#NBCFail: A Traditional Media Company in a Digital World


“Sport and mass media enjoy a very symbiotic relationship in American society” (McChesney, 1989, p. 49).  Indeed, from the first closed-circuit televised broadcast of the Olympics in 1936 to the digitally-delivered Olympics of 2012, the Olympic games provide a compelling environment with which to explore the nature of the symbiosis.  In particular, the London Olympics, the first to have a immersive digital media experience in addition to the traditional broadcast experience, sheds light on the conflict created by new forms of media and how new media threatens traditional commercial mass media business models in the world of sports coverage, perhaps upsetting the symbiotic balance.  NBC Universal, which owned the broadcast rights to the London Olympics in the United States was heavily criticized for their coverage, accused of forcing audiences into viewing paradigms of an earlier era, failing to use new media to its potential, and putting the commercial interest over the public interest (Deitsch, 2012; Holmes, 2012; Moore, 2012; Stanley, 2012).  Most of the criticism centered on NBC’s failure in three dimensions, real-time versus prime-time, cultural deafness in a global village, and tone-deaf coverage selection, prompting a new Internet meme, #NBCFail(Sandomir, 2012; Stanley, 2012).  Despite the criticism, NBC’s coverage was a commercial success with the largest audience in media history (CNN, 2012).  The London Olympics demonstrate that the mass media is dealing with a new reality as a result of a networked audience.  Mainstream media organizations occupy a liminal existence between traditional mass media business models and new media expectations, attempting to step into the digital world while remaining tied to earlier paradigms.

Little does more to reflect the symbiotic relationship between media and sports as much as the financial arrangements between the media and sporting agencies.   In the case of the London Olympics, NBC paid the International Olympic Committee $1.18 billion for the exclusive U.S. broadcast rights to the games (BBC, 2012),  fees that provide the bulk of International Olympic Committee revenue (Associated Press, 2008).  One could argue that the games would not exist in their present form without IOC broadcasting revenue streams.  Moreover, with such hefty prices for broadcasts rights, NBC needed to assure that their coverage would generate significant advertising sales to make the broadcast a commercial success in a media environment where audiences have been fractured between traditional mass media and networked media.  At risk, was not only the commercial success of the deal, but also NBC’s brand reputation in delivering a high-quality media experience that serves public interest in the media event.

By all accounts, the NBC broadcast of the Olympics was a commercial success.  NBC had originally expected to lose $200 million on the broadcast, but ended up making a small profit as a result of larger than expected advertising revenue (Heistand, 2012) and the largest audience ever recorded for any media event (CNN, 2012).  Moreover, NBC executives have linked to their primetime success to their digital programming, suggesting their digital coverage drove viewers to primetime audiences and calling their move into digital coverage “a big, bold, swing” (Heistand, 2012, p. 1).  However, critics have argued that NBC’s digital coverage was missed opportunity because the network continued to think of coverage in traditional, monopolistic terms, assuming that viewers didn’t mind not seeing the events live, and couldn’t get the information elsewhere (Stanley, 2012).  Indeed, NBC’s choice, to delay coverage until primetime, or only offer live digital streams to paying cable customers angered many viewers, although savvy Internet users streamed live coverage directly from the BBC using Internet proxies to circumvent NBC (Moore, 2012).  Rather than a bold move into digitalized networked communication, NBC appeared to use digital content simply to draw the audience to primetime coverage, their traditional revenue source.

Moreover, criticism extended to whether NBC understood how the world had changed as a result of networked communication.  NBC       appeared to be deaf to the multi-cultural nature of the Olympic broadcast, opting to select coverage primarily of U.S. athletes and with color commentary that appeared to understand little of the world outside the United States.  For instance, Moore (2012), described viewers embarrassment of the spectacle:

Having to watch trained TV anchors link Kazakhstan to Borat, describing Luxembourg as a central European nation, note that Uganda’s athletes come from the country of Idi Amin, mispronounce the names of Niger and the Cote D’Ivoire, and otherwise support every ugly American stereotype. (p. 1)

While NBC may be excused their coverage selection given that competition for revenue drives programming choices to the lowest common denominator (McQuail, 2010), the mono-cultural commentary displays both arrogance and ignorance of multicultural character of the global village enabled by the networked world.

The widespread criticism suggests that NBC appeared to underappreciate a variety of audience expectations, including the desire for the shared experience for live Olympic coverage, the expectation of niche, tailored content inherent in the digital world, and the desire of the audience to view the Olympics anywhere, anytime, and on any device.  The resulting outcry from audience members over NBC’s botched monopoly coverage showed up on Twitter with the hashtag #NBCFail, however NBC executives appeared to discount the outcry as dissent from small minority (Richter, 1985), an attitude that demonstrates their misunderstanding of the network form of mass communication.  For example, while over the last three days, there have been a mere 19,800 tweets with the hashtag #NBCFail, those tweets have made more than 15.5 million impressions (Hashtracking, 2012).  Furthermore, the popular #NBCFail meme has transcended Olympic coverage and has entered popular Twitter discourse on NBC’s coverage of football, the mars rover, the election, NBC Nightly News, and even their fall line-up.  While NBC’s Olympic coverage has been a commercial success, the damage done to their brand may be incalculable.

The #NBCFail meme is symptomatic of NBC’s failure to meet the expectations of an audience that become accustomed to new media in a networked world.  Audiences expect to get coverage anywhere, anytime, and on any device.  In addition, audiences have higher expectations of the social nature of global media events, expecting platforms than enable them to share the experience in a multicultural setting.  However, while traditional media companies have the financial power that affords the opportunity for exclusive coverage of global sporting events, they are at the same time, unequipped to transition their business models inline with higher audience expectations, given it requires them to creatively destroy the very business model that provides that financial power.  In fact, #NBCFail could have as easily been #ABCFail or #CBSFail, given most mainstream media organizations occupy a liminal existence between traditional mass media business models and business models that center around new media expectations.

References

Associated Press. (2008, November 18, 2008). EBU urges IOC to stick with European broadcasters  Retrieved August 12,, 2012, from http://sports.espn.go.com/espn/wire?section=oly&id=3710990

BBC. (2012, August 14, 2012). London 2012 was ‘biggest ever US TV event’  Retrieved August 19,, 2012, from http://www.bbc.co.uk/news/entertainment-arts-19253273

CNN. (2012, August 13, 2012). Nielsen: 2012 Olympics most-watched event in U.S. TV history  Retrieved August 19,, 2012, from http://marquee.blogs.cnn.com/2012/08/13/olympics-closing-ceremony-a-ratings-win/

Deitsch, R. (2012, August 10, 2012). Mark Lazarus responds to criticism. London 2012  Retrieved August 19,, 2012, from http://sportsillustrated.cnn.com/2012/olympics/2012/writers/richard_deitsch/08/10/NBCs-Mark-Lazarus-responds-to-criticism/3.html

Hashtracking. (2012, August 19, 2012). #NBCFail  Retrieved August 19,, 2012, from http://beta.hashtracking.com/ht-pro-rpt/cjeffers-nbcfail-2012-08-10/

Heistand, M. (2012, August 12, 2012). NBC: ‘We took a big bold swing’ with digital coverage  Retrieved August 19, 2012, from http://www.usatoday.com/sports/columnist/hiestand-tv/story/2012-08-12/NBC-London-Olympics/57015258/1

Holmes, L. (2012, August 6, 2012). Good Business, Bad Quality: How NBC Is Both Right And Wrong On The Olympics  Retrieved August 19,, 2012, from http://www.npr.org/blogs/monkeysee/2012/08/06/158198998/good-business-bad-quality-how-nbc-is-both-right-and-wrong-on-the-olympics

McChesney, R. W. (1989). Media made sport: A history of sports coverage in the United States. In L. A. Wenner (Ed.), Media, sports, & society (pp. 315 p.). Newbury Park, Calif.: Sage Publications.

McQuail, D. (2010). Mcquail’s mass communication theory (6th ed.). London ; Thousand Oaks, Calif.

Thousand Oaks, CA: Sage Publications.

Moore, H. (2012, July 30, 2012). NBC fail shows network’s commitment to ‘the last great buggy-whip Olympics’. Olympics 2012  Retrieved August 19,, 2012, from http://www.guardian.co.uk/commentisfree/2012/jul/30/nbc-fail-buggy-whip-olympics

Richter, P. (1985, December 12, 1985). General Electric Will Buy RCA for $6.28 Billion  Retrieved August 12,, 2012, from http://articles.latimes.com/1985-12-12/news/mn-16152_1_general-electric-will

Sandomir, R. (2012, July 29, 2012). Olympic Viewers Have a New Reason to Complain, and the Means to Do It. Olympics  Retrieved August 19,, 2012, from http://www.nytimes.com/2012/07/30/sports/olympics/nbc-olympics-delay-and-streaming-bring-complaints-on-twitter.html?_r=1&pagewanted=all

Stanley, T. (2012, August 6, 2012). NBC’s Olympic coverage has been a damning indictment of outdated monopoly media  Retrieved August 19,, 2012, from http://blogs.telegraph.co.uk/news/timstanley/100174920/nbcs-olympic-coverage-has-been-a-damning-indictment-of-outdated-monopoly-media/

 

 

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The NBC Olympic Broadcast: A Case Study of a Media Conglomerate


Every four years, athletes from around the world gather in one city to compete in what some consider the greatest sporting event in the world.  According to Nielsen Company (2008), nearly 70% of the world’s population tuned in to watch the 2008 Olympics in Beijing, or more the 4.7 billion sets of eyeballs.  The staggering figures suggest that the Olympics may be more of a media event than a sporting event.  Moreover, without media funding, it is unlikely the Olympics would exist, given that television rights fees make up most of the International Olympic Committee’s revenue (Associated Press, 2008).  In fact, NBC paid more than $2.2 billion, a staggering sum, for the television rights to the 2012 London Olympics (Associated Press, 2008).  Only a large and well-funded media organization can afford to bid on the rights, much less be able to successfully monetize such an event.  While a large media organization is needed to enable events like the Olympics, what is the make up and character of such organizations, how are they successful, and most importantly, what are the implications for the public?  Through the examination of NBC as a case study, this author has noted that greater media concentration has potential negative implications for both audience content and the U.S. political and regulatory processes.

NBC Corporate Background

            The National Broadcasting Company, or NBC, was born from the early days of radio as an offshoot of an AT&T-GE-Westinghouse-RCA collaboration (Benkler, 2006).  In 1986, to avoid the threat of hostile takeover, RCA, the parent company of NBC, was purchased by manufacturing giant, General Electric (Richter, 1985).  In 2011, Comcast Inc. cleared FCC regulatory hurdles and won approval to purchase a 51% controlling interest in NBC Universal from General Electric, despite media watchdog concerns over one corporation’s power to both create and deliver content, an industry first (Reardon, 2011).  With the acquisition of NBC Universal, Comcast has become “a leading provider of entertainment, information and communications products and services” (Comcast Corporation, 2012, p. 1).

The Post-NBC Acquisition Comcast Media Business

   Comcast Corporation is a $55 billion vertically integrated media conglomerate with a market capitalization of more than $92 billion comprised of five operating segments, cable communication, cable television, broadcast television, filmed entertainment, and theme parks (Comcast Corporation, 2012).   The cable communication segment is responsible for 67% of their revenue, being wired directly to more than 50 million homes and “serving 22.3 million video customers, 18.1 million high-speed Internet customers and 9.3 million voice customers” (Comcast Corporation, 2012, p. 3).  Moreover, with the acquisition of NBC Universal, Comcast increased its content assets to more that $14 billion worth of annual revenue spanning cable and broadcast television stations, the Telemundo and NBC broadcast networks, film production, and digital properties like Television Without Pity, iVillage, Daily Candy, Fandango, and perhaps most importantly, online video service Hulu (Comcast Corporation, 2012).  While some have been skeptical of vertical integration strategies following the AOL/Time Warner debacle, Comcast executives have emphasized that the NBC Universal acquisition is not aimed at creating synergy between segments, suggesting rather it simply makes financial and strategic sense for Comcast shareholders (Knowledge@Wharton, 2009).  Given the lack of focus on synergy, what does Comcast hope to gain through becoming a content provider?

Why A Vertical Media Business?

In an era shaped by media convergence, it is no surprise Comcast might wish to be more diversified.  New technologies have reshaped the media industry and forever separated content from delivery, as consumers now expect content anywhere, anytime, on any device (Jenkins, 2004).  In describing what is at stake in the converging media market, Jenkins (2004) suggests that “the way in which those various transitions play themselves out will determine the balance of power within this new media era” (p. 34).   Some have suggested that Comcast’s acquisition of NBC Universal is a hedge against the risk of media convergence, allowing Comcast to avoid being commoditized into a ‘dumb pipe’, or said otherwise, simply a channel among many (Knowledge@Wharton, 2009).

Furthermore, the ownership of digital properties may position Comcast to be successful in converged future.  For example, in addition to the typically lucrative prime time coverage of the 2012 Olympics, NBC also offered live streams of Olympic events, where a only 10 events drew more than a million live streams (Hiestand, 2012).  While the digital advertising revenue was a fraction of the more than $1 billion in prime time advertising, the digital presence help draw viewers to the prime time coverage (Hiestand, 2012).  In addition, given Comcast’s nearly 23% share of broadband (Taylor, 2011), the much of the bandwidth intensive streaming occurred through Comcast’s ‘dumb pipes’, conceivably driving demand for increased bandwidth.  Finally, given the recent and very public Viacom and DirecTv programming spat over content costs, it is clear that Comcast may be insulated from the impact of rising content prices for a significant portion of their distributed content, given their ownership stake in NBC.  While there appear to be clear benefits to Comcast, critics worry over the implications of media concentration for society.

Implications of Vertical Media Concentration

            For instance, McQuail (2010) suggests policy issues arising from media concentration include the affect on pricing and content.  While there does not appear to be evidence of rising prices for Comcast cable or broadband, there does appear to be a conflict of interest between Comcast’s television and film production and their digital properties.  For example, both Fandango and Television Without Pity are digital properties that influence audiences by providing reviews, criticism, and content for film and television content respectively.  A cursory analysis of content by this author of content presented on the Television Without Pity web site, found that content regarding the television shows American Idol, a Fox property, and The Voice, a competing Comcast property, were invariably favorable towards The Voice.  Perhaps The Voice is simply a better show, or perhaps there is ownership influence over the content.  McQuail (2010) warns that independence from owners or outside political or economic interests is a structural condition for effective media freedom.  While the fate of the free world may not hang in the balance because of a review of American Idol, there are additional implications of Comcast’s growing concentration of media power.

Indeed, because media freedom requires independence from political and economic interests, limits to media concentration are important (McQuail, 2010).  With Comcast’s acquisition of NBC Universal, and $55 billion in annual revenue, Comcast has become one of the largest media companies in the world with important political and economic interests and the influence to affect their interests.  For example, Comcast spent more than $20 million in 2011, and another $8.5 million in the first half of 2012 on lobbying, putting them among the top ten largest spenders, where they lobbied ‘net neutrality’ legislation, FCC programming issues, and their acquisition of NBC Universal (OpenSecrets.org, 2012).  In addition, Comcast is a member of the American Legislative Exchange Council, a Republican-backed bill mill that favors free markets and limited government (sourcewatch.org, 2012).  Comcast sits on ALEC’s Communication and Technology Task Force, helping Republican legislatures draft model bills on issues like a.l.a. carte cable pricing, cable video franchising, and municipal broadband (ALEC, 2012).  Of course, much of the draft legislation is favorable to Comcast’s business interests.  For example, ALEC’s position on efforts by municipalities to offer broadband is to put safeguards into place to protect private providers, and they are drafting model bills in support of their position to be available to legislator members of ALEC, should they be needed (ALEC, 2012).  It is clear that Comcast is using their market dominance and profits to affect the regulatory landscape and promote their continued growth.  The implication is fairly straightforward; massive media conglomerates are able to use their considerable economic and market power to exert influence on both the political and regulatory process, with the potential for negative consequences for consumers.

Conclusion

            As media events typified by the Olympic continue to grow in size, complexity, and audience share, only the world’s largest media conglomerates are positioned to effectively fund and deliver these events to a global audience.  However, as the Comcast example shows, there are significant societal implications of continued media concentration.  Specifically, greater media concentration appears to have potentially negative implications for society that include greater influence over both content, and national political and regulatory processes.

 References

ALEC. (2012). Communications and Technology  Retrieved August 12,, 2012, from http://www.alec.org/task-forces/telecommunications-and-information-technology/

Associated Press. (2008, November 18, 2008). EBU urges IOC to stick with European broadcasters  Retrieved August 12,, 2012, from http://sports.espn.go.com/espn/wire?section=oly&id=3710990

Benkler, Y. (2006). The wealth of networks : how social production transforms markets and freedom. New Haven Conn.: Yale University Press.

Comcast Corporation. (2012). Comcast Corporation 2011 Annual Report on Form 10-K  Retrieved August 12,, 2012, from http://files.shareholder.com/downloads/CMCSA/2014360697x0x561695/79426950-eb48-4e46-a761-f999d155a226/BookmarkedComcast10K.pdf

Hiestand, M. (2012, August 12, 2012). NBC exec: Live streaming Olympic events helped prime time  Retrieved August 12,, 2012, from http://www.usatoday.com/sports/columnist/hiestand-tv/story/2012-08-12/NBC-London-Olympics/57015258/1

Jenkins, H. (2004). The cultural logic of media convergence. International Journal of Cultural Studies, 7(1), 33-43.

Knowledge@Wharton. (2009, December 9, 2009). Comcast-NBC Universal: Will the Marriage of Cable and Content Work?  Retrieved August 12,, 2012, from http://knowledge.wharton.upenn.edu/article.cfm?articleid=2401

McQuail, D. (2010). Mcquail’s mass communication theory (6th ed.). London ; Thousand Oaks, Calif.

Thousand Oaks, CA: Sage Publications.

Nielsen Company. (2008, September 5, 2008). Beijing Olympics Draw Largest Ever Global TV Audience  Retrieved August 12,, 2012, from http://blog.nielsen.com/nielsenwire/media_entertainment/beijing-olympics-draw-largest-ever-global-tv-audience/

OpenSecrets.org. (2012). Lobbying Spending Database: Top Spenders  Retrieved August 12,, 2012, from http://www.opensecrets.org/lobby/top.php?showYear=2011&indexType=s

Reardon, M. (2011, January 21, 2011). What the Comcast-NBC deal means to you (FAQ)  Retrieved August 12, , 2012, from http://news.cnet.com/8301-30686_3-20029160-266.html

Richter, P. (1985, December 12, 1985). General Electric Will Buy RCA for $6.28 Billion  Retrieved August 12,, 2012, from http://articles.latimes.com/1985-12-12/news/mn-16152_1_general-electric-will

sourcewatch.org. (2012). Comcast Corporation – SourceWatch  Retrieved August 12,, 2012, from http://www.sourcewatch.org/index.php?title=Comcast

Taylor, C. (2011, May 17, 2011). Want Broadband? Odds Are, You’ll Chose Cable  Retrieved August 12,, 2012, from http://gigaom.com/broadband/want-broadband-odds-are-youll-choose-cable/