Television: You Get What You Pay For

Philip M. Stone September 6, 2004

Europeans enjoy live coverage from the Olympic Games morning, noon and night. No waiting for prime time to see your country's top athletes win their Gold medals -- a far cry from watching the Games in the US where NBC makes you wait until prime time to see the best.

If ever there was a case to show US television is a business (as opposed to a service) you just have to remember that by the time Athens is over NBC will not see much change from $1 billion for the coverage rights plus all the additional production costs. As a business it has to make that money back plus a profit. It follows a sales and marketing strategy, long proven fruitful, that nothing gets shown until prime time along with a flow of very expensive advertising, each costing well into six figures. NBC will make a profit out of its $1 billion investment!

A few years ago, before the 2000 Sydney Olympics, I attended a conference sponsored by the International Olympic Committee in which the major discussion was about rights to live Olympic coverage on the Internet, mobile phones and the like.

The point made time and time again was that when you have NBC paying the type of money it does for the Games, then NBC deserves as much exclusivity as it can get.

It was during the Q and A session that I asked a question of NBC, "In Europe, the Sydney Games will be occurring mostly during the early morning hours. Yet Europeans are used to getting up early for such events and the ratings are surprisingly high. If Europeans can get up in the middle of the night and watch their favorite athletes live then why can't Americans?" (The Athens time zone makes it even more palatable with many of the main events occurring during the East Coast afternoon, but most people would still be at work)

Well, that brought more than a few snickers from the mostly European audience, who knew, as I knew, what the NBC answer would be, but it seemed to bring near apoplexy to the NBC producer who actually answered the question. He basically said there were more viewers, thus more money to be made, in a four-hour block from 8 p.m. to midnight than there was from 3 a.m. to 7 a.m. Hard to argue with that. But why not have both -- let those who want to get up early take a look and for those who sleep let them eat prime time? When you invest the kind of money NBC invests in the Olympics the answer apparently is you don't take chances in reducing that prime time audience.

And if you ran a business and made a 1 billion dollar investment you'd probably do the same. Which is why that old expression "You Get What You Pay For" comes into play.

Television is also a business in Europe, and while Europe pays for Olympic television rights, the amount doesn't come close to what NBC pays. But in Europe, there are some 14 hours of live coverage from early in the morning until the last event at night, plus the wrap-up shows -- you don't have to wait until prime time to see what has happened.

Which would you prefer?

Before you answer, there is a catch. Most of the stations in Europe carrying the Olympics are state-owned broadcasters, as opposed to private stations. Some state-owned broadcasters carry advertising (as they do in Switzerland) and some don't (such as the BBC in the UK). But they all do have an annual license fee which any household with at least one television set must pay. In the case of Switzerland it costs approximately $1 a day for the privilege of watching television in your home. Cable costs are extra.

In the US, if you put aside cable or direct satellite fees, it costs you $0 a year to watch your national and local networks. In return you see a lot more advertising (most European countries strictly control how many minutes of advertising is allowed each hour and/or how many interruptions there are in a program.) Have you counted the number of commercial breaks, and how many commercials you are watching in an hour during the Games in prime time? If you take the four hour prime time block and strip out all the ads, the station identifications, promotions for upcoming programs etc. then that four-hours of prime time is more like three hours of actual Olympic competition.

And have you noticed how they make you wait until late in the program for what you most want to see. Doesn't take rocket science to figure that one out. But for all of that you have no license fee cost -- the only charge made to you is your time for watching. Which would you prefer?

The real truth is that without the money NBC pays for Olympic rights the Games as we know them would not be as we know them. NBC is so important to the financing of the Olympic movement that it is a wonder they don't call them the NBC Olympic Games!

And that brings us back to where we started. Because NBC pays that kind of money we have such terrific Olympic Games. And that is NBC's real service.

And thank you American viewers for accepting to wait all day to see what has happened, and for watching the ads, and buying what they ask you to buy, and for watching NBCs new fall line-up that they continually promote. The US ratings for the Games are up considerably this year allowing NBC to sell even more ads and make even more money. The investment is a great success. Long may it continue.

And long may we in Europe continue watching everything live.