The cancellation of live sports events during the coronavirus pandemic could be costing media companies more than $1 billion in ad revenue and even more in invaluable opportunities for self-promotion for the media companies that broadcast the events.
Sports is a major money-makers for networks, making up eight of the top 20 television events in 2019 when ranked by search engagement, according to TV data analytics firm EDO. Professional baseball, football, ice hockey, basketball, and college basketball playoffs and championships brought in about $1.21 billion in ad revenue alone.
This year, with major sports leagues all but shut down to stop the spread of COVID-19 six of those events are likely to be canceled and two others heavily impacted.
With these must-watch events suddenly off the schedule, media companies have been forced to rework advertising contracts with brands. Many upfront ad deals are centered around sporting events. If a company wants to advertise during March Madness, it also needs to buy ads elsewhere on the network, but if those games don't air, the network and the brand have to come up with an equal deal or issue a refund. Advertisers spent a total of $1.126 billion advertising on college basketball's March Madness games in 2019, EDO reported.
"[Sports events] anchors other parts of the buy," EDO president and CEO Kevin Krim explained. "If you want to be in a prominent position, you need to buy other things."
Beyond just the lost marketing dollars, the loss of these games also means networks are missing out on a chance to highlight their other shows and products.
NBCUniversal, for example, sold $1.25 billion worth of advertising on the 2020 Olympic Games before it was canceled, about 90 percent of its ad inventory, but it will also lose the opportunity to promote its new streaming service Peacock, which is set to launch to the public on July 15, Krim said, less than two weeks before the Olympics were set to begin. Peacock was supposed to feature three daily shows on the Tokyo Games, as well as live coverage of the Opening and Closing ceremonies.
The Olympics' massive audience means the broadcast will remain a top-tier event when the games finally get underway in 2021 and marketing dollars are likely to return with it. Many companies are multi-year Olympic sponsors, and it's such a unique event that brands will want to advertise during the broadcast no matter when the Games are played, Krim explained.
However, the delayed revenue and missed promotions opportunity could still weigh on the industry.
"It is a really serious impact on these broadcasters," said EDO president and CEO Kevin Krim. "They use these as the lynchpins of their ecosystems."