Olympics Shine as NBC Builds its Brand, Despite Loss

It’s hard not to get caught up in the excitement surrounding this year’s Olympics. Watching players score points by curling “rocks” down the ice in a pumped up version of shuffleboard, has resonated with many new fans, not to mention long-time proponents of the sport.

Vancouver’s Winter Games are not only filled with high sporting drama, but also tinged with tragedy, with the death of Georgian Olympian luge competitor Nodar Kumaritashvili, who was killed during a training accident just hours before the opening ceremonies.

This all makes for good theater. It also attracts more eyeballs. NBC hit a coup last week when the network’s telecast of the Olympics beat out Fox’s “American Idol” in TV ratings. Nielsen reported that the Olympics were seen by 30.1 million people while 18.4 million watched the mega popular hit talent TV show.

NBC however expects to post a $200 million loss for its Olympic broadcast, even though the peacock station is simultaneously airing multiple events on its sister stations and affiliate networks. Drops in ad revenues are responsible for the decline, primarily because NBC’s Olympic bid was made in 2003, when economic times were much better and the cost for advertisements were higher.

Network officials are right to say there are many intangibles associated with broadcasting the Olympics. There is a certain prestige that comes with partnering with a worldwide event, especially when there are potential milestones achieved by some of the Olympians. Documenting those triumphs only builds on a network brand and solidifies its relationship with viewers. The economy will turn around. Ad buys will rise and so will profits. NBC’s Olympic strategy is right on track at the moment, but can’t continue to operate at a loss for an extended period of time.