Live events have been propping up the TV industry, but confirmation that the Olympics will be delayed over the novel coronavirus serve as another big reminder of its vulnerability.
The International Olympic Committee and Japanese Prime Minister Abe Shinzo agreed on March 24 that the games will be postponed until summer 2021 because of the uncertainty around the virus. The $70 billion TV advertising business has been in slow decline as people cut the cord and shift to online viewing, and if not for the Olympics and the 2020 election, TV advertising was expected to decline further in 2020, according to the forecaster Magna. The longtime Olympics broadcaster NBCUniversal said it sold a record $1.5 billion in ads around the games.
"Live sports is what drives live TV today," Barry Lowenthal, the CEO of The Media Kitchen, recent told Business Insider, adding that the Olympics were "still the most extraordinary live sports event. For that to go away will have a ripple effect across the industry."
"The linear television business is perhaps more dependent on reality programming and sports than it has ever been before, and the Olympics is arguably the crown jewel of sports programming," Tim Hanlon, the founder and CEO of Vertere Group, a consultancy that works with media and advertising companies, recently told Business Insider. "If things change with the Olympic scheduling and presentation, that is a huge gaping hole in the NBCUniversal universe."
Hanlon said attendance at sports events was becoming less important than TV audiences because of the piles of money that advertisers are willing to spend on live sports, where advertisers can count on viewers seeing their ads instead of fast-forwarding through them.
"Sports is increasingly becoming more of a television-first economic model while attendance and in-game experiences are secondary," Hanlon said. "There is something to be said that television trumps everything — you're talking about millions of viewers versus tens of thousands of in-person fans."
Comcast said the virus' impact would be minimal
NBCU has said the impact on its business would be small. It has insurance to cover its investment. And a lot of clients' Olympics ad packages, which range from $5 million to more than $100 million, would just be shifted to other parts of the NBCU ecosystem if the games are canceled, a media-buying executive who has several clients advertising in the Olympics and works closely with NBCU has said. This exec also said the logistical challenges of relocating 15,000 athletes and the number of international sports broadcasting contracts made postponement unlikely.
Initially, NBCUniversal's parent Comcast said the games would go on despite the coronavirus concerns.
"The Olympics are obviously on everybody's mind. What I know is it's full steam ahead," Brian Roberts, the chairman and CEO of NBCUniversal's parent, Comcast, said on March 3. "There should be no losses should there not be an Olympics — just wouldn't be a profit this year."
As the IOC moved closer in recent weeks to making a decision about the timing for the games, NBCUniversal's stance has changed.
"These are extraordinary and unprecedented times, and we fully support the IOC's decision to step up its scenario-planning for the Tokyo Olympics," a spokesperson told The Hollywood Reporter on March 23. "We are prepared to stand behind any decision made by the IOC, the Japanese government, and the world health officials with whom they are working regarding the Tokyo Olympics."
NBCU is riding on the Olympics to drive interest in Peacock
Still, the Olympics getting postponed will require the network to fill the airtime with new programming, which could leave it with a weaker lineup and dent ratings.
Further, it could hurt Peacock, NBC's big bet to win back viewers who are fleeing to streaming services. Its planned April launch was timed to ride the wave of interest in the Olympics, Adam Simon, a senior vice president and executive director of strategy at UM's IPG Media Lab, recently said.
The opening and closing ceremonies for the Olympics were planned to first be broadcast on Peacock before being aired to national TV audiences, and after the games NBCUniversal was supposed to air other types of live sports coverage like the Ryder Cup and NASCAR content on Peacock. Peacock has secured big launch advertisers like State Farm, Target, and Unilever.
Asked for comment on Peacock, NBCU previously said there was no impact on its Olympics preparations as of now.
On the other hand, Vertere Group's Hanlon said NBCU might use an Olympics void to promote Peacock, including airing content designated exclusively for the service on national TV.
"If Olympic content were delayed or evaporated, it potentially could be a creative opportunity for NBCUniversal to kill the lost time with things that promote Peacock," he said.
But that's a big "if."
"While Peacock has its fair share of content, the Olympics were seen as the primary launch tentpole for the service, which might struggle to gain immediate traction without them, as the last in a long line of streaming launches," Simon said.
