Olympics Pole Vault NBC Broadcast’s 3Q

The third quarter of 2016 wouldn’t have been all the special for NBC Universal, but factor in the Rio Olympics and results were spectacular. Revenue growth for NBCU was largely driven by the Broadcast Television unit, and the Olympics drove broadcast’s gains.

Senior EVP-CFO Michael J. Cavanaugh cited increased retransmission consent income as an additional positive factor during this morning’s call with analysts.

The 55.6% gain in broadcast revenue to $3.1 billion was accompanied by $378 million in operating cash flow, more than double the $150 million earned during 3Q 2015.

Discussing the quarter’s results, Chairman-CEO Brian L. Roberts said: “Let’s start with Rio, which again validated that the Olympics are the most valuable and most consumed property in media. NBC won all 17 nights of prime time, and the NBC Sports Network was the No. 1 sports cable network in prime time over the 14 days that it provided live coverage of the games.”

Factor out the Olympics and broadcast revenue suffered a 3.6% loss, but as NBCU CEO Stephen B. Burke pointed out, the rest of the NBC lineup had to compete with that very event. “The Olympics took a lot of the advertising from ongoing programs during the quarter,” he explained.

Despite the success of the Rio Olympics, the fact remains that it did not perform as well as the London games in 2012, and on top of that, NFL ratings are down thus far in 2016.

Burke said he was not concerned due to the dominant strength of both properties.

“If you step back, the Olympics and the NFL are the two highest-rated programs of the year in all of television. They dominate the nights that they’re on.”

The Olympic, he noted, beat its No. 2 competitor by a factor of four and Sunday Night Football also dominates the ratings.

“We’re watching it,” he concluded, “and obviously, you’d rather have ratings up than down, but having ratings decline modestly in very, very strong properties doesn’t cause us much concern.

Burke said everybody is waiting for the day when a third party is able to take an event like the Olympics and measure total viewing across all platforms. He said advertisers are aware that there is extra bang for the buck buying a major event on television and likely factor it into their planning, but still, it will be great when it will be possible to attach a reliable statistic to the viewing.

Responding to a question about the likely impact of new OTT services, Burke said, “I think there’s about 20 million … homes in America that are not part of the cable/satellite/MVPD environment. The real promise of some of these new over-the-top entrants is that they would deliver incremental subscribers, which obviously would be good for the content side of the company. I think we all have a healthy degree of skepticism that these new over-the-top entrants are going to create millions and millions of subscribers any time soon.”

Two of this year’s hot broadcast business stories, political advertising and the spectrum auction, were barely mentioned.