Broadcasters stand to lose millions

VANCOUVER — It doesn’t matter how much CTV spent — or may lose — for the broadcasting rights to next month’s Winter Olympics in Vancouver.

VANCOUVER — It doesn’t matter how much CTV spent — or may lose — for the broadcasting rights to next month’s Winter Olympics in Vancouver.

CBC didn’t get them.

Recent reports suggest the North American media giants who spent record amounts for the Vancouver Olympic broadcasting rights stand to lose millions of dollars on what has long been considered a crown jewel for the TV industry.

But some observers say the narrow focus on those potential loses — particularly in Canada where the label of “Olympic network” has become a hard-fought matter of pride — neglects to consider why these companies bid on the Games in the first place.

“That really speaks to the core thesis of sponsorship in the first place — you spend a whole lot of money for some kind of intangible payback,” says telecom analyst Carmi Levy, senior vice-president of AR Communications.

“Long-term, they’ve probably already projected that they’re going to make up more than they’ll lose. The only thing is that windfall simply won’t come before February.”

American broadcaster NBC acknowledged earlier this month that it will likely lose somewhere in the neighbourhood of $200 million on the Vancouver Games, as advertising revenues in a struggling economy have failed to cover the staggering costs of securing the rights and actually covering the event.

The situation isn’t quite so bad in Canada, but the Olympic Broadcast Media Consortium, led by CTV and Rogers Media Inc., admits it has yet to break even, with some newspaper reports putting the current advertising shortfall at around $20 million with less than a month to go before the Games.

The consortium paid a record US$90 million to wrestle the broadcasting rights for Vancouver away from the CBC in a deal that also included another $63 million for the 2012 London Olympics. That pales in comparison to the US$820 million that NBC paid for the U.S. rights.

The contract was seen as an especially sweet victory for CTV and a defeat for the public broadcaster, which has broadcast every Olympics since 1996. It wasn’t long before veteran CBC sportscaster Brian Williams left for Canada’s new Olympic network.

, and the Games are now ingrained into nearly every facet of CTV’s branding.

“The rings are everywhere — if you don’t know that CTV is the major media sponsor of the Olympics, then you basically aren’t Canadian,” says Levy.

The consortium isn’t confirming just how much more advertising revenue it needs to break even, but president Keith Pelley insists sales are on track.

Pelley notes the consortium has signed more than 140 advertising deals, three times what the CBC had for the 2006 Winter Games in Turin, ranging from $10,000 to $15 million each.

“We’re selling Games in our own country, we’re selling something that’s once-in-a-lifetime,” says Pelley. “We’ll be selling right up to the closing ceremonies.”

CTV spokeswoman Bonnie Brownlee says it’s too early to evaluate whether CTV will get its money’s worth from the Vancouver Games, but she says the fact that the Olympics are being held in Canada makes it a must-have for the network.

“We wanted to be part of the Vancouver Olympics because we thought it would be one of the most important events in Canada for many years,” Brownlee says in an email. “We couldn’t conceive not being part of it.”

Olympic expert Stephen Wenn of Wilfrid Laurier University says the potential revenues from Olympic broadcasting are only part of the picture.

“I think we’re naive if we absent the notion that there’s a little bit of ego involved at an executive level, as well,” says Wenn.

“There’s a significant investment here, and obviously there was a great deal of thought in the Canadian market as to what the possible benefits might be from shoving CBC aside in the Olympic marketplace.”

Still, Wenn says the networks won’t be prepared to have the Olympics turn into a money-loser, regardless of the intangible benefits of winning the broadcasting rights.

He suggests all the talk about pending losses in Vancouver, and the size of NBC’s potential shortfall, might be more about the pending negotiations for the rights to broadcast the 2014 and 2016 Olympics in Russia and Brazil.

“You have to look at the U.S. contract as being extremely important, because it really does tend to set the marker for other markets,” says Wenn.

“So I can see where the networks maybe just trying to send the less-than-subtle signal that perhaps you may not want to expect the same degree of markup this time around.”