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NBC plans for Tokyo Olympics as coronavirus worries advertisers

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                                A man wearing a mask takes pictures of the mascots for the Tokyo 2020 Olympics and Paralympics in Tokyo in February. The spreading virus from China has put the Tokyo Olympics at risk.


    A man wearing a mask takes pictures of the mascots for the Tokyo 2020 Olympics and Paralympics in Tokyo in February. The spreading virus from China has put the Tokyo Olympics at risk.

If NBCUniversal is anxious about how coronavirus may affect its plans for the Olympic Games, it is trying not to show it.

“The Olympics are obviously on everybody’s mind,” Brian Roberts, chief executive of Comcast, NBCUniversal’s parent company, said at a conference Tuesday. “What I know is, it’s full steam ahead. We’re getting ready. We’re excited.”

The media giant has been the main broadcaster of the Summer Games since 1988 and the Winter Games since 2002. In 2014, it paid roughly $7.7 billion to retain the U.S. broadcast rights to the Olympics through 2032.

NBCUniversal has sold more than $1.25 billion in advertising commitments, or nearly 90% of the available ad space, to go with 7,000 hours of broadcast, streaming and social media content, the company said Tuesday. It plans to deploy more than 2,000 people to Japan for the 2020 Tokyo Olympics, which start July 24.

The coronavirus could disrupt not only NBCUniversal’s coverage of the Games but also its advertising arrangements, sponsorship deals and promotional events.

As the outbreak expands, killing more than 3,200 people and infecting an estimated 92,000 in dozens of countries, Japanese officials and Olympics organizers have said the Games will proceed as planned. But companies that have signed up for ads are increasingly concerned that the most-watched sporting event in the world may be canceled, rescheduled or diminished.

John Shea, president of marketing and events for Octagon, a sports agency working with several Fortune 100 companies on Olympics deals, said advertisers were taking the threat seriously.

“You’re planning for the world’s biggest event, and there are tens of millions, if not hundreds of millions, of dollars attached to these opportunities,” Shea said, “so these questions are being asked at every level of our clients’ organizations.”

“We have to anticipate that the Games will happen,” he added, “but it would also be irresponsible for us not to acknowledge and recognize that a number of scenarios could take place.”

Sports agents have said they are concerned that endorsement deals with athletes may be affected. Companies like Twitter, which has a deal with NBCUniversal for daily live coverage of the Tokyo Games, have restricted employee travel and backed out of conferences and other events.

Roberts brought up the worst-case scenario in his comments Tuesday. “We try to anticipate, for big events, what might happen so that we’re protected there, and we also have insurance for any expenses we make,” he said. “So there should be no losses should there not be an Olympics. There wouldn’t be a profit this year. But, again, we’re optimistic the Olympics are going to happen.”

Michael Lynch, a marketing consultant who from 1995 until 2012 led Visa’s global sponsorship strategy, which included events like the Olympics, noted the importance of sponsors.

“There’s this enormous brand infrastructure around the world,” he said. “The Games don’t happen without the corporate support.” He added that companies with money in the Olympics were “hoping and praying” that they went on as scheduled.

Major companies that have signed on as sponsors ahead of the 2020 Summer Games include Coca-Cola, Airbnb, General Electric, Procter & Gamble and Visa.

“It would be disastrous if it’s canceled,” said Steven Moy, chief executive of ad agency Barbarian. “There could be a very dramatic impact to the whole economy.”

NBCUniversal also counts on its Olympics programming to promote itself. It plugs its network and cable series, Universal movies and theme parks in between volleyball matches, track-and-field contests and gymnastics competitions.

The “Today” show and Lester Holt’s “Nightly News” program were broadcast from the Summer Games in Rio de Janeiro in 2016, and NBC comedy “Superstore” had a ratings lift when it followed Olympics programming. Other NBC shows, including “The Voice” and “The Tonight Show,” have scored big ratings when the network scheduled them after the opening and closing ceremonies. And Universal film “Jason Bourne” grossed more than $400 million at the box office after it received a promotional push during the 2016 Games.

The Olympics have faced threats before. The Zika virus sparked alarm before the Rio de Janeiro Olympics, and political tensions with North Korea preceded the Pyeongchang Games in 2018. In both cases, the Games went on, and NBC broadcast them to millions of viewers.

NBC also found itself in a bind in 1980, when the United States boycotted the Moscow Olympics. Even after its insurance through Lloyd’s of London kicked in, NBC took a $34 million loss.

If the Tokyo Olympics are canceled, insurance is likely to cover losses related to broadcast rights and production through a claim that the coronavirus was an act of God. But it is not clear if it would protect NBCUniversal if Olympics-themed commercials and promotional tie-ins were scrapped.

In most circumstances, companies pay for Olympics ads after they appear. If the Games are canceled, or continue with fewer nations competing and lower ratings, NBCUniversal may be required to release companies from their ad commitments or otherwise compensate them.

But many ad agencies have spent months working on campaigns tailor-made for the Games that would not make sense in the context of, say, “This Is Us.”

“Unfortunately, there is no simple or easy replacement for the Olympics,” said Kevin Collins, an executive at ad-buying and media intelligence firm Magna. “There’s nothing out there of equal value from a marketing or programming standpoint.”

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