Analyst sees NBCU Olympics win mostly positive


Yes, there are negatives, such as having to part with $4.4 billion, but Wells Fargo Securities analyst Marci Ryvicker thinks having NBCUniversal win the Olympics through 2020 is mostly positive for Comcast Corporation.

“We have to imagine that CMCSA [the stock ticker for Comcast] knew about the Olympics and the possible bid when they acquired NBCU, and we have heard CFO Michael Angelakis say time and time again that he is willing to stay involved in sports as long as CMCSA/NBCU can strike profitable deals,” Ryvicker said in a note to clients after the Olympics decision was announced in Switzerland. “That said, we do note that the 2010 Vancouver Winter games generated a $223M loss for NBC – with a price tag of about $1.0B. The 2012 London Summer games have a price tag of about $1.2B and could show the same loss. At this point, we continue to see the Olympics as less of a financial decision and more of a strategic and branding initiative. Time will tell,” said the analyst.

Interestingly, Ryvicker said she’d gotten a lot of questions in recent weeks about what would happen if the Olympics were to move off of NBC and onto cable. As far as we can tell, no cable-only bid was submitted to the International Olympic Committee for the US TV rights, since losing bidders Fox Sports and ESPN/ABC both planned to use a mix of broadcast, cable and online platforms just like NBC. Ryvicker did, however, provide a three-part answer to the question: “1) from a financial standpoint, the broadcasters would clearly lose the incremental ad dollars associated with the Olympics in the even-numbered years BUT y/y comps would even out; 2) from a strategic standpoint, NBC stations would need to rebrand (somewhat) given that the peacock would no longer be ”home to the Olympics” — although we don’t view this as a big deal most of the time, just near the time that the games air; and 3) from a Wall Street perspective, we think concerns about the longevity of the broadcast model would have been heightened. All that said, the fact that NBC won the games for the next decade clearly puts these fears to rest and removes an overhang on the entire broadcast space, in our view.”

The bottom line, from Ryvicker’s point of view, is that the Olympics win by NBCU is a “positive catalyst” for Comcast, in that the bid “is reasonable, in our mind,” and removes another overhang for the Comcast stock price on top of the recent deal to buy out Blackstone’s stake in Universal Orlando.

Also, Ryvicker sees the deal as good for the broadcast TV business. She told clients it “solidifies the health of the broadcast model and of NBC in particular (our thought being that had the IOC determined that this is a ‘dead’ business or network, it would have gone with one of the other two bidders).”