The Olympics were far from a sure thing for NBC Universal. American interest in the games had been waning for years, and the prospect of a Chinese crackdown on protestors made many network bigwigs nervous.
But the games have been both a critical and commercial success, thanks in part to the freakish performance from Michael Phelps. According to the New York Times, the games have netted NBC and parent company GE more than $100 million in profit:
The Beijing Games have become the hottest event of the summer, with numbers that so far have been certifiably big — far beyond the network’s expectations. The Games have drawn an average audience of about 30 million a night on NBC itself, millions more on NBC’s cable channels, 30 million unique visitors to NBC’s Olympics Web site, 6.3 million shared videos from the coverage streamed on the site and an ultimate profit that network executives project will surpass $100 million.
$100 million would have represented more than 10% of NBC's profit last quarter, and would have added--get ready--a penny to GE's EPS. CEO Jeffrey Immelt hinted at further benefits as well:
Jeffrey R. Immelt, the G.E. chairman, said in a telephone interview from G.E. headquarters in Connecticut that the corporation stands to enjoy a range of “ancillary benefits” based on its sponsorship of the Olympics, the $700 million worth of services it is providing for the Games and its long-term relationship with China, where it does more than $4 billion worth of business.
Other executives were also eager to crow about the games' success. Both NBC and CBS CEOs Jeff Zucker and Les Moonves were quick to trumpet the games as proof that Network TV is not past its prime:
He (Zucker) also argued that the success of the Games showed the future of network television might not be quite as dismal as had been forecast. “It’s a great story for network television,” he said. “This proves the pipes still work.” He added, “When you have an event that transcends popular culture, the only place you can aggregate these audiences is network television.”
Not surprisingly, some competitors agree. Leslie Moonves, the chief executive of CBS, who sent a note of congratulation to Mr. Zucker last week, said in a telephone interview, “Anybody who doubts the viability of network television after this is nuts.”
Okay, but let's keep things in perspective. Relying on one-off events that can succeed or fail depending on a host of factors outside one's control for the majority of your revenue is not exactly a bombproof business model. And although network TV is obviously "viable," it's certainly not the world-beating gold mine it was a decade agao. Google, for example, generates more than $100 million of operating income a week.
