Unit of Comcast Corporation CMCSA, NBC Universal maintains its Olympics telecast rights in the U.S. till 2032 through a 12-year contract extension with the International Olympic Committee IOC. NBC Universal will gain rights to six Winter and Summer Olympic Games for a record $7.75 billion (inclusive of $100 million for promoting the games from 2015 to 2021).
The deal entails a payment of $2.5 billion for the rights to 2022 and 2024 Olympic Games. The rights to the 2026 and 2028 games will cost $2.55 billion and for the same for 2030 and 2032 stands at $2.6 billion, thus reflecting an average 15% rise in price with every game.
In 2011, NBC Universal gained the U.S. telecast rights for the winter games held in 2014 and 2018 and the summer games of 2016 and 2020 for $4.38 billion. The company outbid rivals -- ABC and ESPN networks, controlled by Walt Disney Co. DIS, and News Corp. NWSA-owned Fox Network -- for the rights..
The agreement with the IOC will allow NBC Universal to broadcast the games on media platforms like television, subscription TV, Internet and mobile devices. Moreover, it will enhance the company's video streaming services and safeguard its position against low-cost video streaming companies like Netflix NFLX and Hulu.
Moreover, Comcast has decided to acquire Time Warner Cable Inc. TWC. The deal is currently going through regulatory scrutiny. If U.S. regulators approve the deal then Comcast will become a cable TV behemoth with 30 million subscribers. This will further boost the profitability of NBC Universal.
Comcast exited the first quarter of 2014 with nearly $5.4 billion cash and $44.6 billion debt. Thus, a payment of $7.75 billion may further pressurize the company's cash position.
Hence, it is to be seen whether the Olympics distribution rights will prove profitable to the company in the long run.
Currently, Comcast carries a Zacks Rank #3 (Hold).
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