Comcast Loves the Olympics— and Hopes You Do Too
Greg is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
If you tune into NBC to watch almost any sports event, you will see a distinctive logo in the bottom corner of your television screen—five interlocking rings. It’s part of the network’s effort to continually remind you about the one thing NBC has that you can’t find anywhere else: the Olympics.
The summer and winter Olympic Games are huge for NBC; in fact, some argue that they’re the only two advantages NBC has left; the two feet on which it keeps walking. The network, which remains consistently at the bottom of the rankings most of the time, enjoys a gigantic boost during the two weeks of the Games. But is a two-week boost of any size enough to last a TV network for two more years?
Comcast (NASDAQ: CMCSA), the owning company of the NBC networks, apparently believes quite strongly that it is. NBC has locked in broadcast rights to the Olympics through the 2020 Summer Games, which haven’t even been awarded to a host country yet! We’re going to be seeing those Olympic rings at the bottom of our TV screens for quite a while.
That is, if we continue to watch programs on NBC after the Olympics end. And that’s one of the main reasons Comcast keeps buying Olympics broadcast rights and expanding its coverage all over its other stations (CNBC, MSNBC, Bravo, and Telemundo, among others). Advertisers hope that those new sitcom characters in the commercials will grow on you over the course of two weeks, and when fall rolls around, you’ll be happy to see them again. They also hope that as you watch the Today Show for athlete interviews, you’ll realize how pleasant and engaging the hosts are.
Here’s the risk NBC runs, though: You could get so tired of those sitcom characters that you’ll flee to CBS (NYSE: CBS) or one of the cable channels to get away from them. Judging from NBC’s performance most of the time, that’s the more likely scenario.
But what about all those commercials, you ask? What about all the money from Coca-Cola, McDonald's, and the other companies that we see advertised between gymnastics events? As it turns out, this year it looks like that ad revenue will barely cover the costs of practically moving the entire studio to London and covering the Olympics. That’s still an improvement over the 2010 Vancouver Winter Games, which put NBC in the red.
Is an investment in Comcast during the two weeks of Olympics fever a wise move? It all depends on what you think of the company’s strategy. Apparently, quite a few people agree with it; shares are at a 52-week high after news that the financial investment and return for the Games will be just about even.
But after the closing ceremonies, those ten hours of Olympic coverage each weekday will be gone, and Bob Costas’ voice won’t put us to sleep at night any more. What then?
Hey, there’s always two years from now. The proof is right there in the bottom corner of your screen.
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