Comcast seeks Olympic gold as millions watch

Fewer viewers are tuning into the Sochi Winter Olympics than to the previous Winter Games in Vancouver, B.C., when many events were televised live to the North American audience. But Sochi's ratings are trending ahead of the 2006 Winter Olympics in Torino, Italy, which like the current competition were mostly shown well after the live events.

For  NBC parent Comcast (CMCSA), which spent $4.38 billion in 2011 for the rights to four Olympics and has struggled to earn a profit on them, this is good news.

"They have to be pleased," said Brad Adgate, research director at Horizon Media, adding that the network has also generated big online audiences for popular events such as the U.S. hockey victory over Russia and snowboarder Shawn White's unsuccessful quest for more Olympic gold. "This is in line with expectations."

Indeed, Monday night's prime-time broadcast that showed Meryl Davis and Charlie White win America's first-ever Olympic gold medal in ice dancing attracted 23.5 million viewers and captured the highest ratings at that point in the Winter Games since 2002's contests in Salt Lake City, Utah. More than 1 million viewers even tuned into a recent curling broadcast on CNBC, and more people are checking out the games online than ever, according to the network. 

Heading into the Sochi Winter Games, NBC was confident it would end up in the black. Worries that people would find out the results in advance and not watch, or would be turned off by the political situation in Russia have proven groundless, according to NBC research head Alan Wurtzel.

"Look, you cannot go nine hours and not hear about results, but apparently, for most viewers, it just doesn't matter," he said in a recent conference call with reporters. "Forty-four percent said they heard results on Saturday prior to Sunday, but it had no impact. In fact, over one-third said it made them more interested in the games, and only 15 percent said knowing them -- the results -- made them less interested."

NBC Sports head Mark Lazarus recently told Reuters the company will "make a reasonable profit" on the games. He wasn't more specific, and officials from NBC declined to comment.

One reason for that optimism: rights for the Sochi games cost about $775 million, below the $820 million NBC paid for the Vancouver Games in 2010. The network has estimated it has sold about $900 million worth of ads for Sochi, and the finally tally may top $1 billion. However, the costs of producing the Olympics are considerable, although they've been in-line with Comcast's expectations, according to a company spokesman.

NBC is betting that the Olympics will give an extra boost to the recently launched "Tonight Show Starring Jimmy Fallon" and "Late Night With Seth Meyers" along with the NBC Sports Network, which debuted in 2012. The games likely also help the "Today" show and "NBC Nightly News."

"Their affiliates are happy since they dominate the ratings for 17 days," Horizon Media's Adgate says.

Comcast's successful bid for the Olympics package was roughly $1 billion higher than the offer made by rival Fox (FOX), which is controlled by tycoon Rupert Murdoch, and Walt Disney's (DIS) ESPN. The Olympics' economic track record for NBC, however, has been mixed. The network lost money on the 1992 Barcelona Games and the 2008 contest in Beijing, when it was owned by General Electric (GE). Comcast estimated that it lost $223 million on the 2010 Winter Games in Vancouver and broke even on the 2012 London Summer Games after first expecting another loss.

Since Sochi is a Winter Olympics, it's is a tougher sell to the U.S. audience because some of the sports, such as curling, aren't widely followed. The Summer Games attract bigger audiences.

"Few high schools and colleges in warm-weather areas have ice hockey teams," according to a Harvard Business School study. "Similarly, though many Americans enjoy skiing, most do not live in an area where mountain skiing or even cross-country skiing regularly is possible. ... Nonetheless, some Winter Olympic sports draw broad audiences, such as figure skating and speed skating."

Shares of Comcast, which recently announced a $42.5 billion acquisition of No. 2 cable-TV operator Time Warner Cable (TWC), fell around 3 percent to $51.60 in Wednedsay afternoon trading, but they've gained more than 26 percent over the past year.

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    Jonathan Berr is an award-winning journalist and podcaster based in New Jersey whose main focus is on business and economic issues.