I’m sure people will be confused when ESPN outbids NBC (by a wide margin) for a property that can’t pay for itself in advertising on a broadcast network, let alone a cable station. From MediaPost, via TBI:
General Electric CEO Jeff Immelt said Tuesday that NBC Universal will lose an estimated $200 million on the February Olympics. GE is “counting on a tough economy around the Olympics,” Immelt said.
“It’s just a tough time for an event like that,” he said, referring to the Olympics as a “no-margin” business.
So then why does ESPN have such a crush on the Olympics? For one thing, it’s about status. But it also makes plenty of sense business-wise, even though they’ll never make enough in advertising to fully “pay for” the games.
Instead, they’ll probably just jack up their monthly subscription fees a few more cents, and… tada, they’ve made money on the Olympics. Even more importantly, though, they’ve become that much more of a necessity in your life. Like I talked about yesterday, when cable inevitably goes a la carte (or when people start pulling their plugs entirely), only the most indispensable networks will survive. Instead of charging $4 a month to everybody, ESPN will have to charge $10-20 to some — but in the end, they’ll probably be fine, because you’re going to need ESPN.
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