Comcast Corp. has insurance that will cover expenses related to the postponement of this summer’s Olympic Games in Tokyo because of worries about the Covid-19 pandemic.
Chief Executive Brian Roberts disclosed the coverage at a Morgan Stanley conference earlier this month when the Philadelphia-based company, among others, were optimistic that the Olympics would be able to proceed as scheduled. The International Olympic Committee today formally announced a year-long delay for the Tokyo Games, bowing to pressure from athletes and politicians around the world.
“There should be no losses should there not be an Olympics,” Roberts said at the time. “There just wouldn’t be a profit (from the games) this year.”
AdAge, which first reported Robert’s remarks, notes that NBCUniversal may lose out on $1.25 billion in Olympic advertising sales. The company also faces numerous headaches such as figuring out what to broadcast during the two weeks the games would have aired. NBCUniversal spent an estimated $1.4 billion on the U.S. rights for the competition.
According to Kagan, the media research unit of S&P Global Markets, the launch of the company’s Peacock streaming service, which had been planned for July 15 to take advantage of the Olympic hype, may be affected by the postponement.
For now, though, Philadelphia-based Comcast is tight-lipped about its plans.
“NBCUniversal is actively working with our advertising partners to navigate this postponement, and we’re exploring all options to best serve their brands and our consumers this year, and into 2021,” according to a company spokesperson.
Figuring out what to do about the Olympics advertisers is going to be tricky. Since they likely paid a premium rate to be part of the Games, they may not be interested in moving their ads to other programs that attract fewer viewers. Sports programs are increasingly crucial to broadcast and cable networks because they attract large audiences who view them live.
“Most networks are actually making profits from the airing of live sports,” MoffettNathanson analyst Michael Nathanson wrote in a recent client note on a related topic.
ViacomCBS and AT&T’s Turner Sports are in a similar situation to Comcast with the recently canceled March Madness NCAA Basketball Championship. The nearly month-long tournament generated $910 million in ad revenue in 2019, according to Kantar Media. The companies, which signed an eight-year, $8.8 billion contract extension with the NCAA in 2016, reportedly sold out of ad inventory for this year’s competition.
“For Comcast, the Olympics aren’t canceled, so it’s a timing issue, whereas March Madness is canceled,” said LightShed Partners Analyst Rich Greenfield, in an email “If they paid for the content and it didn’t air, that is especially painful.”
NBC’s connection to the Olympics stretches back decades. The network broadcast the first Olympics Games in Tokyo in 1964 and has had the U.S. broadcast rights to the Summer Olympics since 1988. It first began showing the Winter Olympics in 2002.
The Comcast-owned media/entertainment conglomerate acquired the U.S. broadcast rights to the Tokyo Games in 2011 along with 2014, 2016, 2018 Olympics for $4.38 billion. Three years later, the International Olympic Committee and NBCUniversal signed a $7.75 billion extension running from 2021 to 2032.
Comcast also today became the latest media company to warn that the Covid-19 pandemic could have a material impact on its earnings. As a result, the company finds it “challenging to estimate the future performance of our businesses, particularly over the near to medium term,” according to a Securities & Exchange Commission filing.
Walt Disney issued a similar warning to investors last week.
Like other media companies, Comcast has shuttered all non-news TV and movie productions because of the pandemic. It has also closed its theme parks.