Blame it on Rio: Some U.S. companies see sales hit from Olympics

By on August 5, 2016

BIG APPLE The Olympics are already proving to be a boon for Comcast Corp’s (CMCSA.O) NBC and a drag for its U.S. media opponents, in addition to for restaurants that rely on customers venturing out within the evening for a chunk to devour.

Viacom Inc (VIAB.O), Netflix Inc (NFLX.O) and Discovery Channel all say they’re bracing for a hit to ad gross sales or subscriptions throughout the Games, While Cheesecake Factory Inc (CAKE.O) and others cautioned the event might preserve people out of eating places.

While previous Olympics produced winners and losers among U.S. businesses and industries, the effect will be extra stated this year. That Is because many high-profile competitions will likely be airing in primetime, in about 1/2 of the U.S., and since NBC will air an unheard of 6,755 hours of Olympic programing that may be considered on broadcast tv, Online and on cell gadgets.

The last time the Games coincided with primetime used to be 1996, after they were held in Atlanta. That was before streaming, apps and a bunch of different applied sciences.

NBC mentioned on Thursday it had already bought more than $ 1.2 billion in merchandising, together with most of its top class advert area for the Rio Video Games, hitting an all-time report. About $ 1 billion was sold during the London Games four years in the past.

“If I Am in a trade on this month That’s relying strolling traffic or eyeballs and that i should not have Olympic programing, it’ll be a nasty month,” mentioned Bernard Gershon, president of media and expertise consulting firm Gershon Media.

For the Games, Comcast has improved its X1 video technology, a suite-High field with a voice-controlled far off, and incorporated new options comparable to the ability to go looking situations with the aid of country or athlete and bookmark content material.

“They in reality have stepped up the best way which you can eat the content material and spot it on a couple of monitors,” said Gershon.

The Rio Video Games, which kick off with Friday’s opening ceremony, are expected to draw extra U.S. viewers than the record 217 million who tuned in to the London Olympics in 2012.

In as of late’s fragmented market, It’s more and more rare for any programing to attract that sort of target market. Comcast paid about $ 12 billion for the U.S. rights to broadcast Olympics Video Games via 2032.

Viacom, the dad or mum of networks MTV and Comedy Significant, expects that on account of the Olympics, ad sales within the current quarter might be “a bit of bit worse,” than the decline viewed within the previous quarter, Chief Monetary Officer Wade Davis instructed buyers on Thursday.

Similar concerns had been aired at others that must fight for advertising dollars in August.

Discovery Communications Inc’s (DISCA.O), Chief Monetary Officer Andrew Warren this week warned traders that the corporate’s third-quarter earnings would be “challenged” since the Olympics “suck promoting greenbacks” out of the market.

Discovery is just not falling by the wayside, although. It Is airing 23 hours of new programing all the way through the Olympics, up from 9 hours 4 years ago. A Couple Of others, including CBS, are taking a An Identical tack.

On-line streaming firm Netflix delivered fewer subscribers than expected within the 2nd quarter and said the Rio Video Games are expected to have a “small, but meaningful impact” on the selection of new subscribers within the present quarter, in line with CFO David Wells.

It Isn’t just Comcast’s media rivals which might be bracing for disruption. Except For Cheesecake Manufacturing Unit, executives at Texas Roadhouse Inc (TXRH.O) and Chuy’s Holdings (CHUY.O) mentioned the Olympics could entice folks to stay dwelling and skip going out to dinner.

Nonetheless, some analysts say the Olympics may be used as a smokescreen for a company’s underlying vulnerable performance.

“Olympics is a convenient excuse,” said Brian Wieser, analyst at Pivotal Research Team. “Traditionally, on the ad business, the impression was once beautiful limited. The Cash associated with promotion, no longer associated to the Olympics, Nonetheless confirmed up.”

(Editing with the aid of Eric Effron and Tom Brown)


Reuters: Prime Information

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