NBCUniversal leans into sports ahead of ‘legendary February’

A version of this article first appeared in the CNBC Sport Newsletter with Alex Sherman, bringing you the biggest news and exclusive interviews from the world of sports business and media. subscription To receive future issues, directly to your inbox.

NBC is about to have a “legendary” month.

“Mythical February”, a marketing slogan invented by NBC marketing director Jenny Storms, revolves around sports games to be broadcast by NBCUniversal, an NBC affiliate Comcast. The Winter Olympics begin in Milan-Cortina on February 6 with the opening ceremonies. This will be broadcast on NBC, followed by a two-week series of Olympics programming.

Just two days after Olympics coverage begins, NBC will broadcast the Super Bowl, and a week later, the network will broadcast the NBA All-Star Game, a product of the NBA’s new media rights deal that began this season. The Olympics end on February 22, and NBC will not only broadcast the closing ceremonies, but will also host the Boston Celtics against the Los Angeles Lakers that night.

All highlights will be broadcast on NBC and on its streaming service Peacock.

And that doesn’t even include the FIFA World Cup, which will air on NBCU’s Telemundo channel this summer, or Major League Baseball, which returns to NBC in March after a three-year hiatus.

Running flagship sporting events will be a big test for NBC after it spent billions of dollars to acquire the rights to broadcast them. ROI is judged by a combination of advertising revenue sold for events, plus the distribution value added by making NBC a must-have component of any pay-TV package, plus the value of these events to the streaming service Peacock in terms of monthly subscriber addition and retention.

February is a microcosm of corporate strategy these days — and a notable shift for the media company in recent years. While Comcast co-CEO Mike Kavanagh says he disagrees, it’s hard to say otherwise: NBC has become a sports-first entity.

Sports have been a staple of NBC for decades, but they never used to be the network’s calling card. In the 1990s, NBC stood for “Must See TV,” which was based on hits like “Seinfeld,” “Friends,” “Frasier” and “ER.”

This run continued into the early 2000s, with another string of hits led by “The Office,” “The West Wing,” “Friday Night Lights,” and “This is Us,” as well as beloved hits like “30 Rock,” “Parks and Recreation,” “Community,” and “The Good Place.”

NBC has also long had successful morning shows (“Today”), news programs, and late-night shows (“Saturday Night Live” and “The Tonight Show”), but ratings have declined for all of those entities as tens of millions of Americans have canceled traditional pay television over the past 15 years.

Massive cord cutting has, of course, dramatically changed the media business. With ownership Warner Bros. Discovery It remains in limbo as well Paramount Skydance and Netflix Scrambling for control, NBC suddenly appears in the subdomain.

netflix, amazon, apple and Google/YouTube They have balance sheets that dramatically dwarf the purchasing power of NBCUniversal (at least, if those companies choose to spend on TV shows).

Disney NBCU has a market capitalization of $200 billion — much larger than NBCU, which is just a division of internet giant Comcast, which has a total market capitalization of just over $100 billion. And NBCU has become deliberately smaller, having just spun off its entire lineup of cable networks (including CNBC) other than Bravo.

NBC used to compete with ABC, CBS, Fox and a handful of basic cable networks like TNT, FX and TBS for scripted entertainment. Those days are over. Competition has shifted to include technology streaming giants, and NBC’s portfolio and global reach are dwarfed by larger rivals.

“If you look at where the competition came from, at least in the most recent media, it’s been the entertainment side,” Rick Kordella, president of NBC Sports, told CNBC in a recent interview. “For scripted dramas, you see Apple and Netflix and Amazon producing great dramas and other shows. Sports are harder. Sports is relationships. Sports is production. Sports is access to streaming. And so we have a little bit of an advantage in the sports category that we might not have in other categories.”

That doesn’t mean NBCUniversal can’t invest in scripted TV at all. The company recently signed “Yellowstone” creator Taylor Sheridan to a five-year contract starting in 2029 and worth about $1 billion, according to the Wall Street Journal.

NBC also made some home runs with unscripted television, including “The Voice” (which averaged more than 4 million viewers in its 28th season), “America’s Got Talent” and Peacock’s “Love Island USA.” Over the summer, “America’s Got Talent” was the highest-rated radio show, and season 7 of “Love Island USA” was the most-watched reality show for nine straight weeks. “The Voice” has been the highest-rated unscripted series for the past six seasons.

But NBCU may no longer have the funds at its disposal compared to the competition to outbid rivals on a bunch of expensive shows every year without losing money. Peacock is still losing money, unlike streaming services like Netflix, Disney+ and HBO Max.

That’s why Comcast was interested in purchasing WBD’s studio and streaming assets, including HBO Max, and merging them with NBCU.

NBC decided to expand into sports to keep its pay-TV package afloat while also boosting Peacock subscriptions for those who opt out of the cable service. Most of the viewing of scripted entertainment — which is easier to watch on demand — has gone to streaming.

However, Kavanagh disagreed that sports had become NBC’s main attraction.

““I wouldn’t say that,” the recently appointed co-CEO said in an interview. “Have you seen ‘Stumble’? Have you seen ‘St. Dennis [Medical]’? We don’t want to be just a sports service. This is not the plan.

“I want the sports team to kill,” Kavanagh said. “I want them to feel like they’re the center of the world. I want them to go to a sports media audience and say, ‘We’re the thing.'” But if we were sitting in Los Angeles and talking to… [NBCUniversal Entertainment and Studios] Donna [Langley] or [TV Studios Chairman] Berlina [Igbokwe] or [Bravo & Peacock Unscripted Chairman] Frances Berwick on the real side with Bravo – we have a special DNA in all those places, and they all deliver what the service does today.

Kavanagh has work to do. He is the leader of all NBC divisions, and of course loves all of his children equally.

However, just follow the money. NBC’s primetime schedule is the lightest for scripted comedies and dramas in its history. “Stumble” is currently the 17th most popular program on NBC (and about 75th overall on television), averaging about 1.5 million viewers each week, according to Nielsen numbers. Saint Denis Medical averages about 2.4 million viewers weekly.

Those numbers are roughly in line with what NBC gets for a weekly NBA game, but NBC just agreed to spend about $2.5 billion annually for the NBA. The All-Star Games and NBA playoffs will attract significantly more viewers than a standard regular season game.

“Sunday Night Football” averaged 23.5 million viewers per game this year. It costs NBC about $2 billion annually — a number that is sure to rise significantly if the NFL renegotiates those rights, which could happen as early as this year.

Last year, NBC bested its NBA and MLB “Sunday Night Baseball” competitors.

Two years ago, NBC paid $110 million for an exclusive NFL wild-card game. The rationale at the time was to spend big money on a major sporting event and hope that customers would continue to subscribe to Peacock after finding its library of original movies and TV series.

In the past year, this strategy has evolved a bit. Now, instead of hoping sports fans will stick around to watch Peacock entertainment, NBC has acquired the rights to the NBA and MLB. It’s probably a more reasonable bet to remain an NFL fan to watch exclusive NBA and MLB games than to continue paying $10.99 a month to watch “St. Denis Medical” or “Stumble.”