympics in order to promote them," said John Rash, senior vice president and director of broadcast negotiations with Campbell Mithun, a Minneapolis-based ad agency owned by Interpublic Group.
But Rash added that CBS was able to post solid ratings for the 1992 Winter Olympics in Albertville, France, and the 1994 Winter Games in Lillehammer, Norway, despite the fact that CBS's overall ratings were relatively weak in the early to mid 1990s.
And NBC, to its credit, is shaking things up ahead of the Olympics to try and revitalize Thursday night, a night that it has historically dominated with popular sitcoms such as "The Cosby Show," "Cheers," "Seinfeld" and "Friends."
Earlier this month, NBC announced it had moved its top new hit, "My Name is Earl," from Tuesday to Thursday in January. It has also benched "Joey" and "The Apprentice" until after the Olympics.
NBC has more to offer advertisers as well. Olympic events will also be aired on other networks owned by GE's NBC Universal division, such as CNBC, MSNBC, Bravo and the Spanish-language network Telemundo.
"NBC has broad circulation," said Rash. "There are few, if any, Americans who will be unaware of the advent of the Olympics."
The network may also benefit from the fact that some advertisers appear to be more interested in spending on the Olympics instead of the Super Bowl, which will air five days before the beginning of the Olympics on ABC.
According to a recent report in trade publication Adweek, prominent advertisers such as Visa and McDonald's are not planning on having Super Bowl ads this year. What's more, Adweek reported that the cost of a 30-second spot on Super Bowl XL (that's for 40, not extra large) is flat from a year ago at 2.4 million.
So it looks like the Olympics will probably mean a big ratings boost for NBC this year after all. Critics may be panning most of the network's dramas, comedies and reality shows. But viewers and advertisers apparently still can't get enough of their favorite winter sports.
"No matter how a network is doing, when that final evening of female figure skating happens, people are going to be watching," said Bill Carroll, vice president and director of programming with Katz Television Group, a media consulting firm. "Advertisers that want to be in the Olympics are going to be in the Olympics."
Personally, I can't wait for the curling gold medal match.
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