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Olympics will be big for NBC, but not enough to help Comcast


The Summer Olympics in Rio began Friday, and you can only find them exclusively on NBC. Basically, If you’re not in Rio (and unless you’re working the events or family of an athlete, it’s unlikely you are) and you want to watch the Olympics, you have to watch it through NBC.

You might think this is sure to boost revenues for NBC and for its parent company, Comcast. But some analysts suggest otherwise.

Deutsche Bank notes that NBC has been showing particular strength recently, with the network’s EBITDA (earnings before interest, taxes, depreciation and amortization) beating estimates by 3% higher in Q2 of this year. And that was before any sort of Olympics boost.

Oppenheimer analyst Timothy Horan believes that a key factor for NBC at this year’s Olympics will be its ability to blend its regular media properties with an increased Internet/cloud presence. It’s doing this with more gusto than ever before, as Horan notes: “For the first time, the company is unifying its broadcast, NBC, Telemundo, digital and cable properties, with the Internet/Cloud. This will enable unique targeted advertising,” ultimately stoking more subscriber growth.

What exactly would an increased Internet/cloud presence look like for NBC? Essentially, it means allowing people to view the Olympics more easily from something other than a traditional television set, such as from an Internet-connected tablet. You’ll still need a cable login to watch on tablet, so the hope is that this might make convert some cord-cutters to pay for a cable account, boosting NBC’s recurring revenues. Many more people will be watching NBC’s channels over the next 16 days, which spikes the fees they can charge advertisers per ad. On the other hand, NBC’s costs won’t be much higher than normal since their content costs are fixed, which means that both revenues and margins will go up.

In fact, Bank of America Merrill Lynch analyst Justin Post believes US advertisers will shell out as much as $2 billion on the Olympics. Post also estimates 25% of that advertising will go to online platforms, but that still leaves a great deal of revenue for NBC.

And yet, all of this good news for NBC may not move the needle much for parent company Comcast. While NBC’s results will almost certainly be stronger this year thanks to the Olympics, Horton notes that other segments of Comcast such as Hulu, which loses money and in which Comcast has a minority stake, are likely to offset any gains from the Olympics.

Rayhanul Ibrahim is a reporter for Yahoo Finance.

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