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Stations Face Olympic Ad Hurdles

While NBC nailed its $1 billion goal for advertising sales around the Beijing Olympic Games, it was a somewhat less triumphant story for network affiliates, with many falling short of their local sales expectations.

“I think the network had a great Olympics year,” said Michael Fiorile, chairman of the NBC affiliates board. “On the stations side, it’s more of a mixed bag. Some are doing good or great. Some are not doing great.”

Among those struggling is News-Press & Gazette Broadcasting’s KTVZ Bend, Ore.

“We’re having a tough time of it,” general manager Chris Gallu said. “The economy is very soft here in central Oregon. There just doesn’t seem to be the real desire for advertisers to be there. Sellout rates are 40%-65% at the NBC affiliates my sales managers are talking to. We’re on the low end, pushing a 50% sellout rate here.”

Gannett Broadcasting, Hearst-Argyle Television and Belo told Wall Street in recent days that their NBC-affiliated stations were struggling to reach their goals for local Olympics ad sales. Their Beijing numbers seemed to be in lockstep with the overall media landscape as national advertising is relatively strong compared with local TV.

But there are pockets of strength. For instance, WTHR Indianapolis found the Games as good as gold.

“We are overdelivering our revenue budget and we didn’t lowball our plan,” said Jim Tellus, vice president and GM of the Dispatch Broadcast Group station, a traditionally strong NBC affiliate in a local economy that is better than most.

“This is going to be our biggest summer Olympics success ever, despite the economy and odds against local TV,” he added.

Indianapolis is a particularly good fit with the Olympics because it is the center of U.S. amateur sports as home of the Amateur Athletic Union.

WTHR and another NBC affiliate that is doing well -- WNWO Toledo, Ohio -- began a hard sales push last year before the ad economy really soured.

“We’re fully sold out for the opening ceremonies,” VP/GM John Skorburg said. “And the rest of the Olympics is doing better than we anticipated.” The station is owned by Barrington Broadcasting.

Saying that local Olympic ads were selling well, Diane Kniowski, GM of WOOD Grand Rapids, Mich,, reported that a big batch of smaller advertisers stepped up, replacing bigger advertisers with image ads.

As for NBC’s owned stations, a spokeswoman said they are on pace to exceed their goals in terms of ad sales. At press time, they were not yet sold out but very close, much the same as the national picture.

Taking a general ad-barometer reading in markets where NBC owns a station, ad rate researcher SQAD found that costs-per-points are up a healthy 1%-10% since June in key adult demos. “It’s not bad,” said Neil Klar, president and CEO of SQAD. “If we saw an 8% across-the-board, it would be more impressive, but none of these [daypart] categories are going down.”

NBC paid $894 million in rights fees for the Games, although production costs are expected to put the overall outlay at well over $1 billion. Affiliates are believed to have chipped in via an ad-inventory swap that helped NBC to cover the cost nut. The feast-or-famine nature of the affiliate ad sales for the 2008 Beijing games could make cost sharing for TV-sports rights an issue going forward.

Fiorile was diplomatic on that topic, saying that any local ad woes “obviously is not great news on our behalf but there’s a lot of benefit from ‘event’ programming because it brings sampling” by the audience. Fiorile is also vice chair and CEO of Dispatch Broadcast Group.

An NBC spokeswoman also pointed out that there’s a halo benefit, saying that the Olympics “bring a lot of value to affiliates as a promotion platform.”

And at press time, NBC was still open for business.

“As the ratings come in, I expect a little bit more money to fly through the door,” said John Miller, chief marketing officer for the NBCU Television Group and president of The NBC Agency.

With Michael Malone and Marisa Guthrie.